HERNANDOCOUNTY,FLORIDA … rpts/2017 hernando county.pdf · CERTIFICATEOFACHIEVEMENT VI ORGANIZATIONALCHART VII FINANCIALSECTION INDEPENDENTAUDITORS’REPORT 1 MANAGEMENT’SDISCUSSIONANDANALYSIS

HERNANDO COUNTY, FLORIDACOMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDEDSEPTEMBER 30, 2017

PRINCIPAL OFFICIALSas of September 30, 2017

BOARD OF COUNTY COMMISSIONERSWayne Dukes, Chairman - District 2

Steve Champion, Vice Chairman - District 5Nicholas W. Nicholson – District 1

John Allocco- District 3Jeff Holcomb - District 4

TAX COLLECTOR SHERIFFSally L. Daniel, CFC Al Nienhuis

PROPERTY APPRAISER SUPERVISOR OF ELECTIONSJohn C. Emerson, CFA Shirley Anderson

CLERK OF COURT AND COMPTROLLERDon Barbee, Jr.

Prepared by the Office of the Clerk of Court and Comptroller, Department of Financial Services

INTRODUCTORY SECTION

This section contains the following:

Table of Contents

Letter of Transmittal

Certificate of Achievement Award

Organizational Chart


TABLE OF CONTENTSSeptember 30, 2017

INTRODUCTORY SECTION

LETTER OF TRANSMITTAL I

CERTIFICATE OF ACHIEVEMENT VI

ORGANIZATIONAL CHART VII

FINANCIAL SECTION

INDEPENDENT AUDITORS’ REPORT 1

MANAGEMENT’S DISCUSSION AND ANALYSIS 2

BASIC FINANCIAL STATEMENTS

Government-wide Financial StatementsStatement of Net Position 3Statement of Activities 5

Fund Financial StatementsGovernmental Fund Financial Statements

Balance Sheet – Governmental Funds 6Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position 8Statement of Revenues, Expenditures and Changes in

Fund Balances – Governmental Funds 9Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Funds to theStatement of Activities 11

Statement of Revenues, Expenditures and Changes inFund Balances – Budget and Actual

General Fund 12Transportation Trust and Gas Taxes 13Hernando County Fire Rescue – Fire 14

Proprietary Fund Financial StatementsStatement of Net Position 15Statement of Revenues, Expenses, and Changes in Fund Net Position 19Statement of Cash Flows 21

Fiduciary Fund StatementsStatement of Fiduciary Net Position 25

Notes to the Financial Statement 26



REQUIRED SUPPLEMENTARY INFORMATION

FLORIDA RETIREMENT SYSTEM

Other Post Employment Benefit Plan – Schedule of Funding Progress 81Schedule of the County’s Proportionate Share of the Net Pension Liability -

Florida Retirement System and Health Insurance Subsidy Pension Plans 82Schedule of the County’s Contributions – Florida Retirement System and

Health Insurance Subsidy Pension Plans 83Notes to the Required Supplementary Information 84

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

Combining Balance Sheet – Non-major Governmental Funds 85Combining Statement of Revenues, Expenditures and Changes

in Fund Balances – Non-major Governmental Funds 90Budgetary Comparison Schedules 95Combining Statement of Net Position – Internal Service Funds 110Combining Statement of Revenues, Expenditures and Changes

in Fund Net Position – Internal Service Funds 112Combining Statement of Cash Flows – Internal Service Funds 114Combining Balance Sheet – Agency Funds 118Combining Statements of Changes in Assets and Liabilities – Agency Funds 120

STATISTICAL SECTION (Unaudited)

Schedule 1 Net Position by Component S-1Schedule 2 Changes in Net Position S-3Schedule 3 Fund Balances of Governmental Funds S-7Schedule 4 Changes in Fund Balances of Governmental Funds S-8Schedule 5 General Government State Shared Revenues by Source S-10Schedule 6 Fair Market, Assessed and Taxable Value of Property S-11Schedule 7 Direct and Overlapping Property Tax Rates S-12Schedule 8 Principal Property Taxpayers S-13Schedule 9 Property Tax Levies and Collections S-14Schedule 10 Ratios of Outstanding Debt by Type S-15Schedule 11 Ratios of General Bonded Debt Outstanding S-16Schedule 12 Computation of Direct and Overlapping Debt S-17Schedule 13A Bond Coverage – Capital Improvement Refunding Revenue

Bonds, 2004 S-18Schedule 13B Debt Coverage – Non-Ad Valorem Refunding Bonds, Note S-18Schedule 13C Bond Coverage – Water and Sewer Revenue Bonds, 2013A S-19Schedule 14 Demographic and Economic Statistics S-20Schedule 15 Principal Employers S-21



STATISTICAL SECTION (Unaudited) (Continued)

Schedule 16 County Government Employees by Function/Program S-24Schedule 17 Operating Indicators by Function S-26Schedule 18 Capital Asset and Infrastructure Statistics by Function/Program S-28

COMPLIANCE SECTION

SINGLE AUDIT REPORTS/GRANT COMPLIANCE

Independent Auditors’ Report on Internal Control OverFinancial Reporting and on Compliance and OtherMatters Based on an Audit of Financial StatementsPerformed in Accordance with Government AuditingStandards C-1

Independent Auditors’ Report on Compliance forEach Major Federal Program and State Projectand on Internal Control Over Compliance requiredby Uniform Guidance and Chapter 10.550,Rules of the Auditor General C-3

Schedule of Expenditures of Federal Awards andState Financial Assistance C-5

Notes to the Schedule of Expenditures of Federal Awards andState Financial Assistance C-10

Schedule of Findings and Questioned Costs C-12Management Letter C-14Independent Accountants’ Report on Compliance with

Section 218.415, Florida Statutes C-17Independent Accountants’ Report on Compliance with

Section 365.172(10), Florida Statutes C-18

BOND COMPLIANCE (Not covered by auditors’ report)

Bond Compliance Information C-19

Don Barbee Jr.Clerk of Circuit Court & Comptroller, Hernando County FL20 N. Main Street, Brooksville FL, 34601 (352) 754-4201

March 20, 2018

To the Citizens of Hernando County:

The Comprehensive Annual Financial Report (CAFR) of Hernando County, Florida, for the fiscalyear ended September 30, 2017 is respectfully submitted. This report was prepared by the Clerkof Circuit Court and Comptroller, Department of Financial Services. Responsibility for both theaccuracy of the data presented and the completeness and fairness of the presentation, includingall disclosures, rests with the Clerk of Circuit Court and Comptroller (Clerk and Comptroller) asChief Financial Officer of Hernando County. To provide a reasonable basis in meeting thisresponsibility, a comprehensive internal control framework has been established that is designedboth to protect the County’s assets from loss, theft or misuse, and to compile sufficient reliableinformation for the preparation of the County’s financial statements in conformity with GenerallyAccepted Accounting Principles (GAAP). The Management’s Discussion and Analysis in theFinancial Section of the CAFR should be read in conjunction with this Letter of Transmittal.

Profile of the County

Hernando County, population 181,882, is located in the west central region of the State of Florida,allowing easy access to the Tampa and Orlando metropolitan areas. As part of the Tampa BayRegion, it is bound by the Gulf of Mexico on the west, Citrus County to the north, Sumter Countyto the east, and Pasco County to the south.

Hernando County, established in 1843, covers 473 square miles and is named in honor ofSpanish explorer Hernando De Soto, who led an expedition through the county in 1539.Hernando County has two incorporated cities: the City of Brooksville, the county seat, with apopulation of 8,074 is rich in history and traditions; and the City of Weeki Wachee with apopulation of 9 which incorporated many decades ago to promote its tourism attraction, theBuccaneer Bay/Weeki Wachee Resort, commonly known as the “City of Mermaids.” HernandoCounty’s unincorporated areas include Ridge Manor, Bayport, Aripeka, Lake Lindsey,Istachatta/Nobleton, Masaryktown, Hernando Beach, and most notably, Spring Hill. Spring Hill,located in the southwest part of the County, is the largest unincorporated Hernando Countycommunity.

Hernando County is the heart of the Sunshine State’s renowned Nature Coast. Hernando Countyoffers scenic rolling hills, spectacular parks and waterways, some of the best paved bike trails inFlorida, and eight locations along the Great Florida Birding Trail. Activities of the Nature Coastinclude hunting, camping, bird watching and hiking, as well as fishing, boating, paddling andkayaking on the County’s many waterways.

Situated at the geographic center of the state with easy access to major highways like theVeterans/Suncoast Parkway, Interstate 75, State Road 50 and US Highway 41 make HernandoCounty a strategic business location. Hernando County is unique in the Tampa Bay area with itsvariety of industrial site options including a vibrant general aviation airport and business complex,

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private land, and existing buildings with significant room for growth. Major industries includemanufacturing, precision machining, distribution and healthcare. Growing retail trade and awide selection of professional services enables Hernando County to offer significant choices forits residents.

Hernando County government provides a full range of services including law enforcement,emergency medical services, fire protection, mass transportation services, health and socialservices, cultural and recreational services, water, sewer, waste disposal and businessdevelopment.

The Hernando County Board of County Commissioners, as the legislative body for HernandoCounty, budgets and provides all of the funding used by its Departments and the separateConstitutional Officers with the exception of certain fees collected by the Tax Collector, Clerk andComptroller, Property Appraiser and Sheriff. Hernando County operates under a five-memberpolicy-making elected Board. The Board appoints a county administrator who in turn appointsvarious department managers. All five Board members and the five constitutional officers areelected to four-year terms. Under the direction of the Clerk and Comptroller, the Department ofFinancial Services maintains the accounting system for the Board of County Commissioners andthe Clerk and Comptroller. The Tax Collector, Property Appraiser, Supervisor of Elections andSheriff maintain their own accounting systems. All of the Constitutional Officers invest their fundsindependently. The Clerk and Comptroller manages the investments of the Board of CountyCommissioners and the Clerk and Comptroller.

Formal budgetary integration is employed as a management control device during the year for allsignificant funds. The Board of County Commissioners adopts budgets on a basis consistent withGenerally Accepted Accounting Principles (GAAP). The adoption and amendment of the budgetis done consistent with the laws of Florida. The legal level of control is established on a fundbasis; however, operational control is maintained during the year at the lower of the departmentor fund level. Budgetary control is maintained through the use of encumbrances.

Factors Affecting Financial and Economic Conditions

Local Economy. Following are some highlights of the County’s economic status:

The population of the County is currently approximately 181,882 which is an increase of 12%over what it was 10 years ago. The County’s population is projected to be almost 197,000five years from now and over 209,000 ten years from now.

As part of the Tampa Bay region, Hernando County enjoys being a part of the largestconsumer market in Florida.

Industrial business expansions and new development were welcomed in a number ofsectors. The County assisted four companies with expansion efforts, Airofog, Alumi-Guard,Surge Suppression and Mood Hoops representing 344,000 square feet of space, 290 newjobs and 220 existing jobs.

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The Building Department issued over 12,370 building permits for construction projects, 51 ofthose were for new commercial buildings within the county. Some of the new commercialbusinesses include Treeumph, Dollar Tree, Dollar General, Cheddars, Zaxby’s andHammock Ridge Apartments.

Both residential and commercial development remain steady. The inventory of lots in existingdeveloped subdivisions continues to decrease and new phases are being developed.Commercial development continues to be steady along SR 50 in Spring Hill, a majorshopping corridor in the County. In addition, a significant number of large mixed-usedevelopments previously approved by the County have retained the approved vested rights,and are expected to be of interest to developers as the economy continues to improve.

Long Term Financial Planning. The County prepares a 5-year Capital Improvement Plan whichis adopted by the Board with the annual budget approval. It identifies all public capital facilities,public infrastructure and equipment, with a value over $50,000 and a useful life over 10 years.The plan identifies the funding source (taxes, grants, impact fees, etc) for each project.

Major Initiatives. Hernando County government takes pride in its accomplishments for the fiscalyear. The County is proud of the infrastructure, public facilities and programs that have beenrealized for the citizens of our County. Following is a list of some of our achievements for theyear:

Tourism Development had double digit increases in revenues for the fifth straight year. It hascreated a positive economic impact, jobs and tax relief for our residents. The TouristDevelopment Council awarded special event and marketing grant support to 12 different non-profit organizations totaling $31,845.

The County maintained and improved 22 county parks by adding picnic shelters, a walkingtrail and historical markers, replacing a gate house for money collection and playgroundequipment, sodding and performing patch work and top dressing on soccer and baseballfields. We continue to build partnerships with public, private groups, schools andorganizations through the Parks and Recreation Department offering both adult and youthevents.

The County participated in the inaugural Great Hernando Weight Loss Challenge with 70teams of 10 people committed to living a healthy, active lifestyle for 10 weeks; our combinedcommunity weight loss was 5,579.5 pounds.

The County strengthened our community through technology and information access at ourpublic libraries by facilitating 217 computer lab classes and providing technology instructionto more than 19,000 community members.

The Employee Wellness Center opened in October 2016. The Center provides full serviceprimary health care, onsite lab draws, generic prescriptions and personal healthassessments for the employees of Hernando County, participating Constitutional Offices andtheir eligible family members. The Center has had 3,626 office visits, serviced 811 patients,provided 2,958 lab visits and filled 6,408 prescription orders.

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TheBus increased ridership by 17.6 percent. Several counties including Hernando,Hillsborough, Pasco, Pinellas and Sarasota partnered to establish a new, uniform and moreefficient regional fare payment system to connect transit services making boarding the busesmore efficient. Riders will utilize a smart card for fare payment, including use of smartphones and the ability to use debit/credit cards on board.

The Library System celebrated and coordinated multiple successful signature eventsthroughout the county, including the Third Annual Brooksville Library 5K and Kids Fun Runwith more than 500 people in attendance, the Third Annual Touch-A-Truck Event with morethan 300 in attendance and the Fourth Annual Edible Books Contest with more than 50participants.

In March 2017, the Hernando County Waterways, Extension/Sea Grant, Tourism and Parksand Recreation departments completed a marked nearly five-mile winding paddling trailbetween Bayport and Linda Pedersen parks. Girl Scout troop 317 contributed educationsignage for the trail also.

Aquatic Services deployed 600 tons of precast concrete structures to expand the BendicksonReef project.

The Brooksville-Tampa Bay Regional Airport received the 2017 Florida Department ofTransportation General Aviation Airport of the Year Award. The airport reconstructed ataxiway, replaced approach lighting systems and upgraded instrument landing systems. Theairport also received more than $2.5 million in FAA and FDOT grants for airfield improvementprojects.

Emergency Management implemented the county’s emergency plan through multipleactivations of the EOC: Hurricane Hermine, Hurricane Matthew and Hurricane Irma.Emergency Management also provided support during the water tower wildfire and providedmutual aid under the Emergency Management Assistance Compact in support of evacueesfrom the Virgin Islands and Puerto Rico.

Hernando County has adopted many budgetary and financial policies and continually monitorsthem for adherence and relevance. The establishment of budgetary and financial policiesenables the Board, management and the community to monitor County performance. Followingare some of the more significant budgetary policies: the Board annually adopts a balancedbudget; fund balances anticipated at the end of a fiscal year are budgeted as the beginning fundbalance for the following year; any variance between budgeted fund balance forward and actualfund balance forward is adjusted through a budget amendment; the budget is prepared incompliance with the County’s Budget Reserve Policy and Reserve Stabilization Policy; aminimum reserve policy requires reserves in the General Fund to be maintained at 18.5% andHernando County maintains a five-year Capital Improvement Program (CIP) and updates itannually.

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Awards

The Government Finance Officers Association of the United States and Canada (GFOA) awardeda Certificate of Achievement for Excellence in Financial Reporting to Hernando County for itsComprehensive Annual Financial Report for the fiscal year ended September 30, 2016.

In order to be awarded a Certificate of Achievement, a governmental unit must publish an easilyreadable and efficiently organized Comprehensive Annual Financial Report, whose contentsconform to program standards. Such reports must satisfy both generally accepted accountingprinciples and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. Hernando County hasreceived a Certificate of Achievement for the last 32 consecutive years. We believe our currentreport continues to conform to the Certificate of Achievement Program requirements, and we aresubmitting it to the GFOA.

Acknowledgments

This report is the product of the dedication of the Department of Financial Services of the Clerk ofCircuit Court and Comptroller of Hernando County as Auditor and Comptroller to the Board ofCounty Commissioners.

We would like to express our appreciation and thanks to Frances Pioszak, Assistant Director ofFinancial Services, the County Administration and Budget Offices, and the firm of Purvis, Grayand Company, LLP, who helped us with their comments and advice throughout the year.

Respectfully submitted,

Don Barbee, Jr.Clerk of Circuit Court and Comptroller

Amy Gillis, CPA, CGFODirector of Financial Services

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CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCEIN FINANCIAL REPORTING

The Governmental Finance Officers Association of the United States and Canada(GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting toHernando County, Florida for its comprehensive annual financial report for the fiscal

year ended September 30, 2016. The Certificate of Achievement is a prestigiousnational award recognizing conformance with the highest standards for preparation of

state and local government financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish aneasily readable and efficiently organized comprehensive annual financial report, whose

contents conform to program standards. Such reports must satisfy both generallyaccepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. Hernando Countyhas received a Certificate of Achievement for the last thirty-two consecutive years. We

believe our current report continues to conform to the Certificate of Achievementprogram requirements, and we are submitting it to GFOA.

FINANCIAL SECTION


Independent Auditor’s Report

Management’s Discussion and Analysis

Basic Financial Statements

Notes to the Financial Statements

Required Supplementary Information

Combining and Individual Fund Statements and Schedules

1a

INDEPENDENT AUDITORS’ REPORT

Distinguished Members of theBoard of County Commission

Hernando County, Florida

Report on the Financial StatementsWe have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Hernando County, Florida (the County) as of and for the year ended September 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 StatementsManagement 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.

Auditors’ ResponsibilityOur 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.

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 opinions.

1b



INDEPENDENT AUDITORS’ REPORT(Continued)

OpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the County as of September 30, 2017, and the respective changes in financial position, and, where applicable, cash flows thereof, and the respective budgetary comparison for the General Fund, the Transportation Trust and Gas Taxes Fund, and the Hernando County Fire Rescue-Fire Fund, for the year then ended in accordance with accounting principles generally acceptedin the United States of America.

Other Matters

Required Supplementary InformationAccounting principles generally accepted in the United States of America require that the management’s discussion and analysis and other required supplementary information as listed in the table of contents (collectively, the required supplementary information) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other InformationOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The introductory section, combining and individual fund statements and schedules, statistical section, and bond compliance section, 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 and state financial assistance is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and Chapter 10.550, Rules of the Auditor General of the State of Florida, and is also not a required part of the basic financial statements.

The combining and individual nonmajor fund statements and the schedule of expenditures of federal awards and state financial assistance 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, the combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards and state financial assistance are fairly stated in all material respects in relation to the basic financial statements as a whole.

1c



INDEPENDENT AUDITORS’ REPORT(Concluded)

Other Matters (Concluded)

Other Information (Concluded)The introductory, statistical, and bond compliance sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express anopinion or provide any assurance on them.

Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated March 20, 2018,on our consideration of the 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 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance.

March 20, 2018Sarasota, Florida

2a

MANAGEMENT’S DISCUSSION AND ANALYSIS

This discussion and analysis of Hernando County’s financial statements provides an overview of the financial activityof the County for the fiscal year ended September 30, 2017. We encourage reading this narrative in conjunction withthe Transmittal Letter in the Introductory Section.

FINANCIAL HIGHLIGHTS

At the close of the most recent fiscal year, September 30, 2017, the County’s assets and deferred outflows exceededits liabilities and deferred inflows by $554,062,251. This represents a decrease of $2,825,786 over the prior year netposition. Of the $554,062,251 difference between assets and liabilities, $2,533,915 was unrestricted.

Net position of governmental activities decreased $11,168,121. Net position of business-type activities increased$8,342,335. Accordingly, net position of both the governmental activities and business-type activities decreased a totalof $2,825,786.

As of September 30, 2017, unassigned fund balance in the governmental funds was $6,860,381; representing a 27%decrease from the previous year unassigned fund balance of $9,442,933. The net change in fund balances in thegovernmental funds increased from a negative $1,967,982 for the fiscal year 2015-16 to a negative $801,805 for thefiscal year 2016-17. The current increase is predominantly due to an increase in the fund balance of TransportationTrust and Gas Taxes of $2,270,290 compared to a decrease of $3,047,380 in the prior year. There was also anincrease in fund balance of Impact Fees of $1,138,948 compared to a decrease of $380,708 in the prior year. Theseincreases were offset by a decrease in fund balance of $2,672,374 for General Fund compared to a decrease of$663,548 in the prior year. Additionally, there was a decrease in fund balance of $1,602,440 for NonmajorGovernmental Funds compared to an increase of $4,765,413 in the prior year.

The County’s largest enterprise fund, the Water & Sewer District, had an increase in net position of $6,826,122 for theyear with the increase mostly being in the operating income. The Water and Sewer operating income of $6,824,102represents a 28% increase over operating income of the previous year. Waste Management had an increase in netposition of $641,171 for the year compared to an increase of $2,087,076 in the prior year. Aviation Operations had anincrease in net position of $633,742 for the year compared to an increase of $1,908,711 in the prior year.

OVERVIEW OF THE FINANCIAL STATEMENTS

The County’s Comprehensive Annual Financial Report (CAFR) consists of seven parts: an introductory section;management’s discussion and analysis (this overview); the basic financial statements; required supplementaryinformation; an optional section that presents combining statements for non-major governmental funds, internal servicefunds and certain individual fund financial statements; statistical information; and compliance information. The basicfinancial statements consist of three parts: government-wide financial statements, fund financial statements and notesto the financial statements. Below is a diagram of the components of the CAFR:

Management’s Discussion & Analysis


Statistical Information

Government-Wide FinancialStatements

Fund Financial Statements


Compliance Information

Combining & Individual FundStatements and Schedules

Required SupplementaryInformation

2b

Government-Wide Financial Statements

The government-wide financial statements provide readers with a broad overview of Hernando County’s finances usinga governmental or business-type classification. The government-wide financial statements include a statement of netposition and a statement of activities. The government-wide financial statements distinguish between functions thatare principally supported by taxes and intergovernmental revenues (governmental activities) and those that areprincipally supported by user fees and charges (business-type activities). The government-wide financial statementsare prepared using an economic resources measurement focus and the accrual basis of accounting.

The statement of net position presents information on all assets (plus deferred outflows) and liabilities (plus deferredinflows) of the County, with the difference reported as net position. Over time, increases or decreases in net positionmay serve as a useful indicator of whether the financial position of Hernando County is improving or deteriorating.

The statement of activities presents information on all revenues and expenses of the County and the change in netposition. This statement provides the expenses of a given function or activity offset by related program revenuesresulting in the net expense or revenue for the function or activity. General revenues, such as taxes, are then presentedresulting in a final change in net position. All revenues and expenses are reported as soon as the underlying eventgiving rise to the change occurs, regardless of the timing of related cash flows.


The fund financial statements provide more detailed information about the County’s major funds individually. A fundis a grouping of related accounts that is used to maintain control over resources that have been segregated for specificactivities or objectives. Hernando County, like other state and local governments, uses fund accounting to ensure anddemonstrate compliance with finance-related legal requirements. Some funds are required by state or local law, bondcovenants or the County’s desire to control, manage and account for designated revenues or expenses separately. Allthe funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciaryfunds.

Governmental fund financial statements use the current financial resources measurement focus and the modifiedaccrual basis of accounting, which measures current assets and liabilities, changes in current financial resources, andcurrent available resources.

Because the focus of governmental fund financial statements is based on accounting for resources on a more currentbasis, it is useful to compare with information presented for governmental activities which focus more on long-termresource accounting. Reconciliations of fund balance in governmental funds and changes in fund balance to netposition and changes in net position of governmental activities are provided with the governmental fund financialstatements.

Proprietary fund financial statements consist of two fund types: Enterprise Funds and Internal Service Funds.Proprietary funds use an economic resources measurement focus and the accrual basis of accounting, whichmeasures all assets and liabilities, changes in economic resources, and total economic resources.

Fiduciary fund financial statements provide information concerning assets held in trust by the County on behalf ofothers. Fiduciary funds use the economic resources measurement focus and the accrual basis of accounting.Fiduciary funds are not reflected in the government-wide financial statements because the resources of those fundsare not available to support the County’s own programs.


The notes provide additional detail concerning the financial activities and balances of the County and are essential forthe reader to have a full understanding of the statements.

2c

ANALYSIS OF THE GOVERNMENT-WIDE FINANCIAL STATEMENTS

Hernando County’s Net Position

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In thecase of Hernando County, net position was $554,062,251 at the close of the most recent fiscal year. This representsa decrease of $2,825,786 or 0.5% from the prior year.

The largest portion of Hernando County’s net position (86%) reflects its investment in capital assets (e.g., land,infrastructure, buildings, improvements, construction in progress, intangible assets and equipment), less anyaccumulated depreciation and related debt used to acquire those assets that is still outstanding. Hernando Countyuses these capital assets to provide services to citizens; consequently, these assets are not available for futurespending. Although Hernando County’s investment in its capital assets is reported net of related debt, it should benoted that the resources needed to repay this debt must be provided from other sources, since the capital assetsthemselves cannot be used to liquidate these liabilities.

An additional portion of the County’s net position (14%) represents resources that are subject to external restrictionson how they may be used.

The remaining balance of the County’s net position (less than 1%) is unrestricted.

Governmental Business-TypeActivities Activities Totals

2016 2017 2016 2017 2016 2017Current and other assets $ 120,670,434 $ 125,544,881 $ 78,495,135 $ 89,527,895 $ 199,165,569 $ 215,072,776Capital and other long-term assets 339,304,738 336,904,518 266,752,993 260,731,940 606,057,731 597,636,458

Total assets 459,975,172 462,449,399 345,248,128 350,259,835 805,223,300 812,709,234

Deferred Outflows of Resources 50,341,515 56,546,437 4,872,635 5,211,057 55,214,150 61,757,494

Long-term liabilities 168,042,872 179,619,178 109,099,504 108,682,268 277,142,376 288,301,446Other liabilities 11,293,608 14,906,047 10,469,366 7,584,893 21,762,974 22,490,940

Total liabilities 179,336,480 194,525,225 119,568,870 116,267,161 298,905,350 310,792,386

Deferred Inflows of Resources 4,396,732 9,055,257 247,331 556,834 4,644,063 9,612,091

Net position:Net Investment in capital assets 306,373,129 304,605,052 175,885,969 171,816,828 482,259,098 476,421,880Restricted 62,475,970 57,323,430 12,752,692 17,783,026 75,228,662 75,106,456Unrestricted (42,265,624) (46,513,128) 41,665,901 49,047,043 (599,723) 2,533,915

Total net position $ 326,583,475 $ 315,415,354 $ 230,304,562 $ 238,646,897 $ 556,888,037 $ 554,062,251

2d

Hernando County’s Changes in Net Position

Governmental Business-TypeActivities Activities Totals

2016 2017 2016 2017 2016 2017

RevenuesProgram revenues:

Charges for services $ 54,957,779 $ 56,469,825 $ 43,461,287 $ 46,251,333 $ 98,419,066 $ 102,721,158Operating grants andcontributions 4,935,018 5,993,249 93,531 109,866 5,028,549 6,103,115

Capital grants and contributions 1,777,534 4,728,340 5,306,069 4,469,294 7,083,603 9,197,634General revenues:

Property taxes 61,571,869 62,915,055 - - 61,571,869 62,915,055Other taxes 24,695,136 25,758,113 - - 24,695,136 25,758,113Investment earnings 1,437,246 561,597 701,309 348,481 2,138,555 910,078Other 1,726,398 1,802,369 846,158 946,738 2,572,556 2,749,107

Total revenues 151,100,980 158,228,548 50,408,354 52,125,712 201,509,334 210,354,260

ExpensesGeneral government 24,582,691 26,218,775 - - 24,582,691 26,218,775Public safety 86,581,625 92,685,389 - - 86,581,625 92,685,389Physical environment 1,230,350 1,304,174 - - 1,230,350 1,304,174Transportation 23,236,377 24,465,011 - - 23,236,377 24,465,011Economic environment 3,095,345 3,486,992 - - 3,095,345 3,486,992Human services 7,274,535 7,504,297 - - 7,274,535 7,504,297Culture and recreation 5,715,518 5,711,821 - - 5,715,518 5,711,821Court operations 6,772,680 7,163,540 - - 6,772,680 7,163,540Interest on long-term debt 1,037,630 1,073,528 - - 1,037,630 1,073,528Water and sewer - - 27,672,539 30,933,210 27,672,539 30,933,210Aviation operations - - 2,567,431 2,232,838 2,567,431 2,232,838Waste management - - 6,446,772 7,593,760 6,446,772 7,593,760Building department - - 2,786,446 2,806,711 2,786,446 2,806,711

Total expenses 159,526,751 169,613,527 39,473,188 43,566,519 198,999,939 213,180,046

Change in net position before transfers (8,425,771) (11,384,979) 10,935,166 8,559,193 2,509,395 (2,789,786)Transfers (997,512) 216,858 997,512 (216,858) - -

Change in net position (9,423,283) (11,168,121) 11,932,678 8,342,335 2,509,395 (2,825,786)Net position –beginning of year 336,006,758 326,583,475 218,371,884 230,304,562 554,378,642 556,888,037

Net position –end of year $ 326,583,475 $ 315,415,354 $ 230,304,562 $ 238,646,897 $ 556,888,037 $ 554,062,251

2e

Governmental Activities

Net position of the governmental activities decreased $11,168,121 or 3% over prior year net position balance. Programrevenues in the amount of $67,191,414 were used to offset program expenses of $169,613,527 resulting in a netprogram loss of $102,422,113. General revenues and transfers totaling $91,253,992 offset the difference in thoseprogram expenses and resulted in a total net decrease of $11,168,121.

Program revenues increased 9% during the year. The increase in Program Revenues is mostly attributable to a $3million or 166% increase in Capital Grants and Contributions. Capital Grants and Contributions increased due to anincrease in Impact Fee revenue of $1.4 million. Grants also provided for expansion of the Good Neighbor Trail,completion of bike lane and sidewalk projects, and the addition of a transit vehicle. Operating Grants and Contributionsalso increased $1 million or 21%. The increase is due to additional grants received for the County’s transit program,a grant to aid the libraries and an increase in allocation for the State Housing Initiative Partnership program.

Property taxes increased $1.3 million or 2% due to a 6% increase in the taxable value of property in the County.

Fuel taxes increased $576,000 or 7% due to a 3-cent increase in the Local Option gas taxes which went into effectduring fiscal year 2015-16 and was in effect for the entire fiscal year 2016-17. Two pennies of the proceeds go to thelocal street resurfacing program.

Program expenses increased 6% over the prior year. The most significant changes were increases in GeneralGovernment, Public Safety and Transportation expenses.

General Government expenses increased 7% due to an increase in health insurance and retirement costs. There wasalso an increase in depreciation expense on the capital assets of governmental funds.

Public Safety expenses increased 7% due to a change in the pension-related costs based upon the most recent ratesprovided by the Florida Retirement System. Health insurance and retirement costs also increased.

Transportation expenses increased 5% due to an increase in contract services used to maintain the County’sroadways. Health insurance and retirement costs also increased. Additionally, the transit system increased the transitroutes and frequency during fiscal year 2015-16. The new routes were in effect for the entire fiscal year 2016-17.

Business-Type Activities

Net position of the business-type activities increased $8,342,335 or 4% over prior year net position balance. Programrevenues in the amount of $50,830,493 were used to offset program expenses of $43,566,519, resulting in net programincome of $7,263,974. General revenues less transfers in the amount of $216,858 resulted in a total net increase of$8,342,335.

Charges for services increased mostly due to increases in charges for water and sewer services of $2.8 million, or 6%,from increases in water consumption and the phased in increase in rates as part of a five-year rate plan.

The increase in charges for services is offset by a decrease in Capital Grants and Contributions of $837,000 due tothe completion of various airport construction projects in the beginning of the year.

Water and Sewer expenses increased 12% due to increase in depreciation expense of $1.1 million. Construction inProgress of $47 million was completed and placed into service in fiscal year 2016-17. State Revolving Loan drawswere completed and repayment on all draws resulted in $2 million in additional interest expense.

Waste Management expenses increased 18% due to a change in the estimated long-term care costs of the landfill.There was a significant increase in long term care costs in fiscal year 2016-17 due to a change in estimate for finalclosure and postclosure costs for one of the landfill cells. See Note N for more information.

ANALYSIS OF THE FUND FINANCIAL STATEMENTS

As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legalrequirements. Following is a discussion of the financial statements on a fund accounting level.

2f

Governmental Funds

As previously discussed, governmental funds measure current assets and liabilities and current or spendableresources. A fund’s unassigned fund balance may provide a useful measure of the fund’s net resources available forspending at the end of the fiscal year.

As of the end of the current fiscal year, Hernando County governmental funds reported fund balances of $91,194,966,a decrease of $801,805 or 1% from prior year balances. Of the $91,194,966 fund balance in governmental funds,$6,389,190 constitutes unassigned fund balance, which is available for spending at the County’s discretion and$7,554,124 which is non-spendable. The remainder of fund balance available for spending consists of the following:$54,996,192 in ‘Restricted Fund Balance’ which is restricted by law or externally imposed requirements; $7,003,415 in‘Committed Fund Balance’ which is committed for a specific purpose by the Board; and $15,252,045 in ‘Assigned FundBalance’ which is assigned for a specific purpose by the Board without formal approval. See Note A, GovernmentalFund Balance Classifications, for more information.

Governmental funds are comprised of the General Fund, Special Revenue Funds, Debt Service Funds and CapitalProject Funds. The General Fund is the chief operating fund of the County. As of the end of the fiscal year, total fundbalance for the General Fund was $20,851,081. Following is a chart of the fund balance trend over the past ten yearsof the General Fund.

The chart depicts the General Fund alone, without the impact of the Capital Improvement Fund which is combined withthe General Fund for financial reporting. See Note R of the financial statements. The General Fund had an endingfund balance of $17 million for 2017, and the Capital Improvement Fund had an ending fund balance of $3.8 million for2017, for a total of $20.8 million as reported in the financial statements.

In the General Fund alone, the fund balance decreased $5.6 million, or 25%. General Fund revenues increased 4%and General Fund expenditures increased 4% from prior year. Revenue from Taxes increased $1.2 million from theprior year due to an increase in the taxable value of property from the prior year. Intergovernmental revenue increased$1.7 million or 10% due to additional grant funding received in fiscal 2016-17.

0

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Millions

Fiscal Year

GGeneral FundFund Balance Trend

2g

General Fund expenses for all categories other than Debt Service and Capital Outlay increased due to increasedpersonnel costs, health insurance, retirements and other personnel-related costs.

Additionally, Transportation expenses increased due to professional and contract services increases from prior year.Also, there were additional expenses related to new bus routes which were in effect for the entire fiscal year 2016-17.

Human Services expenses increased due to an increase in contract services related to Animal Services.

Capital Outlay expenses increased due to the addition of $1.1 million for vehicles for the Sheriff and $200,000 for votingmachines for Supervisor of Elections.

The Transportation Trust Fund fund balance increased $2,270,290, or 9%. Revenues from taxes increased 5% fromprior year due to an increase in gas taxes in effect for the entire 2016-17. Intergovernmental Revenue increased 20%due to additional grant revenue.

The decrease in Transportation expense of 6% was due to a decrease in Capital Outlay of 23%.

In the Impact Fee Fund, the fund balance increased $1,138,948, or 14%. Impact Fee Fund revenues increased 110%and Impact Fee Fund expenditures decreased 10%. Impact Fee revenue increased due to an increase in constructionduring the year.

The Hernando County Fire Rescue-Fire fund balance decreased $785,397, or 248%. Revenue increased 5% fromthe prior year. Expenses decreased 8% predominantly due to a change in methodology for the allocation of employeesbetween Fire and Rescue to more accurately reflect the services provided by the employees. An additional loan in theamount of $3,750,000 was provided by the General Fund to the Fire Fund to meet its obligations. Changes to thefunding methodology for the Fire Fund are in the process of approval, but will not impact the fund’s revenues until fiscalyear 2017-18. During the fiscal year, Hernando County Fire took over operations previously provided by HernandoBeach Volunteer Fire Company. This resulted in an increase in fire vehicles and equipment of $319,000.

Proprietary Funds

The Water and Sewer District experienced an increase in net position of $6,826,122 compared to prior year’s increaseof $7,633,183. Operating revenues of $34,227,969 less operating expenses of $27,403,867 resulted in operatingincome of $6,824,102. Operating revenues increased 8% from prior year due to increased water consumption and thephased in increase in rates as part of a five-year rate plan. Operating expenses increased 5% due to an increase indepreciation expense. Increase of personal services expense of 8% was mainly offset by a 6% decrease in otherservices and charges expense. Non-operating Revenues (Expenses) increased 212% due to a significant increase ininterest expense relating to the repayment of debt for the State Revolving Loans program.

Aviation Operations experienced an increase in net position of $633,742. Operating revenues of $1,774,956 lessoperating expenses of $2,163,840 resulted in an operating loss of $388,884. Operating revenue decreased 4% fromprior year due to a decrease in non-aeronautical leases. Operating expenses decreased 11% from the prior year dueto lower repairs and maintenance services and fewer professional services required in fiscal year 2016-17 comparedto prior years. The operating loss was offset by $1,113,926 received in Capital Grants and Contributions, which wasmainly comprised of grants received to construct airport hangars at the Hernando County Airport.

The Waste Management fund had an increase in net position of $641,171 compared to prior year’s increase of$2,087,076. This is mainly due to an increase in the estimated long term care costs of the landfill. These costs mayvary based upon the most recent information available when determining the cost estimates.

Building Department experienced an increase in net position of $135,890 compared to prior year’s increase of$317,214. Operating Revenues decreased 2% from the prior year due to a decrease in Licenses and Permits revenue.Operating Expenses increased 1% from the prior year. An increase of 11% in personal services was offset by adecrease of 18% in other services and charges expense. This resulted in operating income of $164,123.

BUDGETARY HIGHLIGHTS – GENERAL FUND

Budget and actual comparison statements are provided in the Statement of Revenues, Expenditures and Changes inFund Balances – Budget and Actual for the General Fund and all major special revenue funds with annually

2h

appropriated budgets. See page 12 of this report for the financial statement discussed below. This statement showsthe original budget, final budget, actual amounts, and the variances between actual and final budgeted amounts.Budget amendments are approved throughout the year. Budgets are revised for a variety of reasons, such as newgrant awards, unanticipated revenue sources, new bond or loan proceeds, unforeseen expenditures, etc. Below area variety of explanations of the notable variances between the original and final budget, and the final budget and actualamounts in the General Fund:

Actual ad-valorem taxes collected for the General Fund were slightly higher than budgeted.

Intergovernmental revenue sources were 14% less than budgeted due predominantly to the manner the grantfunds are budgeted. Grants that may extend over multiple years are budgeted in full the first year and are reducedeach year by the amount of grant funds previously recognized. This causes a variance between the budgeted andactual grant activity.

Revenue from Fines and Forfeitures was 42% higher than budgeted due to the increase in the Special Masterhearings relating to the Sheriff, Code Enforcement and Animal Services. A special master is generally an officialappointed by a judge to hear evidence and make recommendations to the judge as to the disposition of the matter.

Transportation expenditures were $331,698, or 12%, under budget predominantly due to lower costs thanexpected for the Hernando County transit system, TheBus, operator contract and related maintenance items.

Actual expenditures for Economic Environment were 73% less than the final budget due to a decline in applicantswho met the qualifications of the Neighborhood Stabilization Program (NSP). The grant-funded program aids withdown payments and rehabilitation costs of homes for citizens who meet the program qualifications. Additionally,over $600,000 of budgeted NSP funds were added at the end of the fiscal year without any expenditures due tothe board policy of budgeting the full costs the first year.

Capital Outlay was $987,272, or 23% less than the amount budgeted of $4,293,953. This is partly due to $225,000of park-related projects not being completed during the fiscal year including playground equipment for Pine Islandand Lake Townsend, engineering services related to Bayport Pier, and other miscellaneous equipment.Additionally, over $900,000 of grant funds were budgeted without expenditures due to the way the County haschosen to budget for grant funds in full the first year.

The original budget for Intergovernmental Revenues increased 13% almost entirely due to amendments made tothe original budget for grant funds not budgeted.

The original budget for Economic Environment Expenditures increased 90% almost entirely due to amendmentsmade to the original budget for grant funds not budgeted.

The original budget for Capital Outlay increased 181% due to many reasons. The Sheriff’s capital outlay budgetincreased $976,000 to cover capital outlay expenditures previously unbudgeted. The Board technology capitaloutlay was increased $423,020 to cover an expenditure which was originally scheduled to be financed. The Boardreduced budgeted reserves and increased the capital outlay budget for the purchase of equipment at variousparks throughout the County. Much of the remaining increase in the capital outlay budget was due to the Board’spolicy of increasing budgets for the full amount of grant funds awarded.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

Hernando County’s investment in capital assets for its governmental and business-type activities as of September 30,2017, amounts to $597,588,550 net of accumulated depreciation. This investment in capital assets includes land,buildings, infrastructure, improvements other than buildings, equipment, construction in progress and intangible assets.The total decrease in Hernando County’s investment in capital assets from the prior year was 1% which is comprisedof a 0.7% decrease for governmental activities and a 2% decrease for business-type activities.

2i

Following is a schedule of the County’s capital assets, net of accumulated depreciation, as of September 30, 2016 and2017:

Governmental Activities Business-Type Activities Totals

2016 2017 2016 2017 2016 2017

Land $ 29,338,729 $ 29,832,321 $ 10,200,561 $ 10,326,775 $ 39,539,290 $ 40,159,096

Buildings 88,122,352 84,575,378 15,130,272 18,256,601 103,252,624 102,831,979

Infrastructure 188,778,346 187,204,611 2,184,191 2,784,322 190,962,537 189,988,933

Improvementsother thanBuildings 11,324,390 11,730,010 184,784,195 219,878,467 196,108,585 231,608,477

Equipment 20,583,373 22,236,802 2,981,236 4,224,580 23,564,609 26,461,382

Constructionin Progress 496,573 772,436 51,416,874 5,213,287 51,913,447 5,985,723

IntangibleAssets 660,975 552,960 - - 660,975 552,960

Total $ 339,304,738 $ 336,904,518 $ 266,697,329 $ 260,684,032 $ 606,002,067 $ 597,588,550

Additional information on Hernando County’s capital assets can be found in Note F to the basic financial statements.The decrease in capital asset activity for 2017 occurred in the Governmental Activities primarily due to the depreciationof assets being greater than additions to assets for the year. Equipment increased $319,000 for assets related to theCounty taking over Hernando Beach Volunteer Fire Department. For Business-Type Activities, Construction inProgress from fiscal year 2015-16 was completed and the assets were placed into service as buildings andimprovements other than buildings. The construction of $2.5 million for T-hangers at the Airport was completed. Themajority of the remaining increase in improvements related to updating water and wastewater plants and lines.

Debt Administration

Loans and notes payable amounted to $88,367,201 of which $30,412,616 is for Governmental Activities and$57,954,585 is for Business-Type Activities. Loans for business-type activities include $56,289,627 of financing fromthe State Revolving Loan program for water & sewer improvement projects.

Hernando County had total bonded debt outstanding of $36,156,347. All of these bonds represent bonds securedsolely by specified non-ad valorem revenue sources (i.e., revenue bonds).

Following is the activity of combined governmental and business-type debt for the fiscal year ended September 30,2017:

BeginningBalance Additions Reductions

EndingBalance

Loans & Notes Payable $ 87,591,012 $ 5,128,745 4,352,556 88,367,201Revenue Bonds 39,912,773 - 3,756,426 36,156,347

$ 127,503,785 $ 5,128,745 8,108,982 124,523,548

The County traditionally insured its bonded debt, and consequently, the County’s bonds have historically maintainedan insured rating of “Aaa” from Moody’s and “AAA” from Standard & Poor’s and Fitch. The County also obtainedunderlying ratings during the issuance of certain bonds.

2j

Following are the County’s underlying ratings on bonds outstanding as of September 30, 2017:

Moody’s Fitch S&P

Non-Ad Valorem Refunding Revenue Bonds,Series 2010 Aa2 NR A+

Water and Sewer Refunding Revenue Bonds,Series 2013A Aa3 AA AA-

NR represents No Rating. Additional information on Hernando County’s long-term debt can be found in Note H to thebasic financial statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

Local, state and national economic factors influence the County’s revenues in a variety of ways. Positive economicgrowth correlates with increased revenues from property taxes, sales taxes, fuel taxes, charges for services, staterevenue sharing as well as state and federal grants. Depressed economic growth correlates with decreases in thesame revenue sources.

Economic growth may be measured by a variety of indicators such as employment growth, unemployment, newconstruction and assessed values, diversification of the property tax base, enterprise fund revenue and net assetgrowth.

Hernando County’s population grew from 162,876 in 2007 to 181,882 in 2017, a 12% increase over a period of10 years.

Unemployment in Hernando County decreased to an average of 4.3% and the County’s personal income percapita increased slightly to $34,413 in 2016, the most recent year available.

Total taxable property value has decreased 20% over the last 10 years, but increased 18% over tax year 2013,which was the lowest taxable value in recent history. The 10 largest taxpayers accounted for 12.75% of the totaltaxable assessed value, with Cemex, Inc. increasing by 376% over its value 10 years ago.

Permanent households rose during the year to a total of 75,883, 10% more than 10 years ago. The buildingdepartment issued 12,319 residential permits and 51 new commercial construction permits for the year.

For the fiscal year 2016-17 budget, taxable values increased by $301 million or 4.1% to approximately $7,704 billion.The General Fund millage was 6.9912. The increase in property values meant an additional $1.7 million in revenue tothe General Fund. Due to the increase in property values, the County was able to maintain the same millage rate asthe previous two years.

During fiscal year 2016-17, the Board approved the transfer for $3 million to the Capital Improvement Fund. TheCapital Improvement Fund has been used for setting aside funds for capital improvements the General Fund wouldhave otherwise spent. The funds in the Capital Improvement Fund don’t meet the criteria to be a Special RevenueFund, are often not capital in nature, and have therefore been included in the General Fund for financial reportingpurposes. Due to the reduction in fiscal year ending 2017 fund balance of the General Fund, it is anticipated that theremainder of the $3 million that was transferred, approximately $2.5 million, will be transferred back to the GeneralFund.

For the fiscal year 2017-18 budget, taxable property values increased by $505 million or 6.6% to approximately $8,190billion. Due to additional funding from the Sheriff’s Federal Inmate revenue, the County reduced the General Fundmillage to 6.8912. Even with the change in millage, the increase in property values means an additional $3.5 millionin revenue to the General Fund.

The County has continued to meet its General Fund fund balance reserve requirements of 18.5% (See Note A,Governmental Fund Balance Classification) since adoption of the policy.

2k

TO OBTAIN FURTHER INFORMATION

This financial report was designed to provide an overview of the County’s finances. If you have any questions concerningbudgets, long-term financial planning, or other subjects related to the management of County operations, please contact theCounty Administrator at:

Hernando County20 N Main StreetBrooksville, Florida 34601(352) [email protected]

If you have any questions concerning financial reports or other accounting information in this report, please contact the Officeof the Clerk and Comptroller, Director of Financial Services at:

Hernando County20 N. Main StreetBrooksville, Florida 34601(352) [email protected]

It is also suggested you visit our website at www.hernandocounty.us for general information about the County, andwww.hernandoclerk.com for additional financial information.


ASSETSCash and Cash Equivalents $ 8,050,080 $ 201,375 $ 8,251,455Pooled Cash and Investments 104,156,672 77,808,258 181,964,930Cash with Fiscal Agent 5,541,910 1,546,646 7,088,556Accounts Receivable (net) 3,832,603 4,797,714 8,630,317Internal Balances (3,321,280) 3,321,280 -Due from Other Governments 6,877,814 1,516,542 8,394,356Inventories 89,894 321,126 411,020Prepaid Items 317,188 14,954 332,142Capital Assets, net of accumulated

depreciation:Land 29,832,321 10,326,775 40,159,096Buildings 84,575,378 18,256,601 102,831,979Infrastructure 187,204,611 2,784,322 189,988,933Improvements Other than Buildings 11,730,010 219,878,467 231,608,477Equipment 22,236,802 4,224,580 26,461,382Construction in Progress 772,436 5,213,287 5,985,723Intangible Assets 552,960 - 552,960

Prepaid Bond Insurance - 47,908 47,908Total Assets $ 462,449,399 $ 350,259,835 $ 812,709,234

Deferred Outflows of Resources $ 56,546,437 $ 5,211,057 $ 61,757,494

LIABILITIESAccounts Payable 6,078,733 1,875,026 7,953,759Retainage Payable 185,159 - 185,159Accrued Liabilities 5,341,680 1,609,094 6,950,774Due to Other Governments 729,125 46,016 775,141Unearned Revenue 2,184,603 481,174 2,665,777Deposits 386,747 3,425,489 3,812,236Payable from Restricted Assets:

Accounts Payable - 116,743 116,743Retainage Payable - 31,351 31,351

Non-Current Liabilities:Due Within One Year:

Loans & Notes Payable 4,093,897 2,907,198 7,001,095Bonds Payable 346,546 2,563,783 2,910,329Compensated Absences 6,668,625 749,634 7,418,259Claims Liabilities 3,281,306 - 3,281,306

Due In More Than One Year:Loans & Notes Payable 26,318,719 55,047,387 81,366,106Bonds Payable 2,344,894 30,901,124 33,246,018Compensated Absences 1,219,786 74,139 1,293,925Other Post Employment Benefits 10,207,357 955,361 11,162,718Net Pension Liability 124,488,048 8,728,530 133,216,578Claims Liabilities 650,000 - 650,000Unearned Revenue - 1,449,420 1,449,420Accrued Landfill Closure/Postclosure - 5,305,692 5,305,692

Total Liabilities $ 194,525,225 $ 116,267,161 $ 310,792,386

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

Governmental Business-Type

HERNANDO COUNTY, FLORIDASTATEMENT OF NET POSITION

September 30, 2017

Activities Activities Total

3

Deferred Inflows of Resources $ 9,055,257 $ 556,834 $ 9,612,091

NET POSITIONNet Investment in Capital Assets $ 304,605,052 $ 171,816,828 $ 476,421,880Restricted for:

Grant Funded Programs 1,548,960 1,548,960Court Programs 5,935,138 5,935,138Special Assessment Projects 687,038 687,038Environment Conservation 7,582,758 7,582,758Bond Covenants or Debt Service 603,665 603,665Public Safety 6,797,289 6,797,289Capital Projects 30,544,192 12,059,997 42,604,189Renewal and Replacement 5,723,029 5,723,029Other Purposes 3,624,390 3,624,390

Unrestricted (Deficit) (46,513,128) 49,047,043 2,533,915

Total Net Position $ 315,415,354 $ 238,646,897 $ 554,062,251

Activities Activities Total


September 30, 2017

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5

Impact FeesCapital Project

ASSETSCash and Cash Equivalents $ 3,371,154 $ 395 $ -Pooled Cash and Investments 12,317,294 26,341,794 10,432,714Cash with Fiscal Agent - 352,450 136,524Accounts Receivable (net) 547,461 37,552 -Due from Other Funds 129,203 87,246 -Due from Other Governments 3,793,689 2,328,769 644Advances to Other Funds 7,236,574 - -Inventories - - -Prepaid Items 266,533 - -Total Assets $ 27,661,908 $ 29,148,206 $ 10,569,882

LIABILITIES, DEFERRED INFLOWS OF RESOURCESAND FUND BALANCESLiabilities

Accounts Payable $ 1,818,592 $ 1,195,422 $ 44,269Retainage Payable 74,356 110,803 -Accrued Liabilities 2,822,313 345,644 -Due to Other Funds 538,448 - -Due to Other Governments 120,383 - -Unearned Revenue 297,906 - 1,505,265Deposits 176,518 1,148 -Advances from Other Funds - - -

Total Liabilities 5,848,516 1,653,017 1,549,534Deferred Inflows of Resources

Unavailable Revenue 962,311 893,729 -Fund Balances

Nonspendable:Advances 7,236,574 - -Inventories - - -Prepaid Items 266,533 - -

Restricted for:Grant Funded Programs 770,603 - -Court Programs - - -Special Assessment Projects - - -Environment Conservation - - -Bond covenants or debt service - 88,471 -Public Safety - - -Capital Projects - 18,486,623 9,020,348Other Purposes - - -

Committed to:Budgeted Emergency and Contingency Reserves 3,077,251 - -Budgeted Stabilization Reserves 2,639,739 - -Other Purposes - - -

Assigned to:Economic Development - - -Public Safety - - -Capital Projects - 8,026,366 -Other Purposes - - -

Unassigned 6,860,381 - -Total Fund Balances 20,851,081 26,601,460 9,020,348

Total Liabilities, Deferred Inflows of Resourcesand Fund Balances $ 27,661,908 $ 29,148,206 $ 10,569,882


Transportation

FundFundGeneral Trust

HERNANDO COUNTY, FLORIDABALANCE SHEET

GOVERNMENTAL FUNDSSeptember 30, 2017

and Gas Taxes

6

$ 150 $ 4,477,661 $ 7,849,3607,128,489 32,338,365 88,558,656

- - 488,9745,377 3,154,364 3,744,754

270,767 118,463 605,67913,303 737,695 6,874,100

- - 7,236,574- 1,800 1,800

2,841 47,814 317,188$ 7,420,927 $ 40,876,162 $ 115,677,085

$ 70,360 $ 1,212,299 $ 4,340,942- - 185,159

1,032,343 861,812 5,062,112- 484,946 1,023,394- 608,742 729,125- 5,172 1,808,343- 209,081 386,747

6,786,574 450,000 7,236,5747,889,277 3,832,052 20,772,396

- 1,853,683 3,709,723

- - 7,236,574- 1,800 1,800

2,841 46,376 315,750

- 719,786 1,490,389- 5,935,138 5,935,138- 687,038 687,038- 7,582,758 7,582,758- 515,194 603,665- 5,417,270 5,417,270- 2,192,108 29,699,079- 3,580,855 3,580,855

- - 3,077,251- - 2,639,739- 1,286,425 1,286,425

- 1,342,511 1,342,511- 2,791,542 2,791,542- 3,003,735 11,030,101- 87,891 87,891

(471,191) - 6,389,190(468,350) 35,190,427 91,194,966

$ 7,420,927 $ 40,876,162 $ 115,677,085

Nonmajor Total

Funds FundsGovernmental Governmental

Fire Rescue-FireHernando County

7

Fund Balances - Total Governmental Funds $ 91,194,966

Amounts reported for Governmental Activities in the Statement of NetPosition are different because:

Capital assets used in governmental activities are not financialresources and therefore are not reported in the governmental funds:

Governmental Capital Assets $ 519,464,018Less Accumulated Depreciation (195,628,791) 323,835,227

Unearned revenue and deferred outflows of resources are notavailable to pay for current-period expenditures and are thereforenot reported in the governmental funds:

Unearned Revenue $ 3,709,723Deferred Charges on Debt Refunding 804,590Deferred Charges related to Net Pension Liability 55,437,635 59,951,948

Long-term liabilities are not due and payable in the current period,and therefore are not reported in the governmental funds:

Accrued Liabilities - Interest $ (206,215)Loans and Notes Payable (29,415,620)Bonds Payable (2,691,440)Compensated Absences (7,816,191)Other Post Employment Benefits (10,135,162)Net Pension Liability (123,742,358) (174,006,986)

Deferred inflows of resources apply fo a future period and will notbe recognized as revenue until then:

Deferred Inflows related to Net Pension Liability (9,018,196)

Internal Service Funds are used by management to charge the costsof certain activities to the individual funds:

Net position of the Internal Service Funds that is reportedin the Governmental Activities portion of the Statementof Net Position. 26,391,960

Accumulated net position of the Internal Service Funds is allocatedbetween governmental activities and business-type activities. InternalService Fund net position allocated to business-type activities. (2,903,565)

Net Position of Governmental Activities $ 315,445,354


HERNANDO COUNTY, FLORIDARECONCILIATION OF THE BALANCE SHEET-GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITIONSeptember 30, 2017

8

Impact FeesCapital Project

RevenuesTaxes $ 52,991,102 $ 13,686,579 $ -Licenses and Permits 437,911 2,160 -Intergovernmental 19,109,252 4,030,680 -Charges for Services 11,087,486 1,278,699 -Fines and Forfeitures 106,757 - -Special Assessments - - -Impact Fees - - 2,733,272Interest 204,633 121,004 37,057Miscellaneous 1,403,238 114,767 -

Total Revenues 85,340,379 19,233,889 2,770,329

ExpendituresCurrent

General Government 20,384,193 - -Public Safety 45,737,271 85,687 -Physical Environment 296,056 - -Transportation 2,397,631 12,192,941 -Economic Environment 510,631 - -Human Services 4,274,185 - -Culture and Recreation 4,734,319 59,913 -Court Operations 1,248,242 - -

Debt ServicePrincipal 420,070 - -Interest and Fiscal Charges 70,632 - -

Capital Outlay 3,306,681 6,203,898 1,145,544

Total Expenditures 83,379,911 18,542,439 1,145,544

Excess of Revenues Over (Under) Expenditures 1,960,468 691,450 1,624,785

Other Financing Sources (Uses)Transfers In 567,136 2,288,851 -Transfers Out (5,199,978) (710,011) (485,837)Additions to Long-Term Debt - - -

Total Other Financing Sources (Uses) (4,632,842) 1,578,840 (485,837)

Net Change in Fund Balances (2,672,374) 2,270,290 1,138,948

Fund Balances at Beginning of Year (restated) 23,523,455 24,331,170 7,881,400

Fund Balances at End of Year $ 20,851,081 $ 26,601,460 $ 9,020,348


Fund and Gas Taxes FundGeneral Trust

HERNANDO COUNTY, FLORIDASTATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS

Transportation

For the Fiscal Year Ended September 30, 2017

9

$ - $ 7,499,938 $ 74,177,61964,428 - 504,49965,954 4,073,409 27,279,29572,792 13,145,676 25,584,653

- 1,433,654 1,540,41119,349,352 2,130,008 21,479,360

- - 2,733,27216,027 107,086 485,807

176,460 733,129 2,427,594

19,745,013 29,122,900 156,212,510

- 1,561,620 21,945,81320,185,886 15,320,538 81,329,382

- 847,563 1,143,619- 1,129,732 15,720,304- 2,904,584 3,415,215- 1,435,664 5,709,849- 57,815 4,852,047- 5,703,414 6,951,656

117,564 3,537,443 4,075,077123,265 779,633 973,530

74,646 1,537,258 12,268,027

20,501,361 34,815,264 158,384,519

(756,348) (5,692,364) (2,172,009)

270,767 10,936,446 14,063,200(299,816) (8,365,833) (15,061,475)

- 2,368,479 2,368,479

(29,049) 4,939,092 1,370,204

(785,397) (753,272) (801,805)

317,047 35,943,699 91,996,771

$ (468,350) $ 35,190,427 $ 91,194,966

GovernmentalTotal

FundsGovernmental

Nonmajor

FundsFire Rescue-FireHernando County

10

Net Change in Fund Balances - Total Governmental Funds $ (801,805)

Amounts reported for Governmental Activities in the Statement ofActivities are different because:

Governmental Funds report Capital Outlays as Expenditures. Inthe Statement of Activities, the cost of those assets is depreciatedover their estimated useful lives. Donations of Capital Assets arenot financial resources to Governmental Funds, however increasenet position in the Statement of Activities. Governmental Funds reportthe sale of Capital Assets as a financial resource, however in theStatement of Activities, only the gain/loss on the sale is reported:

Expenditures for Capital Assets $ 12,667,309Less current year depreciation (16,792,358)Donation of Capital Assets 459,448Capital Asset Disposals (256,630) (3,922,231)

Additions to Long-Term Debt provide current financial resources toGovernmental Funds, but issuing debt increases long-term liabilitiesin the Statement of Net Position. Repayment of principal and paymentsto refunding escrow agents are expenditures/other financing usesin the Governmental Funds, but reduce long-term liabilities in theStatement of Net Position:

Additions to Long-Term Debt (2,368,479)Principal Payments 4,075,076 1,706,597

Some expenses reported in the Statement of Activities do notrequire the use of current financial resources and therefore are notreported as expenditures in the Governmental Funds:

Increase in Accrued Interest on Long-Term Debt $ (13,597)Amortization of current year Bond Discount/Premium 2,643Amortization of current year Prepaid Bond Insurance (80,101)Increase in Compensated Absences (322,609)Increase in Accrued Other Post Employment Benefits (1,140,608)Increase in Pension Expenses (8,768,616) (10,322,888)

Some revenues reported in the Statement of Activities do not providea current financial resource, and therefore are not reported asrevenue in the Governmental Funds:

Change in earned revenue from grants and contributions 91,744Change in earned revenue from charges for services 522,367Change in earned revenue from taxes 87,539 701,650

Internal Service Funds are used by management to charge the costsof certain activities to individual funds. A portion of the Change in NetPosition of the Internal Service Funds is reported within GovernmentalActivities. 1,470,556

Change in Net Position of Governmental Activities $ (11,168,121)


HERNANDO COUNTY, FLORIDARECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIES


11

HERNANDO COUNTY, FLORIDASTATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUALGENERAL FUND


Variance withFinal Budget

Actual PositiveOriginal Final Amounts (Negative)

RevenuesTaxes $ 52,801,058 $ 52,801,058 $ 52,991,102 $ 190,044Licenses and Permits 410,788 410,788 437,911 27,123Intergovernmental 19,668,258 22,152,013 19,109,252 (3,042,761)Charges for Services 10,824,949 10,186,133 11,087,486 901,353Fines and Forfeitures 75,060 75,060 106,757 31,697Interest 235,500 235,500 204,633 (30,867)Miscellaneous 1,335,569 1,409,033 1,403,238 (5,795)

Total Revenues 85,351,182 87,269,585 85,340,379 (1,929,206)

ExpendituresCurrent

General Government 22,058,091 21,912,362 20,384,193 1,528,169Public Safety 48,089,238 47,358,457 45,737,271 1,621,186Physical Environment 322,124 322,124 296,056 26,068Transportation 2,608,383 2,729,329 2,397,631 331,698Economic Environment 999,741 1,899,441 510,631 1,388,810Human Services 4,496,557 4,462,832 4,274,185 188,647Culture and Recreation 4,881,576 4,954,937 4,734,319 220,618Court Operations 1,263,515 1,263,515 1,248,242 15,273

Debt ServicePrincipal 420,070 420,070 420,070 -Interest and Fiscal Charges 70,632 70,632 70,632 -

Capital Outlay 1,529,483 4,293,953 3,306,681 987,272

Total Expenditures 86,739,410 89,687,652 83,379,911 6,307,741

Excess of Revenues Over Expenditures (1,388,228) (2,418,067) 1,960,468 4,378,535

Other Financing Sources (Uses)Transfers In 277,390 327,955 567,136 239,181Transfers Out (5,025,540) (5,193,398) (5,199,978) (6,580)Reserve for Contingencies (17,913,493) (17,414,717) - 17,414,717

Total Other Financing Sources (Uses) (22,661,643) (22,280,160) (4,632,842) 17,647,318

Net Change in Fund Balance (24,049,871) (24,698,227) (2,672,374) 22,025,853

Fund Balance at Beginning of Year (restated) 24,049,871 24,698,227 23,523,455 (1,174,772)

Fund Balance at End of Year $ - $ - $ 20,851,081 $ 20,851,081


Budgeted Amounts

12


CHANGES IN FUND BALANCES - BUDGET AND ACTUALTRANSPORTATION TRUST AND GAS TAXES




RevenuesTaxes $ 13,429,992 $ 13,768,937 $ 13,686,579 $ (82,358)Licenses and Permits - - 2,160 2,160Intergovernmental 6,849,913 8,535,916 4,030,680 (4,505,236)Charges for Services 928,600 998,600 1,278,699 280,099Interest 120,000 205,000 121,004 (83,996)Miscellaneous 58,000 69,200 114,767 45,567

Total Revenues 21,386,505 23,577,653 19,233,889 (4,343,764)

ExpendituresCurrent

Public Safety - - 85,687 (85,687)Transportation 13,409,298 13,937,198 12,192,941 1,744,257Culture and Recreation 60,000 60,000 59,913 87

Capital Outlay 8,244,873 18,801,511 6,203,898 12,597,613


Excess of Revenues Over Expenditures (327,666) (9,221,056) 691,450 9,912,506

Other Financing Sources (Uses)Transfers In 1,068,215 4,537,949 2,288,851 (2,249,098)Transfers Out (1,874,247) (3,009,849) (710,011) 2,299,838Reserve for Contingencies (21,970,132) (16,638,216) - 16,638,216

Total Other Financing Sources (Uses) (22,776,164) (15,110,116) 1,578,840 16,688,956

Net Change in Fund Balance (23,103,830) (24,331,172) 2,270,290 26,601,462

Fund Balance at Beginning of Year 23,103,830 24,331,172 24,331,170 (2)



Budgeted Amounts

13


CHANGES IN FUND BALANCES - BUDGET AND ACTUALHERNANDO COUNTY FIRE RESCUE - FIRE




RevenuesLicenses and Permits $ 72,584 $ 72,584 $ 64,428 $ (8,156)Intergovernmental 53,000 53,000 65,954 12,954Charges for Services 49,000 49,000 72,792 23,792Special Assessments 19,026,562 19,026,562 19,349,352 322,790Interest 85,000 85,000 16,027 (68,973)Miscellaneous 162,338 162,338 176,460 14,122

Total Revenues 19,448,484 19,448,484 19,745,013 296,529

ExpendituresCurrent

Public Safety 19,788,259 19,812,650 20,185,886 (373,236)Debt Service

Principal 830,991 830,991 117,564 713,427Interest and Fiscal Charges 123,266 123,266 123,265 1

Capital Outlay 95,686 74,646 74,646 -

Total Expenditures 20,838,202 20,841,553 20,501,361 340,192

Excess of Revenues Over Expenditures (1,389,718) (1,393,069) (756,348) 636,721

Other Financing Sources (Uses)Transfers In - - 270,767 270,767Transfers Out (299,816) (299,816) (299,816) -Additions to Long-term Debt 3,750,000 3,750,000 - (3,750,000)Reserve for Contingencies (4,270,404) (2,374,163) - 2,374,163

Total Other Financing Sources (Uses) (820,220) 1,076,021 (29,049) (1,105,070)

Net Change in Fund Balance (2,209,938) (317,048) (785,397) (468,349)

Fund Balance at Beginning of Year 2,209,938 317,048 317,047 (1)

Fund Balance at End of Year $ - $ - $ (468,350) $ (468,350)


Budgeted Amounts

14

ASSETSCurrent Assets

Cash and Cash Equivalents $ 198,710 $ 200 $ 1,665Pooled Cash and Investments 28,650,644 1,590,412 19,911,108Cash with Fiscal Agent - - -Restricted Cash and Investments:

Pooled Cash and Investments 26,149 - 72Accounts Receivable (net) 4,269,806 53,011 474,827Due from Other Funds 350,919 - 66,796Due from Other Governments 1,094,958 396,036 25,548Inventories 301,350 - 19,776Prepaid Expenses - - 14,954

Total Current Assets 34,892,536 2,039,659 20,514,746Non-Current Assets

Restricted Assets:Pooled Cash and Investments 17,031,131 - 7,728,176Cash with Fiscal Agent 1,546,646 - -

Capital Assets, net of accumulateddepreciation:

Land 7,998,563 209,611 1,903,601Buildings 8,709,833 7,481,292 1,108,479Infrastructure - 2,784,322 -Improvements Other Than Buildings 206,029,689 7,841,821 5,933,701Equipment 3,846,553 16,199 333,601Construction in Progress 2,884,469 2,026,805 302,013

Prepaid Bond Insurance 47,908 - -Total Non-Current Assets 248,094,792 20,360,050 17,309,571

Total Assets $ 282,987,328 $ 22,399,709 $ 37,824,317

Deferred Outflows of Resources $ 3,912,663 $ 140,528 $ 620,261

LIABILITIESCurrent Liabilities

Accounts Payable 1,075,955 348,148 376,137Accrued Liabilities 1,326,589 50,208 118,181Due to Other Governments 31,093 - -Unearned Revenues 424,366 56,808 -Deposits 2,971,839 84,741 35,729Loans & Notes Payable 2,621,627 285,571 -Bonds Payable 2,563,783 - -Compensated Absences 502,154 40,765 124,538Claims Liabilities - - -Payable from Restricted Assets:

Accounts Payable 116,671 - 72Retainage Payable - 31,351 -Total Current Liabilities 11,634,077 897,592 654,657

PROPRIETARY FUNDSSeptember 30, 2017


Business-Type

Sewer District OperationsWater & Aviation Waste

Management

15

BuildingDepartment Total

$ 800 $ 201,375 $ 200,7202,870,566 53,022,730 15,598,016

- - 5,052,936

- 26,221 -70 4,797,714 87,849

- 417,715 -- 1,516,542 3,714- 321,126 88,094- 14,954 -

2,871,436 60,318,377 21,031,329

- 24,759,307 -- 1,546,646 -

215,000 10,326,775 -956,997 18,256,601 1,527,648

- 2,784,322 -73,256 219,878,467 -28,227 4,224,580 11,541,643

- 5,213,287 -- 47,908 -

1,273,480 287,037,893 13,069,291$ 4,144,916 $ 347,356,270 $ 34,100,620

$ 537,605 $ 5,211,057 $ 304,212

74,786 1,875,026 1,737,791114,116 1,609,094 73,35314,923 46,016 -

- 481,174 376,260333,180 3,425,489 -

- 2,907,198 253,673- 2,563,783 -

82,177 749,634 65,720- - 3,281,306

- 116,743 -- 31,351 -

619,182 13,805,508 5,788,103

Continued

Activities - Enterprise Funds

Service FundsInternal

GovernmentalActivities-

16

Non-Current LiabilitiesLoans & Notes Payable 53,668,000 1,379,387 -Bonds Payable 30,901,124 - -Compensated Absences 49,664 4,032 12,316Other Post-Employment Benefits 655,548 35,375 143,436Net Pension Liability 5,758,813 354,129 1,402,241Claims Liabilities - - -Payable from Restricted Assets:

Unearned Revenues 1,449,420 - -Accrued Landfill Closure/Postclosure Care - - 5,305,692Total Non-Current Liabilities 92,482,569 1,772,923 6,863,685


Deferred Inflows of Resources $ 349,988 $ 21,207 $ 112,810

NET POSITIONNet Investment in Capital Assets 142,266,861 18,695,092 9,581,395Restricted for

Capital Projects 12,059,997 - -Renewal and Replacement 5,723,029 - -

Unrestricted 22,383,470 1,153,423 21,232,031

Total Net Position $ 182,433,357 $ 19,848,515 $ 30,813,426

Adjustment to reflect the consolidation of Internal Service Fund activities related to Enterprise Funds

Net Position of business-type activities


PROPRIETARY FUNDSSeptember 30, 2017


Business-TypeWater & Aviation Waste

Sewer District Operations Management

17

- 55,047,387 743,323- 30,901,124 -

8,127 74,139 6,500121,002 955,361 72,195

1,213,347 8,728,530 715,690- - 650,000

- 1,449,420 -- 5,305,692 -

1,342,476 102,461,653 2,187,708$ 1,961,658 $ 116,267,161 $ 7,975,811

$ 72,829 $ 556,834 $ 37,061

1,273,480 171,816,828 12,072,295

- 12,059,997 -- 5,723,029 -

1,374,554 46,143,478 14,319,665

$ 2,648,034 235,743,332 $ 26,391,960

2,903,565

$ 238,646,897

Activities -Governmental

Activities - Enterprise FundsBuilding Internal

Service FundsDepartment Total

18

Operating RevenuesLicenses and Permits $ 6,650 $ - $ 28,000Charges for Services 33,735,229 1,697,830 7,768,184Miscellaneous 486,090 77,126 334,019

Total Operating Revenues 34,227,969 1,774,956 8,130,203

Operating ExpensesPersonal Services 8,797,541 432,565 2,141,910Other Services & Charges 9,290,662 667,631 4,354,345Claims - - -Depreciation 9,315,664 1,063,644 1,097,505

Total Operating Expenses 27,403,867 2,163,840 7,593,760

Operating Income (Loss) 6,824,102 (388,884) 536,443

Non-Operating Revenues (Expenses)Interest Income 232,704 6,033 99,645Interest Expense (3,708,126) (68,998) -Operating Grants 58,478 51,388 -Gain (Loss) on Sale of Capital Assets 1,202 4 (12,507)Amortization of Bond Discount/Premium 178,783 - -

Total Non-Operating Revenues (Expenses) (3,236,959) (11,573) 87,138

Income (Loss) Before Contributionsand Transfers 3,587,143 (400,457) 623,581

Capital Grants and Contributions 3,355,368 1,113,926 -Transfers In 81,475 - 66,796Transfers Out (197,864) (79,727) (49,206)

Total Contributions and Transfers 3,238,979 1,034,199 17,590

Change in Net Position 6,826,122 633,742 641,171

Net Position-Beginning 175,607,235 19,214,773 30,172,255

Net Position-Ending $ 182,433,357 $ 19,848,515 $ 30,813,426

Adjustment to reflect the consolidation of Internal Service Fund activities related to Enterprise Funds

Change in net position of business-type activities


AND CHANGES IN FUND NET POSITIONPROPRIETARY FUNDS

HERNANDO COUNTY, FLORIDASTATEMENT OF REVENUES, EXPENSES


Water & Aviation WasteSewer District Operations Management

Business-Type

19

$ 2,824,388 $ 2,859,038 $ -85,642 43,286,885 28,289,34160,804 958,039 664,167

2,970,834 47,103,962 28,953,508

1,950,825 13,322,841 3,163,325804,726 15,117,364 10,021,237

- - 13,775,79751,160 11,527,973 1,927,937

2,806,711 39,968,178 28,888,296

164,123 7,135,784 65,212

10,099 348,481 75,790- (3,777,124) (6,942)- 109,866 -- (11,301) 205,581- 178,783 -

10,099 (3,151,295) 274,429

174,222 3,984,489 339,641

- 4,469,294 21,192- 148,271 1,324,862

(38,332) (365,129) (109,729)(38,332) 4,252,436 1,236,325

135,890 8,236,925 1,575,966

2,512,144 24,815,994

$ 2,648,034 $ 26,391,960

105,410

$ 8,342,335

GovernmentalActivities -Activities - Enterprise Funds

Building InternalDepartment Total Service Funds

20

Cash Flows from Operating ActivitiesReceipts from Customers $ 34,739,553 $ 2,371,757Receipts from Inter-Fund Services - -Payments to Suppliers (12,453,497) (693,287)Payments to Employees (7,955,199) (386,803)Claims Paid - -Other Receipts 486,090 77,126

Net Cash provided by (used for) Operating Activities 14,816,947 1,368,793

Cash Flows from Noncapital Financing ActivitiesOperating Grants 58,478 51,388Transfers From Other Funds 81,475 -Transfers to Other Funds (197,864) (79,727)

Net Cash Provided by (used for)Noncapital Financing Activities (57,911) (28,339)

Cash Flows from Capital and Related Financing ActivitiesAdditions to Capital Assets (3,457,036) (1,637,530)Proceeds from Capital Debt 1,560,616 -Principal Paid on Capital Debt (3,372,057) (277,770)Interest Paid on Capital Debt (4,185,426) (72,851)Capital Grants Revenue 1,025,676 1,113,926Connection Fee Collections 2,112,573 -Proceeds From Sale of Capital Assets 1,202 4

Net Cash provided by (used for) Capital andRelated Financing Activities (6,314,452) (874,221)

Cash Flows from Investing ActivitiesInterest Received 232,704 6,033

Net Cash Provided by Investing Activities 232,704 6,033

Net Increase (Decrease) in Cash and Cash Equivalents 8,677,288 472,266

Cash and Cash Equivalents at Beginning of Year 38,775,992 1,118,346

Cash and Cash Equivalents at End of Year $ 47,453,280 $ 1,590,612

Classified as:Current Assets 28,849,354 1,590,612Restricted Assets - Current 26,149 -Restricted Assets - Non-current 18,577,777 -

Totals $ 47,453,280 $ 1,590,612

For the Fiscal Year Ended September 30, 2017PROPRIETARY FUNDS

STATEMENT OF CASH FLOWSHERNANDO COUNTY, FLORIDA

Business-type

Sewer District OperationsWater & Aviation

21

$ 7,566,937 $ 3,002,349 $ 47,680,596 $ 1,109,697- - - 4,200,496

(3,244,165) (769,597) (17,160,546) (1,127,068)(1,919,321) (1,770,641) (12,031,964) 494,602

- - - (3,970,261)334,019 60,804 958,039 121,583

2,737,470 522,915 19,446,125 829,049

- - 109,866 -66,796 - 148,271 -

(49,206) (38,332) (365,129) -

17,590 (38,332) (106,992) -

(137,973) (20,110) (5,252,649) (3,242,788)- - 1,560,616 1,199,648- - (3,649,827) (202,652)- - (4,258,277) (6,942)- - 2,139,602 -- - 2,112,573 -

24,517 - 25,723 225,190

(113,456) (20,110) (7,322,239) (2,027,544)

99,645 10,099 348,481 75,79099,645 10,099 348,481 75,790

2,741,249 474,572 12,365,375 (1,122,705)

24,899,772 2,396,794 67,190,904 19,429,363

$ 27,641,021 $ 2,871,366 $ 79,556,279 $ 18,306,658

19,912,773 2,871,366 53,224,105 18,306,65872 - 26,221 -

7,728,176 - 26,305,953 -

$ 27,641,021 $ 2,871,366 $ 79,556,279 $ 18,306,658

Continued

Activities - Enterprise Funds Activities -Governmental

Management DepartmentWaste Building

Total Service FundsInternal

22

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

Operating Income (Loss) $ 6,824,102 $ (388,884)

Adjustments to Reconcile Operating Income (Loss)to Net Cash provided by (used for) Operating Activities

Depreciation 9,315,664 1,063,644Other Post-Employment Benefits 65,257 3,432Pension Adjustments 416,568 22,758Landfill Closure/Postclosure Care Amortization - -(Increase) Decrease in

Accounts Receivable (531,750) (9,470)Due from Other Funds 117 -Due from Other Governments 1,420,185 693,783Advances to Other Funds 82,000 -Inventories 23,562 -Prepaid Expenses 7,756 -

Increase (Decrease) inAccounts Payable (2,671,141) 88,736Retainage Payable (526,400) (114,392)Accrued Liabilities 360,517 19,572Due to Other Funds - -Due to Other Governments 3,388 -Unearned Revenues 74,127 (1,700)Deposits (47,005) (8,686)Claims Liabilities - -

Total Adjustments 7,992,845 1,757,677

Net Cash Provided by (used for) Operating Activities $ 14,816,947 $ 1,368,793

Non-cash Investing, Financing, and Capital Activities:Contributions of Capital Assets from Developers $ 217,119 $ -


For the Fiscal Year Ended September 30, 2017PROPRIETARY FUNDS

STATEMENT OF CASH FLOWSHERNANDO COUNTY, FLORIDA

Business-typeWater & Aviation

Sewer District Operations

23

$ 536,443 $ 164,123 $ 7,135,784 $ 65,212

1,097,505 51,160 11,527,973 1,927,93714,925 14,980 98,594 8,826

132,949 93,072 665,347 59,801950,041 - 950,041 -

(214,007) (70) (755,297) (18,973)851 - 968 (2,286)

(25,548) - 2,088,420 (3,665)- - 82,000

(9,785) - 13,777 (49,905)8,157 - 15,913 343,227

169,924 36,829 (2,375,652) (22,144)- - (640,792) -

74,715 72,132 526,936 425,975- - - (4,105)- (1,700) 1,688 -(360) - 72,067 17,594

1,660 92,389 38,358 -- - - 349,264

2,201,027 358,792 12,310,341 3,031,546

$ 2,737,470 $ 522,915 $ 19,446,125 $ 3,096,758

$ - $ - $ 217,119 $ -

Activities - Enterprise FundsGovernmental

Activities -Waste

Management Total Service FundsBuilding Internal

Department

24

AgencyFunds

ASSETSCash and Cash Equivalents $ 2,253,763Pooled Cash and Investments 7,772,151Accounts Receivable (net) 300Due from Other Governments 421

Total Assets $ 10,026,635

LIABILITIESAccounts Payable $ 293,764Accrued Liabilities 3,264,654Due to Other Governments 3,285,402Deposits 3,182,815

Total Liabilities $ 10,026,635


AGENCY FUNDSSeptember 30, 2017

HERNANDO COUNTY, FLORIDASTATEMENT OF FIDUCIARY NET POSITION

25

HERNANDO COUNTY, FLORIDASeptember 30, 2017

NOTES TO THE FINANCIAL STATEMENTS

PAGE

NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 26

NOTE B STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY 36

NOTE C CASH AND INVESTMENTS 36

NOTE D RECEIVABLES 42

NOTE E RESTRICTED ASSETS 43

NOTE F CAPITAL ASSETS 44

NOTE G INTERFUND TRANSACTIONS 47

NOTE H LONG-TERM LIABILITIES 51

NOTE I RETIREMENT SYSTEM 65

NOTE J POST EMPLOYMENT BENEFITS OTHER THAN PENSION 73

NOTE K ARBITRAGE REBATE LIABILITY 75

NOTE L PROPERTY TAXES 75

NOTE M RISK MANAGEMENT 76

NOTE N CLOSURE AND POSTCLOSURE CARE COSTS 77

NOTE O DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED9INFLOW OF RESOURCES 79

NOTE P SEGMENT INFORMATION 79

NOTE Q CONTINGENCIES 79

NOTE R RESTATED BEGINNING FUND BALANCE 81

HERNANDO COUNTY, FLORIDANOTES TO THE FINANCIAL STATEMENTS

September 30, 2016

26

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. THE REPORTING ENTITY

Hernando County was created in 1843 as a political subdivision of the State of Florida, under Chapter 107, Section1, Florida Statutes. It is governed by an elected Board of County Commissioners (the Board) which is governedby state statutes and regulations. In addition to the five members of the Board, there are five elected ConstitutionalOfficers: Clerk of Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections, and TaxCollector. The Constitutional Officers maintain separate accounting records and budgets. The Board andConstitutional Officers provide the following services: public safety (police, fire and rescue), highways and streets,sanitation, water and sewer utilities, health and social services, culture/recreation, public improvements, planningand zoning, and general administrative services.

In accordance with the provisions of generally accepted accounting standards, these financial statements presentthe financial position, results of operations, and cash flows of the applicable fund types. The statements presentthe government and its component units, entities for which the government is considered to be financiallyaccountable. Blended component units are, in substance part of the primary government’s operations, eventhough they may be legally separate entities. Thus, blended component units are appropriately presented as fundsof the primary government. Otherwise, discretely presented component units, if there were any, would be reportedin a separate column in the government-wide financial statements.

Blended Component Units

The following component units are included in the accompanying financial statements as part of the primarygovernment because they satisfy the criteria for blending.

The following component units are in substance part of the County’s operations, have the same governing boardand management team as the County, and there is a specific benefit or burden relationship with the County:

Hernando County Water and Sewer District - established by Ordinance 80-4 to provide water and sewerservice to residents of the County which are not serviced by other agencies or entities.

Kass Circle Community Redevelopment Agency - approved by Resolution 2016-44 to establish thenecessary means by which redevelopment can be accomplished in the Kass Circle NeighborhoodRevitalization Area, as authorized in Florida Statutes 163.356.

The following component units are in substance part of the County’s operations, have the same management teamas the County, there is a specific benefit or burden relationship with the County, and they provide services entirelyto the County, strictly in an advisory capacity:

Hernando County Port Authority - established pursuant to Laws of Florida, Chapter 65-1618 and 71-666for the purpose providing advisory services regarding waterway management.

Hernando County Law Library - established pursuant to Laws of Florida, Chapter 65-1627, to provideadvisory services regarding a central law library which is available to County officials, judges, officersof the court and the public.

Separate financial statements are not prepared for any of the above component units.


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NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

The basic financial statements are composed of the Government-Wide Financial Statements, the Fund FinancialStatements and the Notes to the Financial Statements.

Government-Wide Financial Statements

The government-wide financial statements consist of a Statement of Net Position and a Statement of Activities.These statements report on the government as a whole and include separate columns for the governmental andbusiness-type activities of the primary government. An additional separate column would be presented for anydiscretely presented component unit for which the County is financially accountable.

The Statement of Net Position presents information on all of the assets, deferred outflows, liabilities and deferredinflows of the County except the Fiduciary Funds. The difference between (assets plus deferred outflows) less(liabilities plus deferred inflows) is reported as net position. Changes in net position may serve as an indicator ofwhether the financial position of the County is improving or deteriorating. The Statement of Fiduciary Net Positionis presented separately.

The Statement of Activities reports functional categories of programs provided by the County, and demonstrateshow and to what degree those programs are supported by specific revenue. The “Expenses” column reports directexpenses that are clearly identifiable with a specific function or program. “Program Revenues” are directlyattributable to a specific function or program and are categorized as charges for services, operating grants andcontributions, and capital grants and contributions. The net of program expenses less program revenues reflectsthe net cost of each function or program. The general revenues section includes revenues that are not programspecific such as taxes and investment earnings.

As a general rule, interfund activities, with the exception of interfund services provided and used have beenremoved from the government-wide financial statements. Residual amounts between governmental and business-type activities are reported as “internal balances.” These statements distinguish between the governmental andbusiness-type activities of the County. Governmental activities generally are financed through taxes,intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in wholeor in part by fees charged to external parties.


The underlying accounting system of the County is organized and operated on the basis of separate funds. A fundis a group of related accounts that are used to maintain control over resources that have been segregated forspecific activities or purposes. Fund accounting is used to ensure and demonstrate compliance with legal,legislative, contractual and other finance-related provisions. All of the funds of the County may be divided intothree categories: governmental funds, proprietary funds and fiduciary funds. The County’s major funds arereported as separate columns in the fund financial statements, and non-major funds are aggregated and presentedas a single column on each statement. Fund financial statements are presented after the government-widefinancial statements. A reconciliation is provided that converts the results of governmental fund accounting to thegovernment-wide presentation.


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Internal service funds of the County (which traditionally provide services primarily to other funds of the County) arepresented, in summary form, as part of the proprietary fund financial statements. Since the principal users of theinternal services are the County’s governmental activities, financial statements of internal service funds areincluded in the governmental activities column when presented at the government-wide level. The costs of theseservices are allocated to the appropriate functional activity (Public Safety, Physical Environment, etc.). Whenappropriate, surplus or deficits in the Internal Service Funds are allocated back to customers in the government-wide Statement of Activities. This creates a reconciling item between the business-type activities column and theProprietary Fund statements as reflected on the bottom of each statement.

The County’s fiduciary funds are presented in the fund financial statements. Since, by definition, these assets arebeing held for the benefit of a third party (other local governments, private parties, etc.) and cannot be used toaddress activities or obligations of the government, these funds are not incorporated into the government-widestatements.

GASB sets forth minimum criteria for the determination of what are to be considered major funds for financialstatement presentation. The County uses these criteria for major fund determination. The County electively addedsome proprietary funds as major funds, which either had debt outstanding or specific community focus. The Countyalso electively added the Impact Fee fund as a major-fund for purposes of consistency with prior years. The non-major funds are combined into one column in the respective fund financial statements.

The following are reported as major governmental funds:

General Fund – The general operating fund of the County. It accounts for all financial resources of the generalgovernment, except those required to be accounted for in another fund.

Transportation Trust and Gas Taxes – To account for the proceeds of gas taxes and other revenues for theconstruction and maintenance of County roads.

Impact Fees Capital Project Fund– To account for the proceeds of impact fees levied by the County, and associatedexpenditures for roads, parks, public buildings, library, law enforcement and emergency services.

Hernando County Fire Rescue-Fire - To account for assessments levied for fire protection services within thedistrict.

The following are reported as major enterprise funds:

Water and Sewer District – This fund is used to account for the operation of water, wastewater and reclaimed waterservices owned by Hernando County.

Aviation Operations – This fund is used to account for the operation of the Hernando County Airport and theIndustrial Complex located on Airport property.

Waste Management – This fund is used to account for the operation of the sanitary landfill for the handling anddisposal of solid waste.

Building Department – This fund is used to account for the operation of providing building permits and otherconstruction-related services to County citizens.


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The County also reports the following funds:

Internal Service Funds - These funds are used to account for goods or services provided by one department toother departments of the County or to other governmental units on a cost reimbursement basis. Such goods andservices include a central fueling system, vehicle and fleet maintenance and replacement, risk management,workers compensation management, computer replacement and health self-insurance.

Agency Funds – These funds are clearing accounts for the collection and disbursement of funds by the County onbehalf of individuals, private organizations, or other governments. Agency Funds include jury and witness, courtregistry, tax, vehicle tags, payroll deductions, and law enforcement holdings.

3. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION

The accounting policies of the County conform to generally accepted accounting principles as applicable togovernments in accordance with the Government Accounting Standards Board (GASB). GASB is the acceptedstandard setting body for establishing governmental accounting and financial reporting principles. The preparationof financial statements in conformity with generally accepted accounting principles requires management to makeestimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results coulddiffer from those estimates.

The following is a summary of the more significant policies:

The accounting and financial reporting treatment is determined by the applicable measurement focus and basis ofaccounting. Measurement focus indicates the type of resources being measured such as current financialresources or economic resources. The basis of accounting indicates the timing of transactions or events forrecognition in the financial statements.

The government-wide financial statements and proprietary fund statements are reported using the economicresources measurement focus and the accrual basis of accounting. Revenues are recorded when earned andexpenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxesare recognized as revenues in the year for which they are levied.

The governmental fund financial statements are reported using the current financial resources measurement focusand the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable andavailable. Revenues are considered to be available when they are collectible within the current period or soonenough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues tobe available if they are collected within 45 days of the end of the current fiscal period. The government considersintergovernmental grant revenues to be available if they are collected within 180 days of the end of the currentfiscal period. A majority of the County’s grants are expenditure driven. The reimbursement is often approved longafter the 45-day availability period used for non-grant revenues, especially as it relates to Federal EmergencyManagement Association (FEMA) activity. Receivables collected after these periods are reported as deferredinflows of resources until the revenue becomes available. Expenditures generally are recorded when a liability isincurred, as under accrual accounting.

However debt service expenditures, as well as expenditures related to compensated absences, and claims andjudgments, are recorded only when payment is due. General capital asset acquisitions are reported as


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expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reportedas other financing sources.

Property taxes, sales taxes, franchise taxes, licenses, and interest associated with the current fiscal period are allconsidered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period.Grant entitlements are recorded as revenues when all eligibility requirements are met, and are accruedsimultaneously with the grant expenditures. All other revenue items are considered to be measurable and availableonly when cash is received by the government.

Proprietary funds record both operating and non-operating revenues and expenses. Operating revenues are thosethat are obtained from the operations of the proprietary fund such as user fees. Non-operating revenues are notrelated to the operations of the proprietary fund and include interest income and grants. Operating expensesrepresent the cost of operations, which includes depreciation. Non-operating expenses are not related tooperations, such as interest expense.

The agency fund has no measurement focus, but utilizes the accrual basis of accounting for reporting its assetsand liabilities.

4. GOVERNMENTAL FUND BALANCE CLASSIFICATIONS

Governmental fund balances are classified either as non-spendable or spendable. Spendable fund balances arefurther classified in a hierarchy based on the extent to which constraints are placed on the spending of these fundbalances. Fund balances are reported in the governmental fund statements in the following classifications:

Non-spendable Fund Balance

This component of fund balance consists of amounts that are not in spendable form, or are legally or contractuallyrequired to be maintained intact.

Spendable Fund Balance

Restricted Fund Balance – This component of fund balance consists of amounts that are constrained either (a)externally by third parties (creditors, grantors, contributors, or laws or regulations of other governments), or (b) bylaw through constitutional provisions or enabling legislation.

Committed Fund Balance – This component of fund balance consists of amounts that can only be used for specificpurposes pursuant to constraints imposed by formal action (approval of a resolution by a majority of the Board) ofthe organization’s governing authority (County Commission). These committed amounts cannot be used for anyother purpose unless the governing authority removes or changes the specified use by taking the same type ofaction employed to constrain those amounts.

Assigned Fund Balance – This component of fund balance consists of amounts that are constrained by a less-than-formal action of the organization’s governing authority, or by an individual or body to whom the governingauthority has delegated this responsibility. The governing authority, the County Commission, has approved theassigned fund balances through action taken during the budget process. The County Commission has notdelegated the responsibility to assign fund balances to any individual or body.


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Unassigned Fund Balance – This classification is used for (a) negative unrestricted fund balances in anygovernmental fund, or (b) fund balances within the general fund that are not restricted, committed, or assigned.

When both restricted and unrestricted resources are available for use, it is the County’s policy to use restrictedresources first, then unrestricted resources (committed, assigned and unassigned) as they are needed. Whenunrestricted resources (committed, assigned and unassigned) are available for use, it is the County’s policy to useunassigned resources first, then assigned, and then committed as needed.

5. BUDGETARY INFORMATION

The annual budget, formally adopted by the Board of County Commissioners, serves as the legal authorization forexpenditures. Legal budgetary authority and control is established on a fund basis in accordance with FloridaStatutes 129.03, however, operational control for management purposes is maintained during the year at the lowerof the department or fund level. The adopted budget can only be changed by a budget amendment or a budgetresolution. Management can transfer appropriations within a fund without the Board of County Commissionersapproval unless the transfer affects a budgeted reserve. Pursuant to Florida Statutes 129.06 budget amendmentsrequire the approval of the Board of County Commissioners whenever the effect of the amendment is to increasethe total appropriations of the fund, to transfer monies between the funds, or to transfer budgeted reserve funds.

The County’s annual budgetary process is governed by Florida Statutes, Chapters 129 and 200. The total of theestimated receipts, including balances brought forward, must equal the total of the appropriations and reserves,therefore enabling a balanced budget. During the budgeting process, budgets are prepared on a basis consistentwith generally accepted accounting principles. All appropriations lapse at year-end.

The original budget is the first complete appropriated budget. The final budget is the original budget adjusted byall reserves, transfers, allocations, supplemental appropriations and other legally authorized executive changesapplicable to the fiscal year, whenever legally authorized.

In 2009, the County established a General Fund Budget Reserve Policy, creating four reserve categories. Eachof the following minimum levels are calculated as a percentage of the total approved General Fund budget, lessreserves, transfers, debt and grants: Reserve for Contingencies established at .5% to be used for smallunanticipated, non-recurring needs; an Emergency Reserve established at 3.5% to be used for more significantemergencies, those in excess of $100,000; a Stabilization Reserve established at 3.5% to be used when there isa one-time loss of a major revenue source and/or severe downturn in the economy; and a Reserve for CashForward established at 11.0% for the purpose of providing funds to support operations in the new fiscal year untilthe County’s most significant revenue source, property tax, is received. The total of these reserves, 18.5%, isincluded in the annual approved budget. The policy also establishes the approval required to use these budgetedreserves, and the method in which they are to be replenished. The first three reserves are classified as committedfund balance on the accompanying balance sheet of the General Fund. The fourth reserve (reserve for cashforward) is included within the unassigned fund balance classification.

6. ASSETS, DEFERRED OUTFLOWS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION

Cash, Cash Equivalents, Pooled Cash and Investments

The County considers cash and cash equivalents to be cash on hand, demand deposits, and highly liquidinvestments, including those held as restricted assets, with original maturities of three months or less when pur-


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chased. For purposes of the statement of cash flows, the County considers a fund’s share of pooled cash andinvestments to be cash equivalents.

The County pools substantially all cash and investments, except for cash and investments which are maintainedin accordance with legal restrictions. Each fund’s equity share of the total pooled cash and investments is includedunder the caption “Pooled Cash and Investments”. Interest earned is allocated to the various funds based on theiraverage daily cash balances within the pooled account.

The County’s investments are recorded at fair value unless the investment qualifies as an external investment poolunder the guidance of GASB, which allows under certain criteria these investments to be recorded at amortizedcosts. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. The method of measuring the fair value ofinvestments uses the fair value hierarchy as defined by GASB. See Note C. The Local Government SurplusFunds Trust Fund (Florida Prime) is an investment pool reported at amortized cost which approximates Net AssetValue (NAV). The Florida Cooperative Liquid Assets Securities System (FLCLASS) is reported at amortized costand measured at fair value. The Florida Trust reports all share information at NAV and reflects fair values in itsshare value.

Receivables and Payables

The accounts receivable of the County are recorded in the government-wide and fund financial statements, andare net of an allowance for uncollectibles, which generally is equivalent to the receivables that are over 90 days.

Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of thefiscal year are referred to as either “due to/from other funds” (i.e. the current portion of interfund loans) or “advancesto/from other funds” (i.e. the non-current portion of interfund loans). Any residual balances outstanding betweenthe governmental activities and business-type activities are reported in the government-wide financial statementsas “internal balances.”

Advances between funds, as reported in the fund financial statements, are offset by a non-spendable fund balanceaccount in applicable governmental funds to indicate that they are not available for appropriation and are notexpendable available financial resources.

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferredoutflows of resources. This separate financial statement element, deferred outflows of resources, represents aconsumption of net position that applies to a future period(s) and so will not be recognized as an outflow ofresources (expense/expenditure) until then. For the County, there are two items that qualify for reporting in thiscategory. One is a deferred charge on debt refunding. A deferred charge on debt refunding results from thedifference in the carrying value of refunded debt and its reacquisition price. The amount is deferred and amortizedover the shorter of the life of the refunded or refunding debt. The second item is related to pensions. The deferredoutflows related to pensions result from County contributions to the County's retirement plan subsequent to theretirement plan's measurement date, and other timing differences.


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In addition to liabilities, the statement of financial position will sometimes report a separate section for deferredinflows of resources. This separate financial statement element, deferred inflows of resources, represents anacquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources(revenue) until then. There are two items that qualify for reporting in this category. The first one, a deferred inflowrelated to pensions is the result of certain timing differences from the state retirement plan. The second one,reported in the Business-Type Funds, results from grants and other funds available after the revenue recognitionperiod.

The County also has a deferred inflow in the Balance Sheet of the Governmental Funds. This deferred inflow,unavailable revenue, consists of funds received/receivable by the County that are applicable to a future period.

Unbilled Revenue

Unbilled revenue in the Water and Sewer Fund generally represents revenue earned during the last month of thefiscal year for which bills are sent the following month. Revenue is recognized as Charges for Services when thecustomer has used the services provided by the County which is also considered to be when it is earned.

Unearned Revenue

Unearned revenue in the Water and Sewer Fund generally represents prepaid connection fees from developers.Such revenues are considered imposed non-exchange transactions. Revenue is recognized when the County hasan enforceable legal claim to such connection fees at which time it is reported as capital grants and contributions.The majority of unearned revenue in the governmental funds represents prepaid impact fees which are refundable.

Inventories and Prepaid Items

Inventories are determined by physical count and are valued at cost using the first-in, first-out method. The costis recorded as an expenditure using the consumption method at the time the individual inventory items are used.Certain payments to vendors represent costs applicable to future accounting periods and are recorded as prepaiditems in both the government-wide and fund financial statements. In most cases, the prepaid items are recordedas an expenditure using the consumption method at the time the prepaid items are received.

Restricted Assets

The use of certain Enterprise Fund assets is restricted by bond resolution and agreements with various parties.Assets so designated are identified as restricted assets on the Statement of Net Position.

Capital Assets

Capital assets, which include property (land), buildings, infrastructure assets (e.g. roads, bridges, sidewalks andsimilar items), improvements, equipment, construction in progress and intangible assets (e.g. software) arereported in the applicable governmental or business-type activities columns in the government-wide financialstatements as well as the proprietary fund financial statements.


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The County has established the following thresholds for additions to capital assets, and estimated useful lives fordepreciation purposes:

Threshold Useful Life-YearsLand $ - -Easements 150,000 -Right-of-Way 150,000 -Buildings 10,000 20-40Infrastructure 150,000 5-50Improvements-Other Than Buildings 10,000 20Improvements-Water/Sewer Lines 10,000 50General Asset Accounts 100,000 annually Based upon group characteristicsLeasehold Improvements 10,000 Life of lease or life of improvement

Whichever is shorterEquipment 1,000 5-10Intangible Assets 150,000 Per contractual provisions

Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donatedcapital assets are recorded at acquisition value at the date of donation. Interest incurred during the constructionphase of capital assets in business-type activities is included as part of the capitalized value of the assetsconstructed. Normal maintenance and repairs to capital assets are not included in the reported value becausethey do not increase the capacity or extend the useful life of the capital asset.

Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets.Depreciation is charged as an expense against the operations of the governmental and business-type activities inthe government-wide financial statements. Depreciation of assets in the proprietary funds is charged as anexpense at the fund level.

Compensated Absences

The County maintains a policy that permits employees to accumulate earned but unused paid time off benefits thatwill be paid to employees upon separation from County service based on years of service, and if certain criteriaare met. The County’s policy also permits employees to either bank a limited amount of paid time off benefits orreceive a limited cash buyout on an annual basis, depending on budget availability.

These benefits plus their related tax and retirement costs are classified as compensated absences. Both thecurrent and long-term portion of compensated absences are accrued and reported in the government-wide andproprietary fund financial statements. A liability is reported in governmental funds only if it has matured, forexample, as a result of employee resignations and retirements, and is considered due and payable at year-end.Compensated absences have typically been liquidated by the fund in which the employees’ salaries are charged,the most significant of these being General Fund, Transportation Trust and Gas Taxes, Hernando County FireRescue – Fire, and the Water and Sewer District.

Other Long-Term Obligations

In the government-wide financial statements and proprietary fund financial statements, discounts, premiums andbond insurance costs related to long-term debt, and gains/losses on bond refundings are deferred and amortized


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over the life of the bonds using the straight-line method of accounting. Discounts and premiums are combined withthe debt, and classified as a liability. Bond insurance is classified as an asset. Gains/losses are classified asdeferred inflows/outflows of resources. Discounts, premiums, bond insurance costs, and other issuance costsrelated to debt in the governmental fund financial statements are recorded as expenditures or other financingsources/uses when paid and therefore are not accounted for in subsequent periods.

State and federal laws and regulations require the Waste Management Division to place a final cover on the landfillcells when they stop accepting waste and to perform certain maintenance and monitoring functions at the site forthirty years after closure. Although closure and post-closure care costs will be paid only near or after the date thatthe landfill stops accepting waste, the Division accrues an estimated portion of these closure and post-closurecosts at the balance sheet date.

The County’s risk management activities are recorded in Internal Service Funds (Risk Management, Worker’sCompensation and Health Insurance). The Worker’s Compensation Fund is a self-insurance program for worker’scompensation claims on losses up to established maximums, and is insured against losses in excess of thoseamounts. Both the County Health Insurance and Sheriff Health Insurance are self-insurance funds for medicalhealth insurance claims up to established maximums, and are insured against losses in excess of those amounts.

Based on actuarial estimates, “Claims Liabilities” have been established in the Worker’s Compensation, CountyHealth Insurance and Sheriff Health Insurance Funds for claims reported but not paid, and incurred but notreported.

Long-term obligations associated with pensions, compensated absences and post-employment liabilities havetypically been liquidated by the fund in which the employees’ salaries are charged, the most significant of thesebeing General Fund, Transportation Trust and Gas Taxes, Hernando County Fire Rescue – Fire, and the Waterand Sewer District.

7. EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

During the year ended September 30, 2017, the County implemented the following Governmental AccountingStandards Board (GASB) Statements:

GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than PensionPlans. GASB 74 addresses changes in the accounting and financial reporting for governments utilizing atrust to fund their Other Post Employment Benefits (OPEB). Hernando County does not have a trust fortheir OPEB, and therefore GASB 74 has no significant impact to the County’s financial statements.

GASB Statement No. 77, Tax Abatement Disclosures. GASB 77 considers the impact on limitations ofrevenue-raising capacity resulting from government programs that use tax abatements to induce behaviorthat is beneficial to the government or its citizens, most often in the form of tax abatements to encourageeconomic development. The statement requires disclosure of tax abatement information about (1) areporting government’s own tax abatement agreements and (2) those that are entered into by othergovernments and that reduce the reporting government’s tax revenues. Although Hernando County andother governments that would impact the County’s tax revenues participate in economic developmentincentive activity, neither the County or the other governments participate in tax abatement that couldreduce the County’s tax revenues. For that reason, GASB 77 does not have a material impact to theCounty’s financial statements.


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GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit PensionPlans. GASB 78 establishes requirements for certain pensions that Hernando County does not participatein. For that reason, GASB 78 does not impact Hernando County’s financial statements.

GASB Statement No. 80, Blending Requirements for Certain Component Units. GASB 80 establishes anadditional blending requirement for the financial statement presentation of certain component units. Thisstatement does not impact Hernando County’s financial statements.

GASB Statement No. 82, Pension Issues. GASB 82 addresses how payroll-related measures arepresented in required supplementary information, guidance on assumptions used for financial reportingpurposes, and the classification of employee (plan member) contributions. The requirements of thisstatement were implemented.

NOTE B – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

1. BUDGETARY COMPARISONS

Only funds with legally adopted budgets are included when the budget to actual expenditures or revenues arecompared. The actual figures are presented on the same basis of accounting as the budgeted figures on thesestatements. Only actual expenditures are compared to budgeted expenditures since all encumbrances lapse atyear-end. All funds have legally adopted annual budgets for the fiscal year ended September 30, 2017.

2. EXCESS OF EXPENDITURES OVER APPROPRIATIONS

For the year ended September 30, 2017, the following funds had an excess of actual expenditures over budgetedexpenditures. Only those funds with legally adopted budgets are considered for purposes of this note.

BudgetedExpenditures

ActualExpenditures

Capital Improvement and Refunding Revenue Bonds 2004 $ 952,363 $ 952,524Non-Ad Valorem Refunding Revenue Bonds 2010 442,444 442,529

$ 1,394,807 $ 1,395,053

3. DEFICIT FUND BALANCES/NET POSITION

For the year ended September 30, 2017, the following fund had a deficit fund balance:Hernando County Fire Rescue-Fire $ 468,350

Measures including a new revenue source, an MSTU, have been put into place to remedy this.

NOTE C – CASH AND INVESTMENTS

In order to minimize its cost basis and limit taxpayer liability in the provision of a full range of county services, theCounty manages a portfolio of cash and investments to maximize net investment earnings on invested surplusfunds. The Board of County Commissioners and Constitutional Officers each maintain an approved investmentpolicy in compliance with guidelines and restrictions established by Florida Statutes. The primary objective of the


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NOTE C – CASH AND INVESTMENTS (CONTINUED)

investment policy is to assure that investment risk is limited upon order entry. The second criterion is the assuranceof liquidity and the third consideration is yield.

The County is authorized to invest surplus public funds in the following:

The Local Government Surplus Funds Trust Fund, Florida Prime;The Florida Local Government Investment Trust, Florida Trust;Direct obligations of the United States Treasury;Federal agencies and instrumentalities;Certain obligations issued or guaranteed by the United States Government Agencies;Certain Supranationals;Certain Mortgage Backed Securities;Certain Interest-bearing time deposits or savings accounts in qualified public depositories;Certain Registered money market funds;Certain commercial paper which is rated as prime by at least two nationally recognized statistical ratingorganizations;Certain Domestic Bankers’ Acceptances;Certain Municipal Debt General Obligation securities;Certain Corporate Notes which are rated A or better by at least two nationally recognized statistical ratingorganizations;Certain Asset Backed Securities;Other Intergovernmental Investment Pools.

The following is a summary of the carrying amount of cash, investments and cash held with fiscal agent as ofSeptember 30, 2017:

GovernmentalActivities

Business-TypeActivities

Statement ofFiduciary Net

Position TotalCash and CashEquivalents $ 8,050,080 $ 201,375 $ 2,253,763 $ 10,505,218

Pooled Cash andInvestments 104,156,672 77,808,258 7,772,151 189,737,081

Cash with FiscalAgent 5,541,910 1,546,646 - 7,088,556

Total $ 117,748,662 $ 79,556,279 $ 10,025,914 $ 207,330,855

The County had the following deposits, investments and cash held with fiscal agent at September 30, 2017:

Deposits $ 37,365,045Cash with Fiscal Agent 7,088,556Carrying Amount of Investments 162,877,254

Total $ 207,330,855


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DEPOSITS

Deposits represent petty cash and cash held with banks in demand deposit and/or savings accounts. To managecustodial credit risk for deposits, all demand and time deposits, including money market accounts, are insured andcollateralized in accordance with Chapter 280, Florida Statutes, which established the Public Deposit SecurityTrust Fund, a multiple financial institution collateral pool. Florida Statutes Section 280.08 provides for assessments

against the members of the pool on a pro rata basis in the event that the collateral pool is insufficient to cover thelosses of a member financial institution that fails. As such, all deposits covered by this collateral pool areconsidered to be fully insured.

CASH WITH FISCAL AGENT

At fiscal year end, the County had the following funds held by a fiscal agent for the County:

Sheriff Health Insurance Fund $ 5,052,936Transportation Trust Fund 352,450Impact Fees Capital Projects Fund 136,524Water & Sewer District 1,546,646

$ 7,088,556

The Insurance Fund is held by a third-party administrator for the purpose of managing claims. The other funds areheld by the State in conjunction with a joint transportation and utility relocation project.


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INVESTMENTS

At September 30, 2017, the County’s investments consisted of the following:

MaturitiesType of Investment Par Value Fair Value 1-3 years 1-5 years

United States Treasuries $ 86,880,000 $ 87,373,107 $ 34,858,344 $ 52,514,763Federal Home Loan Bank 5,900,000 5,911,463 5,911,463 -Federal Home LoanMortgage Corporation 10,487,587 10,591,103 7,028,537 3,562,566Federal National MortgageAssociation 7,296,927 7,334,279 3,498,706 3,835,573Federal Farm Credit Bank 1,000,000 1,001,718 1,001,718 -Money Market Fund 1,422,899 1,428,826 1,395,080 33,746Corporate Notes 7,860,000 9,180,652 4,238,587 4,942,065Municipal Notes 1,325,000 1,329,297 - 1,329,297Local Government SurplusFunds Trust Fund, (FloridaPrime) 6,500,000 6,551,985 6,551,985 -Florida Local GovernmentInvestment Trust (FloridaTrust) 28,402,208 28,402,208 28,402,208 -Florida Cooperative LiquidAssets Securities System(FLCLASS) 3,750,000 3,772,616 3,772,616 -

$ 160,824,621 $ 162,877,254 $ 96,659,244 $ 66,218,010

The County participates in Securities Exchange Commission Registered Money Market Funds. Money MarketFunds use amortized cost which is reported at a stable NAV, typically $1.00 per share. The money market fundsare rated AAAm for Credit Quality by Standard & Poor’s Rating Agency.

The County also participates in the following investment pools:

The State of Florida Local Government Surplus Funds Trust Fund (Florida Prime) administered by the State Boardof Administration (SBA). This investment pool was created by Section 218.415, Florida Statutes, and operatesunder investment guidelines established by Section 215.47, Florida Statues. The County’s investments in this poolare reported at amortized cost, and are not subject to the fair value hierarchy.

The Florida Local Government Investment Trust (Florida Trust), which is administered by a Board of Trusteesappointed by the Florida Association of Court Clerks and Comptrollers, and the Florida Association of Counties,Inc. The Florida Trust was created in 1992 to provide a means for public entities to pool surplus funds to maintainsafety of principal and maximize available yield. The Florida Trust reports all share information at Net Asset Valueand reflects share value.


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The Florida Cooperative Liquid Assets Securities System (FLCLASS), an independent local governmentinvestment pool designed to provide a safe and competitive investment alternative for Florida governmentalentities. The management of FLCLASS is under the direction of an appointed Board of Trustees comprised ofeligible participants of the FLCLASS program. FLCLASS does not meet all of the specific criteria outlined in GASB79, paragraph 4, and should therefore be measured at fair value, but reports using amortized cost whichapproximates fair value.

None of the pools have limitations or restrictions on participant withdrawals including items such as redemptionnotices, maximum transaction amounts, or authority to impose liquidity fees or redemption gates.

At September 30, 2017, the County’s investments carried the following Credit Rating and Fair Value Hierarchy:

Type of Investment Credit RatingS&P's/Moody's

Fair ValueHierarchy

United States Treasuries AA+/Aaa 2

Federal Home Loan Bank AA+/Aaa 2Federal Home Loan MortgageCorporation AA+/Aaa 2Federal National MortgageAssociation AA+/Aaa 2Federal Farm Credit Bank AA+/Aaa 2Money Market Fund AAAm/Aaa 1

Corporate Notes A+ to AAA/A1 to Aaa 2

Municipal Notes AA to AAA/Aa1 2Local Government Surplus FundsTrust Fund, (Florida Prime) AAAm/NA NAFlorida Local GovernmentInvestment Trust (Florida Trust) AAAf/NA 1Florida Cooperative Liquid AssetsSecurities System (FLCLASS) AAAm/NA 1

GASB Statement No. 72, Fair Value Measurement and Application, sets forth the framework for measuring fairvalue. The County’s investments are recorded at fair value unless the investment qualifies as an externalinvestment pool under the guidance in GASB Statement No. 79. The County’s valuation measurement is reflectedin the chart above. The fair value hierarchy categorizes the inputs of valuation techniques used to measure fairvalue into three levels. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priorityto Level 3 inputs. If a price for an identical asset or liability is not observable, a government should measure fair

value using another valuation technique that maximizes the use of relevant observable inputs and minimizes theuse of unobservable inputs.


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The County’s valuation measurement levels are reflected in the chart above.

Level 1 inputs: quoted prices (unadjusted) for identical assets or liabilities in active markets that agovernment can access at the measurement date.

Level 2 inputs: quoted prices for similar, but not identical, assets or liabilities in active markets, includingmatrix pricing technique; quoted prices for identical or similar assets or liabilities in markets that are notactive; certain inputs other than quoted prices that are observable for the asset or liability.

Level 3 inputs: unobservable inputs for an asset or liability.

Management of the following investment risks are addressed below:

Custodial credit risk – risk that a government will not be able to recover deposits or the value of an investmentthat’s in the possession of a failed institution or counterparty;Credit risk – risk of loss from an issuer’s failure to repay principal and/or interest on a debt obligation;Liquidity risk – risk that an investment cannot be bought or sold quickly enough to minimize a loss stemmingfrom a lack of marketability;Concentration of investment risk – increasing probability of loss arising from heavily lopsided exposure to anasset class, issuer, structure or maturity;Interest rate risk – risk that a security’s value will decrease with a rise in interest rates.

To manage custodial credit risk for investments, the County’s investment policy specifies the County will executea Third-Party Custodial Safekeeping Agreement with a commercial bank’s trust department separately charteredby the U.S. Government or State of Florida. In addition, no more than 25% of the entire portfolio may be placedwith any one financial institution or securities dealer. All securities purchased by the County are properlydesignated as an asset of the County and are held in safekeeping by the bank’s trust department.

To manage credit risk, the County’s investment policy identifies and limits investments to only top ratings issuedby nationally recognized statistical rating organizations. At order entry, the County’s investments in Federal FarmCredit Bank, Federal Home Loan Bank, Federal Home Loan Mortgage Corporation and Federal National MortgageAssociation were rated Aaa by Moody’s Investor Service. At order entry, the County’s investments in corporateand municipal notes were rated A or better.

To manage liquidity risk, the County’s investment policy identifies and limits investment to only top ratings issuedby nationally recognized statistical rating organizations. In order to ensure deep liquid markets, the County’sinvestment policy identifies and limits investment in corporate notes to domestic issuers. Position size is also takeninto consideration with regard to liquidity risk.

To manage concentration of investment risk, the County’s investment policy stipulates maximum limitationguidelines for diversification by instrument. A maximum of 50% of the portfolio may be invested in each of theFlorida Trust and Local Government Surplus Funds Trust Fund (Florida Prime) individually. Investment maximumlimitations range from 10% to 80% for each of the remaining types of investments. More than 5% of the County’stotal investments are invested in US Treasuries, Federal Home Loan Mortgage Corporation, and Corporate Notes.


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To manage interest rate risk, the County maintains a formal investment policy that limits investment maturities notto exceed seven (7) years. The County maintains and reports interest rate risk using the segmented timedistribution method. This coupled with a diversified portfolio of differing maturities that employ callable, floating,and structured securities limits exposure to fair value losses arising from interest rate risk.

NOTE D – RECEIVABLES

Accounts receivable at September 30, 2017, for the County’s individual major funds and non-major funds in total,including applicable allowances for uncollectibles were as follows:

AccountsReceivable,

Gross

Allowancefor

UncollectibleAccounts

AccountsReceivable,

Net

General Fund $ 1,419,227 $ 871,766 $ 547,461Transportation Trust and Gas Taxes 243,898 206,346 37,552Hernando County Fire Rescue -Fire 120,590 115,213 5,377Water and Sewer District 4,458,806 189,000 4,269,806Aviation Operations 198,011 145,000 53,011Waste Management 479,089 4,262 474,827Business Development 18,600 18,530 70Non-major government funds 18,946,933 15,792,569 3,154,364Internal Service Funds 87,849 - 87,849

Total $ 25,973,003 $ 17,342,686 $ 8,630,317

Included in accounts receivable in the Water and Sewer District are unbilled amounts totaling $1,837,550 earnedin September 2017, but billed in October 2017.

The County’s State Housing Initiatives Partnership (SHIP) program offers zero-interest rate loans for housingrehabilitation or down payment assistance to qualified recipients. Generally, the loans are required to be repaid atthe earlier of thirty years or sale/transfer of the property. The County has recorded the gross amount of thereceivable as an asset of $14 million, offset entirely by an allowance for uncollectible receivables.


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NOTE D – RECEIVABLES (CONTINUED)

Due from Other Governments at September 30, 2017, for the County’s individual major funds and non-major fundswere as follows:

Due fromGrantors

Due fromState Other Total

General Fund $ 1,979,451 $ 1,749,812 $ 64,426 $ 3,793,689Transportation Trust and GasTaxes 449,709 1,849,471 29,589 2,328,769Impact Fees Capital Project Fund - - 644 644Hernando County Fire Rescue-Fire 13,303 - - 13,303Water and Sewer District 683,784 20,601 390,573 1,094,958Aviation Operations 60,869 335,167 - 396,036Waste Management 25,548 - - 25,548Non-major governmental funds 399,703 317,829 20,163 737,695Internal Service Funds - - 3,714 3,714

Total $ 3,612,367 $ 4,272,880 $ 509,109 $ 8,394,356

NOTE E – RESTRICTED ASSETS

As of September 30, 2017, restricted assets were held for the following purposes:

Cash withFiscal Agent

Pooled Cashand

Investmentsand Other

Investments Total

Debt Service Funds $ - $ 23,638 $ 23,638

Water and Sewer DistrictConstruction $ 1,546,646 $ 10,312,137 $ 11,858,783Debt Retirement - 1,027,491 1,027,491Renewal and Replacement - 5,717,652 5,717,652

Total Water and Sewer District 1,546,646 17,057,280 18,603,926Waste Management

Landfill Closure/Post-closure - 7,728,248 7,728,248Total Waste Management - 7,728,248 7,728,248

Total Business-Type Activities $ 1,546,646 $ 24,785,528 $ 26,332,174


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NOTE F – CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2017, was as follows:

BeginningBalance Increases Decreases

EndingBalance

Governmental activities:Capital assets, not being depreciated:

Land $ 29,338,729 $ 692,355 $ 198,763 $ 29,832,321Construction in Progress 496,573 1,649,702 1,373,839 772,436

Total capital assets, not being depreciated 29,835,302 2,342,057 1,572,602 30,604,757

Capital assets, being depreciated:Buildings 136,078,267 - 162,037 135,916,230Infrastructure 277,587,040 6,306,382 - 283,893,422Improvements other than buildings 28,495,343 1,483,767 - 29,979,110Equipment 67,140,421 8,017,101 6,089,277 69,068,245Software 1,546,022 - 6,000 1,540,022

Total capital assets being depreciated 510,847,093 15,807,250 6,257,314 520,397,029

Less accumulated depreciation for:Buildings 47,955,915 3,518,955 134,018 51,340,852Infrastructure 88,808,694 7,880,117 - 96,688,811Improvements other than buildings 17,170,953 1,078,147 - 18,249,100Equipment 46,557,048 6,135,061 5,860,666 46,831,443Software 885,047 108,015 6,000 987,062

Total accumulated depreciation 201,377,657 18,720,295 6,000,684 214,097,268

Total capital assets, being depreciated,net 309,469,436 (2,913,045) 256,630 306,299,761

Capital assets, net $ 339,304,738 $ (570,988) $ 1,829,232 $ 336,904,518


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NOTE F – CAPITAL ASSETS (CONTINUED)

BeginningBalance Increases Decreases

EndingBalance

Business-type activities:Capital assets, not being depreciated:

Land $ 10,200,561 $ 126,214 $ - $ 10,326,775Construction in Progress 51,416,874 4,939,883 51,143,470 5,213,287

Total capital assets, not beingdepreciated 61,617,435 5,066,097 51,143,470 15,540,062

Capital assets, being depreciated:Buildings 19,837,919 3,874,560 - 23,712,479Infrastructure 2,652,910 682,558 - 3,335,468Improvements other than buildings 328,653,082 45,027,127 - 373,680,209Equipment 8,407,897 2,020,315 496,150 9,933,990

Total capital assets being depreciated 359,551,808 51,604,560 496,150 410,662,146

Less accumulated depreciation for:Buildings 4,707,647 748,231 - 5,455,878Infrastructure 468,719 82,427 - 551,146Improvements other than buildings 143,868,887 9,932,855 - 153,801,742Equipment 5,426,661 764,460 483,639 5,709,410

Total accumulated depreciation 154,471,914 11,527,973 483,639 165,518,176

Total capital assets, beingdepreciated, net 205,079,894 40,076,587 12,511 245,143,970

Capital assets, net $ 266,697,329 $ 45,142,684 $ 51,155,981 $ 260,684,032

Depreciation expense was charged to functions as follows:

Governmental ActivitiesGeneral Government $ 4,461,071Public Safety 3,034,642Physical Environment 134,051Transportation 8,489,131Economic Environment 32,398Human Services 1,720,794Culture and Recreation 686,933Court Operations 161,275

Total Depreciation for Governmental Activities $ 18,720,295

Business-Type ActivitiesWater and Sewer District $ 9,315,664Aviation Operations 1,063,644Waste Management 1,097,505Building Department 51,160

Total Depreciation for Business-Type Activities $ 11,527,973


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NOTE F – CAPITAL ASSETS (CONTINUED)

Interest incurred during the period of construction and preparation for use of business-type assets constructed iscapitalized as part of those assets. During the year ended September 30, 2017, interest costs incurred totaled$3,790,057 for the Water and Sewer District and $68,998 for the Aviation Operations, of which $81,931 wascapitalized as an asset of the Water and Sewer District.

Construction or capital improvement commitments outstanding as measured by purchase orders and contractsoutstanding at September 30, 2017 were as follows:

ConstructionCommitmentsOutstanding

General Fund $ 845,587Transportation Trust and Gas Taxes 3,148,166Impact Fees Capital Project Fund 16,726Non-major governmental funds:

Stormwater Management 671,643Capital Project Fund 46,215Court-Related Funds 21,275Municipal Service Benefit Units 29,049Hernando County Fire Rescue-Rescue 2,880Miscellaneous Special Revenue Funds 12,000

Water and Sewer District 469,110Aviation Operations 1,729,035Waste Management 450,792Internal service funds:

Fleet Replacement 3,658,452Total $ 11,100,930


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NOTE G – INTERFUND TRANSACTIONS

1. DUE TO / DUE FROM OTHER FUNDS

Interfund balances at September 30, 2017 were as follows:Interfund

ReceivableInterfundPayable

General FundTransportation Trust and Gas Taxes $ - $ 82,881Hernando County Fire Rescue-Fire - 270,767Non-major governmental funds 129,203 118,004Water and Sewer District - 66,796

Total General Fund 129,203 538,448

Transportation Trust and Gas TaxesGeneral Fund 83,246 -Non-major governmental funds 4,000 -

Total Transportation Trust and Gas Taxes 87,246 -

Hernando County Fire Rescue-FireGeneral Fund 270,767 -

Non-major governmental fundsGeneral Fund 118,004 129,203Transportation Trust and Gas Taxes - 365Non-major governmental funds 459 4,459Water and Sewer District - 350,919

Total Non-major governmental funds 118,463 484,946

Water and Sewer DistrictNon-major governmental funds 350,919 -

Waste Management FundGeneral Fund 66,796 -

Total Due To/Due From Other Funds $ 1,023,394 $ 1,023,394

The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goodsand services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accountingsystem, and (3) payments between funds are made. The outstanding balances generally are the result of onefund providing services to another fund.


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NOTE G – INTERFUND TRANSACTIONS (CONTINUED)

2. ADVANCES TO / ADVANCES FROM OTHER FUNDS

Individual interfund advances were as follows:

Advances toOther Funds

Advancesfrom Other

Funds

General Fund $ 7,236,574 $ -

Hernando County Fire Rescue-FireThe General Fund advanced $7,000,000 at 2.5% interest, - 6,786,574to Hernando County Fire Rescue-Fire to cover a shortfallin funds needed for operations. Final reimbursement isscheduled for fiscal year 2021.

Special Revenue FundsMiscellaneous Special Revenue Funds - 450,000

The General Fund advanced $450,000 at 0% interest, toestablish a separate fund within Miscellaneous SpecialRevenue funds for the Hernando/Citrus MetropolitanPlanning Organization. A date for final reimbursement hasnot been determined.

Total Advances To/Advances From Other Funds $ 7,236,574 $ 7,236,574


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3. INTERFUND TRANSFERS

Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fundthat statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collectingthe receipts to the debt service fund as debt service payments become due and (3) use unrestricted revenuescollected in the General Fund to finance various programs accounted for in other funds in accordance withbudgetary authorizations.

Transfers In Transfers OutGeneral Fund

Transportation Trust and Gas Taxes $ 452,933 $ 95,464Hernando County Fire Rescue-Fire - 270,767Non-major governmental funds 114,203 4,287,143Waste Management - 66,796Internal Service Funds - 479,808

Total General Fund 567,136 5,199,978

Transportation Trust and Gas TaxesGeneral Fund 82,881 452,933Non-major governmental funds 2,205,970 122,985Internal Service Funds - 134,093

Total Transportation Trust 2,288,851 710,011

Impact Fees Capital Project FundNon-major governmental funds - 485,837

Hernando County Fire Rescue-FireGeneral Fund 270,767 -Non-major governmental funds - 67,425Internal Service Funds - 232,391

Total Hernando County Fire Rescue-Fire 270,767 299,816

Non-major governmental fundsGeneral Fund 258,004 114,203Transportation Trust and Gas Taxes 3,114,514 2,205,971Impact Fees Capital Project Fund - 3,080,000Hernando County Fire Rescue-Fire - -Non-major governmental funds 7,563,928 2,792,001Water and Sewer District - 9,275Internal Service Funds - 164,383

Total Non-major governmental funds 10,936,446 8,365,833

Water and Sewer DistrictNon-major governmental funds 9,275 -Aviation Operations 72,200 -Internal Service Funds - 197,864

Total Water and Sewer District 81,475 197,864

Aviation OperationsWater & Sewer District 72,200Internal Service Funds - 7,527

Total Aviation Operations - 79,727


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Transfers In Transfers Out

Waste Management FundGeneral Fund $ 66,796 $ -Internal Service Funds - 49,206

Total Waste Management Fund 66,796 49,206

Building DepartmentInternal Service Funds - 38,332

Internal Service FundsGeneral Fund 479,808 -Transportation Trust and Gas Taxes 134,093 -Hernando County Fire Rescue-Fire 232,391 -Non-major governmental funds 164,383 88,471Water and Sewer District 197,864 -Aviation Operations 7,527 -Waste Management 49,206 -Building Department 38,332 -Internal Service Funds 21,258 21,258

Total Internal Service Funds 1,324,862 109,729

Total Interfund Transfers $ 15,536,333 $ 15,536,333


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NOTE H – LONG-TERM LIABILITIES

The following is a summary of changes in long-term liabilities:


EndingBalance

DueWithin

One YearGovernmental Activities

Bonds Payable $ 3,950,000 $ - $ 1,270,000 $ 2,680,000 $ 345,000Net Bond Premium 14,083 - 2,643 11,440 1,546

Total Bonds Payable 3,964,083 - 1,272,643 2,691,440 346,546Loans & Notes Payable 29,852,217 3,568,127 3,007,728 30,412,616 4,093,897Compensated Absences 7,553,475 6,550,306 6,215,370 7,888,411 6,668,627

Other Post EmploymentBenefits 9,057,923 1,149,434 - 10,207,357 -

Net Pension Liability 114,033,132 10,454,916 - 124,488,048 -Claims Liabilities 3,582,042 13,341,352 12,992,088 3,931,306 3,281,306

Total $ 168,042,872 $ 35,064,135 $ 23,487,827 $ 179,619,180 $ 14,390,376


EndingBalance

DueWithin

One YearBusiness-Type Activities

Bonds Payable $ 32,804,950 $ - $ 2,305,000 $ 30,499,950 $ 2,385,000Net Bond Premium 3,143,740 - 178,783 2,964,957 178,783

Total Bonds Payable 35,948,690 - 2,483,783 33,464,907 2,563,783Loans & Notes Payable 57,738,795 1,560,618 1,344,828 57,954,585 2,907,198Compensated Absences 794,146 734,550 704,923 823,773 749,634

Other Post EmploymentBenefits 856,767 98,594 - 955,361 -

Net Pension Liability 7,917,107 811,423 - 8,728,530 -

LandfillClosure/Postclosure 4,355,651 950,041 - 5,305,692 -

Total $ 107,611,156 $ 4,155,226 $ 4,533,534 $ 107,232,848 $ 6,220,615


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NOTE H – LONG-TERM LIABILITIES (CONTINUED)

See Note I for a discussion of the Net Pension Liability. See Note J for a discussion of the liability for Other Post-Employment Benefits. See Note M for a discussion of the liability for Claims Liabilities. See Note N for a discussionof the liability for landfill closure/postclosure.

1. LOANS & NOTES PAYABLE

Summary of Loans & Notes Payable



Non-revolving Lines of Credit $ 9,480,616 $ 1,664,958State Revolving Loans - 56,289,627Other Loans and Notes 20,932,000 -

Total $ 30,412,616 $ 57,954,585

Governmental Activities-Governmental Funds

The following are summaries of Non-Revolving Lines of Credit at September 30, 2017:

Non-revolving line of credit dated October 22, 2008 with a bank for$4,000,000 to be used to finance improvement projects. The minimumdraw for a project is $50,000 and the resulting note is to be amortized over3, 5, 7 or 10 years, as determined at the time of the draw. Payment ofprincipal and interest on these notes is to be made from specialassessments levied and collected for the project. As of year-end thefollowing notes had been executed under this agreement:

Desert Sparrow Paving. Applicable rate of interest: 4.76%. Averageannual principal payments of $12,937 due until May 1, 2018. Interest ispaid semi-annually May 1 and November 1. $ 12,350

Bahama Swallow Paving. Applicable rate of interest: 4.76%. Averageannual principal payments of $13,051 due until May 1, 2018. Interest ispaid semi-annually May 1 and November 1. 12,458

Eskimo Curlew Paving. Applicable rate of interest: 4.76%. Averageannual principal payments of $8,711 due until May 1, 2018. Interest is paidsemi-annually May 1 and November 1. 8,315

Flock Avenue Paving. Applicable rate of interest: 4.04%. Average annualprincipal payments of $10,140 due until May 1, 2019. Interest is paid semi-annually May 1 and November 1. 19,114

Olson Road Paving. Applicable rate of interest: 4.04%. Average annualprincipal payments of $11,097 due until May 1, 2019. Interest is paid semi-annually May 1 and November 1. 20,919

Osprey Avenue Paving. Applicable rate of interest: 4.04%. Averageannual principal payments of $6,402 due until November 1, 2019. Interestis paid semi-annually May 1 and November 1. 12,068


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Dotted Wren Paving. Applicable rate of interest: 3.41%. Average annualprincipal payments of $4,667 due until May 1, 2021. Interest is paid semi-annually May 1 and November 1. $ 16,695

Mountain Mockingbird/Marvista Court Paving. Applicable rate of interest:3.41%. Average annual principal payments of $5,993 due until May 1,2021. Interest is paid semi-annually May 1 and November 1. 21,439

Golden Avenue Paving. Applicable rate of interest: 3.41%. Averageannual principal payments of $2,451 due until May 1, 2021. Interest is paidsemi-annually May 1 and November 1. 8,766

Owl Road Paving. Applicable rate of interest: 3.41%. Average annualprincipal payments of $8,504 due until May 1, 2021. Interest is paid semi-annually May 1 and November 1. 30,418

Croft Lane Paving. Applicable rate of interest: 3.41%. Average annualprincipal payments of $2,661 due until May 1, 2021. Interest is paid semi-annually May 1 and November 1. 9,517

Nuzum Paving. Applicable rate of interest: 3.41%. Average annualprincipal payments of $11,391 due until May 1, 2021. Interest is paid semi-annually May 1 and November 1. 40,747

$ 212,806

Non-revolving line of credit dated November 13, 2012 with a bank for$7,500,000 to be used to finance improvement projects. The minimumdraw for a project is $50,000 and the resulting note is to be amortized over3, 5, 7 or 10 years, as determined at the time of the draw. Payment ofprincipal and interest on these notes is to be made from specialassessments levied and collected for the project. As of year-end thefollowing notes had been executed under this agreement:

English Sparrow Paving. Applicable rate of interest: 1.81%. Averageannual principal payments of $5,463 due until May 1, 2023. Interest is paidsemi-annually May 1 and November 1. $ 28,937

Flock West Paving. Applicable rate of interest: 1.81%. Average annualprincipal payments of $1,252 due until May 1, 2023. Interest is paid semi-annually May 1 and November 1. 6,632

Flatwood Paving. Applicable rate of interest: 1.81%. Average annualprincipal payments of $5,680 due until May 1, 2023. Interest is paid semi-annually May 1 and November 1. 30,084

Lomita Wren Paving. Applicable rate of interest: 1.81%. Average annualprincipal payments of $2,885 due until May 1, 2023. Interest is paid semi-annually May 1 and November 1. 15,282

Marvelwood Paving. Applicable rate of interest: 1.81%. Average annualprincipal payments of $13,610 due until May 1, 2023. Interest is paid semi-annually May 1 and November 1. 72,087


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Phillips Paving. Applicable rate of interest: 1.81%. Average annualprincipal payments of $7,923 due until May 1, 2023. Interest is paid semi-annually May 1 and November 1. $ 41,963

Flicker Road Paving. Applicable rate of interest: 2.55%. Average annualprincipal payments of $4,081 due until May 1, 2023. Interest is paid semi-annually May 1 and November 1. 21,963

State Road Canal Dredge. Applicable rate of interest: 2.55%. Averageannual principal payments of $11,757 due until May 1, 2023. Interest ispaid semi-annually May 1 and November 1. 63,280

Hernando County Fire Rescue District Fire Engine. Applicable rate ofinterest: 1.81%. Average annual principal payments of $75,163 due untilMay 1, 2018. Interest is paid semi-annually May 1 and November 1. 72,902

County Radio System Upgrade. Applicable rate of interest: 1.91%.Average annual principal payments of $422,965 due until May 1, 2023.Interest is paid semi-annually May 1 and November 1. 2,333,598

Hernando Beach Volunteer Fire Department Fire Engine. Applicable rateof interest: 2.29%. Average annual principal payment of $46,809 due untilMay 1, 2023. Interest is paid semi-annually May 1 and November 1. 269,935

$ 2,956,663

Non-revolving line of credit dated August 4, 2014 with a bank for$10,000,000 to be used to finance improvement projects. The minimumdraw for a project is $50,000 and the resulting note is to be amortized over3, 5, 7, 10 or 15 years, as determined at the time of the draw. Payment ofprincipal and interest on these notes is secured by covenant to budget andappropriate legally available non-ad valorem revenues or specialassessments levied and collected for the project. As of year-end thefollowing notes had been executed under this agreement:

Courthouse Energy Performance Study. Applicable rate of interest: 2.8%.Average annual principal payment of $62,848 due until May 1, 2029.Interest is paid semi-annually May 1 and November 1. $ 633,126

Phillips East Paving. Applicable rate of interest: 2.51%. Average annualprincipal payments of $8,808 due until May 1, 2024. Interest is paid semi-annually May 1 and November 1. 75,380

Puffin Paving. Applicable rate of interest: 2.51%. Average annual principalpayments of $1,296 due until May 1, 2024. Interest is paid semi-annuallyMay 1 and November 1. 11,091

Grass Finch Paving. Applicable rate of interest: 2.51%. Average annualprincipal payments of $3,181 due until May 1, 2024. Interest is paid semi-annually May 1 and November 1. 27,223

Harris Hawk Paving. Applicable rate of interest: 2.51%. Average annualprincipal payments of $9,500 due until May 1, 2024. Interest is paid semi-annually May 1 and November 1. 81,304


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Royal Highlands Area A Paving. Applicable rate of interest: 2.53%.Average annual principal payments of $12,361 due until May 1, 2024.Interest is paid semi-annually May 1 and November 1. $ 78,399

Ostrom/Allen Paving. Applicable rate of interest: 2.53%. Average annualprincipal payments of $4,588 due until May 1, 2024. Interest is paid semi-annually May 1 and November 1. 29,100

Benes Roush Paving. Applicable rate of interest: 2.53%. Average annualprincipal payments of $3,604 due until May 1, 2024. Interest is paid semi-annually May 1 and November 1. 22,863

Eider Paving. Applicable rate of interest: 2.53%. Average annual principalpayments of $2,914 due until May 1, 2024. Interest is paid semi-annuallyMay 1 and November 1. 18,484

Helene Paving. Applicable rate of interest: 2.53%. Average annualprincipal payments of $6,025 due until May 1, 2024. Interest is paid semi-annually May 1 and November 1. 38,213

Hancock Lake Paving. Applicable rate of interest: 2.44%. Average annualprincipal payments of $14,079 due until May 1, 2025. Interest is paid semi-annually May 1 and November 1. 101,227

Crum Paving. Applicable rate of interest: 2.44%. Average annual principalpayments of $8,529 due until May 1, 2025. Interest is paid semi-annuallyMay 1 and November 1. 61,324

Hernando County Fire Department Fire Engine. Applicable rate of interest:2.52%. Average annual principal payment of $147,080 due until May 1,2025. Interest is paid semi-annually May 1 and November 1. 1,053,685

Hernando County Fire Department Emergency Services Equipment.Applicable rate of interest: 2.52%. Average annual principal payment of$42,265 due until May 1, 2025. Interest is paid semi-annually May 1 andNovember 1. 302,791

$ 2,534,210Non-revolving line of credit dated October 22, 2015 with a bank for$15,000,000 to be used to finance improvement projects. The minimumdraw for a project is $50,000 and the resulting note is to be amortized over3, 5, 7, 10 or 15 years, as determined at the time of the draw. Payment ofprincipal and interest on these notes is secured by covenant to budget andappropriate legally available non-ad valorem revenues or specialassessments levied and collected for the project. As of year-end thefollowing notes had been executed under this agreement:

Royal Highlands Area C Paving. Applicable rate of interest: 2.73%.Average annual principal payments of $46,817 due until May 1, 2025.Interest is paid semi-annually May 1 and November 1. $ 332,416


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Royal Highlands Area E Paving. Applicable rate of interest: 2.73%.Average annual principal payments of $27,923 due until May 1, 2025.Interest is paid semi-annually May 1 and November 1. $ 198,260

Royal Highlands Area F Paving. Applicable rate of interest: 2.73%.Average annual principal payments of $11,372 due until May 1, 2025.Interest is paid semi-annually May 1 and November 1. 80,746

Royal Highlands Area G Paving. Applicable rate of interest: 2.34%.Average annual principal payments of $34,880 due until May 1, 2026.Interest is paid semi-annually May 1 and November 1. 314,030

Royal Highlands Area B Paving. Applicable rate of interest: 2.34%.Average annual principal payments of $15,372 due until May 1, 2026.Interest is paid semi-annually May 1 and November 1. 1,383,919

Golden Warbler Paving. Applicable rate of interest: 2.34%. Averageannual principal payments of $4,690 due until May 1, 2026. Interest is paidsemi-annually May 1 and November 1. 42,225

Paramount Area Paving. Applicable rate of interest: 2.34%. Averageannual principal payments of $7,309 due until May 1, 2026. Interest is paidsemi-annually May 1 and November 1. 65,800

Pine Warbler Paving. Applicable rate of interest: 2.81%. Average annualprincipal payments of $14,095 due until May 1, 2027. Interest is paid semi-annually May 1 and November 1. 122,362

Mexican Canary Paving. Applicable rate of interest: 2.81%. Averageannual principal payments of $9,308 due until May 1, 2027. Interest is paidsemi-annually May 1 and November 1. 80,799

Godwit Paving. Applicable rate of interest: 2.81%. Average annualprincipal payments of $6,872 due until May 1, 2027. Interest is paid semi-annually May 1 and November 1. 59,827

Pelican Paving. Applicable rate of interest: 2.81%. Average annualprincipal payments of $5,225 due until May 1, 2027. Interest is paid semi-annually May 1 and November 1. 45,361

Furley Paving. Applicable rate of interest: 2.81%. Average annualprincipal payments of $6,243 due until May 1, 2027. Interest is paid semi-annually May 1 and November 1. 54,196

$ 2,779,941Total $ 8,483,620


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The following is a summary of other loans at September 30, 2017:

Non-Ad Valorem Refunding Revenue Note, Series 2012 dated November13, 2012 with a bank for $24,430,000 to be used to refinance CapitalImprovement and Refunding Bonds, Series 2002 and a portion of CapitalImprovement and Refunding Bonds, Series 2004. Payment of principaland interest on these notes is secured by covenant to budget andappropriate legally available non-ad valorem revenues.

Applicable rate of interest: 2.572%. Average annual principal payments of$1,987,624 due until February 1, 2028. Interest is paid semi-annuallyFebruary 1 and August 1. $ 20,932,000

Total $ 29,415,620

Governmental Activities-Internal Service Funds

Non-revolving line of credit dated October 22, 2015 with a bank for$15,000,000 to be used to finance improvement projects. The minimumdraw for a project is $50,000 and the resulting note is to be amortized over3, 5, 7, 10 or 15 years, as determined at the time of the draw. Payment ofprincipal and interest on these notes is secured by covenant to budget andappropriate legally available non-ad valorem revenues or specialassessments levied and collected for the project. As of year-end thefollowing notes had been executed under this agreement:

Vehicle purchases. Applicable rate of interest: 2.16%. Average annualprincipal payments of $200,000 due until May 1, 2019. Interest is paidsemi-annually May 1 and November 1. $ 397,348

Vehicle purchases. Applicable rate of interest: 2.81%. Average annualprincipal payments of $69,076 due until May 1, 2027. Interest is paid semi-annually May 1 and November 1. 599,648

Total $ 996,996

Total $ 30,412,616


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Below is a summary of debt service requirements until maturity for the Governmental Activities Loans & NotesPayable:

Year endedSeptember 30 Principal Interest Total

2018 $ 4,093,897 $ 722,454 $ 4,816,3512019 4,078,297 627,334 4,705,6312020 3,928,216 525,852 4,454,0682021 4,024,968 425,769 4,450,7372022 2,469,932 344,760 2,814,692

2023-2027 10,169,695 855,221 11,024,9162028-2029 1,647,611 24,888 1,672,499

Total $ 30,412,616 $ 3,526,278 $ 33,938,894


The following is a summary of Loans & Notes Payable at September 30, 2017:

Aviation Operations

Non-revolving line of credit dated October 22, 2008 with a bank for$4,000,000 to be used to refinance Florida Local Government FinanceCommission Pooled Commercial Paper Note, Series A, Draw No. A-1-5,originally issued to finance costs of the extension of Sgt. Lea MillsBoulevard and the Aerial Way extension to Spring Hill Drive at HernandoCounty Airport. The minimum draw for a project is $50,000 and theresulting note is to be amortized over 3, 5, 7 or 10 years, as determined atthe time of the draw. As of year-end the following note had been executedunder this agreement:

Applicable rate of interest: 2.50%. Average annual principal payments of$123,350 due until May 1, 2018. Interest is paid semi-annually May 1 andNovember 1. $ 117,106

Non-revolving line of credit dated October 22, 2015 with a bank for$15,000,000 to be used for construction of multiple T-Hangar buildingsknown as Southeast T-Hangar Construction Phase III. The minimum drawfor a project is $50,000 and the resulting note is to be amortized over 3, 5,7, 10, or 15 years, as determined at the time of the draw. As of year-endthe following note had been executed under this agreement:

Applicable rate of interest: 3.92%. Average annual principal payments of$190,000 due until May 1, 2025. Interest is paid semi-annually May 1 andNovember 1. 1,547,852

$ 1,664,958


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Water & Sewer District

Each of the following State Revolving Loans is secured by a lien on netrevenues and connections fees. These liens are junior, inferior andsubordinate to the senior liens on the Water and Sewer Revenue Bonds.

State Revolving Fund Loan due in semi-annual installments of $58,053beginning December 15, 2012. The loan has an interest rate of 2.90% andmatures June 2032. $ 1,404,119

State Revolving Fund Construction Loan due in semi-annual installmentsof $358,255 beginning October 15, 2012. The loan has an interest rates of2.29% to 2.41% and matures April 2032. 8,981,001

State Revolving Fund Construction Loan due in semi-annual installmentsof $86,604 beginning October 15, 2012. The loan has an interest rate of2.16% and matures April 2032. 2,209,139

State Revolving Fund Construction Loan due in semi-annual installmentsof $191,200 beginning November 15, 2012. The loan has an interest rateof 2.37% and matures May 2032. 4,803,578

State Revolving Fund Construction Loan due in semi-annual installmentsof $87,779 beginning December 15, 2016. The loan has an interest rate of2.23% and matures June 2036. 2,706,930

State Revolving Fund Construction Loan due in semi-annual installmentsof $1,128,372 beginning August 15, 2017. The loan has an interest ratesof 1.82% to 2.23% and matures February 2037. 36,184,860

$ 56,289,627

$ 57,954,585


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Below is a summary of debt service requirements until maturity for the Business-Type Activities Loans & NotesPayable:

Year EndedSeptember 30 Principal Interest Total

2018 $ 2,907,198 1,262,502 4,169,7002019 2,854,031 1,195,635 4,049,6662020 2,919,497 1,130,166 4,049,6632021 2,986,535 1,063,133 4,049,6682022 3,055,178 994,488 4,049,666

2023-2027 15,897,475 3,892,575 19,790,0502028-2032 17,008,648 2,093,981 19,102,6292033-2037 10,326,023 531,556 10,857,579

Total $ 57,954,585 $ 12,164,036 $ 70,118,621

2. BONDS PAYABLE

Governmental Activities

NON-AD VALOREM REFUNDING REVENUE BONDS, SERIES 2010

Non-Ad Valorem Refunding Revenue Bonds, Series 2010 dated February 19, 2010 in the aggregate amount of$9,980,000 were issued during the fiscal year ended September 30, 2010. Of the total bonds issued, the portionattributable to the Governmental Fund is $5,700,000. The bonds were issued to legally defease all of theoutstanding Capital Improvement Revenue Refunding Bonds, Series 1998 and a portion of the Water and SewerRefunding Revenue Bonds, Series 1998, and to pay certain costs and expenses relating to the issuance of theSeries 2010 Bonds, including the premium for a financial guaranty insurance policy.

The Series 2010 Bonds are payable solely from the County’s covenant to budget and appropriate in its annualbudget Non-Ad Valorem revenues sufficient to pay principal and interest when due and pay all required depositsto the Rebate Fund. For the fiscal year 2017, pledged revenues in the amount of $34 million provided a coverageratio of 12.82 times the annual debt service for the combined Non-Ad Valorem Refunding Revenue Bonds, Series2010 and the Non-Ad Valorem Refunding Revenue Note, Series 2012.

Interest on the bonds is payable February 1 and August 1 of each year, commencing August 2010. The bondscarry interest rates varying from 2.0% to 4.125%, depending upon maturity date. Bonds maturing on or beforeFebruary 1, 2020 are not subject to optional redemption prior to their respective stated dates of maturity. Bondsmaturing on February 1, 2021 and thereafter are subject to redemption prior to their respective dates of maturity.


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The following are the debt service requirements until maturity for the governmental activity bonds outstanding asof September 30, 2017:


Water & Sewer District

HOLLAND SPRINGS BONDS

Revenue bonds (“Series E Bonds”) were issued to finance the construction of the Holland Springs water project,in the amount of $659,450. The bonds were scheduled to mature April 1, 2025 with interest thereon at the rate of7% per year payable each April 1 and October 1 beginning October 1, 1985. During the fiscal year endedSeptember 30, 1989, an amended agreement was executed whereby $619,500 of these revenue bonds werecancelled in exchange for connection fee credits to the developer in a like amount. The remaining $39,950 ofbonds remain outstanding and payable in accordance with the original bond provisions. The bonds are payablefrom Net Revenues only up to an amount per annum equal to twenty-five percent (25%) of that portion of therevenues in the immediately preceding fiscal year derived from the Holland Springs system in excess of $20,000,as certified by the Consulting Engineer.

In the event that insufficient revenues to pay principal of and interest on the Series E Bonds are so derived fromthe Holland Springs system at the maturity date of the Series E Bonds, the lien of the Series E Bonds on NetRevenues shall be extinguished and the County shall be under no obligation to provide for the payment of theprincipal or interest on the Series E Bonds. As of year-end, insufficient revenues have been generated to requirepayment of principal or interest on these bonds. As such, these bonds have not been included in the followingschedule of debt service requirements.


Non-Ad Valorem Refunding Revenue Bonds, Series 2010 dated February 19, 2010 in the aggregate amount of$9,980,000 were issued during the fiscal year ended September 30, 2010. Of the total bonds issued, the portionattributable to the Water and Sewer District Fund is $4,280,000. The bonds were issued to legally defease all of

Non-Ad ValoremRefunding

Revenue BondsSeries 2010

Year Principal Interest2018 $ 345,000 96,3882019 350,000 84,6562020 370,000 71,5942021 380,000 57,2942022 395,000 42,031

2023-2024 840,000 34,597

Total $ 2,680,000 $ 386,560


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the outstanding Capital Improvement Revenue Refunding Bonds, Series 1998 and a portion of the Water andSewer Refunding Revenue Bonds, Series 1998, and to pay certain costs and expenses relating to the issuance ofthe Series 2010 Bonds, including the premium for a financial guaranty insurance policy.

The Series 2010 Bonds are payable solely from the County’s covenant to budget and appropriate in its annualbudget Non-Ad Valorem revenues sufficient to pay principal and interest when due and pay all required depositsto the Rebate Fund. Because the pledge for these bonds is from Non-Ad Valorem revenues, and not from revenuesof the Water and Sewer system, these bonds are not considered legal debt of the Water and Sewer Fund. It is,however, expected that Water and Sewer will pay their portion of the debt service. We have, therefore, includedthe debt as a liability for financial statement purposes. For the fiscal year 2017, pledged revenues in the amountof $19 million provided a coverage ratio of 4.91 times the annual debt service for the combined Water and SewerBonds, Series 2013A and the Water and Sewer portion of the Non-Ad Valorem Refunding Revenue Bonds, Series2010.

Interest on the bonds is payable February 1 and August 1 of each year, commencing August 2010. The bondscarry interest rates varying from 2.0% to 4.125%, depending upon maturity date. Bonds maturing on or beforeFebruary 1, 2020 are not subject to optional redemption prior to their respective stated dates of maturity. Bondsmaturing on February 1, 2021 and thereafter are subject to redemption prior to their respective dates of maturity.

WATER AND SEWER REFUNDING REVENUE BONDS, SERIES 2013A

Water and Sewer Refunding Revenue Bonds, Series 2013A dated July 6, 2013 in the aggregate amount of$36,160,000 were issued during the fiscal year ended September 30, 2013. The bonds were issued to legallydefease all of the outstanding Water and Sewer Refunding Revenue Bonds, Series 2003 and Water and SewerRevenue Bonds, Series 2004, and to pay certain costs and expenses relating to the issuance of the Series 2013ABonds, including the premiums for municipal bond insurance policy and reserve account insurance.

The Series 2013A Bonds are payable solely from and secured by a lien upon and pledge of the Net Revenues andConnection Fees of the County’s water and sewer system. For the fiscal year 2017, pledged revenues in theamount of $19 million provided a coverage ratio of 4.91 times the annual debt service for the combined Water andSewer Refunding Revenue Bonds, Series 2013A, and the Water and Sewer portion of the Non-Ad ValoremRefunding Revenue Bonds, Series 2010.

Interest on the bonds is payable June 1 and December 1 of each year, commencing December 2013. The bondscarry interest rates varying from 2.0% to 5.0%, depending upon maturity date. Bonds maturing on or before June1, 2023 are not subject to optional redemption prior to their respective stated dates of maturity. Bonds maturingafter June 1, 2023 are subject to redemption prior to their respective dates of maturity.


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The following are the debt service requirements until maturity for the Hernando County Water and Sewer Districtrevenue bonds, excluding the Holland Springs Bonds, as noted previously:

Non-Ad ValoremRefunding

Revenue BondsSeries 2010

Water and SewerRefunding

Revenue BondsSeries 2013A

Year Principal Interest Principal Interest

2018 $ 515,000 27,094 $ 1,870,000 1,392,3562019 535,000 9,363 1,960,000 1,298,8562020 - - 1,200,000 1,200,8562021 - - 1,260,000 1,140,8562022 - - 1,320,000 1,077,856

2023-2027 - - 7,615,000 4,392,0302028-2032 - - 9,665,000 2,336,0322033-2034 - - 4,520,000 281,738

Total $ 1,050,000 $ 36,457 $ 29,410,000 $ 13,120,580

Total

Year Principal Interest

2018 $ 2,385,000 1,419,4502019 2,495,000 1,308,2192020 1,200,000 1,200,8562021 1,260,000 1,140,8562022 1,320,000 1,077,856

2023-2027 7,615,000 4,392,0302028-2032 9,665,000 2,336,0322033-2034 4,520,000 281,738

Total $ 30,460,000 $ 13,157,037


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The following is a reconciliation of total principal due on the Water and Sewer District’s revenue bonds as ofSeptember 30, 2017, per the Statement of Net Position and the preceding amortization schedule:

Principal per amortization schedule $ 30,460,000

Unamortized premium as of September 30, 2017 2,964,957

Bonds not included in amortization schedule, as noted above:Holland Springs Bonds 39,950

Total Carrying Value, Revenue Bonds 33,464,907

Current Portion, Revenue Bonds (2,385,000)

Current Portion of unamortized premium (178,783)

Long-Term Portion, Revenue Bonds $ 30,901,124

4. DEFEASED BONDS

In prior years, the County defeased certain revenue bonds by placing the proceeds of new bonds in an irrevocabletrust to provide for all future debt service payments on old bonds. Accordingly, the trust account assets and theliability for the defeased bonds were not included in the County’s financial statements. As of September 30, 2017,there were no defeased bonds.

5. DEBT COMPLIANCE

Various bond indentures contain significant limitations and restrictions on the County regarding annual debt servicerequirements, the use of certain restricted accounts, minimum sinking fund balances, and minimum revenue bondcoverage. Management believes that the County has complied with all material financial related covenants.

6. CONDUIT DEBT OBLIGATIONS

Periodically, Hernando County has issued Industrial Revenue Development Bonds to provide financial assistanceto private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be inthe public interest. The bonds are secured by the property financed and are payable solely from payments receivedon the underlying mortgage loans. Hernando County is not obligated in any manner for the repayment of thebonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements.

As of September 30, 2017, there was only one series of outstanding Industrial Revenue Development Bonds,which was paid off during the year resulting in a $2,250,000 balance as of year-end.


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NOTE I – RETIREMENT SYSTEM

General Information about the Florida Retirement System (FRS)The Florida Retirement System (FRS) was created in Chapter 121, Florida Statutes, to provide a defined benefitpension plan for participating public employees. The FRS was amended in 1998 to add the Deferred RetirementOption Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contributionplan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated definedcontribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the RetireeHealth Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan, to assistretired members of any state-administered retirement system in paying the costs of health insurance.

Essentially all regular employees are eligible to enroll as members of the state-administered FRS. Provisionsrelating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112 Part IV, Florida Statutes;Chapter 238, Florida Statutes and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility,contributions, and benefits are defined and escribed in detail. Such provisions may be amended at any time byfurther action from Florida Legislature. The FRS is a single retirement system administered by the FloridaDepartment of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employerdefined-benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS,which includes its financial statements, required supplementary information, actuarial report, and other relevantinformation, is available from the Florida Department of Management Services’ web site (www.dms.myflorida.com).

For the year ended September 30, 2017, the County’s contributions to all Plans totaled $11,683,775. Pensionpayables of $1,148,639 related to FRS (all plans) were owed as of the end of the fiscal year.

1. FRS PENSION PLAN

Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan,with a DROP for eligible employees. The general classes of membership applicable for the County are as follows:

Regular Class—Members of the Plan who do not qualify for membership in the other classes.Elected County Officer Class—Members who hold specified elective offices in local government.Senior Management Service Class—Members in senior management level positions.Special Risk Class—Members who are employed as law enforcement, fire and rescue and others who meetthe criteria to qualify for this class.

Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolledin the plan on or after July 1, 2011, vest at eight years of creditable service. All vested members enrolled prior toJuly 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service, exceptfor members classified as special risk who are eligible for normal retirement benefits at age 55 or at any age after25 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normalretirement benefits at age 65 or any time after 33 years of creditable service, except for members classified asspecial risk who are eligible for normal retirement benefits at age 60 or at any age after 30 years of service.Members of the plan may include up to four years of credit for military service toward creditable service. The Planalso includes an early retirement provision; however, there is a benefit reduction for each year a member retiresbefore his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustment to eligible participants.

DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirementunder the Plan to defer receipts of monthly benefit payments while continuing employment with an FRS employer.


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NOTE I – RETIREMENT SYSTEM (CONTINUED)

An employee may participate in DROP for a period not to exceed 60 months after electing to participate, exceptthat certain instructional personnel may participate for up to 96 months. During the period of DROP participation,deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does notinclude amounts for DROP participants, as these members are considered retired and are not accruing additionalpension benefits.

Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years of service, averagefinal compensation, and service credit. Credit for each year of service is expressed as a percentage of the averagefinal compensation. For members initially enrolled before July 1, 2011, the average final compensation is theaverage of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the averagefinal compensation is the average of the eight highest fiscal year’s earnings. The total percentage value of thebenefit received is determined by calculating the total value of all service, which is based on the retirement classto which the member belonged when the service credit was earned. Certain members are eligible for in-line-of-duty or regular disability and survivors’ benefits. The following chart shows the percentage value for each year ofservice credit earned:

Class, Initial Enrollment and Retirement Age/Years of Service Percent Value

Regular Class Members Initially Enrolled Before July 1, 2011:Retirement up to age 62 or up to 30 years of service 1.60Retirement at age 63 or with 31 years of service 1.63Retirement at age 64 or with 32 years of service 1.65Retirement at age 65 or with 33 years of service 1.68

Regular Class Members Initially Enrolled on or After July 1, 2011:Retirement up to age 65 or up to 33 years of service 1.60Retirement at age 66 or with 34 years of service 1.63Retirement at age 67 or with 35 years of service 1.65Retirement at age 68 or with 36 years of service 1.68

Elected County Officers 3.00Senior Management Service Class 2.00Special Risk Class

Service from December 1, 1970 thru September 30, 1974 2.00Service on and after October 1, 1974 3.00

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011,and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3% per year. If themember is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is anindividually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3%determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multipliedby 3%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment afterretirement.


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Contributions. The Florida Legislature establishes contribution rates for participating employers and employees.Contribution rates during the 2016-2017 fiscal year were as follows:

Year Ended June 30,2017

Year Ended June 30,2018

Percent of Gross Salary Percent of Gross SalaryClass Employee Employer Employee EmployerFRS, Regular 3.00 5.80 3.00 6.20FRS. Elected County Officers 3.00 40.75 3.00 43.78FRS, Senior Management Service 3.00 20.05 3.00 20.99FRS, Special Risk Regular 3.00 20.85 3.00 21.55

DROP—Applicable to Members from All of theAbove Classes 0.00 11.33 0.00 11.60FRS, Reemployed Retiree (1) (1) (1) (1)

Notes: (1) Contribution rates are dependent upon retirement class in which reemployed. Employer contributions are also required formembers in the FRS Investment Plan for a portion of the unfunded actuarial accrued liability.

The County contributions, including employee contributions, to the Plan totaled $9,637,808 for the fiscal year endedSeptember 30, 2017. This excludes the HIS defined benefit pension plan contributions.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows ofResources Related to Pensions. At September 30, 2017, the County reported a liability of $108,546,704 for itsproportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, andthe total pension liability used to calculate the net pension liability was determined by an actuarial valuation as ofJuly 1, 2017. The County’s proportionate share of the net pension liability was based on the County’s 2016-17fiscal year contributions relative to the 2016-17 fiscal year contributions of all participating members. At June 30,2017, the County’s proportion was .366968106%, which was a decrease of .0000786821 from its proportionmeasured as of June 30, 2016.

For the year ended September 30, 2017, the County recognized pension expense of $18,275,808 related to thePlan. At September 30, 2017, the County reported deferred outflows of resources and deferred inflows ofresources related to pensions from the following sources:

Description

DeferredOutflows ofResources

DeferredInflows ofResources

Employer Contributions after Measurement Date $ 2,394,921 $ -Difference between Expected and Actual Experience 9,961,975 601,293Changes in Assumptions 36,479,355 -

Changes in Proportion and Difference between CountyContributions and Proportionate Share of Contributions 5,505,147 3,548,462

Net Difference between Projected and ActualEarnings on Pension Plan Investments - 2,690,059

Total $ 54,341,398 $ 6,839,814


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The deferred outflows of resources related to pensions, totaling $2,394,921, resulting from County contributionssubsequent to the measurement date, will be recognized as a reduction of the net pension liability in the yearended September 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows ofresources related to pensions will be recognized in pension expense as follows:

Fiscal YearEnding Amount

2018 $ 5,828,8462019 15,166,5932020 11,204,0922021 2,891,3672022 7,383,112

Thereafter 2,632,653Total $ 45,106,663

Actuarial Assumptions. The total pension liability in the July 1, 2017 actuarial valuation was determined usingthe individual entry age cost method and the following actuarial assumptions:

Inflation 2.60%Salary Increases 3.25% Average, Including InflationInvestment Rate of Return 7.10% Net of Pension Plan Investment Expense,

Including Inflation

Mortality rates were based on the Generational RP-2000 with Projection Scale BB, with adjustments for mortalityimprovements based on Scale AA.

The actuarial assumptions used in the July 1, 2017 valuation were based on the results of an actuarial experiencestudy for the period July 1, 2008, through June 30, 2013.

The long-term expected rate of return on pension plan investments was not based on historical returns, but insteadis based on a forward-looking capital market economic model. The allocation policy's description of each assetclass was used to map the target allocation to the asset classes shown below. Each asset class assumption isbased on a consistent set of underlying assumptions, and includes an adjustment or the inflation assumption. Thetarget allocation and best estimates of arithmetic and geometric real rates of return for each major asset class aresummarized in the following table:

Asset ClassTarget

Allocation (1)

AnnualArithmetic

Return

Annual(Geometric)

ReturnStandardDeviation

Cash 1% 3.0% 3.0% 1.8%Fixed Income 18% 4.5% 4.4% 4.2%Global Equity 53% 7.8% 6.6% 17.0%Real Estate (Property) 10% 6.6% 5.9% 12.8%Private Equity 6% 11.5% 7.8% 30.0%Strategic Investments 12% 6.1% 5.6% 9.7%Total 100%

Assumed Inflation-Mean 2.6% 1.9%


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Discount Rate. The discount rate used to measure the total pension liability was 7.10%. The Plan's fiduciary netpension position was projected to be available to make all projected future benefit payments of current active andinactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-termexpected rate of return. The discount rate was 7.60% in the July 1, 2016 valuation.

Sensitivity of the County's Proportionate Share of the Net Pension Liability to Changes in the DiscountRate. The following presents the County's proportionate share of the net pension liability calculated using thediscount rate of 7.10%, as well as what the County's proportionate share of the net pension liability would be if itwere calculated using a discount rate that is 1-percentage-point lower (6.10%) or 1-percentage-point higher(8.10%) than the current rate:

1% Decrease(6.10%)

CurrentDiscount Rate

(7.10%)1% Increase

(8.10%)County’s Proportionate Share of

Net Pension Liability $ 196,462,977 $ 108,546,704 $ 35,556,054

Pension Plan Fiduciary Net Position. Detailed information about the Plan's fiduciary net position is available inthe separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual FinancialReport.

2. HIS PENSION PLAN

Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pensionplan established under Section 112.363, Florida Statutes, and may be amended by the Florida Legislature at anytime. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying theirhealth insurance costs and is administered by the Division of Retirement within the Florida Department ofManagement Systems.

Benefits Provided. For the fiscal year ended September 30, 2017, eligible retirees and beneficiaries received amonthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimumHIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, FloridaStatutes. To be eligible to receive a HIS Plan benefit, a retiree under a State-administered retirement system mustprovide proof of health insurance coverage, which may include Medicare.

Contributions. The HIS Plan is funded by required contributions from FRS participating employers as set by theFlorida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members.Effective July 1, 2015, the Legislature increased the HIS employer contribution rate from 1.26% to 1.66%, pursuantto Section 112.363, Florida Statutes. The County contributed 100% of its statutorily required contributions for thecurrent and preceding three years. HIS Plan contributions are deposited in a separate trust fund from whichpayments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation.In the event the legislative appropriation or available funds fail to provide a full subsidy benefit to all participants,benefits may be reduced or cancelled.

The County's contributions to the HIS Plan totaled $1,233,196 for the fiscal year ended September 30, 2017.


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Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows ofResources Related to Pensions. At September 30, 2017, the County reported a liability of $24,669,874 for itsproportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, andthe total pension liability used to calculate the net pension liability was determined by an actuarial valuation as ofJuly 1, 2017. The County’s proportionate share of the net pension liability was based on the County’s 2016-17fiscal year contributions relative to the 2015-16 fiscal year contributions of all participating members. At June 30,2017, the County’s proportion was .230722126%, which was a decrease of .000003552829 from its proportionmeasured as of June 30, 2016.

For the year ended September 30, 2017, the County recognized pension expense of $2,051,231 related to thePlan. At September 30, 2017, the County reported deferred outflows of resources and deferred inflows ofresources related to pensions from the following sources:

Description

DeferredOutflows ofResources

DeferredInflows ofResources

Employer Contributions after Measurement Date $ 291,271 $ -Difference between Expected and Actual Experience - 51,367Changes in Assumptions 3,467,736 2,133,230

Changes in Proportion and Difference between CountyContributions and Proportionate Share of Contributions 1,361,929 549,953

Net Difference between Projected and ActualEarnings on Pension Plan Investments 13,681 -

Total $ 5,134,617 $ 2,734,550

The deferred outflows of resources related to pensions, totaling $291,271, resulting from County contributions tothe HIS Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability inthe year ended September 30, 2018. Other amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions will be recognized in pension expense as follows:

Fiscal YearEnding Amount

2017 $ 570,0792018 576,4902019 575,2472020 498,1682021 237,091

Thereafter (357,279)Total $ 2,108,796


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Actuarial Assumptions. The total pension liability in the July 1, 2017 actuarial valuation, was determined usingthe individual entry age cost method and the following actuarial assumptions, applied to all periods included in themeasurement:

Inflation 2.60%Salary Increases 3.25% Average, Including InflationInvestment Rate of Return 3.58% Net of Pension Plan Investment Expense,

Including Inflation

Mortality rates were based on the Generational RP-2000 with Projected Scale BB.

The actuarial assumptions used in the July 1, 2017 valuation, were based on the results of an actuarial experiencestudy for the period July 1, 2008, through June 30, 2013.

Discount Rate. The discount rate used to measure the total pension liability was 3.58%. In general, the discountrate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-termexpected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit isessentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the singleequivalent discount rate is equal to the municipal bond rate selected by the HIS Plan sponsor. The Bond BuyerGeneral Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.

Sensitivity of the County's Proportionate Share of the Net Pension Liability to Changes in the DiscountRate. The following presents the County's proportionate share of the net pension liability calculated using thediscount rate of 2.85%, as well as what the County's proportionate share of the net pension liability would be if itwere calculated using a discount rate that is 1-percentage-point lower (1.85%) or 1-percentage-point higher(3.85%) than the current rate:

1% Decrease(2.58%)

CurrentDiscount Rate

(3.58%)1% Increase

(4.58%)County’s Proportionate Share of

Net Pension Liability $ 28,151,593 $ 24,669,874 $ 21,769,794

Pension Plan Fiduciary Net Pension. Detailed information about the HIS Plan's fiduciary net position is availablein the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive AnnualFinancial Report.

3. FRS-DEFINED CONTRIBUTION PENSION PLAN

The County contributes to the FRS Investment Plan (Investment Plan), a defined contribution pension plan, for itseligible employees electing to participate in the Investment Plan. The Investment Plan is administered by the SBA,and is reported in the SBA's annual financial statements and in the State of Florida Comprehensive AnnualFinancial Report. Service retirement benefits are based upon the value of the member's account upon retirement.


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As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the InvestmentPlan in lieu of the FRS defined benefit plan. County employees participating in DROP are not eligible to participatein the Investment Plan. Employer and employee contributions, including amounts contributed to the individualmember's accounts, are defined by law, but the ultimate benefit depends in part on the performance of investmentfunds. Benefit terms, including contribution requirements, for the Investment Plan are established and may beamended by the Florida Legislature. The Investment Plan is funded with the same employer and employeecontribution rates that are based on salary and membership class (Regular Class, Elected County Officials, etc.),as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individualmembers allocate contributions and account balances among various approved investment choices. Allocationsto the Investment members' accounts during the 2015-16 fiscal year were as follows:

Class Percentage of Gross ContributionsFRS, Regular 3.30FRS, Elected County Officers 8.34FRS, Senior Management Services 4.67FRS, Special Risk 11.00

For all membership classes, employees are immediately vested in their own contributions and are vested after oneyear of service for employer contributions and investment earnings. If an accumulated benefit obligation for servicecredit originally earned under the Plan is transferred to the Investment Plan, the member must have the years ofservice required for Plan vesting (including the service credit represented by the transferred funds) to be vestedfor these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense accountfor up to five years. If the employee returns to FRS-covered employment within the five-year period, the employeewill regain control over their account. If the employee does not return within the five-year period, the employee willforfeit the accumulated account balance. Costs of administering the Investment Plan, including the FRS FinancialGuidance Program, are funded through an employer contribution of 0.04% of payroll and by forfeit benefits ofInvestment Plan members. For the fiscal year September 30, 2017, the information for the amount of forfeitureswas unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial tothe County.

After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan,structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds investedfor future distribution, or any combination of these options. Disability coverage is provided; the member may eithertransfer the account balance to the Plan when approved for disability retirement to receive guaranteed lifetimemonthly benefits under the Plan, or remain in the Investment Plan and rely upon that account balance for retirementincome.

Pension expense for the County’s Investment Plan totaled $812,771 for the fiscal year ended September 30, 2017.


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NOTE J – POST EMPLOYMENT BENEFITS OTHER THAN PENSION

1. SUMMARY AND PLAN DESCRIPTION

In addition to the retirement plan described in Note I, the County provides post-retirement health care benefits inaccordance with Section 112.0801, Florida Statutes, to all employees who retire from the employ of the County.This is administered via a single-employer defined benefit healthcare plan (the “Plan”). In most cases, the retireepays 100% of the premium cost for the retiree to participate in the County’s insurance program. As a rule, the costof health care increases with age. Thus age-adjusted healthcare premiums for active employees can normally beexpected to be less than age-adjusted premiums for retirees. When a single premium is established for both activeemployees and retirees, the retiree ‘benefits’ from an abnormally low premium. Governmental AccountingStandards Board (GASB) Statement No. 45 describes such an arrangement as an ‘implicit rate subsidy’ andmandates that it be treated as Other Post-Employment Benefits (OPEB) even though the employer makes nopayments 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 retiredemployees. 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.

Currently, there are no direct subsidies provided by any of the County agencies to retired employees. The Sheriff’sOffice offered a subsidy to help pay the premium required to continue coverage under the County’s plan, buteffective November 1, 2010, that was discontinued.

Eligibility for participation in the Plan is limited to full time employees of the County, employees who are activeparticipants in the Plan at the time of retirement, who retire and are either vested with the Florida RetirementSystem (FRS), are vested in the FRS and are age 62, have 30 years of creditable service before age 62, or meetalternative criteria if disabled or a member of a Special Risk Class. Surviving spouses or dependents ofparticipating retirees may continue in the Plan if eligibility criteria specific to those classes are met. In an opensession, the County approves the Plan rates for the enrollment period, and may amend the Plan with changes tothe benefits, premiums and/or levels of participant contribution at any time.

At October 1, 2016, the date of the latest actuarial valuation, plan participation consisted of:

Active Plan Participants 1,341Retirees and Beneficiaries Receiving Benefits 83

Total Membership 1,424

2. FUNDING POLICY

Currently, the County’s OPEB benefits are unfunded. The County has the authority to establish and amend afunding policy; however, no Trust contributions are legally or contractually required.

3. ANNUAL OPEB COST AND NET OPEB OBLIGATION

The County’s annual cost (expense) for Other Post-Employment Benefits (OPEB) is calculated based on theAnnual Required Contribution (ARC), an amount actuarially determined in accordance with the GovernmentalAccounting Standards Board (GASB) Statement No. 45. The ARC represents a level of funding that, if paid on anongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liability over a


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NOTE J – POST EMPLOYMENT BENEFITS OTHER THAN PENSION (CONTINUED)

period not to exceed 30 years. The following table shows the components of the County’s annual OPEB cost forthe year, the amount actually contributed, and the changes in the net OPEB obligation.

Annual required contribution $ 1,903,832Interest on net OPEB obligation 347,014Less: Adjustment to annual required contribution (450,668)

Annual OPEB cost (expense) 1,800,178Less: Contributions made (552,150)Increase in net OPEB obligation 1,248,028Net OPEB obligation-beginning of year 9,914,690Net OPEB obligation-end of year $ 11,162,718

The County’s annual OPEB cost, annual amount contributed (including as a percentage of annual OPEB cost),and net OPEB obligation for the current and the two preceding years were as follows:

Year EndedSeptember 30

AnnualOPEBCost

EstimatedAmount

Contributed

% of AnnualOPEBCost

Contributed

EstimatedNet OPEBObligation

2015 $ 1,637,272 $ 600,248 36.66% $ 8,937,1302016 $ 1,692,477 $ 714,917 42.24% $ 9,914,6902017 $ 1,800,178 $ 552,150 30.67% $ 11,162,718

4. FUNDED STATUS AND FUNDING PROGRESS

As of the October 1, 2016 actuarial valuation date, the actuarial accrued liability (AAL) was $17.7 million, all ofwhich was unfunded. The covered payroll (annual payroll of active employees covered by the OPEB Plan) was$66.3 million and the ratio of the unfunded actuarial accrued liability (UAAL) to covered payroll was 26.7%.

5. ACTUARIAL METHODS AND ASSUMPTIONS

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions aboutthe 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 theannual required contributions of the employer are subject to continual revision as actual results are compared withpast expectations and new estimates are made about the future. The schedule of funding progress, presented asrequired supplementary information following the notes to the financial statements, presents multi-year trendinformation about whether the actuarial value of the plan assets is increasing or decreasing over time relative tothe actuarial accrued liabilities for benefits.

Calculations for financial reporting purposes are based on the benefits provided under terms of the substantiveplan (the plan as understood by the employer and the plan members) in effect at the time of each valuation andon the pattern of sharing of costs between the employer and plan members to that point. The projection of benefitsfor financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual fundinglimitations on the pattern of cost sharing between the employer and plan members in the future. Actuarialcalculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions


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NOTE J – POST EMPLOYMENT BENEFITS OTHER THAN PENSION (CONTINUED)

used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilitiesand the actuarial value of assets.

The actual methods are:Actuarial cost method Entry Age NormalAmortization method Level percent of projected payroll, closedAmortization period 22 years on a closed basisAsset valuation method Unfunded, fair value

The actuarial assumptions are:Inflation rate 2.5%Investment rate of return 3.5%Projected annual salaries increase 3.7% - 7.8%Healthcare cost trend rate 7.25% for the initial year decreased to 7.0% in the second

year and varying each subsequent year until reaching 4.57%

NOTE K – ARBITRAGE REBATE LIABILITY

Hernando County calculates and records the estimated liability for arbitrage rebate on its outstanding bonds. Therebate calculations are done pursuant to Internal Revenue Code Section 148. The amount to be rebated iscalculated as the excess of amounts earned on investments of bond proceeds over amounts that would have beenearned if investments had been invested at a rate equal to the rate of yield on the bond issue, plus any incomeattributable to such excess. The regulations provide that the first rebate payment must be made not later thansixty (60) days after the end of the fifth bond year of the issue; the last installment payment must be made withinsixty (60) days after the day on which the issue’s last obligation is redeemed. As of September 30, 2017 there isno estimated rebate liability on any of the County’s bond issues.

NOTE L – PROPERTY TAXES

Property tax collections, sales, and liens are governed by Chapter 197 of the Florida Statutes.

The Just/Market Value of all properties in the County is established by the Property Appraiser as of January 1 ofeach year for the subsequent fiscal year. Taxable Value is computed after deducting from Assessed Value variousexemptions including governmental, educational, religious, institutional and qualified personal exemptions e.g.;homestead, widow or widower, blind, disabled, and various veteran’s exemptions.

All property taxes are levied and become due and payable on November 1 of each year, and are delinquent onApril 1 of the following year. Discounts are allowed for early payment of 4%, 3%, 2% and 1% in November throughFebruary, respectively. Delinquent taxes on real property may be paid after the date of delinquency but prior tothe sale of a tax certificate by paying all taxes, costs, advertising charges, and interest of 18% per annum. For allreal property with delinquent taxes, the Tax Collector advertises as required by Statute and sells tax certificates.All unsold certificates are issued to the County.

Any person owning real property upon which a tax certificate has been sold may redeem the property by payingthe face amount of the tax certificate plus interest and costs associated with the sale of the certificate.


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NOTE L – PROPERTY TAXES (CONTINUED)

After taxes have been delinquent (April 1) for two years, the owner of a tax certificate may file an application fortax deed sale. The County is able to do the same for two years after taxes were due (November 1). All taxesimposed on any property become a first lien; superior to all other liens, as of January 1, of the year the taxes arelevied.

NOTE M – RISK MANAGEMENT

The County’s risk management activities are recorded in the Internal Service Funds (Risk Management, Workers’Compensation, County and Sheriff Health Insurance). The purpose of these funds is to administer workers’compensation, unemployment and disability insurance, property and liability insurance and health insurance.These funds account for the risk financing activities of the County but do not constitute a transfer of risk from theCounty.

Significant losses are covered by commercial insurance for all major programs, except workers’ compensation.The County and the Sheriff are self-insured for health benefits. For insured programs, there have been nosignificant reductions in insurance coverage from the prior year. Settlement amounts have not exceeded insurancecoverage for the current year or prior three years.

The Workers’ Compensation fund is a self-insurance program for workers’ compensation claims on losses up to$1,100,000 per occurrence and is indemnified against losses in excess of these amounts. The Workers’Compensation fund has indemnified each fund against any losses in a given year in excess of the fee charged. Inthe event actual losses are less than the fee charged, such amounts will be retained in the Workers’ Compensationfund. Claim settlements and losses are accrued and subsequently paid from the Workers’ Compensation fund.As of September 30, 2017 claims accrued, including an estimate for claims incurred but not reported, were$3,200,000. The County records an estimated liability for workers’ compensation. Claims liabilities are based onestimates of the ultimate cost of reported claims and an estimate for claims incurred but not reported based onhistorical experience.

On October 1, 2011, the Sheriff’s Office established a self-insurance program under Florida Statute 112.08 toreduce employee medical costs. The program is administered by an outside third party, and uses a combinationof self-insurance and specific and aggregate stop-loss coverage to minimize risk exposure. It is accounted for inan Internal Service Fund. Fund revenues are primarily contributions from other funds, retirees, and employees, foramounts needed to pay insurance premiums, anticipated self-insured losses, and administrative expenses.

On October 1, 2014, the Board of County Commissioners established a County self-insurance program underFlorida Statute 112.08 to reduce employee medical costs. The program facilitates self-insurance for the Board,Clerk of Court and Comptroller, Supervisor of Elections, Tax Collector and Property Appraiser. The program isadministered by an outside third party, and uses a combination of self-insurance and aggregate stop-loss coverageto minimize risk exposure. It is accounted for in an Internal Service Fund. Fund revenues are primarilycontributions from other funds, retirees, and employees for amounts needed to pay insurance premiums,anticipated self-insured losses, and administrative expenses.


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NOTE M – RISK MANAGEMENT (CONTINUED)

CLAIMS LIABILITIES

Workers’Compensation

County HealthInsurance

Sheriff HealthInsurance

Liability balance September 30, 2015 $ 3,270,000 $ 513,723 $ 320,024Claims incurred 1,150,062 9,415,519 4,744,409Claims paid (1,690,062) (9,374,263) (4,767,370)Liability balance September 30, 2016 2,730,000 554,979 297,063

Claims incurred 670,144 8,351,683 4,319,525Claims paid (200,144) (8,482,919) (4,309,025)Liability balance September 30, 2017 $ 3,200,000 $ 423,743 $ 307,563

Cash available to pay claims September30, 2017Reported in governmental activities $ 6,181,057 $ 4,880,681 $ 5,052,936

NOTE N – CLOSURE AND POSTCLOSURE CARE COSTS

The County’s active landfills are at the Northwest facility, and include a Class 1 landfill (Cells 1, 2 & 3) and a C&Dlandfill. State and federal laws and regulations require the Waste Management Division (the Division) to place finalcovers on the active County landfills when they stop accepting waste and to perform certain maintenance andmonitoring functions at the site. Although closure and postclosure care costs will be paid only near or after thedate that the landfill stops accepting waste, the Division reports a portion of these closure and postclosure carecosts as an operating expense in each period based on landfill capacity used as of each balance sheet date. Asof September 30, 2017, the Division has accrued a total of $5,305,692 in liabilities related to estimated closure andpostclosure care costs.

Cells 1 and 2 at the Class 1 landfill were partially closed in 2014 at a cost of $3,158,604. Remaining closure costsof $5,360,699, as show in the table below, are primarily for Cell 3. Cell 3 is approximately 39% filled at September30, 2017, and has a remaining design life of approximately 10 years. Postclosure maintenance and monitoringfunctions will be required for thirty years after closure. Remaining estimated postclosure costs for the Class 1landfill (all Cells) are $4,472,724. The class 1 landfill (all Cells) is approximately 66% filled at September 30, 2017.The County will recognize the remaining costs that have not been accrued (closure costs of $3,245,442 andpostclosure costs of $1,532,244) as the remaining estimated capacity is filled.

The C&D landfill is approximately 99% filled at September 30, 2017, and has a remaining design life of less thanone year. Postclosure maintenance and monitoring functions will be required for five years after closure.Remaining estimated closure and postclosure costs for the C&D landfill are $157,249 and $93,385, respectively.The County will recognize the remaining costs that have not been accrued (closure costs of $426 and postclosurecosts of $253) as the remaining estimated capacity is filled.

All cost estimates are in current dollars. Actual costs may be higher or lower due to inflation, changes in technologyor processes, or changes in regulations.


September 30, 2017

78

NOTE N – CLOSURE AND POSTCLOSURE CARE COSTS (CONTINUED)

Following is a table showing the remaining costs and amount accrued for the combined Northwest facility:

Landfill

EstimatedRemaining

ClosureCosts

PercentAccrued

ClosureAccrued

Liability at9/30/17

EstimatedRemainingPostclosure

CostsPercentAccrued

PostclosureAccrued

Liability at9/30/17

TotalAccrued

Liability at9/30/17

NW Cells 1, 2& 3 $ 5,360,699 39.46% $ 2,115,257 $ 4,472,724 65.74% $ 2,940,480 $ 5,055,737

NW C & D 157,249 99.73% 156,823 93,385 99.73% 93,132 249,955

$ 5,517,948 $ 2,272,080 $ 4,566,109 $ 3,033,612 $ 5,305,692

Amortization expense for 2017 was $927,907 for the Class 1 landfill and $22,134 for the C&D landfill. This expenseincreased significantly for the Class 1 landfill due to a 11% increase in capacity used and a 6% increase inpostclosure costs for fiscal year 2017.

The Division is required by state and federal laws and regulations to make contributions to a trust to finance closureand postclosure care. The Division believes it is in compliance with these requirements, and at September 30,2017, cash and investments of $7,728,176 are held for these purposes. These are reported as restricted assetson the Statement of Net Position. The Division expects that future inflation costs will be paid from the interestearnings on these contributions.


September 30, 2017

79

NOTE O – DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OFRESOURCES

The deferred outflows of resources and deferred inflows of resources in the Statement of Net Position andStatement of Governmental Funds Balance Sheet are aggregated. Following are details of the aggregatedamounts.



Statement of Net PositionDeferred Outflows of Resources:

Pensions $ 55,741,847 $ 3,734,168Deferred charge on debt refunding 804,590 1,476,889

$ 56,546,437 $ 5,211,057

Deferred Inflows of Resources:Pensions $ 9,055,257 $ 519,106Deferred grant funds - 25,549Other - 12,179

$ 9,055,257 $ 556,834

Statement of Governmental Funds Balance SheetDeferred Inflows of Resources:

Receipt of taxes, applicable to a future period $ 1,657,378 -Receipt of ambulance fees, applicable to a future period 1,717,550 -Receipt of other items, applicable to a future period 334,795 -

$ 3,709,723

NOTE P – SEGMENT INFORMATION

The County has four enterprise funds and has elected to separately report each as a major fund in the BasicFinancial Statements. For this reason, segment information is not provided in the notes.

NOTE Q – CONTINGENCIES

1. GENERAL LITIGATION

As part of the ordinary course of operations, the County is exposed to various risks of losses related to torts; theftof, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.Currently, the County is at varying stages in certain actions against it. Although the outcome of these actions isnot presently determinable, in the opinion of the County Attorney, the resolution of these matters will not have amaterial adverse effect on the financial condition of the County.


September 30, 2017

80

NOTE Q – CONTINGENCIES (CONTINUED)

2. GRANTS AND CONTRACTS

The County participates in various federal and state assisted grant programs that are subject to review and auditby the grantor agencies. Entitlement to these resources is generally conditional upon compliance with the termsand conditions of grant agreements and applicable federal and state regulations, including the expenditure ofresources for allowable purposes. Any disallowance resulting from a federal or state audit may become a liabilityof the County.

All County agencies and departments are required to comply with various federal and state regulations if suchagency or department is a recipient of a federal or state grant, contract or their sponsored agreement. Certainagencies and departments may not be in total compliance with these regulations. Failure to comply may result inquestions concerning the allowability of related direct and indirect charges pursuant to such agreements. It isbelieved that the ultimate disallowance pertaining to these regulations, if any, will be immaterial to the overallfinancial condition of the County.

3. HURRICANE ACTIVITY

The County encountered damages related to both Hurricane Hermine in August of 2016 and Hurricane Irma inSeptember of 2017.

The Florida Division of Emergency Management (FDEM) entered into a Federally Funded Agreement for disasterassistance related to Hurricane Hermine in January 2017. Currently, Federal Emergency Management Agency(FEMA) and FDEM are in varying stages of obligation to the County on eligible expenditures. As of September30, 2017, approximately $510,000 of eligible expenditures have been identified from Hermine, and it is anticipatedanother $410,000 will be obligated during Fiscal Year 2018.

The Fund Agreement with the County for Hurricane Irma is not anticipated until Fiscal Year 2018. Eligibleexpenditures for this event are estimated to be approximately $3 million, but that is subject to change pendingreview and obligation by the funding agency. While the County believes most of the eligible expenses for HurricaneIrma will be funded under the Public Assistance Program, because the agreement had not been approved by fiscalyear-end and/or funds have not been obligated, no receivables associated with expenditures incurred have beenrecorded.

4. ADDITIONAL SERVICES TO OTHER GOVERNMENTS

The Board has been approached by a municipality in the County to provide public safety-related services. Althoughno agreement has been reached at time of issuance of this financial report, a preliminary review of the request hasindicated no material negative financial impact to the County government.


September 30, 2017

81

NOTE R – RESTATED BEGINNING FUND BALANCE

The beginning fund balance of General Fund has been restated by $849,168 to include funds previously classifiedas a capital projects fund. The previous separately reported capital project fund no longer has a substantial portionof inflows derived from restricted or committed revenue sources, and the remaining resources are thereforereported in the General Fund.

CapitalImprovement

Fund

General Fund

Beginning Fund Balance $ 849,168 $ 22,674,287Adjustment to Beginning Fund Balance (849,168) 849,168Adjusted Beginning Fund Balance $ - $ 23,523,455

HERNANDO COUNTY, FLORIDAREQUIRED SUPPLEMENTARY INFORMATIONOTHER POST EMPLOYMENT BENEFIT PLAN

SCHEDULE OF FUNDING PROGRESSSeptember 30, 2017

82

ActuarialValuationDate (a)

ActuarialValue ofAssets

ActuarialAmortization

Method

ActuarialAccruedLiability(AAL)

UnfundedAAL

(UAAL)FundedRatio

CoveredPayroll

UALL as aPercentageOf Covered

Payroll

10/01/06 -ProjectedUnit Credit $ 8,813,000 $ 8,813,000 0.00% $ 40,607,170 21.7%

10/01/08 -ProjectedUnit Credit $ 11,794,000 $ 11,794,000 0.00% $ 58,465,695 20.1%

10/01/10 - Entry Age $ 17,993,474 $ 17,993,474 0.00% $ 61,325,882 29.3%

10/01/12 - Entry Age $ 13,293,147 $ 13,293,147 0.00% $ 62,075,001 21.4%

10/01/14 - Entry Age $ 17,923,915 $ 17,923,915 0.00% $ 62,434,507 28.7%

10/01/16 - Entry Age $ 17,672,331 $ 17,672,331 0.00% $ 66,276,204 26.7%

(a) Eleventh year of plan disclosure, no prior data available

HERNANDO COUNTY, FLORIDAREQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF THE COUNTY’S PROPORTIONATE SHAREOF THE NET PENSION LIABILITY

September 30, 2017

83

FLORIDA RETIREMENT SYSTEM PENSION PLAN

September 30,2016

September 30,2017

County’s Proportion of the FRS Net Pension Plan 0.3748363150% 0.366968106%

County’s Proportionate Share of the FRS NetPension Liability $ 94,646,464 $ 108,546,704

County’s Covered Payroll $ 64,506,237 $ 65,184,851

County’s Proportionate Share of the FRS NetPension Liability as a Percentage of itsCovered-Employee Payroll 146.72% 166.52%

FRS Plan Fiduciary Net Position as a Percentageof the Total Pension Liability 84.88% 83.89

Note: The amounts shown above as reported on the date indicated have a measurement date three monthsprior. Covered-employee payroll is for the year shown. Additional information will be provided annuallyuntil ten years’ data is presented.

HEALTH INSURANCE SUBSIDY PENSION PLAN

September 30,2016

September 30,2017





FRS Plan Fiduciary Net Position as a Percentageof the Total Pension Liability .97% 1.64%


HERNANDO COUNTY, FLORIDAREQUIRED SUPPLEMENTARY INFORMATON

SCHEDULE OF THE COUNTY’S CONTRIBUTIONSSeptember 30, 2017

84


2016 2017

Contractually Required Contributions $ 8,953,651 $ 9,637,808

FRS Contribution in Relation to the Contractually RequiredContributions (8,953,651) (9,637,808)

FRS Contribution Deficiency (Excess) $ - $ -


FRS Contributions as a Percentage of Covered Payroll 13.88% 14.79%

Note: Additional information will be provided annually until ten years’ data is presented.


2016 2017







HERNANDO COUNTY, FLORIDANOTES TO REQUIRED SUPPLEMENTARY INFORMATION

September 30, 2017

85

NOTE 1 – SCHEDULES OF NET PENSION LIABILITY AND SCHEDULES OF CONTRIBUTIONS

Changes in Benefit Terms from the year ended June 30, 2016 to June 30, 2017:

Changes in Assumptions from the year ended June 30, 2016 to June 30, 2017:

FRS: The long-term expected rate of return was decreased from 7.60% to 7.10%, and the active membermortality assumption was updated.

HIS: The municipal bond rate used to determine total pension liability increased from 2.85% to 3.58%.

HERNANDO COUNTY, FLORIDAREQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF THE COUNTY’S PROPORTIONATE SHAREOF THE NET PENSION LIABILITY

September 30, 2017

83


September 30,2016

September 30,2017





FRS Plan Fiduciary Net Position as a Percentageof the Total Pension Liability 84.88% 83.89



September 30,2016

September 30,2017





FRS Plan Fiduciary Net Position as a Percentageof the Total Pension Liability .97% 1.64%


HERNANDO COUNTY, FLORIDAREQUIRED SUPPLEMENTARY INFORMATON

SCHEDULE OF THE COUNTY’S CONTRIBUTIONSSeptember 30, 2017

84


2016 2017








2016 2017







HERNANDO COUNTY, FLORIDANOTES TO REQUIRED SUPPLEMENTARY INFORMATION

September 30, 2017

85

NOTE 1 – SCHEDULES OF NET PENSION LIABILITY AND SCHEDULES OF CONTRIBUTIONS

Changes in Benefit Terms from the year ended June 30, 2016 to June 30, 2017:

Changes in Assumptions from the year ended June 30, 2016 to June 30, 2017:

FRS: The long-term expected rate of return was decreased from 7.60% to 7.10%, and the active membermortality assumption was updated.

HIS: The municipal bond rate used to determine total pension liability increased from 2.85% to 3.58%.

Combining and Individual Fund Statements and Schedules

Nonmajor Governmental Funds

Special Revenue Funds

Stormwater ManagementTo account for the proceeds of ad valorem taxes and other revenues for funding Stormwater

Management.

Sensitive LandsTo account for the proceeds of ad valorem taxes and other revenues for purchasing environmentally

sensitive lands.

State Housing Initiative PartnershipTo account for the grant proceeds and associated expenditures of a low-income housing assistance

program.

Court-Related FundsTo account for the proceeds of revenues received for the purpose of funding court-related technology,

court improvements, court innovations, juvenile alternative programs, law library, legal aid, youth court andtreatment of alcohol and other drug abuse.

Municipal Service Benefit Units Special Revenue FundTo account for the proceeds of assessments levied for the purpose of funding road improvements,

street lighting, fire hydrant maintenance, and other services within the various Municipal Service Benefit Unitsof the County.

Hernando County Fire Rescue-RescueTo account for the revenue and expenditures related to providing ambulance and rescue services

within this district.

Miscellaneous Special Revenue FundsTo account for the revenues from specific taxes or other earmarked revenue sources which by law are

designated to finance particular functions or activities of government and which, therefore, cannot be divertedto other uses. Included in this fund are the following: Hernando/Citrus MPO, Florida Boating ImprovementProgram, Health Department, State and Local Mosquito Control, Law Enforcement Trust Fund, CrimePrevention, Hernando County Sheriff Revenue Fund, Tourist Development Tax, Affordable Housing, KassCircle Neighborhood Community Redevelopment Agency, Landscape Enhancement, Industrial/EconomicIncentives, Dori Slosberg Driver Education Safety and Library Estate Fund.

Clerk of Court & Comptroller Special Revenue FundsTo account for the funds received in the Clerk of Circuit Court’s Records Modernization Fund and

Fines and Forfeitures Fund.

Property Appraiser Special Revenue FundsTo account for the funds received in the Property Appraiser’s Graphic Information Systems Fund,

Addressing Fund, Addressing Fees Fund, GIS Business Units Fund and the County Fees and CommissionsFund.

Sheriff Special Revenue FundsTo account for the funds received in the Sheriff’s Law Enforcement Education Fund, Child Saver

Program Fund, Inmate Welfare Fund, Grants and Contributions Fund, Federal Forfeitures Fund, Sheriff E911Fund and 800MHz Fund.

Debt Service Funds

Capital Improvement and Refunding Revenue Bonds 2004To account for the debt service requirements of the Capital Improvement and Refunding Revenue

Bonds, Series 2004.

Non-Ad Valorem Refunding Revenue Bonds 2010To account for the debt service requirements of the Non-Ad Valorem Refunding Revenue Bonds,

Series 2010.

Non-Ad Valorem Refunding Revenue Note 2012To account for the debt service requirements of the Non-Ad Valorem Refunding Revenue Note, Series

2012.

Capital Project Funds

Quality of Life ProjectsTo account for the capital outlay expenditures of the Board of County Commissioners for projects

which improve the quality of life for the citizens of the County.

StateHousing

Stormwater Sensitive InitiativeManagement Lands Partnership

ASSETSCash and Cash Equivalents $ - $ - $ -Pooled Cash and Investments 5,140,605 2,468,019 605,733Accounts Receivable (net) 283 115 71,679Due from Other Funds 13,339 5 -Due from Other Governments 331 - -Inventories - - -Prepaid Items - - -

Total Assets $ 5,154,558 $ 2,468,139 $ 677,412


Accounts Payable $ 17,758 $ 4,339 $ 22,959Accrued Liabilities 11,343 5,999 -Due to Other Funds - - -Due to Other Governments - - -Unearned Revenue - - -Deposits - 500 -Advances from Other Funds - - -

Total Liabilities 29,101 10,838 22,959Deferred Inflows of Resources

Unavailable Revenue - - -Fund Balances

Nonspendable:Inventories - - -Prepaid Items - - -

Restricted for:Grant Funded Programs - - 654,453Court Programs - - -Special Assessment Projects - - -Environment Conservation 5,125,457 2,457,301 -Bond covenants or debt service - - -Public Safety - - -Capital Projects - - -Other Purposes - - -

Committed to:Capital Projects - - -Other Purposes - - -

Assigned to:Economic Development - - -Public Safety - - -Capital Projects - - -Other - - -

Total Fund Balances 5,125,457 2,457,301 654,453

Total Liabilities, Deferred Inflows of Resourcesand Fund Balances $ 5,154,558 $ 2,468,139 $ 677,412

See accompanying independent auditors' report.

HERNANDO COUNTY, FLORIDACOMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS


September 30, 2017

86

Hernando MiscellaneousCourt- Municipal County Fire Special

Related Service Benefit Rescue - RevenueFunds Units Rescue Funds

$ - $ 250 $ - $ 4005,978,339 3,830,153 2,302,117 6,601,511

79,536 339 2,360,362 605,774- 24,832 78,672 1,615

1,332 - 5,249 280,407- - 1,800 -- - 2,841 -

$ 6,059,207 $ 3,855,574 $ 4,751,041 $ 7,489,707

$ 86,411 $ 139,228 $ 116,603 $ 173,17322,658 - 626,405 63,44315,000 345,644 - -

- - 1,704 -- - - 5,172- - - -- - - 450,000

124,069 484,872 744,712 691,788

- - 1,717,550 9,955

- - 1,800 -- - 2,841 -

- - - 65,3335,935,138 - - -

- 687,038 - -- - - -- 491,556 - -- - 2,284,138 -- 2,192,108 - -- - - 2,173,938

- - - -- - - 326,749

- - - 1,342,511- - - 2,791,542- - - -- - - 87,891

5,935,138 3,370,702 2,288,779 6,787,964

$ 6,059,207 $ 3,855,574 $ 4,751,041 $ 7,489,707

Continued


87

Clerk of Court Propertyand Comptroller Appraiser SheriffSpecial Revenue Special Revenue Special Revenue

Funds Funds FundsASSETSCash and Cash Equivalents $ - $ 1,020,419 $ 3,456,592Pooled Cash and Investments 2,345,825 - -Accounts Receivable (net) - - 36,276Due from Other Funds - - -Due from Other Governments 62,972 - 387,404Inventories - - -Prepaid Items 44,973 - -

Total Assets $ 2,453,770 $ 1,020,419 $ 3,880,272


Accounts Payable $ 20,109 $ 749 $ 592,280Accrued Liabilities 103,322 - 28,642Due to Other Funds 64,491 59,811 -Due to Other Governments 606,855 183 -Unearned Revenue - - -Deposits 208,541 - 40Advances from Other Funds - - -

Total Liabilities 1,003,318 60,743 620,962Deferred Inflows of Resources

Unavailable Revenue - - 126,178Fund Balances

Nonspendable:Inventories - - -Prepaid Items 43,535 - -

Restricted for:Grant Funded Programs - - -Court Programs - - -Special Assessment Projects - - -Environment Conservation - - -Bond covenants or debt service - - -Public Safety - - 3,133,132Capital Projects - - -Other Purposes 1,406,917 - -

Committed to:Capital Projects - - -Other Purposes - 959,676 -

Assigned to:Economic Development - - -Public Safety - - -Capital Projects - - -Other - - -

Total Fund Balances 1,450,452 959,676 3,133,132

Total Liabilities, Deferred Inflows of Resourcesand Fund Balances $ 2,453,770 $ 1,020,419 $ 3,880,272


NONMAJOR GOVERNMENTAL FUNDSSeptember 30, 2017


88

Non-Ad ValoremRefundingRevenue

Bonds 2010

$ 4,477,661 $ - $ - $ -29,272,302 7,248 8,519 7,8713,154,364 - - -

118,463 - - -737,695 - - -

1,800 - - -47,814 - - -

$ 37,810,099 $ 7,248 $ 8,519 $ 7,871

$ 1,173,609 $ - $ - $ -861,812 - - -484,946 - - -608,742 - - -

5,172 - - -209,081 - - -450,000 - - -

3,793,362 - - -

1,853,683 - - -

1,800 - - -46,376 - - -

719,786 - - -5,935,138 - - -

687,038 - - -7,582,758 - - -

491,556 7,248 8,519 7,8715,417,270 - - -2,192,108 - - -3,580,855 - - -

- - - -1,286,425 - - -

1,342,511 - - -2,791,542 - - -

- - - -87,891 - - -

- - -32,163,054 7,248 8,519 7,871

$ 37,810,099 $ 7,248 $ 8,519 $ 7,871

Continued

Funds Bonds 2004 Note 2012

Debt Service Funds

Refunding RevenueTotal

Special Revenue

Improvementand Refunding Non-Ad Valorem

Revenue

Capital

89

ASSETSCash and Cash Equivalents $ - $ - $ 4,477,661Pooled Cash and Investments 23,638 3,042,425 32,338,365Accounts Receivable (net) - - 3,154,364Due from Other Funds - - 118,463Due from Other Governments - - 737,695Inventories - - 1,800Prepaid Items - - 47,814

Total Assets $ 23,638 $ 3,042,425 $ 40,876,162


Accounts Payable $ - $ 38,690 $ 1,212,299Accrued Liabilities - - 861,812Due to Other Funds - - 484,946Due to Other Governments - - 608,742Unearned Revenue - - 5,172Deposits - - 209,081Advances from Other Funds - - 450,000

Total Liabilities - 38,690 3,832,052Deferred Inflows of Resources

Unavailable Revenue - - 1,853,683Fund Balances

Nonspendable:Inventories - - 1,800Prepaid Items - - 46,376

Restricted for:Grant Funded Programs - - 719,786Court Programs - - 5,935,138Special Assessment Projects - - 687,038Environment Conservation - - 7,582,758Bond covenants or debt service 23,638 - 515,194Public Safety - - 5,417,270Capital Projects - - 2,192,108Other Purposes - - 3,580,855

Committed to:Capital Projects - - -Other Purposes - - 1,286,425

Assigned to:Economic Development - - 1,342,511Public Safety - - 2,791,542Capital Projects - 3,003,735 3,003,735Other - - 87,891

Total Fund Balances 23,638 3,003,735 35,190,427

Total Liabilities, Deferred Inflows of Resourcesand Fund Balances $ 23,638 $ 3,042,425 $ 40,876,162

TotalNonmajor

GovernmentalFundsProjectsFunds


NONMAJOR GOVERNMENTAL FUNDSSeptember 30, 2017

Capital Project Fund

Quality of LifeDebt ServiceTotal

90

StateHousing

Stormwater Sensitive InitiativeManagement Lands Partnership

RevenuesTaxes $ 832,120 $ 481 $ -Licenses and Permits - - -Intergovernmental 478,423 - 1,167,013Charges for Services - - -Fines and Forfeitures - - -Special Assessments - - -Interest 3,128 20,053 4,580Miscellaneous 49,950 4,800 418,588

Total Revenues 1,363,621 25,334 1,590,181

ExpendituresCurrent

General Government - - -Public Safety - 73 -Physical Environment 491,738 315,625 -Transportation - - -Economic Environment - - 1,389,571Human Services - - -Culture and Recreation - - -Court Operations - - -

Debt ServicePrincipal - - -Interest and Fiscal Charges - - -

Capital Outlay 1,120,146 - -

Total Expenditures 1,611,884 315,698 1,389,571

Excess of Revenues Over (Under) Expenditures (248,263) (290,364) 200,610

Other Financing Sources (Uses)Transfers In 13,339 5 -Transfers Out (2,788) (3,082,718) -Additions to Long-Term Debt - - -

Total Other Financing Sources (Uses) 10,551 (3,082,713) -

Net Change in Fund Balances (237,712) (3,373,077) 200,610

Fund Balances at Beginning of Year (restated) 5,363,169 5,830,378 453,843

Fund Balances at End of Year $ 5,125,457 $ 2,457,301 $ 654,453




HERNANDO COUNTY, FLORIDACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCESNONMAJOR GOVERNMENTAL FUNDS

91

HernandoCourt- Municipal County Fire Miscellaneous

Related Service Benefit Rescue - Special RevenueFunds Units Rescue Funds

$ - $ - $ 4,918,351 $ 1,748,986- - - -

15,266 - 81,430 686,7861,142,938 - 5,804,334 22,658

900 - - 161,085- 2,130,008 - -

22,002 244 8,468 16,893169 42,510 45,092 65,863

-1,181,275 2,172,762 10,857,675 2,702,271

- - - 585,364- 266,614 13,348,602 150,619- 1,614 - 3,555- 1,118,058 - 11,674- - - 1,515,013- - - 1,435,664- - - 50,720

1,024,022 - - -

- 510,321 106,122 -- 84,077 10,748 -

78,039 47,237 111,789 53,170

1,102,061 2,027,921 13,577,261 3,805,779

79,214 144,841 (2,719,586) (1,103,508)

484,156 59,347 78,672 3,474,367(6,970) (2,205,605) (136,575) (15,333)

- 2,368,479 - -

477,186 222,221 (57,903) 3,459,034

556,400 367,062 (2,777,489) 2,355,526

5,378,738 3,003,640 5,066,268 4,432,438-

$ 5,935,138 $ 3,370,702 $ 2,288,779 $ 6,787,964

Continued


92

Clerk of Court Propertyand Comptroller Appraiser SheriffSpecial Revenue Special Revenue Special Revenue

Funds Funds FundsRevenues

Taxes $ - $ - $ -Licenses and Permits - - -Intergovernmental 528,516 895,574 220,401Charges for Services 3,261,615 75,643 2,838,488Fines and Forfeitures 1,044,270 - 227,399Special Assessments - - -Interest 25,847 927 3,676Miscellaneous 324 - 105,833

Total Revenues 4,860,572 972,144 3,395,797

ExpendituresCurrent

General Government 92,201 884,019 -Public Safety - - 1,554,630Physical Environment - - -Transportation - - -Economic Environment - - -Human Services - - -Culture and Recreation - - -Court Operations 4,679,392 - -

Debt ServicePrincipal - - -Interest and Fiscal Charges - - -

Capital Outlay 28,600 1,613 62,525


Excess of Revenues Over (Under) Expenditures 60,379 86,512 1,778,642

Other Financing Sources (Uses)Transfers In 140,000 - -Transfers Out (64,491) (59,811) (2,791,542)Additions to Long-Term Debt - - -

Total Other Financing Sources (Uses) 75,509 (59,811) (2,791,542)

Net Change in Fund Balances 135,888 26,701 (1,012,900)

Fund Balances at Beginning of Year (restated) 1,314,564 932,975 4,146,032

Fund Balances at End of Year $ 1,450,452 $ 959,676 $ 3,133,132





93

CapitalImprovement Non-Ad Valorem

and Refunding RefundingRevenue Revenue

Bonds 2004 Bonds 2010

$ 7,499,938 $ - $ - $ -- - - -

4,073,409 - - -13,145,676 - - -

1,433,654 - - -2,130,008 - - -

105,818 89 57 1,122733,129 - - -

29,121,632 89 57 1,122

1,561,584 11 11 1415,320,538 - - -

812,532 - - -1,129,732 - - -2,904,584 - - -1,435,664 - - -

50,720 - - -5,703,414 - - -

616,443 935,000 335,000 1,651,00094,825 17,513 107,518 559,777

1,503,119 - - -

31,133,155 952,524 442,529 2,210,791

(2,011,523) (952,435) (442,472) (2,209,669)

4,249,886 952,364 442,419 2,211,777(8,365,833) - - -2,368,479 - - -

(1,747,468) 952,364 442,419 2,211,777

(3,758,991) (71) (53) 2,108

35,922,045 7,319 8,572 5,763

$ 32,163,054 $ 7,248 $ 8,519 $ 7,871

Continued

FundsRefunding Revenue

Note 2012

Debt Service Funds

Non-Ad ValoremSpecial Revenue

Total

94

RevenuesTaxes $ - $ - $ 7,499,938Licenses and Permits - - -Intergovernmental - - 4,073,409Charges for Services - - 13,145,676Fines and Forfeitures - - 1,433,654Special Assessments - - 2,130,008Interest 1,268 - 107,086Miscellaneous - - 733,129

Total Revenues 1,268 - 29,122,900

ExpendituresCurrent

General Government 36 - 1,561,620Public Safety - - 15,320,538Physical Environment - 35,031 847,563Transportation - - 1,129,732Economic Environment - - 2,904,584Human Services - - 1,435,664Culture and Recreation - 7,095 57,815Court Operations - - 5,703,414

Debt ServicePrincipal 2,921,000 - 3,537,443Interest and Fiscal Charges 684,808 - 779,633

Capital Outlay - 34,139 1,537,258


Excess of Revenues Over (Under) Expenditures (3,604,576) (76,265) (5,692,364)

Other Financing Sources (Uses)Transfers In 3,606,560 3,080,000 10,936,446Transfers Out - - (8,365,833)Additions to Long-Term Debt - - 2,368,479

Total Other Financing Sources (Uses) 3,606,560 3,080,000 4,939,092

Net Change in Fund Balances 1,984 3,003,735 (753,272)

Fund Balances at Beginning of Year (restated) 21,654 - 35,943,699

Fund Balances at End of Year $ 23,638 $ 3,003,735 $ 35,190,427

GovernmentalQuality of LifeDebt ServiceFunds FundsProjects

NonmajorTotal


Debt Service Funds Capital Project Fund

Total



95


CHANGES IN FUND BALANCES - BUDGET AND ACTUALIMPACT FEES CAPITAL PROJECT FUND




RevenuesImpact Fees $ 1,087,235 $ 2,391,235 2,733,272 $ 342,037Interest 31,307 62,307 37,057 (25,250)

Total Revenues 1,118,542 2,453,542 2,770,329 316,787

ExpendituresCurrent

Public Safety 60,000 60,000 - 60,000Capital Outlay 2,010,000 2,888,910 1,145,544 1,743,366


Excess of Revenues Over Expenditures (951,458) (495,368) 1,624,785 2,120,153

Other Financing Sources (Uses)Transfers Out (485,838) (485,838) (485,837) 1Reserve for Contingencies (6,735,887) (6,970,518) - 6,970,518

Total Other Financing Sources (Uses) (7,221,725) (7,456,356) (485,837) 6,970,519


Fund Balance at Beginning of Year 8,173,183 7,951,724 7,881,400 (70,324)



Budgeted Amounts

96

HERNANDO COUNTY, FLORIDASCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUALSTORMWATER MANAGEMENT




RevenuesTaxes $ 819,025 $ 830,795 $ 832,120 $ 1,325Intergovernmental 680,000 480,000 478,423 (1,577)Interest 25,000 3,500 3,128 (372)Miscellaneous 31,500 31,500 49,950 18,450

Total Revenues 1,555,525 1,345,795 1,363,621 17,826

ExpendituresCurrent

Physical Environment 508,905 627,114 491,738 135,376Capital Outlay 1,350,000 2,864,963 1,120,146 1,744,817


Excess of Revenues Over (Under) Expenditures (303,380) (2,146,282) (248,263) 1,898,019

Other Financing Sources (Uses)Transfers In 5,000 - 13,339 13,339Transfers Out - (2,788) (2,788) -Reserve for Contingencies (5,461,125) (3,214,098) - 3,214,098

Total Other Financing Sources (Uses) (5,456,125) (3,216,886) 10,551 3,227,437

Net Change in Fund Balance (5,759,505) (5,363,168) (237,712) 5,125,456

Fund Balance at Beginning of Year 5,759,505 5,363,168 5,363,169 1



Budgeted Amounts

97


CHANGES IN FUND BALANCES - BUDGET AND ACTUALSENSITIVE LANDS




RevenuesTaxes $ 25 $ 25 $ 481 $ 456Interest 10,000 10,000 20,053 10,053Miscellaneous 5,280 5,280 4,800 (480)

Total Revenues 15,305 15,305 25,334 10,029

ExpendituresCurrent

Public Safety - - 73 (73)Physical Environment 751,469 778,346 315,625 462,721

Total Expenditures 751,469 778,346 315,698 462,648

Excess of Revenues Over (Under) Expenditures (736,164) (763,041) (290,364) 472,677

Other Financing Sources (Uses)Transfers In - - 5 5Transfers Out (2,718) (3,082,718) (3,082,718) -Reserve for Contingencies (5,061,118) (1,984,620) - 1,984,620

Total Other Financing Sources (Uses) (5,063,836) (5,067,338) (3,082,713) 1,984,625





Budgeted Amounts

98


CHANGES IN FUND BALANCES - BUDGET AND ACTUALSTATE HOUSING INITIATIVE PARTNERSHIP




RevenuesIntergovernmental $ 1,125,196 $ 1,125,196 $ 1,167,013 $ 41,817Interest 8,400 8,400 4,580 (3,820)Miscellaneous 200,000 200,000 418,588 218,588

Total Revenues 1,333,596 1,333,596 1,590,181 256,585

ExpendituresCurrent

Economic Environment 1,564,111 1,514,111 1,389,571 124,540


Excess of Revenues Over (Under) Expenditures (230,515) (180,515) 200,610 381,125

Other Financing Sources (Uses)Transfers Out - (50,000) - 50,000Reserve for Contingencies - (223,328) - 223,328

Total Other Financing Sources (Uses) - (273,328) - 273,328

Net Change in Fund Balance (230,515) (453,843) 200,610 654,453

Fund Balance at Beginning of Year 230,515 453,843 453,843 -

Fund Balance at End of Year $ - $ - $ 654,453 $ 654,453


Budgeted Amounts

99



RevenuesIntergovernmental $ 14,288 $ 18,892 $ 15,266 $ (3,626)Charges for Services 1,128,907 1,128,907 1,142,938 14,031Fines and Forfeitures - - 900 900Special Assessments - - - -Interest 18,900 18,900 22,002 3,102Miscellaneous - - 169 169

Total Revenues 1,162,095 1,166,699 1,181,275 14,576

ExpendituresCurrent

Court Operations 1,592,751 1,173,793 1,024,022 149,771Capital Outlay 109,670 107,036 78,039 28,997



Other Financing Sources (Uses)Transfers In 484,156 484,156 484,156 -Transfers Out (2,788) (6,970) (6,970) -Reserve for Contingencies (4,685,499) (5,741,796) - 5,741,796

Total Other Financing Sources (Uses) (4,204,131) (5,264,610) 477,186 5,741,796

Net Change in Fund Balance (4,744,457) (5,378,740) 556,400 5,935,140




Budgeted Amounts


CHANGES IN FUND BALANCES - BUDGET AND ACTUALCOURT-RELATED FUNDS


100


CHANGES IN FUND BALANCES - BUDGET AND ACTUALMUNICIPAL SERVICE BENEFIT UNITS




RevenuesSpecial Assessments $ 1,973,741 $ 2,119,061 $ 2,130,008 $ 10,947Interest 4,918 5,268 244 (5,024)Miscellaneous 18,000 34,184 42,510 8,326

Total Revenues 1,996,659 2,158,513 2,172,762 14,249

ExpendituresCurrent

Public Safety 230,539 262,081 266,614 (4,533)Physical Environment 2,381 2,381 1,614 767Transportation 1,228,357 1,201,642 1,118,058 83,584

Debt ServicePrincipal 552,701 566,835 510,321 56,514Interest and Fiscal Charges 122,709 81,481 84,077 (2,596)

Capital Outlay 1,350,500 245,445 47,237 198,208


Excess of Revenues Over (Under) Expenditures (1,490,528) (201,352) 144,841 346,193

Other Financing Sources (Uses)Transfers In 1,099,000 2,188,518 59,347 (2,129,171)Transfers Out (1,018,215) (4,442,432) (2,205,605) 2,236,827Additions to Long-Term Debt 1,911,294 2,346,301 2,368,479 22,178Reserve for Contingencies (1,981,145) (1,444,006) - 1,444,006

Total Other Financing Sources (Uses) 10,934 (1,351,619) 222,221 1,573,840


Fund Balance at Beginning of Year 1,479,594 1,552,969 3,003,640 1,450,671

Fund Balance at End of Year $ - $ (2) $ 3,370,702 $ 3,370,704


Budgeted Amounts

101


CHANGES IN FUND BALANCES - BUDGET AND ACTUALHERNANDO COUNTY FIRE RESCUE - RESCUEFor the Fiscal Year Ended September 30, 2017



RevenuesTaxes $ 4,843,225 $ 4,843,225 $ 4,918,351 $ 75,126Intergovernmental 31,500 91,500 81,430 (10,070)Charges for Services 6,686,399 6,686,399 5,804,334 (882,065)Interest 3,100 3,100 8,468 5,368Miscellaneous 38,450 38,450 45,092 6,642

Total Revenues 11,602,674 11,662,674 10,857,675 (804,999)

ExpendituresCurrent

Public Safety 13,453,515 13,546,338 13,348,602 197,736Debt Service

Principal 171,485 171,485 106,122 65,363Interest and Fiscal Charges 37,586 37,586 10,748 26,838

Capital Outlay 134,704 133,285 111,789 21,496


Excess of Revenues Over (Under) Expenditures (2,194,616) (2,226,020) (2,719,586) (493,566)

Other Financing Sources (Uses)Transfers In - - 78,672 78,672Transfers Out (136,575) (136,575) (136,575) -Reserve for Contingencies (1,955,556) (2,703,673) - 2,703,673

Total Other Financing Sources (Uses) (2,092,131) (2,840,248) (57,903) 2,782,345


Fund Balance at Beginning of Year 4,286,747 5,066,268 5,066,268 -



Budgeted Amounts

102


CHANGES IN FUND BALANCES - BUDGET AND ACTUALMISCELLANEOUS SPECIAL REVENUE FUNDSFor the Fiscal Year Ended September 30, 2017



RevenuesTaxes $ 1,794,720 $ 1,796,720 $ 1,748,986 $ (47,734)Intergovernmental 1,062,852 1,166,350 686,786 (479,564)Charges for Services - 40,000 22,658 (17,342)Fines and Forfeitures 117,000 95,000 161,085 66,085Interest 25,790 25,790 16,893 (8,897)Miscellaneous 154,260 156,743 65,863 (90,880)

Total Revenues 3,154,622 3,280,603 2,702,271 (578,332)

ExpendituresCurrent

General Government 985,653 1,091,334 585,364 505,970Public Safety 261,500 261,500 150,619 110,881Physical Environment 101,858 101,858 3,555 98,303Transportation 16,838 16,838 11,674 5,164Economic Environment 1,715,349 1,781,022 1,515,013 266,009Human Services 1,670,765 1,773,614 1,435,664 337,950Culture and Recreation 209,000 146,006 50,720 95,286

Capital Outlay 15,000 81,351 53,170 28,181


Excess of Revenues Over (Under) Expenditures (1,821,341) (1,972,920) (1,103,508) 869,412

Other Financing Sources (Uses)Transfers In 699,240 2,903,988 3,474,367 570,379Transfers Out (15,333) (15,333) (15,333) -Reserve for Contingencies (2,617,413) (5,234,526) - 5,234,526

Total Other Financing Sources (Uses) (1,933,506) (2,345,871) 3,459,034 5,804,905


Fund Balance at Beginning of Year 3,754,847 4,318,791 4,432,438 113,647



Budgeted Amounts

103


CHANGES IN FUND BALANCES - BUDGET AND ACTUALCLERK OF COURT AND COMPTROLLER SPECIAL REVENUE FUNDS




RevenuesIntergovernmental $ 328,500 $ 407,017 $ 528,516 $ 121,499Charges for Services 3,193,000 3,193,000 3,261,615 68,615Fines and Forfeitures 990,000 990,000 1,044,270 54,270Special Assessments - - - -Interest 8,500 8,500 25,847 17,347Miscellaneous - - 324 324

Total Revenues 4,520,000 4,598,517 4,860,572 262,055

ExpendituresCurrent

General Government 272,000 272,000 92,201 179,799Court Operations 4,764,000 4,842,517 4,679,392 163,125

Capital Outlay 150,000 150,000 28,600 121,400



Other Financing Sources (Uses)Transfers In 140,000 140,000 140,000 -Transfers Out - - (64,491) (64,491)Reserve for Contingencies (740,500) (740,500) - 740,500

Total Other Financing Sources (Uses) (600,500) (600,500) 75,509 676,009





Budgeted Amounts

104


CHANGES IN FUND BALANCES - BUDGET AND ACTUALPROPERTY APPRAISER SPECIAL REVENUE FUNDS




RevenuesIntergovernmental $ 895,574 $ 895,574 $ 895,574 $ -Charges for Services - - 75,643 75,643Interest - - 927 927Miscellaneous - 75,004 - (75,004)

Total Revenues 895,574 970,578 972,144 1,566

ExpendituresCurrent

General Government 960,078 960,078 884,019 76,059Capital Outlay 10,500 10,500 1,613 8,887

Total Expenditures 970,578 970,578 885,632 84,946

Excess of Revenues Over Expenditures (75,004) - 86,512 86,512

Other Financing Sources (Uses)Transfers Out - - (59,811) (59,811)

Total Other Financing Sources (Uses) - - (59,811) (59,811)

Net Change in Fund Balance (75,004) - 26,701 26,701

Fund Balance at Beginning of Year 75,004 - 932,975 932,975



Budgeted Amounts

105


CHANGES IN FUND BALANCES - BUDGET AND ACTUALSHERIFF SPECIAL REVENUE FUNDS




RevenuesIntergovernmental $ 240,248 $ 314,630 $ 220,401 $ (94,229)Charges for Services 2,154,000 2,154,000 2,838,488 684,488Fines and Forfeitures 213,000 213,000 227,399 14,399Interest 4,500 4,500 3,676 (824)Miscellaneous 104,025 104,025 105,833 1,808

Total Revenues 2,715,773 2,790,155 3,395,797 605,642

ExpendituresCurrent

Public Safety 1,963,603 2,051,985 1,554,630 497,355Capital Outlay 513,180 528,180 62,525 465,655


Excess of Revenues Over (Under) Expenditures 238,990 209,990 1,778,642 1,568,652

Other Financing Sources (Uses)Transfers Out (2,222,877) (2,222,877) (2,791,542) 568,665Reserve for Contingencies (2,156,951) (2,127,951) - (2,127,951)

Total Other Financing Sources (Uses) (4,379,828) (4,350,828) (2,791,542) (1,559,286)

Net Change in Fund Balance (4,140,838) (4,140,838) (1,012,900) 9,366


Fund Balance at End of Year $ - $ - $ 3,133,132 $ 14,560


Budgeted Amounts

106


CHANGES IN FUND BALANCES - BUDGET AND ACTUALCAPITAL IMPROVEMENT AND REFUNDING REVENUE BONDS 2004




RevenuesInterest $ - $ - $ 89 $ 89

Total Revenues - - 89 89

ExpendituresCurrent

General Government - - 11 (11)Debt Service

Principal 935,000 935,000 935,000 -Interest and Fiscal Charges 17,363 17,363 17,513 (150)

Total Expenditures 952,363 952,363 952,524 (161)

Excess of Revenues Over (Under) Expenditures (952,363) (952,363) (952,435) (72)

Other Financing Sources (Uses)Transfers In 952,363 952,364 952,364 -Reserve for Contingencies - (7,320) - 7,320

Total Other Financing Sources (Uses) 952,363 945,044 952,364 7,320

Net Change in Fund Balance - (7,319) (71) 7,248

Fund Balance at Beginning of Year - 7,319 7,319 -



Budgeted Amounts

107


CHANGES IN FUND BALANCES - BUDGET AND ACTUALNON-AD VALOREM REFUNDING REVENUE BONDS 2010




RevenuesInterest $ 24 $ 24 $ 57 $ 33

Total Revenues 24 24 57 33

ExpendituresCurrent

General Government 25 25 11 14Debt Service

Principal 335,000 335,000 335,000 -Interest and Fiscal Charges 107,419 107,419 107,518 (99)

Total Expenditures 442,444 442,444 442,529 (85)

Excess of Revenues Over (Under) Expenditures (442,420) (442,420) (442,472) (52)

Other Financing Sources (Uses)Transfers In 442,420 442,420 442,419 (1)Reserve for Contingencies - (8,573) - 8,573

Total Other Financing Sources (Uses) 442,420 433,847 442,419 8,572

Net Change in Fund Balance - (8,573) (53) 8,520

Fund Balance at Beginning of Year - 8,573 8,572 (1)



Budgeted Amounts

108


CHANGES IN FUND BALANCES - BUDGET AND ACTUALNON-AD VALOREM REFUNDING REVENUE NOTE 2012




RevenuesInterest $ - $ - $ 1,122 $ 1,122

Total Revenues - - 1,122 1,122

ExpendituresCurrent

General Government - - 14 (14)Debt Service

Principal 1,651,000 1,651,000 1,651,000 -Interest and Fiscal Charges 560,778 560,778 559,777 1,001

Total Expenditures 2,211,778 2,211,778 2,210,791 987

Excess of Revenues Over (Under) Expenditures (2,211,778) (2,211,778) (2,209,669) 2,109

Other Financing Sources (Uses)Transfers In 2,211,781 2,211,781 2,211,777 (4)Reserve for Contingencies (3) (5,767) - 5,767

Total Other Financing Sources (Uses) 2,211,778 2,206,014 2,211,777 5,763

Net Change in Fund Balance - (5,764) 2,108 7,872

Fund Balance at Beginning of Year - 5,764 5,763 (1)



Budgeted Amounts

109


CHANGES IN FUND BALANCES - BUDGET AND ACTUALQUALITY OF LIFE PROJECTS




ExpendituresCurrent

Physical Environment - 35,050 35,031 19Culture and Recreation - 7,095 7,095 -

Capital Outlay - 3,037,855 34,139 3,003,716

Total Expenditures - 3,080,000 76,265 3,003,735

Excess of Revenues Over (Under) Expenditures - (3,080,000) (76,265) 3,003,735

Other Financing Sources (Uses)Transfers In - 3,080,000 3,080,000 -

Total Other Financing Sources (Uses) - 3,080,000 3,080,000 -

Net Change in Fund Balance - - 3,003,735 3,003,735

Fund Balance at Beginning of Year - - - -



Budgeted Amounts

110

Internal Service Funds

Central Fueling SystemTo account for the internal operation of the central fueling division of Hernando County.

Risk ManagementTo account for the internal operation of the general insurance programs used by the County.

Workers’ CompensationTo account for the internal operations of the self-insured workers’ compensation program.

Computer ReplacementTo account for the management and replacement of County computers.

Vehicle MaintenanceTo account for the internal operation of the privatized vehicle maintenance program.

Fleet ReplacementTo account for the management and replacement of County vehicles.

County Health InsuranceTo account for self-insured medical insurance provided to the employees by the County.

Sheriff Health InsuranceTo account for self-insured medical insurance provided to the employees by the Sheriff.

ASSETSCurrent Assets

Cash and Cash Equivalents $ - $ - $ 200,000Pooled Cash and Investments 539,580 1,663,587 5,981,057Cash with Fiscal Agent - - -Accounts Receivable (net) 17,943 - 872Due from Other Governments 3,714 - -Inventories 88,094 - -

Total Current Assets 649,331 1,663,587 6,181,929Non-Current Assets

Capital Assets, net of accumulateddepreciation:

Buildings - - -Equipment 27,575 447 -

Total Non-Current Assets 27,575 447 -Total Assets $ 676,906 $ 1,664,034 $ 6,181,929

Deferred Outflows of Resources $ 12,021 $ 46,776 $ 27,729

LIABILITIESCurrent Liabilities:

Accounts Payable 195,535 3,015 35,635Accrued Liabilities 1,989 5,098 7,434Compensated Absences 2,719 4,692 3,396Unearned Revenues - - -Loans & Notes Payable - - -Claims Liabilities - - 2,550,000

Total Current Liabilities 200,243 12,805 2,596,465Non-Current Liabilities:

Loans & Notes Payable - - -Compensated Absences 269 464 336Other Post-Employment Benefits 2,692 7,669 10,215Net Pension Liability 27,605 85,306 73,359Claims Liabilities - - 650,000

Total Non-Current Liabilities 30,566 93,439 733,910Total Liabilities $ 230,809 $ 106,244 $ 3,330,375

Deferred Inflows of Resources $ 1,465 $ 306 $ 3,264

NET POSITIONNet Investment in Capital Assets 27,575 447 -Unrestricted 429,078 1,603,813 2,876,019

Total Net Position $ 456,653 $ 1,604,260 $ 2,876,019

HERNANDO COUNTY, FLORIDACOMBINING STATEMENT OF NET POSITION

INTERNAL SERVICE FUNDSSeptember 30, 2017

Central Workers'Fueling RiskSystem Management

Compen-sation

111

$ - $ 720 $ - $ - $ - $ 200,720479,511 851,833 1,201,767 4,880,681 - 15,598,016

- - - - 5,052,936 5,052,936- - - 1,238 67,796 87,849- - - - - 3,714- - - - - 88,094

479,511 852,553 1,201,767 4,881,919 5,120,732 21,031,329

- 1,527,648 - - - 1,527,648393,235 7,169 11,112,331 886 - 11,541,643393,235 1,534,817 11,112,331 886 - 13,069,291

$ 872,746 $ 2,387,370 $ 12,314,098 $ 4,882,805 $ 5,120,732 $ 34,100,620

$ - $ 197,558 $ 16,960 $ 3,168 $ - $ 304,212

- 246,200 1,171 910,740 345,495 1,737,791- 44,177 10,498 4,157 - 73,353- 40,109 10,160 4,644 - 65,720- - - - 376,260 376,260- - 253,673 - - 253,673- - - 423,743 307,563 3,281,306- 330,486 275,502 1,343,284 1,029,318 5,788,103

- - 743,323 - - 743,323- 3,967 1,005 459 - 6,500- 47,278 3,796 545 - 72,195- 479,747 44,031 5,642 - 715,690- - - - - 650,000- 530,992 792,155 6,646 - 2,187,708

$ - $ 861,478 $ 1,067,657 $ 1,349,930 $ 1,029,318 $ 7,975,811

$ - $ 26,774 $ 3,362 $ 1,890 $ - $ 37,061

393,235 1,534,817 10,115,335 886 - 12,072,295479,511 161,859 1,144,704 3,533,267 4,091,414 14,319,665

$ 872,746 $ 1,696,676 $ 11,260,039 $ 3,534,153 $ 4,091,414 $ 26,391,960

HealthInsurance

ComputerReplacement Replacement

FleetVehicleMaintenance

SheriffHealth

Insurance Total

County

112

HERNANDO COUNTY, FLORIDACOMBINING STATEMENT OF REVENUES, EXPENSES

AND CHANGES IN FUND NET POSITIONINTERNAL SERVICE FUNDS


Operating RevenuesCharges for Services $ 1,052,229 $ 4,248,414 $ 1,095,967Miscellaneous 1,654 - 3,866

Total Operating Revenues 1,053,883 4,248,414 1,099,833

Operating ExpensesPersonal Services 43,663 63,164 121,425Other Services & Charges 938,289 4,015,827 256,807Claims - - 1,140,144Depreciation and Amortization 4,218 383 -

Total Operating Expenses 986,170 4,079,374 1,518,376

Operating Income (Loss) 67,713 169,040 (418,543)

Non-Operating Revenues (Expenses)Interest Income 848 5,906 21,953Interest Expense - - -Gain (Loss) on Sale of Capital Assets - - -

Total Non-Operating Revenues (Expenses) 848 5,906 21,953

Income (Loss) Before Transfers 68,561 174,946 (396,590)

Contributions - - -Transfers In - - -Transfers Out (1,255) (976) (1,882)

Total Contributions and Transfers (1,255) (976) (1,882)

Change in Net Position 67,306 173,970 (398,472)

Net Position-Beginning 389,347 1,430,290 3,274,491

Net Position-Ending $ 456,653 $ 1,604,260 $ 2,876,019


ManagementCompen-

sationRisk

SystemFuelingCentral Workers'

113

$ 156,754 $ 2,567,168 $ 2,152,458 $ 11,719,376 $ 5,296,975 $ 28,289,341- 1,207 321,607 214,250 121,583 664,167

156,754 2,568,375 2,474,065 11,933,626 5,418,558 28,953,508

- 809,150 89,379 2,036,544 - 3,163,3257,700 1,671,970 520,212 1,196,712 1,413,720 10,021,237- - - 8,351,683 4,283,970 13,775,797

122,510 61,173 1,739,517 136 - 1,927,937130,210 2,542,293 2,349,108 11,585,075 5,697,690 28,888,296

26,544 26,082 124,957 348,551 (279,132) 65,212

1,265 198 6,599 21,796 17,225 75,790- - (6,942) - - (6,942)

4 - 205,577 - - 205,5811,269 198 205,234 21,796 17,225 274,429

27,813 26,280 330,191 370,347 (261,907) 339,641

- - 21,192 - - 21,192- - 25,675 1,299,187 - 1,324,862- (104,780) (836) - - (109,729)- (104,780) 46,031 1,299,187 - 1,236,325

27,813 (78,500) 376,222 1,669,534 (261,907) 1,575,966

844,933 1,775,176 10,883,817 1,864,619 4,353,321 24,815,994

$ 872,746 $ 1,696,676 $ 11,260,039 $ 3,534,153 $ 4,091,414 $ 26,391,960

Maintenance TotalHealthHealth

Insurance Insurance

SheriffComputer

CountyFleet

ReplacementReplacementVehicle

114

Cash Flows from Operating ActivitiesReceipts from Customers $ (47,905) $ (24,768) $ (872)Receipts from Inter-Fund Services 42,315 27,103 -Payments to Suppliers 97,904 409 (14,413)Payments to Employees 3,283 4,719 14,692Claims Paid - - 470,000Other Receipts (Payments) - - -

Net Cash provided by ( used in) Operating Activities 95,597 7,463 469,407

Cash Flows from Noncapital Financing ActivitiesTransfers from Other Funds - - -Transfers to Other Funds - - -

Net Cash Provided by (used for)Noncapital Financing Activities - - -

Cash Flows from Capital and Related Financing ActivitiesAdditions to Capital Assets (31,793) - -Proceeds From Capital Debt - - -Principal Paid on Capital Debt - - -Interest Paid on Capital Debt - - -Proceeds From Sale of Capital Assets - - -

Net Cash Provided by (used for) Capital andRelated Financing Activities (31,793) - -

Cash Flows from Investing ActivitiesInterest Received 848 5,906 21,953

Net Cash Provided by Investing Activities 848 5,906 21,953

Net Increase (Decrease) in Cash and Cash Equivalents 64,652 13,369 491,360

Cash and Cash Equivalents at Beginning of Year 403,983 1,481,307 6,109,786

Cash and Cash Equivalents at End of Year $ 468,635 $ 1,494,676 $ 6,601,146


Fueling Risk Compen-


System Management

Central

HERNANDO COUNTY, FLORIDACOMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS

Workers'

sation

115

Vehicle Fleet

$ (4,244) $ 989 $ - $ (80,669) $ 1,267,166 $ 1,109,6974,244 - - 79,431 4,047,403 4,200,496- 33,826 (69,965) 238,891 (1,413,720) (1,127,068)- 73,025 762,798 (363,915) - 494,602- - - (131,236) (4,309,025) (3,970,261)- - - - 121,583 121,583- 107,840 692,833 (257,498) (286,593) 829,049

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

- - - - - -

(253,096) (2,499) (2,954,378) (1,022) - (3,242,788)- - 1,199,648 - - 1,199,648- - (202,652) - - (202,652)- - (6,942) - - (6,942)- - 225,190 - - 225,190

(253,096) (2,499) (1,739,134) (1,022) - (2,027,544)

1,265 198 6,599 21,796 17,225 75,7901,265 198 6,599 21,796 17,225 75,790

(251,831) 105,539 (1,039,702) (236,724) (269,368) (1,122,705)

582,288 760,572 1,300,051 3,469,072 5,322,304 19,429,363

$ 330,457 $ 866,111 $ 260,349 $ 3,232,348 $ 5,052,936 $ 18,306,658

Continued

Replacement Insurance TotalInsuranceMaintenance

SheriffHealthComputer

MaintenanceHealthCounty

116

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

Operating Income (Loss) $ 67,713 $ 169,040 $ (418,543)

Adjustments to Reconcile Operating Income (Loss)to Net Cash provided by (used in) Operating Activities

Depreciation and Amortization 4,218 383 -Other Post-Employment Benefits 327 436 981Pension Adjustments 1,911 3,699 6,953(Increase) Decrease in

Accounts Receivable (1,876) - (872)Due from Other Funds - (2,286) -Due from Other Governments (3,714) 49 -Inventories (49,905) - -Prepaid Expenses - - -

Increase (Decrease) inAccounts Payable 148,227 409 (14,413)Accrued Liabilities 1,045 584 6,758Due to Other Funds (418) - -Unearned Revenues - - -Claims Liabilities - - 470,000

Total Adjustments 99,815 3,274 469,407

Net Cash Provided by (used in) Operating Activities $ 167,528 $ 172,314 $ 50,864

System sationManagement


HERNANDO COUNTY, FLORIDACOMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDS

Fueling Compen-RiskCentral Workers'

117

$ 26,544 $ 26,082 $ 124,957 $ 348,551 $ (279,132) $ 65,212

122,510 61,173 1,739,517 136 - 1,927,937- 5,829 708 545 - 8,826- 39,282 3,592 4,364 - 59,801

- 989 - (1,238) (15,976) (18,973)- - - - - (2,286)- - - - - (3,665)- - - - - (49,905)- - 343,227 - - 343,227

- 37,367 (413,046) 238,891 (19,579) (22,144)- 27,914 758,498 (368,824) - 425,975- (3,541) (146) - - (4,105)- - - - 17,594 17,594- - - (131,236) 10,500 349,264

122,510 169,013 2,432,350 (257,362) (7,461) 3,031,546

$ 149,054 $ 195,095 $ 2,557,307 $ 91,189 $ (286,593) $ 3,096,758

TotalVehicle Health

InsuranceMaintenance Insurance

SheriffHealth

MedicalFleet

ReplacementComputer

Replacement

118

Fiduciary Funds

Board of County Commissioners Agency FundTo account for assets held in trust by the Board of County Commissioners as trustee or agent,

including employee insurance payments, industrial bond escrow funds and impact fees held for the SchoolBoard of Hernando County.

Clerk of Circuit Court Agency FundTo account for assets held in trust by the Clerk of Circuit Court as trustee or agent, including fines and

fees, court registry funds, child support and alimony payments, and juror and witness funds.

Tax Collector Agency FundTo account for assets held in trust by the Tax Collector as trustee or agent, including tax and tag

funds.

Sheriff Agency FundTo account for assets held in trust by the Sheriff as trustee or agent, including service fees.

Board of ClerkCounty of the Tax

Commissioners Circuit Court CollectorASSETSCash and Cash Equivalents $ - $ - $ 2,136,250Pooled Cash and Investments 2,093,060 2,853,739 2,825,352Accounts Receivable (net) - 300 -Due from Other Governments - - 421

Total Assets $ 2,093,060 $ 2,854,039 $ 4,962,023

LIABILITIESAccounts Payable $ 65,981 $ 10,318 $ 172,691Accrued Liabilities 1,980,602 1,254,275 -Due to Other Governments 26,690 597,160 2,653,082Deposits 19,787 992,286 2,136,250




AGENCY FUNDSSeptember 30, 2017

119

Sheriff Total

$ 117,513 $ 2,253,763- 7,772,151- 300- 421

$ 117,513 $ 10,026,635

$ 44,774 $ 293,76429,777 3,264,654

8,470 3,285,40234,492 3,182,815

$ 117,513 $ 10,026,635

120

Balance Balance9/30/2016 Additions Deletions 9/30/2017

ASSETSPooled Cash and Investments $ 2,702,183 $ - $ 609,123 $ 2,093,060

Total Assets $ 2,702,183 $ - $ 609,123 $ 2,093,060

LIABILITIESAccounts Payable $ 98,448 $ - $ 32,467 $ 65,981Accrued Liabilities 2,565,483 - 584,881 1,980,602Due to Other Funds - - - -Due to Other Governments 18,465 8,225 - 26,690Due to Hernando County BCC - - - -Deposits 19,787 - - 19,787Other Current Liabilities -

Total Liabilities $ 2,702,183 $ 8,225 $ 617,348 $ 2,093,060


-

HERNANDO COUNTY, FLORIDACOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

BOARD OF COUNTY COMMISSIONERS' AGENCY FUNDSFor the Fiscal Year Ended September 30, 2017

121


ASSETSPooled Cash and Investments $ 3,554,076 $ - $ 700,337 $ 2,853,739Accounts Receivable (net) 300 - - 300

Total Assets $ 3,554,376 $ - $ 700,337 $ 2,854,039

LIABILITIESAccounts Payable $ 14,317 $ - $ 3,999 $ 10,318Accrued Liabilities 2,033,339 - 779,064 1,254,275Due to Other Funds - - - -Due to Other Governments 645,948 - 48,788 597,160Due to Hernando County BCC - - - -Deposits 860,772 131,514 - 992,286

Total Liabilities $ 3,554,376 $ 131,514 $ 831,851 $ 2,854,039



CLERK OF COURT & COMPTROLLER AGENCY FUNDSFor the Fiscal Year Ended September 30, 2017

122


ASSETSCash and Cash Equivalents $ 2,212,834 $ - $ 76,584 $ 2,136,250Pooled Cash and Investments 310,911 2,514,441 - 2,825,352Due from Other Governments 414 7 - 421

Total Assets $ 2,524,159 $ 2,514,448 $ 76,584 $ 4,962,023

LIABILITIESAccounts Payable $ 12,050 $ 160,641 $ - $ 172,691Due to Other Governments 299,298 2,353,784 - 2,653,082Due to Hernando County BCC - - - -Deposits 2,212,811 - 76,561 2,136,250

Total Liabilities $ 2,524,159 $ 2,514,425 $ 76,561 $ 4,962,023



TAX COLLECTOR AGENCY FUNDSFor the Fiscal Year Ended September 30, 2017

123


ASSETSCash and Cash Equivalents $ 103,838 $ 13,675 $ - $ 117,513

Total Assets $ 103,838 $ 13,675 $ - $ 117,513

LIABILITIESAccounts Payable $ 40,212 $ 4,562 $ - $ 44,774Accrued Liabilities - 29,777 - 29,777Due to Other Funds 32,334 - 32,334 -Due to Other Governments 10,566 - 2,096 8,470Deposits 20,726 13,766 - 34,492

Total Liabilities $ 103,838 $ 48,105 $ 34,430 $ 117,513



SHERIFF AGENCY FUNDSFor the Fiscal Year Ended September 30, 2017

124

STATISTICAL SECTION

This part of Hernando County’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health. Contents Page

Financial Trends

S-1 through

S-9

These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time.

Revenue Capacity

S-10 through

S-14

These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax.

Debt Capacity

S-15 through

S-19

These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future

Demographic and Economic Information

S-20 through

S-23

These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place.

Operating Information

S-24 through

S-29

These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

Schedule 1

Hernando County, FloridaNet Position by Component

Last Ten Fiscal Years(accrual basis of accounting)

(dollars expressed in thousands)

2008 2009 2010 2011 2012

Governmental ActivitiesNet Investment in Capital Assets $ 240,796 $ 257,885 $ 267,795 $ 280,327 $ 285,954Restricted 69,441 80,026 76,929 86,754 88,847Unrestricted (Deficit) 55,722 49,724 51,616 37,429 30,767

Total Governmental Activities Net Position $ 365,959 $ 387,635 $ 396,340 $ 404,510 $ 405,568

Business-type ActivitiesNet Investment in Capital Assets $ 154,168 $ 161,722 $ 173,889 $ 179,518 $ 170,908Restricted 14,632 37,246 9,964 6,956 10,743Unrestricted 26,750 25,097 20,836 19,608 25,030

Total Business-type Activities Net Position $ 195,550 $ 224,065 $ 204,689 $ 206,082 $ 206,681

Primary GovernmentNet Investment in Capital Assets $ 394,964 $ 419,607 $ 441,684 $ 459,845 $ 456,862Restricted 84,073 117,272 86,893 93,710 99,590Unrestricted 82,472 74,821 72,452 57,037 55,797

Total Primary Government Net Position $ 561,509 $ 611,700 $ 601,029 $ 610,592 $ 612,249

(1) GASB 68 was implemented in 2015, requiring a reduction in beginning net position of $67,122,821 (governmental) and $4,813,564(business-type). Prior years have not been restated in this schedule.

Fiscal Year

S - 1

2013 2014 2015 (1) 2016 2017

$ 290,020 $ 292,320 $ 303,506 $ 306,373 $ 304,60582,667 72,678 61,254 62,476 57,32324,747 32,333 (28,753) (42,266) (46,513)

$ 397,434 $ 397,331 $ 336,007 $ 326,583 $ 315,415

$ 171,017 $ 168,614 $ 171,560 $ 174,660 $ 171,81710,312 10,442 9,597 12,753 17,78328,386 33,505 37,215 42,892 49,047

$ 209,715 $ 212,561 $ 218,372 $ 230,305 $ 238,647

$ 461,037 $ 460,934 $ 475,066 $ 481,033 $ 476,42292,979 83,120 70,851 75,229 75,10653,133 65,838 8,462 626 2,534

$ 607,149 $ 609,892 $ 554,379 $ 556,888 $ 554,062

S - 2

Schedule 2

Hernando County, FloridaChanges in Net Position

Last Ten Fiscal Years (a)(accrual basis of accounting)


2008 2009 2010 2011 2012ExpensesGovernmental Activities:

General Government $ 24,579 $ 23,141 $ 20,142 $ 18,750 $ 17,511Public Safety 75,116 63,261 61,896 59,674 69,359Physical Environment 1,175 1,731 1,088 1,236 1,114Transportation 18,872 18,864 22,998 25,265 20,939Economic Environment 2,549 2,891 5,919 3,828 2,691Human Services 6,832 6,622 6,159 7,280 10,404Culture and Recreation 7,711 7,126 5,839 5,557 5,004Court Operations 7,817 7,165 5,852 5,771 5,609Interest on Long-term Debt 2,072 2,095 1,887 1,730 1,654

Total Governmental Activities Expenses 146,723 132,896 131,780 129,091 134,285Business-type Activities:

Water and Sewer District 25,469 25,669 25,797 25,648 25,976Aviation Operatoins 1,523 1,664 1,717 2,588 2,232Waste Management 7,197 9,748 368 6,072 6,040Building Department 4,350 2,204 1,774 1,710 1,794Zoning Department - 991 609 446 378

Total Business-type Activities Expenses 38,539 40,276 30,265 36,464 36,420Total Primary Government Expenses $ 185,262 $ 173,172 $ 162,045 $ 165,555 $ 170,705

Program RevenuesGovernmental Activities:

Charges for Services:General Government $ 10,550 $ 11,322 $ 10,729 $ 12,696 $ 12,666Public Safety 15,757 19,068 16,014 16,153 19,961Physical Environment 258 615 172 100 630Transportation 7,292 4,792 4,588 4,460 4,194Economic Environment 2 12 24 57 2Human Services 278 236 245 249 238Culture and Recreation 596 657 655 724 809Court Operations 6,478 5,145 4,196 4,336 4,399

Operating Grants and Contributions 5,709 4,938 7,027 7,818 3,864Capital Grants and Contributions 7,695 18,733 11,995 15,538 3,652

Total Government Activities Program Revenues 54,615 65,518 55,645 62,131 50,415Business-type Activities:

Charges for Services:Water and Sewer District 22,790 22,164 21,941 22,988 24,491Aviation Operations 1,585 1,726 1,704 1,587 1,558Waste Management 7,019 7,067 6,867 6,965 7,085Building Department 2,377 1,482 1,641 1,737 1,921Zoning Department - 503 302 319 274

Operating Grants and Contributions 48 36 38 584 85Capital Grants and Contributions 5,282 3,554 1,315 2,300 2,409

Total Business-type Activities Program Revenues 39,101 36,532 33,808 36,480 37,823Total Primary Government Program Revenues $ 93,716 $ 102,050 $ 89,453 $ 98,611 $ 88,238

(a) In fiscal year 2009, the Building Department and Zoning Department Business-Type Activities were split and reported separately.In fiscal year 2015, the Zoning Department was moved to the General Fund.

Fiscal Year

S - 3

2013 2014 2015 2016 2017

$ 20,629 $ 21,044 $ 22,134 $ 24,583 $ 26,21969,196 74,079 74,105 86,582 92,685

1,316 988 1,195 1,230 1,30419,119 19,983 20,187 23,236 24,465

2,377 1,689 2,355 3,095 3,4878,819 10,009 8,762 7,275 7,5045,326 5,173 5,146 5,714 5,7126,140 6,656 6,868 6,773 7,1631,224 1,144 1,062 1,038 1,074

134,146 140,765 141,814 159,526 169,613

25,147 25,505 25,882 27,673 30,9332,561 2,914 2,242 2,567 2,2336,902 6,918 3,348 6,447 7,5941,724 1,990 2,218 2,786 2,807

350 359 - - -36,684 37,686 33,690 39,473 43,567

$ 170,830 $ 178,451 $ 175,504 $ 198,999 $ 213,180

$ 10,116 $ 13,730 $ 14,238 $ 12,050 $ 12,41918,180 27,931 29,063 31,168 31,312

79 306 214 345 8654,327 3,165 4,856 5,398 5,692

115 54 96 - 66231 245 229 250 231811 851 833 915 1,037

4,978 5,120 5,059 4,832 4,8484,528 2,408 5,033 4,935 5,9934,323 1,887 3,006 1,777 4,728

47,688 55,697 62,627 61,670 67,191

25,275 26,568 28,569 31,032 33,8321,878 1,629 1,607 1,806 1,7017,331 7,420 7,668 7,653 7,8031,792 1,900 2,602 2,970 2,915

247 320 - - -75 245 294 94 110

2,036 1,549 2,531 5,306 4,46938,634 39,631 43,271 48,861 50,830

$ 86,322 $ 95,328 $ 105,898 $ 110,531 $ 118,021

S - 4

Schedule 2

Hernando County, FloridaChanges in Net Position (Continued)

Last Ten Fiscal Years(accrual basis of accounting)


2008 2009 2010 2011 2012

Net (Expense)/RevenueGovernmental Activities $ (92,108) $ (67,378) $ (76,135) $ (66,960) $ (83,870)Business-type Activities 562 (3,744) 3,543 15 1,404Total Primary Government Net Expense $ (91,546) $ (71,122) $ (72,592) $ (66,945) $ (82,466)

General Revenues and Other Changes inNet Position

Governmental Activities:Taxes

Property Taxes $ 85,150 $ 67,314 $ 61,237 $ 52,091 $ 56,605Fuel Taxes 6,952 6,573 6,696 7,112 6,216Sales Taxes 7,631 7,098 7,154 7,817 7,367Other Taxes 1,927 2,155 1,892 1,946 1,768

State Shared Revenue 3,967 3,592 3,611 3,758 4,013Investment Earnings 8,371 5,599 2,449 1,297 2,209Miscellaneous 282 1,113 1,532 941 1,787Gain on Sale of Capital Assets - - 354 47 -Extraordinary Item 3,695 - - - -Transfers (56) (3,663) (85) 121 (77)

Total Governmental Activities 117,919 89,781 84,840 75,130 79,888Business-type Activities:

Investment Earnings 3,294 1,976 846 382 664Gain on Sale of Capital Assets 6 12 4 1 (1,091)Miscellaneous 1,834 1,510 1,242 1,116 (454)Transfers 56 3,664 85 (121) 77

Total Business-type Activities 5,190 7,162 2,177 1,378 (804)Total Primary Government $ 123,109 $ 96,943 $ 87,017 $ 76,508 $ 79,084

Change in Net PositionGovernmental Activities $ 25,811 $ 22,403 $ 8,705 $ 8,170 $ (3,981)Business-type Activities 5,752 3,418 5,720 1,393 600Total Primary Government $ 31,563 $ 25,821 $ 14,425 $ 9,563 $ (3,381)

Fiscal Year

S - 5

2013 2014 2015 2016 2017

$ (85,068) $ (79,187) $ (104,569) $ (97,856) $ (102,422)1,945 9,581 3,988 9,388 7,264

$ (83,123) $ (69,606) $ (100,581) $ (88,468) $ (95,158)

$ 57,141 $ 59,178 $ 58,984 $ 61,572 $ 62,9156,058 6,089 6,242 8,146 8,7227,638 8,029 8,697 9,100 9,3371,804 1,667 2,530 2,560 2,5974,227 4,428 4,756 4,889 5,102

73 1,475 1,671 1,437 5621,460 4,351 1,274 1,378 1,597

- 28 221 349 205- - - - -

(76) (18) 610 (998) 21778,325 85,227 84,985 88,433 91,254

31 605 743 701 348116 50 46 28 (11)860 900 864 818 958

76 18 (610) 998 (217)1,083 1,573 1,043 2,545 1,078

$ 79,408 $ 86,800 $ 86,028 $ 90,978 $ 92,332

$ (6,743) $ 6,040 $ (19,584) $ (9,423) $ (11,168)3,028 11,154 5,031 11,933 8,342

$ (3,715) $ 17,194 $ (14,553) $ 2,510 $ (2,826)

S - 6

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807

$14

9,96

0$

156,

212

Expe

nditu

res

Cur

rent

Gen

eral

Gov

ernm

ent

$22

,552

$20

,624

$18

,264

$16

,905

$15

,891

$18

,563

$18

,516

$20

,258

$21

,271

$21

,946

Publ

icSa

fety

71,9

0860

,334

60,0

9658

,051

67,0

4767

,047

70,4

4975

,963

78,7

0781

,327

Phys

ical

Envi

ronm

ent

1,09

71,

643

1,00

41,

148

1,05

71,

140

966

1,13

11,

094

1,14

4Tr

ansp

orta

tion

14,8

3714

,547

13,3

7413

,112

12,6

6613

,037

13,5

0013

,584

14,9

3215

,720

Econ

omic

Envi

ronm

ent

2,51

62,

838

5,88

13,

799

2,64

62,

350

1,63

92,

298

3,03

13,

415

Hum

anSe

rvic

es5,

448

5,23

44,

757

5,88

29,

054

7,40

28,

538

7,04

35,

520

5,71

0C

ultu

rean

dR

ecre

atio

n6,

774

6,32

65,

004

4,74

94,

228

4,50

04,

316

4,61

54,

758

4,85

2C

ourt

Ope

ratio

ns7,

732

7,08

45,

756

5,60

25,

461

6,03

46,

525

6,70

86,

585

6,95

2D

ebtS

ervi

cePr

inci

pal

3,05

83,

209

3,37

63,

141

3,20

43,

319

3,08

52,

888

3,85

44,

075

Inte

rest

and

Fisc

alC

harg

es2,

047

2,04

02,

037

1,69

11,

627

963

1,07

899

097

897

5C

apita

lOut

lay

18,6

2616

,240

20,0

4217

,602

15,0

9514

,227

15,6

6319

,297

13,4

7512

,268

Tota

lExp

endi

ture

s$

156,

595

$14

0,11

9$

139,

591

$13

1,68

2$

137,

976

$13

8,58

2$

144,

275

$15

4,77

5$

154,

205

$15

8,38

4

Exce

ssof

Rev

enue

sO

ver(

Und

er)E

xpen

ditu

res

11,9

097,

861

(2,8

00)

(7,8

99)

(10,

109)

(16,

072)

(4,4

35)

(8,9

68)

(4,2

45)

(2,1

72)

Fisc

alYe

ar

S-8

Sche

dule

4

Her

nand

oC

ount

y,Fl

orid

aC

hang

esin

Fund

Bal

ance

sof

Gov

ernm

enta

lFun

ds(C

ontin

ued)

Last

Ten

Fisc

alYe

ars

(mod

ified

accr

ualb

asis

ofac

coun

ting)

(dol

lars

expr

esse

din

thou

sand

s)

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Oth

erFi

nanc

ing

Sour

ces

(Use

s)Tr

ansf

ers

In13

,489

17,3

5112

,226

6,48

812

,851

10,2

766,

812

6,04

610

,989

14,0

63Tr

ansf

ers

Out

(12,

637)

(20,

922)

(12,

152)

(6,2

56)

(12,

964)

(10,

889)

(8,2

66)

(7,8

34)

(9,4

69)

(15,

061)

Addi

tions

toLo

ng-T

erm

Deb

t99

61,

323

5029

919

629

,786

1,71

31,

864

757

2,36

8Pr

ocee

dsof

Ref

undi

ngBo

nds

--

5,70

0-

--

--

--

Prem

ium

onR

efun

ding

Bond

s-

-23

--

--

--

-D

isco

unto

nR

efun

ding

Bond

s-

--

--

--

--

-Pa

ymen

tto

Ref

unde

dBo

ndEs

crow

Agen

t-

-(5

,640

)-

-(2

5,30

8)-

--

-To

talO

ther

Fina

ncin

gSo

urce

s(U

ses)

1,84

8(2

,248

)20

753

183

3,86

525

976

2,27

71,

370

Net

Cha

nge

inFu

ndB

alan

ces

$13

,757

$5,

613

$(2

,593

)$

(7,3

68)

(10,

026)

(12,

207)

(4,1

76)

(8,8

92)

(1,9

68)

(802

)

Deb

tSer

vice

asa

Perc

enta

geof

Non

capi

tal

Expe

nditu

res

3.7%

4.2%

4.3%

4.0%

3.8%

3.4%

3.2%

2.9%

3.4%

3.5%

Fisc

alYe

ar

S-9

Schedule 5

Hernando County, FloridaGeneral Government State Shared Revenues by Source

Last Ten Fiscal Years(dollars expressed in thousands)

Local State StateGovernment Revenue Local Housing

Half-Cent Sharing Constitutional County Option InitiativeFiscal Year Sales Tax Proceeds Fuel Tax Fuel Tax 1 - 6 cents Partnership

2008 7,631 3,562 1,728 753 4,746 1,1102009 7,098 3,228 1,696 735 4,450 1,6042010 7,154 3,252 1,656 723 4,548 3502011 7,232 3,398 1,660 725 4,457 3502012 7,354 3,653 1,702 737 4,277 -2013 7,608 3,838 1,657 731 4,136 4282014 8,000 4,063 1,701 734 4,143 -2015 8,647 4,392 1,724 756 4,257 8642016 9,099 4,519 1,780 787 4,571 8782017 9,306 4,735 1,836 808 4,594 1,167

(a) Note that these revenue sources are a component of Intergovernmental Revenues on the financial statements. OtherComponents of Intergovernmental Revenues include federal, state, and local government grants.

S - 10

Sche

dule

6

Her

nand

oC

ount

y,Fl

orid

aFa

irM

arke

t,As

sess

edVa

lue

and

Taxa

ble

Valu

eof

Prop

erty

Last

Ten

Fisc

alYe

ars

(dol

lars

expr

esse

din

thou

sand

s)

Fair

Mar

ket(

a)(i)

Asse

ssed

Valu

e(b

)(i)

Taxa

ble

Valu

e(d

)(i)

Tax

Roll

Real

Pers

onal

Real

Pers

onal

Real

Pers

onal

Real

Pers

onal

Cent

rally

Tota

lDire

ctYe

arPr

oper

ty(f)

Prop

erty

(g)

Prop

erty

(f)Pr

oper

ty(g

)Pr

oper

ty(f)

Prop

erty

(g)

Prop

erty

(f)Pr

oper

ty(g

)As

sess

ed(h

)To

tal

Tax

Rate

(e)

2008

15,8

36,2

871,

185,

886

13,3

71,2

811,

167,

054

3,92

0,19

232

5,88

29,

451,

089

841,

172

6,39

810

,298

,659

7.69

8120

0913

,471

,361

1,40

3,42

211

,638

,948

1,11

1,66

13,

752,

551

339,

154

8,22

9,02

91,

044,

563

6,92

49,

280,

516

7.68

2620

1011

,572

,263

1,66

9,62

310

,731

,692

1,65

2,66

23,

593,

658

336,

472

7,13

8,03

51,

316,

191

6,49

98,

460,

724

7.72

0620

1110

,600

,374

1,62

9,93

39,

915,

576

1,58

5,61

73,

466,

896

325,

372

6,44

8,68

11,

260,

244

7,19

97,

716,

124

7.79

1220

129,

949,

202

1,69

1,64

39,

269,

516

1,64

5,98

73,

332,

500

339,

564

5,93

7,01

61,

306,

423

7,32

57,

250,

764

8.23

9620

139,

989,

311

1,60

2,91

19,

341,

160

1,59

4,24

23,

349,

573

627,

890

5,99

1,58

796

6,35

17,

626

6,96

5,56

48.

4478

2014

10,3

49,8

631,

606,

000

9,53

1,61

81,

604,

589

3,35

0,77

160

8,79

86,

180,

847

995,

791

7,84

27,

184,

480

8.47

7520

1510

,800

,268

1,58

5,64

49,

795,

639

1,58

4,74

43,

403,

429

600,

482

6,39

2,21

098

4,26

37,

869

7,38

4,34

28.

5941

2016

11,2

08,2

621,

703,

765

10,0

44,1

611,

703,

015

3,47

3,22

059

6,85

26,

570,

941

1,10

6,16

38,

326

7,68

5,43

18.

5942

2017

12,2

47,9

491,

834,

656

10,5

72,7

951,

766,

495

3,55

5,44

060

0,84

87,

017,

354

1,16

5,64

77,

483

8,19

0,48

48.

9692

(a)

(b)

(c)

(d)

(e)

(f) (g)

Pers

onal

Prop

erty

com

mon

lykn

own

asTa

ngib

lePe

rson

alPr

oper

ty(T

PP)i

sde

fined

asfu

rnitu

re,f

ixtu

res

and

equi

pmen

tuse

din

the

oper

atio

nof

abu

sine

ss.

(h)

Cen

trally

asse

ssed

prop

erty

are

the

railr

oad

track

san

dtra

inca

rswh

ich

cros

sco

unty

lines

and

are

asse

ssed

byth

eFl

orid

aD

epar

tmen

tofR

even

uew

hopr

ovid

eth

eas

sess

edva

lues

to

(i)

Dat

are

pres

ents

the

tax

roll

fort

heye

aref

fect

ive

Janu

ary

1of

the

year

refle

cted

,bille

din

Oct

ober

ofth

atye

ar,a

ndis

colle

cted

tosu

ppor

tthe

fisca

lyea

rbeg

inni

ngin

that

year

.

Sour

ce:

Her

nand

oC

ount

yPr

oper

tyAp

prai

ser

Ther

ear

ea

num

bero

fpro

perty

tax

exem

ptio

nswh

ich

incl

ude,

buta

reno

tlim

ited

to;h

omes

tead

,wid

ow/w

idow

ers,

blin

d,di

sabl

ed,v

eter

ans,

gove

rnm

enta

ndin

stitu

tiona

l.

the

resp

ectiv

ePr

oper

tyAp

prai

ser.

No

exem

ptio

nsar

eap

plic

able

toC

entra

llyAs

sess

edPr

oper

ties.

The

year

prev

ious

tocu

rrent

year

may

bere

stat

eddu

eto

chan

ges

mad

esu

bseq

uent

tore

leas

eof

prev

ious

year

'sva

lues

.

tode

velo

pth

ead

valo

rem

prop

erty

tax.

Taxa

ble

valu

eis

the

resu

lting

valu

eaf

tera

llap

plic

able

exem

ptio

nsha

vebe

ende

duct

edfro

mth

eas

sess

edva

lue

ofth

epr

oper

ty.

The

taxa

ble

valu

eis

wha

tthe

milla

gera

tes

are

appl

ied

Tota

lDire

ctTa

xR

ate

isth

ewe

ight

edav

erag

eof

the

dire

ctra

tes

inea

char

ea.

See

Sche

dule

7,"D

irect

and

Ove

rlapp

ing

Prop

erty

Tax

Rat

es"f

orm

ore

info

rmat

ion.

Rea

lPro

perty

mea

nsla

nd,b

uild

ings

,fix

ture

s,an

dal

loth

erim

prov

emen

tsto

land

.

Exem

ptio

ns(c

)(i)

Flor

ida

law

requ

ires

that

'Jus

tVal

ue'o

fall

prop

erty

bede

term

ined

each

year

.Th

eFl

orid

aSu

prem

eC

ourt

has

decl

ared

Just

Valu

eto

bele

gally

syno

nym

ous

toFu

llC

ash

Valu

ean

dFa

irM

arke

tVal

ue.T

heJu

stVa

lue

orFa

irM

arke

tVal

ueis

the

amou

ntit

coul

dse

llfo

rin

aco

mpe

titiv

eop

enm

arke

t,as

sum

ing

that

the

buye

rand

selle

rbot

hac

ted

know

ledg

eabl

yan

dw

ithou

t

Asse

ssed

valu

eis

diffe

rent

than

just

/mar

ketv

alue

fort

hose

prop

ertie

sth

atha

veas

sess

men

tlim

itatio

nson

them

.Ex

ampl

esof

asse

ssm

entl

imita

tions

incl

ude

Save

ourH

omes

(SO

H)

limita

tion

forh

omes

tead

prop

ertie

s,"g

reen

belt"

forp

rope

rties

whic

hha

vean

agric

ultu

ralu

secl

assi

ficat

ion,

and

pollu

tion

cont

rold

evic

es.

dure

ss.

S-1

1

Sche

dule

7

Her

nand

oC

ount

y,Fl

orid

aD

irect

and

Ove

rlapp

ing

Prop

erty

Tax

Rat

es

Last

Ten

Fisc

alYe

ars

DIR

ECT

RAT

ES(a

)C

ount

ywid

eH

erna

ndo

Cou

nty

Gov

ernm

ent:

Gen

eral

Fund

5.43

945.

4394

5.43

945.

6279

5.91

696.

8669

6.99

126.

9912

6.99

126.

8912

Spec

ialR

even

ueTr

ansp

orta

tion

Trus

tFun

d0.

7091

0.70

910.

7091

0.70

910.

7091

0.70

910.

7091

0.70

910.

7091

0.70

91H

ealth

Dep

artm

ent

0.11

020.

1102

0.11

020.

1102

0.11

020.

1102

0.11

020.

1102

0.11

020.

1102

Sens

itive

Land

sFu

nd(v

oted

)0.

0844

0.08

440.

0844

--

--

--

-To

talC

ount

ywid

e6.

3431

6.34

316.

3431

6.44

726.

7362

7.68

627.

8105

7.81

057.

8105

7.71

05M

axim

umAl

low

ed(b

)10

.000

010

.000

010

.000

010

.000

010

.000

010

.000

010

.000

010

.000

010

.000

010

.000

0

Oth

erH

erna

ndo

Cou

nty

Gov

ernm

ent:

Mun

icip

alSe

rvic

esTa

xing

Uni

tsSt

orm

wat

erM

anag

emen

tPro

gram

0.11

390.

1139

0.11

390.

1139

0.11

390.

1139

0.11

390.

1139

0.11

390.

1139

Emer

genc

yM

edic

alSe

rvic

es0.

5598

0.55

980.

5598

0.55

980.

5598

0.55

340.

5534

0.67

000.

6700

0.67

00Fi

reSe

rvic

es-

--

--

--

--

0.50

00M

osqu

itoC

ontro

l-

--

0.08

440.

0844

0.10

00-

--

-Sp

ring

Hill

Fire

and

Res

cue

(e)

2.26

862.

2686

2.50

002.

5000

2.50

00-

--

--

Tota

l2.

9423

2.94

233.

1737

3.25

813.

2581

0.76

730.

6673

0.78

390.

7839

1.28

39M

axim

umAl

low

edPe

rTax

paye

r(b)

10.0

000

10.0

000

10.0

000

10.0

000

10.0

000

10.0

000

10.0

000

10.0

000

10.0

000

10.0

000

Tota

lDire

ctTa

xR

ates

(c)

7.69

817.

6826

7.72

067.

7912

8.23

968.

4478

8.47

758.

5941

8.59

428.

9692

OVE

RLA

PPIN

GR

ATES

(d)

Cou

ntyw

ide

Scho

olBo

ard

7.77

907.

4790

0.74

177.

5080

7.45

407.

2800

7.16

707.

1960

6.86

906.

6190

Sout

hwes

tFlo

rida

Wat

erM

anag

emen

tDis

trict

0.38

660.

3866

0.37

700.

3928

0.39

280.

3818

0.36

580.

3488

0.33

170.

3131

Not

Cou

ntyw

ide

Mun

icip

aliti

esC

ityof

Broo

ksvi

lle6.

0690

6.06

906.

3700

6.37

006.

3700

6.73

176.

6962

6.64

396.

6426

6.97

63C

ityof

Wee

kiW

ache

e2.

1173

2.57

692.

6587

2.78

382.

7137

2.76

542.

6237

2.76

222.

8478

2.84

70So

uthw

estF

lorid

aW

ater

Man

agem

entD

istri

ctW

ithla

cooc

hee

Basi

n0.

2308

0.23

080.

2380

--

--

--

-C

oast

alBa

sin

0.18

850.

1885

0.18

85-

--

--

--

(a)

Dire

ctra

tes

supp

ortt

head

valo

rem

reve

nue

base

forC

ount

yG

over

nmen

tope

ratio

ns.

(MST

U).

(d)

Ove

rlapp

ing

rate

sar

eth

ose

rate

sle

vied

byot

herl

ocal

gove

rnm

ents

who

over

lap

Her

nand

oC

ount

y'sge

ogra

phic

area

.N

otal

lrat

esap

ply

toal

lHer

nand

oC

ount

yre

side

nts;

fore

xam

ple,

each

inco

rpor

ated

mun

icip

ality

with

inth

eC

ount

yal

sota

xes

itsre

spec

tive

resi

dent

s.(e

)O

nJu

ne11

,200

9,a

Spec

ialA

ctof

the

Legi

slat

ure

was

pass

edch

angi

ngth

eSp

ring

Hill

Fire

And

Res

cue'

sst

atus

toin

depe

nden

toft

heC

ount

yan

dsu

bseq

uent

lyw

asdi

ssol

ved

beco

min

gde

pend

ento

nth

eC

ount

yon

Oct

ober

1,20

11.

(f)D

ata

repr

esen

tsth

em

illage

sus

edto

appr

ove

the

budg

et,a

ndca

lcul

ate

taxe

sto

supp

ortt

hefo

llow

ing

year

,but

are

base

don

the

tax

roll

whi

chbe

gan

onJa

nuar

y1

forr

efle

cted

year

.So

urce

:H

erna

ndo

Cou

nty

Prop

erty

Appr

aise

r

2017

Fisc

alYe

ar

2014

2010

(c)

Tota

lDire

ctTa

xR

ate

isth

ew

eigh

ted

aver

age

ofth

edi

rect

rate

sin

each

area

.

2015

2016

2008

2012

2009

2013

(b)

Sect

ion

200.

071,

Flor

ida

Stat

utes

,aco

unty

may

notl

evy

inex

cess

of10

mills

,exc

eptf

orvo

ted

levi

esan

dfo

rser

vice

sor

faci

litie

spr

ovid

edth

roug

ha

mun

icip

alse

rvic

esta

xing

unit

2011

S-1

2

Schedule 8

Hernando County, FloridaPrincipal Property Taxpayers

Latest Fiscal year compared to the Fiscal Year Ten Years Earlier(dollars expressed in thousands)

2017 2007

Percentage of Percentage ofTaxable Total Taxable Taxable Total Taxable

Assessed Assessed Assessed AssessedTaxpayer Type of Business Value Rank Value Value Rank Value

CementCemex, Inc. Manufacturing $ 281,122 1 3.43% $ 59,045 6 0.50%

Withlacoochee RiverElectric Co-op Electric Utility 201,310 2 2.46% 132,551 1 1.16%

Florida Power Development, LLC Electric Utility 161,708 3 1.97%

Retail Sales,Wal-Mart Stores, Inc. Distribution 100,219 4 1.22% 121,023 2 1.06%

Duke Energy (formerly Progress Electric Utility 90,360 5 1.10% 36,247 8 0.32%Energy)

HCA Health Servicesof Florida, Inc. Hospital/Health Care 54,551 6 0.57% 61,908 5 0.54%

Florida Gas Transmissions Utility 47,880 7 0.58%

MIC SCV LLC Apartments 38,388 8 0.47%

Bright House Networks Cable Utility 37,335 9 0.46% 30,804 9 0.27%

AT&TTelecommunications Telecommunications 31,475 10 0.38% 65,000 4 0.57%

Florida Crushed StoneCorporation Rock Mining 70,589 3 0.62%

Hampton Ridge Development Real Estate 47,680 7 0.42%

BDC Investors Real Estate 26,602 10 0.23%

Totals $ 1,044,348 12.75% $ 651,449 5.69%

Source: Hernando County Property Appraiser

S - 13

Sche

dule

9

Her

nand

oC

ount

y,Fl

orid

aPr

oper

tyTa

xLe

vies

and

Col

lect

ions

Last

Ten

Fisc

alYe

ars

(dol

lars

expr

esse

din

thou

sand

s)

Cert

ified

Adju

sted

Fisc

alYe

arTa

xes

Levi

edCe

rtifi

cate

sof

Taxe

sLe

vied

Prio

rYea

rEn

ded

fort

heCo

rrec

tion

byfo

rthe

Levi

edAd

just

edPe

rcen

tage

Taxe

sPe

rcen

tage

Sept

embe

r30

Fisc

alYe

ar(a

)(d)

Prop

erty

Appr

aise

rFi

scal

Year

(a)

Colle

ctio

nsDi

scou

nts/

Pena

lties

Colle

ctio

nsCo

llect

edCo

llect

ed(c

)Am

ount

Colle

cted

2008

104,

359

103,

128

98.8

232

610

3,45

499

.13

2009

95,4

0193

,822

98.3

469

894

,520

99.0

820

10(e

)87

,787

(335

)87

,452

86,5

78(2

,490

)84

,088

96.1

577

284

,860

97.0

420

1181

,473

(1,7

28)

79,7

4576

,596

(2,2

76)

74,3

2093

.20

776

75,0

9694

.17

2012

77,2

91(1

,801

)75

,490

73,6

89(2

,197

)71

,492

94.7

067

772

,169

95.6

020

1375

,403

(2,8

70)

72,5

3372

,114

(2,1

97)

69,9

1796

.39

320

70,2

3796

.83

2014

83,2

74(2

04)

83,0

7082

,776

(2,5

31)

80,2

4596

.60

404

80,6

4997

.09

2015

85,3

21(4

19)

84,9

0284

,555

(2,6

29)

81,9

2696

.49

229

82,1

5596

.76

2016

88,9

33(1

12)

88,8

2188

,485

(2,7

78)

85,7

0796

.49

403

86,1

1096

.95

2017

92,9

6916

193

,130

91,3

20(2

,890

)88

,430

94.9

545

188

,881

95.4

4

(a)

Cer

tifie

dta

xes

levi

edis

the

orig

inal

tax

asse

ssm

entd

ueto

Her

nand

oC

ount

ybe

fore

any

adju

stm

ents

are

dete

rmin

edby

Prop

erty

Appr

aise

rand

/ort

heVa

lue

Adju

stm

ent

Boar

d,an

dbe

fore

any

tax

amou

nts

are

dete

rmin

edto

beun

colle

ctib

ledu

eto

inso

lven

cies

and/

orlit

igat

ion.

Adju

sted

Taxe

sLe

vied

refle

cts

chan

ges

mad

eth

roug

hout

the

fisca

lyea

r.Th

eta

xle

vyre

pres

ents

only

the

taxe

sdu

eto

the

Her

nand

oC

ount

yfin

anci

alre

porti

ngen

tity

and

ther

efor

e,ex

clud

esta

xes

due

toth

eSc

hool

Boar

d,th

eC

ityof

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ksvi

lle,S

outh

wes

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rida

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erM

anag

emen

tDis

trict

and

certa

inot

herg

over

nmen

tale

ntiti

es.

This

corre

spon

dsto

the

Dire

ctTa

xR

ates

sect

ion

ofSc

hedu

les

6an

d7.

(b)

Inac

cord

ance

with

Flor

ida

Stat

utes

,pro

perty

taxe

sbe

com

edu

ean

dpa

yabl

eon

Nov

embe

r1of

each

year

and

are

delin

quen

ton

April

1of

the

follo

win

gye

ar.

Afo

urpe

rcen

tdi

scou

ntis

allo

wed

ifth

eta

xes

are

paid

inN

ovem

ber,

with

the

disc

ount

decl

inin

gby

one

perc

ente

ach

mon

thth

erea

fter.

Taxe

sco

llect

edw

illno

tequ

al10

0%of

the

tax

levy

due

toin

solv

enci

es,l

itiga

tion

and

coun

tyce

rtific

ates

.In

the

tabl

eab

ove,

taxe

sco

llect

edN

ovem

ber1

,201

6th

roug

hM

arch

31,2

017

are

refle

cted

asle

vied

fort

heFi

scal

Year

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dSe

ptem

ber3

0,20

17.

Tax

Cer

tific

ates

foru

npai

dta

xes

and

asse

ssm

ents

fort

haty

earw

illbe

sold

nola

tert

han

June

1,20

18.

(c)

Incl

udes

alld

elin

quen

ttax

colle

ctio

nsre

ceiv

eddu

ring

the

year

rega

rdle

ssof

the

year

inw

hich

the

taxe

sw

ere

orig

inal

lyle

vied

.

(d)

Incl

udes

non-

adva

lore

mta

xes,

whi

char

eno

tapa

rtof

the

tax

notic

e.N

on-a

dva

lore

mta

xes

are

sepa

rate

lyre

porte

das

Spec

ialA

sses

smen

tsin

the

Gov

ernm

enta

lFun

dsan

dar

epa

rtof

Cha

rges

forS

ervi

ces

inth

ePr

oprie

tary

Fund

s.

(e)

Effe

ctiv

efis

caly

ear2

010,

itha

sbe

ende

emed

mor

ein

form

ativ

eto

prov

ide

addi

tiona

linf

orm

atio

n.

Sour

ce:

Her

nand

oC

ount

yTa

xC

olle

ctor

Colle

cted

With

inth

eFi

scal

year

ofth

eLe

vy(b

)To

talT

axes

Colle

cted

S-1

4

Sche

dule

10

Her

nand

oC

ount

y,Fl

orid

aR

atio

sof

Out

stan

ding

Deb

tby

Type

Last

Ten

Fisc

alYe

ars

(dol

lars

expr

esse

din

thou

sand

s,ex

cept

perc

apita

)

Rev

enue

and

Wat

eran

dD

ebta

sa

Fisc

alYe

arR

even

ueSe

wer

Solid

Was

teTo

tal

Rat

ioto

Ende

dR

efun

ding

Not

esC

apita

lR

even

ueR

even

ueN

otes

Prim

ary

Pers

onal

Deb

tPer

Sept

embe

r30

Bon

ds(a

)Pa

yabl

eLe

ases

Bon

ds(a

)B

onds

(a)

Paya

ble

Gov

ernm

ent

Inco

me

(b)

Cap

ita

2008

45,9

871,

238

946

51,5

12-

965

100,

648

2.01

%60

620

0943

,351

2,07

680

749

,701

-1,

559

97,4

941.

89%

590

2010

40,9

701,

370

657

47,9

47-

11,5

1410

2,45

82.

02%

619

2011

38,3

761,

278

498

45,9

62-

18,2

0710

4,32

11.

96%

603

2012

35,7

1191

651

243

,915

-24

,969

106,

023

1.91

%61

320

138,

663

29,2

3053

540

,920

-24

,195

103,

543

1.89

%59

620

14(c

)6,

983

30,9

0021

740

,666

-23

,196

101,

962

2.04

%58

320

155,

209

31,6

6554

38,3

37-

40,5

4011

5,80

52.

13%

655

2016

3,96

429

,852

-35

,949

-57

,739

127,

504

1.97

%71

220

172,

691

29,4

16-

33,4

65-

57,9

5512

3,52

7-

679

Not

e:D

etai

lsre

gard

ing

the

Cou

nty's

outs

tand

ing

debt

can

befo

und

inth

eno

tes

toth

efin

anci

alst

atem

ents

.

(a)

Bond

sar

esh

own

neto

frel

ated

defe

rred

gain

sor

loss

eson

bond

refu

ndin

gsan

dne

tofr

elat

edun

amor

tized

bond

issu

epr

emiu

ms

ordi

scou

nts.

(b)

Due

toa

time

lag

inre

ceiv

ing

pers

onal

inco

me

figur

es,r

atio

sw

ere

notr

epor

ted

fort

hem

ostr

ecen

tyea

r(s).

See

Sche

dule

14,"

Dem

ogra

phic

and

Econ

omic

Stat

istic

s",f

orac

tual

pers

onal

inco

me

and

popu

latio

nfig

ures

used

abov

e.So

urce

:U

.S.D

epar

tmen

tof

Com

mer

ceBu

reau

ofEc

onom

icAn

alys

is

(c)

Effe

ctiv

e20

14,d

ebta

mou

nts

excl

ude

loss

esw

hich

have

been

recl

assi

fied

tode

ferre

dou

tflow

son

the

bala

nce

shee

tin

acco

rdan

cew

ithG

ASB

65.

Gov

ernm

enta

lAct

iviti

esB

usin

ess-

Type

Activ

ities

S-1

5

Schedule 11

Hernando County, FloridaRatios of General Bonded Debt Outstanding

Last Ten Fiscal Years(dollars expressed in thousands, except per capita amount)

Revenue and Percentage of GeneralFiscal Year Revenue Less: Amounts Taxable Debt

Ended Refunding Available in Debt Net General Value of PerSeptember 30 Bonds Service Fund Bonded Debt Property (a) Capita (b)

2008 45,987 688 45,299 0.44% 2722009 43,351 753 42,598 0.45% 2572010 40,970 723 40,247 0.48% 2472011 38,376 650 37,726 0.49% 2212012 35,711 671 35,040 0.48% 2062013 8,663 667 7,996 0.11% 502014 6,983 658 6,325 0.09% 402015 5,209 82 5,127 0.07% 292016 3,964 22 3,942 0.05% 222017 2,691 24 2,667 0.03% 15

Note: Details regarding the County's outstanding debt can be found in the notes to the financial statements.

(a) Bonds are shown net of related deferred gains or losses on bond refundings and net of related unamortized bondissue premiums or discounts.

(b) Taxable Value information can be found on Schedule 6, Schedule of Fair Market, Assessed Value and Taxable Value ofProperty for property value data.

(c) Population data can be found on Schedule 14, Schedule of Demographic and Economic Statistics.

S - 16

Schedule 12

Hernando County, FloridaComputation of Direct and Overlapping Debt

Payable fromAd Valorem

Taxes

Non-Self-Supporting

Revenue Debt Total

Percentageof Debt toTotal Debt

COUNTY BOARD:

Non-revolving line of credit draws $ - $ 9,480,616 $ 9,480,616 5.79%

Non-Ad Valorem Refunding Revenue Note, Series 2012 - 20,932,000 20,932,000 12.78%Capital Improvement and Refunding Revenue Bonds,Series 2004 - - - 0.00%Non-Ad Valorem Refunding Revenue Bonds,Series 2010 - 2,680,000 2,680,000 1.64%

Subtotal Direct Debt $ - $ 33,092,616 $ 33,092,616 20.21%

SCHOOL BOARD: (1)

State Board of Education Bonds, Series 2009A Refunding - 65,000 65,000 0.04%

State Board of Education Bonds, Series 2010A - 1,090,000 1,090,000 0.67%



State Board of Education Bonds, Series 2014B Refunding - 526,000 526,000 0.32%

Bonds Payable-Unamortized Premium 250,978 250,978 0.15%

Certificates of Participation, Series 2013A - 18,027,516 18,027,516 11.01%

Certificates of Participation, Series 2016A - 90,645,000 90,645,000 55.35%

Unamortized Premium 10,975,918 10,975,918 6.70%

Capital Improvement bonds, Series 2001 - 2,140,000 2,140,000 1.31%

Notes Payable - 3,598,654 3,598,654 2.20%

CITY OF BROOKSVILLE:

General Fund Promissory Note 199,980 - 199,980 0.12%

USDA Loan - 143,000 143,000 0.09%Florida Capital Improvement Revenue Note,Series 2011 - 2,348,308 2,348,308 1.43%

Subtotal Overlapping Debt $ 199,980 $ 130,486,374 $ 130,686,354 79.81%Total Direct and Overlapping Debt $ 199,980 $ 163,578,990 $ 163,778,970 100.02%

(1) Outstanding debt obligations for Hernando County School Board at June 30, 2017.

The percentage of the overlap is calculated as follows:Total Overlapping Debt

Total Direct and Overlapping Debt

S-17

Schedule 13A

Hernando County, FloridaSchedule of Revenue Bond Coverage

Capital Improvement Revenue Bonds, Series 2004

Last Ten Fiscal Years(dollars expressed in thousands)

Fiscal Year Net RevenueEnded Gross Available for

September 30 Revenues (a) Expenditures (b) Debt Service Principal Interest Total Coverage

2008 7,631 - 7,631 1,870 1,795 3,665 2.082009 7,098 - 7,098 1,920 1,737 3,657 1.942010 7,154 - 7,154 1,500 1,388 2,888 2.482011 7,232 - 7,232 1,545 1,342 2,887 2.512012 7,354 - 7,354 1,595 1,292 2,887 2.552013 7,608 - 7,608 825 131 956 7.962014 8,000 - 8,000 850 106 956 8.372015 8,647 - 8,647 875 78 953 9.072016 9,099 - 9,099 905 48 953 9.552017 9,306 - 9,306 935 16 951 9.79

(a) Gross revenues reflect the pledged revenues for the bonds. Pledged revenues for these bonds consist of the distribution of theState "Half-Cent Sales Tax".

(b) There are no expenditures that relate directly to the gross revenue, but gross revenues not used for the purpose of debt serviceare used for other purposes in the budget.

( c) In 2013, a Non-Ad Valorem Refunding Revenue Note for $24,430,000 was used to refinance Capital Improvement and RefundingBonds, Series 2002 and a portion of Capital Improvement and Refunding Bonds, Series 2004.

Fiscal Year Net RevenueEnded Gross Available for

September 30 Revenues (a) Expenditures (b) Debt Service Principal Interest Total Coverage

2010 31,290 - 31,290 0 75 75 417.202011 31,221 - 31,221 560 178 738 42.302012 31,807 - 31,807 570 164 734 43.332013 28,088 - 28,088 600 595 1,195 23.502014 34,209 - 34,209 310 761 1,071 31.942015 33,869 - 33,869 557 749 1,306 25.932016 34,711 - 34,711 1,935 720 2,655 13.072017 34,003 - 34,003 1,986 667 2,653 12.82

(a) Gross revenues reflect the pledged revenues for the bonds and notes. Pledged revenues consist of non-ad valorem revenues.

(b) There are no expenditures that relate directly to the gross revenue, but gross revenues not used for the purpose of debt serviceare used for other purposes in the budget.


Debt Service Requirements


Hernando County, FloridaSchedule of Non-Ad Valorem Debt Coverage

Non-Ad Valorem Refunding Revenue Bonds, Series 2010

Last Eight Fiscal Years

Schedule 13B

Non-Ad Valorem Refunding Revenue Note, Series 2012

S - 18

Schedule 13C

Hernando County, FloridaSchedule of Revenue Bond Coverage

Water and Sewer Revenue Bonds, Series 2013A

Last Ten Fiscal Years(dollars expressed in thouands)

Fiscal Year Net RevenueEnded Gross Available for Connection Pledged

September 30 Revenues(a) Expenses (b) Debt Service Fees Funds(c) Principal Interest Total Coverage

2008 25,386 17,066 8,320 1,437 9,757 1,770 2,310 4,080 2.392009 23,531 17,490 6,041 1,579 7,620 1,815 2,262 4,077 1.872010 22,667 17,479 5,188 553 5,741 1,880 2,198 4,078 1.412011 23,496 17,110 6,386 552 6,938 1,990 2,044 4,034 1.722012 24,894 16,086 8,808 538 9,346 2,055 1,982 4,037 2.312013 25,623 15,026 10,597 794 11,391 2,125 1,916 4,041 2.822014 27,270 15,617 11,653 1,379 13,032 2,015 1,525 3,540 3.682015 29,089 16,062 13,027 1,384 14,411 2,150 1,652 3,802 3.792016 31,925 17,805 14,120 2,178 16,298 2,210 1,590 3,800 4.292017 34,461 17,863 16,598 2,113 18,711 2,305 1,507 3,812 4.91

(a) Pursuant to bond definitions, gross revenues include operating revenue and interest income, but do not include sewer connectionfees, water connection fees or special assessment proceeds.

(b) Pursuant to bond definitions, expenses do not include amortizations or depreciation. Similarly, charges associated with replacementof vehicles in lieu of depreciation have not been included.

(c) Effective with the issuance of the Water and Sewer Refunding Revenue Bonds Series 2003, connection fees are included in thedefinition of pledged funds.

(d) Includes Water and Sewer Refunding Revenue Bonds, Series 2013A, and the Water and Sewer portion of the Non-Ad Valorem RefundingRevenue Bonds, Series 2010.


S - 19

Sche

dule

14

Her

nand

oC

ount

y,Fl

orid

aD

emog

raph

ican

dEc

onom

icSt

atis

tics

Last

Ten

Fisc

alYe

ars

Pers

onal

Tota

lC

itize

nsU

ninc

orpo

rate

dIn

com

ePe

rson

alW

itha

Publ

icFi

scal

City

ofC

ityo f

Her

nand

oPe

rman

ent

Per

Inco

me

Med

ian

Bac

helo

rsSc

hool

Une

mpl

oym

ent

Year

Bro

oksv

ille

Wee

kiW

ache

eC

ount

yTo

tal

Hou

seho

lds

(g)

Cap

ita(f)

(inth

ousa

nds)

(c)(f

)Ag

e(c

)D

egre

e(h)

Enro

llmen

t(d)

Rat

e(e

)

2007

7,30

98

154,

876

162,

876

68,7

8928

,064

4,73

7,48

045

.39.

9%23

,382

6.0%

2008

7,64

08

158,

325

165,

973

70,2

6329

,148

4,99

7,41

444

.314

.7%

22,4

929.

2%20

097,

633

715

7,40

816

5,15

470

,022

29,9

505,

147,

746

44.8

15.1

%22

,598

13.8

%20

107,

592

715

7,97

316

5,57

270

,231

29,3

975,

079,

155

46.8

15.5

%22

,316

14.8

%20

117,

711

1216

5,35

517

3,07

871

,864

30,7

295,

318,

514

47.7

16.2

%22

,146

13.5

%20

127,

702

1216

5,39

717

3,11

172

,106

31,9

275,

536,

867

47.7

16.2

%21

,855

10.4

%20

137,

643

516

6,16

017

3,80

872

,238

31,4

225,

481,

211

48.0

15.5

%21

,541

8.5%

2014

7,68

75

167,

263

174,

955

72,4

9232

,324

5,68

4,26

648

.514

.9%

21,4

708.

1%20

157,

780

516

9,03

417

6,81

972

,951

33,6

666,

007,

249

48.0

15.5

%21

,421

6.5%

2016

8,00

65

171,

492

179,

503

73,4

0234

,413

6,25

9,10

548

.415

.7%

21,6

136.

2%20

1780

749

173,

799

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S-2

3

Schedule 16

Hernando County, FloridaCounty Government Employees by Function/Program

Last Ten Fiscal Years

2008 2009 (b) 2010 2011 2012 (b)

Function/ProgramGovernmental Activities:

General Government 297 271 238 243 227Public Safety 507 362 368 471 566Physical Environment 10 7 7 5 7Transportation 97 99 99 79 91Economic Environment 8 8 8 7 7Human Services 35 32 25 20 21Culture and Recreation 95 93 72 62 65Courts 84 74 77 78 79

Business-type Activities:Airport 5 5 5 5 5Water and Wastewater 167 164 154 149 147Business Development 43 34 31 29 28Solid Waste 55 52 28 28 29

Total 1,403 1,201 1,112 1,176 1,272

(a) Source: Hernando County Department of Financial Services.(b) Spring Hill Fire and Rescue District became an independent District in fiscal year 2009 and subsequently was

dissolved becoming dependent on the County on October 1, 2011.(c) Increase is due to addition of jail employees to the Hernando County Sheriff department.

Fiscal Year

S-24

2013 ( c) 2014 2015 2016 2017

221 227 225 237 244750 773 776 782 782

6 7 7 8 891 92 93 92 967 7 8 10 10

21 21 20 19 2165 66 63 63 7084 88 85 78 83

5 5 4 4 4142 139 134 132 13126 28 27 27 3129 28 33 32 32

1,447 1,481 1,475 1,484 1,512

S - 25

Schedule 17

Hernando County, FloridaOperating Indicators by Function


Function 2008 2009 2010 2011 2012

General GovernmentNumber of programs broadcast 310 299 207 212 208Number of employee records managed 1,091 785 683 645 859

Public SafetyTotal incidents responded to (HCFR) 13,895 14,234 14,020 14,076 22,868Number of emergency citizen volunteers 656 655 750 838 825Number of building permits issued 11,210 9,194 10,074 11,316 11,904

Physical EnvironmentExtension Classes/programs 40,993 30,480 27,015 20,055 17,863

TransportationNumber of signals maintained 88 83 86 80 88Number of lane miles of roads re-surfaced 129 61 199 70 64

Economic EnvironmentNumber of successful business projects 48 16 9 7 8Number of veteran clients served 33,590 32,719 21,955 6,681 23,540

Human ServicesAnimals impounded 6,659 5,773 5,117 4,256 3,578Number of human service requestsprocessed 19,723 25,513 27,043 13,256 23,540

Culture and RecreationRegistered library card holders 84,579 86,204 93,685 85,284 90,623Number of participants in the CountyRecreation programs 21,445 20,563 21,115 19,485 19,185

Court OperationsNumber of judicial cases managed 52,168 55,476 60,109 57,394 65,520

Water and SewerWater consumption in millions of gallons

a day 22.9 19.5 15.6 18.9 18.4Average number of water accounts 57,667 57,378 60,966 61,260 61,363Number of meter reads 719,043 688,536 749,652 752,244 736,400

Aviation OperationsNumber of airport & industrial park leases 146 145 178 173 140

Waste ManagementTotal tons landfilled 119,599 105,697 77,770 99,346 104,281Tons of Convenience CenterWaste Collected 5,975 7,244 7,012 7,681 15,701Tons of recyclables collected & processed 5,905 5,497 5,264 5,638 4,881

Source: Various County Departments.

Fiscal Year

S-26

2013 2014 2015 2016 2017

208 206 190 196 288745 772 771 782 795

27,222 26,254 28,951 30,496 31,704903 982 1,009 1,440 1,440

10,492 11,104 12,048 12,525 12,370

30,480 20,172 29,730 32,267 30,770

88 88 85 85 8632 36 42 39 8

7 9 8 8 36,857 6,918 7,916 8,909 6,141

3,095 2,923 2,950 2,725 3,143

8,288 9,099 10,789 6,285 9,558

97,642 102,910 109,366 116,994 122,503

13,799 17,955 20,045 22,049 24,790

63,060 64,290 53,796 51,869 66,156

17.1 16.8 16.7 17.7 18.856,975 57,376 58,251 58,281 59,952

737,748 740,748 719,986 751,440 773,101

140 141 138 133 173

103,733 114,370 117,230 122,259 127,047

7,317 6,161 6,945 7,814 7,9684,910 11,976 11,839 11,685 10,815

S - 27

Schedule 18

Hernando County, FloridaCapital Asset and Infrastructure Statistics by Function/Program


Function/Program 2008 2009 2010 2011 2012

General GovernmentNumber of buildings 174 169 169 172 151Fleet Vehicles 453 434 405 395 370

Public SafetySheriff's patrol vehicles: 343 346 341 343 336Radio Towers 3 5 5 5 5

TransportationLane miles 2,332 2,345 2,364 2,371 2,380

Culture and RecreationPark acreage - developed 310 310 323 323 323Park acreage - undeveloped 1,230 1,230 1,206 1,206 1,206Trails-Jogging/Exercise/Nature 30 30 30 30 30Playgrounds 14 14 14 14 14Boat ramps (lanes) 16 16 16 16 16Picnic shelters 189 189 189 189 189Number of libraries/branches 6 6 6 6 6

Aviation OperationsNumber of runways 2 2 2 2 2Runways in linear feet 12,000 12,000 12,000 12,000 12,000Land (acres) 2,400 2,400 2,400 2,400 2,400

Waste ManagementVolume developed for landfill use (million

cubic yards) 3,189,269 3,337,115 6,601,544 6,601,544 6,601,544Remaining available landfill capacity

(cubic yards) 692,408 298,940 3,547,487 3,346,936 3,255,100

WaterTrans & dist lines (miles) 1,050 1,232 1,232 1,247 1,232Maximum daily storage capacity (million gallons) 10.25 17.72 15.58 19.46 20.90Number of meters in service 57,730 57,089 58,455 59,131 56,805

SewerNumber of pumping or lift stations 298 298 300 297 298Collection & Trans lines (miles) 421 465 465 486 486Reclaimed water trans & dist lines (miles) 0.38 2.90 2.00 4.30 4.30Number of manholes 6,462 6,732 6,732 6,946 6,945

(a) Source: Various County Departments.

Fiscal Year

S-28

2013 2014 2015 2016 2017

156 160 165 169 177403 423 403 378 392

336 324 325 336 3485 5 5 4 4

2,393 2,407 2,457 2,492 2,516

323 340 340 340 3401,206 1,206 1,206 1,206 1,206

30 30 30 30 3014 14 14 14 1316 16 16 16 8

189 190 190 190 1906 5 5 4 4

2 2 2 2 212,000 12,000 12,000 12,000 12,000

2,400 2,400 2,400 2,400 2,400

6,601,544 6,601,544 6,601,544 6,601,544 6,601,544

2,941,953 2,704,818 2,452,353 2,435,065 2,059,982

1,232 1,232 1,232 1,232 1,70920.90 19.08 19.08 19.78 19.78

56,805 57,376 58,251 58,281 59,952

298 301 301 301 307486 501 501 513 515

4.30 4.30 4.30 4.30 4.306,945 6,952 7,106 7,165 7,200

S - 29

COMPLIANCE SECTION


Single Audit Reports and Grant Compliance

Bond Compliance Information

Single Audit Reports and Grant Compliance

C-1

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT

OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS



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 business-type activities, each major fund, and the aggregate remaining fund information of Hernando County, Florida (the County) as of and for the year ended September 30, 2017, and the related notes to the financial statements,which collectively comprise the County’s basic financial statements, and have issued our report thereon dated March 20, 2018.

Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the County's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control.

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.

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 orsignificant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

C-2

Distinguished Members of the Board of County Commission


INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT

OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS

(Concluded)

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this ReportThe purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the County’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


C-3

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJORFEDERAL PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER

COMPLIANCE REQUIRED BY UNIFORM GUIDANCE AND CHAPTER 10.550,RULES OF THE AUDITOR GENERAL



Report on Compliance for Each Major Federal Program/State ProjectWe have audited Hernando County, Florida (the County)’s compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement, and the requirements described in the Florida Department of Financial Services’ State Projects Compliance Supplement, that could have a direct and material effect on each of the County’s major federal programs and state projects for the year ended September 30, 2017. The County's major federal programs and state projects are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.

Management’s ResponsibilityManagement is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal and state awards applicable to its federal programs and state projects.

Auditors’ ResponsibilityOur responsibility is to express an opinion on compliance for each of the County’s major federal programs and state projects based on our audit of the types of compliance requirements referred to above. Weconducted 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; 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); and Chapter 10.550, Rules of the Auditor General.Those standards, Chapter 10.550, Rules of the Auditor General, and 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 a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the 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 and state project. However, our audit does not provide a legal determination of the County's compliance.

C-4



INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJORFEDERAL PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER

COMPLIANCE REQUIRED BY UNIFORM GUIDANCE AND CHAPTER 10.550,RULES OF THE AUDITOR GENERAL

(Concluded)

Opinion on Each Major Federal Program and State ProjectIn our opinion, the 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 and state projects for the year ended September 30, 2017.

Report on Internal Control over ComplianceManagement of the 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 the County's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program and state project to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing anopinion on compliance for each major federal program and state project, and to test and report on internal control over compliance in accordance with Uniform Guidance and Chapter 10.550, Rules of the Auditor General, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the 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 or state project 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 or state project 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 or state project 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 compliancethat 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.

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 Uniform Guidanceand Chapter 10.550, Rules of the Auditor General. Accordingly, this report is not suitable for any other purpose.


HERNANDO COUNTY, FLORIDASchedule of Federal Awards and State Financial Assistance

Year Ended September 30, 2017

Grant Program Name

Pass Through FLORIDA DEPARTMENT OF ECONOMIC OPPORTUNITYCommunity Development Block Grant (CDBG) 14.228 17DB-OL-05-37-01-H 07 29$

Total DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 29$

DirectFISH & WILDLIFE SERVICERefuge Revenue Sharing 15.659 -- 15,250$

Total DEPARTMENT OF THE INTERIOR 15,250$

Pass Through FLORIDA OFFICE OF ATTORNEY GENERALCrime Victim Assistance (VOCA) 16.575 #VOCA-2016-HCSO-00588 43,448$

Pass Through FLORIDA COALITION AGAINST DOMESTIC VIOLENCESTOP Violence Against Women 16.588 17-8015-LE-ENH 78,198$STOP Violence Against Women 16.588 18-8015-LE-ENH 18,596Subtotal CFDA 16.588 96,794$

DirectState Criminal Alien Assistance Program (SCAAP) 16.606 2015-AP-BX-0780 5,473$State Criminal Alien Assistance Program (SCAAP) 16.606 2016-AP-BX-0076 3,229Subtotal CFDA 16.606 8,702$

DirectEdward Byrne Memorial Justice Assistance Grant Program 16.738 2016-DJ-BX-0776 33,767$

Pass Through FLORIDA DEPARTMENT OF LAW ENFORCEMENTEdward Byrne Memorial Justice Assistance Grant Program 16.738 2017-JAGC-HERN-1-F9-156 22,899$Edward Byrne Memorial Justice Assistance Grant Program 16.738 2017-JAGC-HERN-2-F9-021 19,085

Subtotal CFDA 16.738 75,751$

DirectEquitable Sharing Program/Federal Forfeitures 16.922 FL0270000 30,730

Total DEPARTMENT OF JUSTICE 255,425$

DEPARTMENT OF LABOR

Pass Through PASCO HERNANDO WORK FORCEReentry Employment Opportunities 17.270 AJSC-S LEAP 46,459$

Total DEPARTMENT OF LABOR 46,459$

DEPARTMENT OF TRANSPORTATION

DirectAirport Improvement Program 20.106 3-12-0008-019-2016 206,888$

Highway Planning & Construction Cluster:

DEPARTMENT OF JUSTICE

Federal/State/Pass Through Grantor CFDA /CSFA # Grant ID Expenditures

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

DEPARTMENT OF THE INTERIOR

C-5



Grant Program NameFederal/State/Pass Through Grantor CFDA /

CSFA # Grant ID Expenditures

Pass Through FLORIDA DEPARTMENT OF TRANSPORTATIONHighway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 GOK48; FPN 434309-1-58/68-01 3,823$Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 ARL26; FPN 427996-5-58/68-01 607,206Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 ARR94; FPN 430583-1-38-01 1,875Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 G0318; FPN 433695-1-38-01 8,741Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 G0915; FPN 434499-1-38-01 15,006Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 G0996; FPN 430503-1-58/68-01 240,653Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 G0997; FPN 430504-1-58/68-01 7,185Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 G0D79; FPN 427996-3-38-01 22,433Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 GOE34; FPN 430583-1-58/68-01 196,422Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 GOK42; FPN 436708-1-38-1 1,815Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 GOK43; FPN 436710-1-38-01 1,686Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 GOK44; FPN 436711-1-38-01 651Highway Planning & Construction- Federal Aid Highway Program (LAP) 20.205 GOL88; FPN 434499-1-58/68-01 1,799Highway Planning & Construction- Federal Aid Highway Program (PL) 20.205 G0D09; FPN 439335-1-14-01 468,156Total Highway Planning & Construction Cluster (CFDA 20.205) 1,577,451$

Pass Through FLORIDA DEPARTMENT OF TRANSPORTATIONMetropolitan Transportation Planning (Section 5305d) 20.505 ARA86; FPN 401983-1-14-14 3,058$Metropolitan Transportation Planning (Section 5305d) 20.505 ARL23; FPN 401983-1-14-15 65,656Metropolitan Transportation Planning (Section 5305d) 20.505 G0787; FPN 401983-1-14-16 24,174Subtotal CFDA 20.505 92,888$

Federal Transit Cluster:Direct

Urbanized Area Formula Program (Section 5307) 20.507 FL-90-X794-00 950$Urbanized Area Formula Program (Section 5307) 20.507 FL-90-X865-00 122,973Urbanized Area Formula Program (Section 5307) 20.507 FL-90-X776-00 205,554Urbanized Area Formula Program (Section 5307) 20.507 FL-2017-062 (X015) 646,192Urbanized Area Formula Program (Section 5307) 20.507 FL-2017-094 (X016) 465,073Urbanized Area Formula Program (Section 5307) 20.507 X017 27,893Subtotal CFDA 20.507 1,468,635$

Pass Through FLORIDA DEPARTMENT OF TRANSPORTATIONBus and Bus Facilities Formula Program (Section 5339) 20.526 G0956; FPN 439288-1-94-16 405,131

Total Federal Transit Cluster (CFDA 20.507 & 20.526) 1,873,766$

Pass Through FLORIDA DEPARTMENT OF TRANSPORTATIONFormula Grants for Rural Areas (Section 5311) 20.509 ART59; FPN 401982-1-84-15 130,774

Total DEPARTMENT OF TRANSPORTATION 3,881,767$

ENVIRONMENTAL PROTECTION AGENCY

Clean Water State Revolving Fund Cluster:

Pass Through FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTIONCleanwater State Revolving Funds (CWSRF) 66.458 WW270150 508,638$

Total Clean Water State Revolving Fund Cluster (CFDA 66.458) 508,638$

Total ENVIRONMENTAL PROTECTION AGENCY 508,638$

C-6





US ELECTION ASSISTANCE COMMISSION

DirectHelp America Vote Act Requirements Payments (HAVA) 90.401 MOD Dated 07/17/2013 11,703$Help America Vote Act Requirements Payments (HAVA) 90.401 MOA #2012-2013-0001 14,718Subtotal CFDA 90.401 26,421$

Total US ELECTION ASSISTANCE COMMISSION 26,421$

DEPARTMENT OF HEALTH & HUMAN SERVICES

Pass Through FLORIDA DEPARTMENT OF REVENUEChild Support Enforcement 93.563 COC27 361,078$Child Support Enforcement 93.563 COC27 2,216Subtotal CFDA 93.563 363,294$

Total DEPARTMENT OF HEALTH & HUMAN SERVICES 363,294$

DEPARTMENT OF HOMELAND SECURITY

Pass Through FLORIDA DIVISION OF EMERGENCY MANAGEMENTDisaster Grants - Public Assistance 97.036 17-PA-W1-05-37-02-054 301,832$Disaster Grants - Public Assistance 97.036 13-DB-73-05-37-02-564 44,046Subtotal CFDA 97.036 345,878$

Pass Through FLORIDA DIVISION OF EMERGENCY MANAGEMENTEmergency Management Performance Grant 97.042 17-FG-P9-05-37-01-100 78,331$Emergency Management Performance Grant 97.042 18-FG-7A-05-37-01-132 6,252

Pass Through VOLUNTEER FLORIDAEmergency Management Performance Grant 97.042 FY16/17 CERT 7,800Emergency Management Performance Grant 97.042 FY16/17 CITIZEN CORP 7,800Emergency Management Performance Grant 97.042 FY17/18 CERT 692

Subtotal CFDA 97.042 100,875$

Total DEPARTMENT OF HOMELAND SECURITY 446,753$

TOTAL EXPENDITURES OF FEDERAL AWARDS 5,544,036$

C-7





FLORIDA EXECUTIVE OFFICE OF THE GOVERNOR

Emergency Management Program (EMPA) 31.063 17-BG-83-05-37-01-033 90,544$Emergency Management Program (EMPA) 31.063 18-BG-W9-05-37-01-133 16,682Subtotal CSFA 31.063 107,226$

Total FLORIDA EXECUTIVE OFFICE OF THE GOVERNOR 107,226$

FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION

Pass Through SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT (SWFWMD)Florida Springs Grant Program 37.052 16CF0000244 683,784$

Total FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION 683,784$

FLORIDA DEPARTMENT OF ECONOMIC OPPORTUNITY

Visit Florida 40.006 5150 1,225$

Total FLORIDA DEPARTMENT OF ECONOMIC OPPORTUNITY 1,225$

FLORIDA HOUSING FINANCE CORPORATION

State Housing Initiatives Program (SHIP) 40.901 SHIP FY15/16 134,039$State Housing Initiatives Program (SHIP) 40.901 SHIP FY16/17 1,255,513State Housing Initiatives Program (SHIP) 40.901 SHIP FY17/18 18

1,389,570$

Total FLORIDA HOUSING FINANCE CORPORATION 1,389,570$

FLORIDA DEPARTMENT ARGICULTURE & CONSUMER SERVICES

Mosquito Control 42.003 023798 23,575$

Total FLORIDA DEPARTMENT ARGICULTURE & CONSUMER SERVICES 23,575$

FLORIDA DEPARTMENT OF STATE

State Aid to Libraries 45.030 16-ST-19 307,189$

Total FLORIDA DEPARTMENT OF STATE 307,189$

FLORIDA DEPARTMENT OF TRANSPORTATION

Commission for Transportation Disadvantaged Planning Grant 55.002 G0C50 8,206$Commission for Transportation Disadvantaged Planning Grant 55.002 G0N41 3,468Subtotal CSFA 55.002 11,674$

Aviation Development Grants 55.004 AQU75; FPN 424104-1-94-01 30,000$Aviation Development Grants 55.004 G0006; FPN 437550-1-94-01 147,661Aviation Development Grants 55.004 G0382; FPN 437499-1-94-01 505,777Aviation Development Grants 55.004 G0384; FPN 429620-1-94-01 84,691Aviation Development Grants 55.004 G0816; FPN 429618-1-94-01 9,425Aviation Development Grants 55.004 G0H40; FPN 431261-1-94-01 124,377Aviation Development Grants 55.004 G0J48; FPN 440874-1-94-01 5,113Subtotal CSFA 55.004 907,044$

Public Transit Block Program 55.010 ART63; FPN 40810418415 173,266$Public Transit Block Program 55.010 GOA75; FPN 40810418416 116,341Subtotal CSFA 55.010 289,607$

C-8





Public Transit Service Development Program 55.012 G0692; FPN 401982-3-84-16 11,888

Transit Corridor Program 55.013 ARA86; FPN 401983-1-14-14 382Transit Corridor Program 55.013 ARL23; FPN 401983-1-14-15 8,207Transit Corridor Program 55.013 G0787; FPN 401983-1-14-16 3,022Subtotal CSFA 55.013 11,611$

NPDES/TMDL Stormwater Retrofit Project 55.024 AQX46; FPN 421748-1-72-06 3,423

Total FLORIDA DEPARTMENT OF TRANSPORTATION 1,235,247$

FLORIDA DEPARTMENT OF HEALTH

Emergency Medical Services (EMS) Matching Awards 64.003 M4260 60,000$

County Grant Awards (EMS) 64.005 C5027 24,823

Total FLORIDA DEPARTMENT OF HEALTH 84,823$

FLORIDA FISH & WILDLIFE CONSERVATION COMMISSION

Artificial Reef Grants Program 77.007 FWC-14017 59,913

Total FLORIDA FISH & WILDLIFE CONSERVATION COMMISSION 59,913$

TOTAL EXPENDITURES OF STATE FINANCIAL ASSISTANCE 3,892,552$

C-9

C-10

HERNANDO COUNTY, FLORIDANOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

AND STATE FINANCIAL ASSISTANCEFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

Note 1 - General

The accounting policies and presentation of the accompanying schedule of expenditures of federal awards and state financial assistance of Hernando County, Florida (the County) have been designed to conform with generally accepted accounting principles applicable to governmental units, including the reporting and compliance requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (federal awards) and Chapter 10.550, Rules of the Auditor General of the State of Florida.

The County reporting entity is defined in Note A to the County's basic financial statements for the year ended September 30, 2017. All federal awards and state financial assistance received directly from federal or state agencies, as well as federal awards and state financial assistance passed through other governmental agencies, are included in the schedule.

Note 2 - Basis of Accounting

The accompanying schedule of expenditures of federal awards and state financial assistance is presented using the same basis of accounting as the fund in which the grant is recorded, generally the accrual or modified accrual basis, as described in Note A to the County's financial statements.

Note 3 - Loans Outstanding

The County has the following loan balances outstanding at September 30, 2017:

CSFA LoanProgram Number Outstanding

State Housing Initiatives Partnership 40.901 $ 14,040,641

Only current year loans issued to eligible recipients are included as expenditures on the accompanying schedule.

Note 4 - Contingencies

Grant monies received and disbursed by the County are for specific purposes and are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to the disallowance of expenditures. Based upon prior experience, the County does not believe that such disallowances, if any, would have a material effect on the financial position of the County.

C-11

HERNANDO COUNTY, FLORIDANOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

AND STATE FINANCIAL ASSISTANCEFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

(Concluded)

Note 5 - Program Income

Program income generated by and expended on a Federal or State award during the period of performance is included on this Schedule if the program income is added to the award amount or if specifically directed by the awarding agency and/or required by program guidance. Program income that is expended by reducing the total program expenditures (deduction method) is not included.

In accordance with the direction from the grantor, program income totaling $3,819 was expended on the Justice Assistance Grant (CFDA 16.378) during 2017, and is included in the total expended amount recorded on this Schedule.In accordance with the terms of the grant, program income generated during 2017 totaled $173,791, and was used to reduce the program expenditures for the Urbanized Area Formula Program (CFDA 20.507), Formula Grants for Rural Areas (CFDA 20.509), Public Transit Block Program (CSFA 55.010), and Public Transit Service Development Program (CSFA 55.012). These associated expenditures are not report on this Schedule.In accordance with the terms of the grant, program income received by the State Housing Initiative Partnership (SHIP) program (CSFA 40.901) during 2017, is added to the original award amount in the corresponding year the program income was earned. Expense of this program income may not occur until subsequent fiscal years.

Note 6 - Pre-award Authorization

Under the pre-award authorization for the Urbanized Area Formula Program (CFDA 20.507)-Section 5307, expenditures totaling $27,893 are included on this Schedule since they were incurred during the fiscal year, but are not expected to be reimbursed until a later fiscal year when the award is granted. The granting agency, Federal Transit Administration (FTA), has not assigned a final unique grant/project number, so “X017” is currently being used.

Note 7 - Indirect Costs

Hernando County Board of County Commissioners did not elect to use the 10% de minimis cost rate in 2017 as covered in 2 CFR 200.414.

Note 8 - Disaster Public Assistance

Disaster funding received from the FEMA Public Assistance Program (CFDA 97.036) is based on Project Worksheets (PWs) that outline the eligible expenses and the scope of the project. Expenditures recorded on this Schedule are contingent on when funds are obligated and approved, and the County has incurred eligible expenditures. PWs are categorized as either “small” or “large” based on the total expenses. “Small PWs are reported based on the amount obligated, while “large” PWs are determined by actual eligible expenditures. Approximately $247,246 of expenditures incurred in prior years were reported on the Schedule this year since the corresponding PWs were not approved and obligated until fiscal year 2017.

C-12

HERNANDO COUNTY, FLORIDASCHEDULE OF FINDINGS AND QUESTIONED COSTS

FEDERAL AWARD PROGRAMS AND STATE FINANCIAL ASSISTANCE PROJECTSFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

PART A - SUMMARY OF AUDITORS’ RESULTS

1. The independent auditors’ report expresses unmodified opinions on the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Hernando County, Florida (the County) as of and for the year ended September 30, 2017, which collectively comprise the County’s basic financial statements.

2. No material weaknesses or significant deficiencies in the internal control over financial reporting were disclosed during the audit of the basic financial statements (see Independent Auditors’ 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).

3. No instances of noncompliance material to the financial statements of the County were disclosed during the audit (see the same report referenced in 2).

4. No material weaknesses or significant deficiencies in internal control over major federal awards programs or major state financial assistance projects were disclosed (see Independent Auditors’ Report on Compliance for each Major Federal Program and State Project and on Internal Control Over Compliance Required by Uniform Guidance and Chapter 10.550, Rules of the Auditor General).

5. An unmodified opinion was issued on compliance over major federal programs and major state projects (see the same report referenced in 4).

6. Audit findings relative to the major federal award programs for the County are reported inPart C of this schedule. Audit findings relative to the major state financial assistance projects are reported in Part D of this schedule. (There were no audit findings.)

7. The programs/projects tested as major programs/projects included the following:

Major Federal ProgramsDepartment of Transportation, (Federal Transit Cluster)

Urbanized Area Formula Program (Section 5307), CFDA No. 20.507Department of Transportation (Federal Transit Cluster), Passed Through Florida Department of Transportation

Bus and Bus Facilities Formula Program (Section 5339), CFDA No. 20.526Department of Homeland Security, Passed through the Florida Division of Emergency Management

Disaster Grants-Public Assistance, CFDA No. 97.036

C-13

HERNANDO COUNTY, FLORIDASCHEDULE OF FINDINGS AND QUESTIONED COSTS

FEDERAL AWARD PROGRAMS AND STATE FINANCIAL ASSISTANCE PROJECTSFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2017

(Concluded)

PART A - SUMMARY OF AUDITORS’ RESULTS (Concluded)

7. (Concluded)

Major State ProjectsFlorida Executive Office of the Governor

Emergency Management Program, CSFA No. 31.063Florida Department of Environmental Protection, Pass Through Southwest Florida Water Management District (SWFWMD)

Florida Springs Grant Program, CSFA No. 37.052Florida Housing Finance Corporation

State Housing Initiatives Program (SHIP), CSFA No. 40.901Florida Department of State

State Aid to Libraries, CSFA No. 45.030

8. The threshold for distinguishing Type A and Type B programs/projects was $750,000 for major federal award programs and $300,000 for major state financial assistance projects.

9. The County did qualify as a low-risk auditee per criteria set forth in Section .520 of the Uniform Guidance.

PART B - FINDINGS - FINANCIAL STATEMENT AUDIT

None

PART C - FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS

None

PART D - FINDINGS AND QUESTIONED COSTS - MAJOR STATE FINANCIAL ASSISTANCE PROJECTS

None

PART E - OTHER ISSUES

No summary schedule of prior audit findings is required because there were no prior audit findings related to federal programs or state projects.

No corrective action plan is required because there were no current year findings required to be reported under the Federal or Florida Single Audit Acts.

C-14

MANAGEMENT LETTER



Report on the Financial StatementsWe have audited the financial statements of Hernando County, Florida (the County) as of and for the year ended September 30, 2017, and have issued our report thereon dated March 20, 2018.

Auditors’ ResponsibilityWe conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance); and Chapter 10.550, Rules of the Auditor General.

Other Reporting RequirementsWe have issued our Independent Auditors’ 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; Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project and on Internal Control over Compliance required by the Uniform Guidance andChapter 10.550, Rules of the Auditor General; Schedule of Findings and Questioned Costs; and Independent Accountants’ Report on an examination conducted in accordance with AICPA Professional Standards, AT-CSection 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the AuditorGeneral. Disclosures in those reports and schedule, which are all dated March 20, 2018, should be considered in conjunction with this management letter.

Prior Audit FindingsSection 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations made in the preceding annual financial audit report.

Official Title and Legal AuthoritySection 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The County has disclosed this information in the notes to the financial statements.

C-15



MANAGEMENT LETTER(Continued)

Financial Condition and ManagementSections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether or not the County has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the County did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the County. It is management’s responsibility to monitor the County’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same.

Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

Annual Financial ReportSections 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for the County for the fiscal year ended September 30, 2017, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2017. In connection with our audit, we determined that these two reports were in agreement.

Special District Component UnitsSection 10.554(1)(i)5.d, Rules of the Auditor General, requires that we determine whether or not a special district that is a component unit of the County provided the financial information necessary for proper reporting of the component unit within the audited financial statements of the County in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we did not note any special district component units that failed to provide the necessary information for proper reporting in accordance with Section 218.39(3)(b), Florida Statutes.

Additional MattersSection 10.554(1)(i)3., Rules of the Auditor General, requires that we communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of the LetterOur management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Distinguished Members of the Hernando County, Florida, Board of County Commission, and applicable management, and is not intended to be, and should not be, used by anyone other than these specified parties.

C-16



MANAGEMENT LETTER(Concluded)

We wish to take this opportunity to thank you and your staff for the cooperation and courtesies extended to us during the course of the audit. Please let us know if you have any questions or comments concerning this letter, our accompanying reports, or other matters.


C-17

INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCEWITH FLORIDA STATUTE SECTION 218.415-INVESTMENTS OF PUBLIC FUNDS



We have examined Hernando County, Florida (the County)’s compliance with Section 218.415, Florida Statutes, during the fiscal year ended September 30, 2017. County management is responsible for the County’s compliance with those requirements. Our responsibility is to express an opinion on the County’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the County complied in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the County complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the County’s compliance with specified requirements.

In our opinion, the County complied, in all material respects, with the aforementioned requirements during the fiscal year ended September 30, 2017.

This report is intended solely for the information and use of the Florida Auditor General, the County Commissioners of the County and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.


C-18

INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCEWITH SECTION 365.172(10), FLORIDA STATUTES



We have examined Hernando County, Florida (the County)’s compliance with the requirements of Section 365.172(10), Florida Statutes, as of and for the year ended September 30, 2017, as required by Section 10.556(10)(b), Rules of the Auditor General, with regards to the use of the County’s E911 funds.Management is responsible for the County’s compliance with those requirements. Our responsibility is to express an opinion on the County’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the County complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the City complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

In our opinion, the County complied, in all material respects, with the aforementioned requirements duringthe year ended September 30, 2017.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Distinguished Members of the Board of County Commission, and applicable management, and is not intended to be, and should not be, used by anyone other than these specified parties.


Bond Compliance

HERNANDO COUNTY, FLORIDASUPPLEMENTAL INFORMATION

September 30, 2017(UNAUDITED)

C-19

BOND COMPLIANCE INFORMATION

CAPITAL IMPROVEMENT AND REFUNDING REVENUE BONDS, SERIES 2004

HISTORICAL COLLECTIONS OF STATE SALES TAXLAST TEN FISCAL YEARS

The following table sets forth data regarding the collection of overall State Sales Tax and theannual percentage increases for the State of Florida and for Hernando County, Florida.

State Fiscal YearEnded June 30 State of Florida

%Change Hernando County

%Change

2008 20,569,094,349 (5.43) 94,967,233 (6.91)2009 17,368,889,418 (15.60) 79,335,172 (16.50)2010 16,768,646,720 (3.46) 79,707,979 0.472011 17,575,218,111 4.81 81,297,441 1.992012 18,487,539,555 5.10 82,488,028 1.462013 19,657,996,927 6.33 85,819,584 4.042014 21,097,421,292 7.32 90,149,675 5.052015 22,833,522,335 8.23 98,203,183 8.932016 24,089,395,925 5.50 104,492,643 6.402017 25,221,896,109 4.70 108,167,088 3.52

Source: Department of Revenue

PERCENTAGE DISTRIBUTION OF HALF-CENT SALES TAX REVENUEFOR HERNANDO COUNTY AND THE CITY OF BROOKSVILLE (1)

The following table sets forth the respective percentage distribution of the State of Florida Half-Cent Sales Tax Revenues to Hernando County, Florida and to the City of Brooksville, Florida forthe last ten State fiscal years.

State Fiscal YearEnded June 30 Hernando County City of Brooksville

2008 95.42 4.582009 95.57 4.432010 95.52 4.482011 95.50 4.502012 95.70 4.302013 95.70 4.302014 95.70 4.302015 95.70 4.302016 95.70 4.302017 95.60 4.40

(1) The City of Weeki Wachee receives an immaterial percentage of the State of Florida Half-Cent SalesTax Revenues for Hernando County. The percentage is so small that it is not included in this table.

(2) Percentages are estimated based on data provided by the Florida Department of Revenue.



C-20

RECEIPT OF HALF-CENT SALES TAX REVENUESBY HERNANDO COUNTY, FLORIDA

The historical State of Florida Half-Cent Sales Tax Revenues received by Hernando County,Florida during the last ten fiscal years are set forth in the table below.

Fiscal Year Sales Tax Revenues % Change

2008 7,631,497 (7.25)2009 7,098,139 (6.99)2010 7,153,868 0.792011 7,231,814 1.092012 7,354,197 1.692013 7,607,684 3.452014 8,000,302 4.912015 8,646,879 8.082016 9,098,938 5.232017 9,305,757 2.27

WATER AND SEWER REFUNDING REVENUE BONDS, SERIES 2013A

HISTORIC GROWTH OF WATER AND WASTEWATER SYSTEM CUSTOMERS

The following table sets forth data regarding the Historic Growth of Water and WastewaterSystem Customers for the last ten fiscal years for Hernando County, Florida:

Number of Active Accounts (1)Fiscal Year Water Sewer

2008 57,667 27,3662009 57,089 27,0142010 56,962 26,9092011 56,597 26,7572012 56,777 26,8112013 56,975 26,8972014 57,376 27,1272015 58,251 27,6882016 58,281 27,6882017 59,952 28,778

(1) Figures represent number of active accounts at the close of each Fiscal Year ended September 30.

Source: Hernando County Utilities Department



C-21

HISTORIC WATER CONSUMPTION FLOWS

The following table sets forth data regarding the Historic Water Consumption Flows for the lastten fiscal years for Hernando County, Florida:

Fiscal Average Daily Peak DayYear Flow (MGD) Flow (MGD)

2008 22.879 38.9682009 19.543 29.6432010 19.832 40.9082011 18.902 28.9452012 18.380 25.1372013 17.088 24.9992014 16.762 24.4262015 16.725 23.9572016 17.707 24.6642017 18.766 27.684


HISTORIC WASTEWATER TREATMENT PLANT FLOWS

The following table sets forth data regarding the Historic Wastewater Treatment Plant Flows forthe last ten fiscal years for Hernando County, Florida:

FiscalYear

Average DailyFlow (MGD)

2008 3.6442009 3.8172010 3.8272011 3.6922012 3.9662013 3.9782014 4.1282015 4.1912016 4.4702017 4.802




C-22

COUNTY SYSTEM RATESMonthly Water Rates

As of September 30, 2017Residential

Minimum Monthly Billing Charge:All Meter Sizes $ 7.09

Consumption Charge (Per 1,000 Gallons)0-5000 $ 1.33

5,001-10,000 1.5610,001-20,000 2.3320,001-30,000 3.1430,001-50,000 4.6950,001-75,000 7.80Above 75,000 15.60

CommercialMinimum Monthly Billing Charge:

Per ERU $ 7.09Consumption Charge (Per 1,000 Gallons)

0-10,000 $ 1.5610,001-20,000 2.3320,001-30,000 3.1430,001-50,000 4.6950,001-75,000 7.80Above 75,000 15.60

IrrigationMinimum Monthly Billing Charge:

Per ERU $ 7.09Consumption Charge (Per 1,000 Gallons)

0-10,000 $ 1.5610,001-20,000 2.3320,001-30,000 3.1430,001-50,000 4.6950,001-75,000 7.80Above 75,000 15.60

ResidentialMinimum Monthly Billing Charge (per Account) $ 18.66Consumption Charge (Per 1,000 Gallons) 4.02

(Capped at 10,000 Gallons per Month)

CommercialMinimum Monthly Billing Charge (per ERU) $ 18.66Consumption Charge (Per 1,000 Gallons) 4.02

1) Amounts shown to be applied on a per ERU basis.Source: Hernando County Utilities Department

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.Th

isis

cons

iste

ntw

ithde

finiti

onof

Ope

ratin

gEx

pens

esin

the

Res

olut

ion,

whi

chex

clud

esde

prec

iatio

n,am

ortiz

atio

nan

dot

hers

imila

rcha

rges

.(4

)N

etre

venu

esar

ede

fined

inth

eR

esol

utio

nas

Gro

ssR

even

ues

less

Ope

ratin

gEx

pens

es.

(5)

Pled

ged

Rev

enue

sar

ede

fined

inth

eR

esol

utio

nas

Net

Rev

enue

spl

usC

onne

ctio

nFe

es,t

oget

herw

ithce

rtain

othe

rfun

dsan

dac

coun

tsw

hich

are

acco

unte

dfo

rin

this

tabl

e .

HER

NAN

DO

CO

UN

TY,F

LOR

IDA

SUPP

LEM

ENTA

LIN

FOR

MAT

ION

Sept

embe

r30,

2017

(UN

AUD

ITED

)

C-2

8

(6)

The

Serie

s19

98Bo

nds

wer

ere

fund

edw

ithN

on-A

dVa

lore

mR

efun

ding

Rev

enue

Bond

s,Se

ries

2010

.Th

ePl

edge

fort

he20

10bo

nds

isfro

mno

n-ad

valo

rem

reve

nues

,not

from

reve

nue

ofth

ew

ater

and

sew

ersy

stem

,and

isth

eref

ore

nota

lega

lobl

igat

ion

ofth

ew

ater

and

sew

ersy

stem

.Fo

rpur

pose

sof

this

repo

rt,ho

wev

er,w

eha

vein

clud

edth

epo

rtion

ofde

btse

rvic

eat

tribu

ted

toth

ew

ater

and

sew

erfu

nd.

Ifth

eN

on-A

dVa

lore

mBo

ndde

btse

rvic

ew

ere

noti

nclu

ded

inth

eca

lcul

atio

n,th

eco

vera

gefo

reac

hof

the

Net

Rev

enue

san

dPl

edge

dFu

nds

wou

ldin

crea

seby

0.82

and

the

Pled

ged

Fund

sw

ould

incr

ease

by0.

73.

TOP

TEN

UTI

LITY

CU

STO

MER

S(B

ASED

ON

SALE

SR

EVEN

UE)

The

follo

win

gta

ble

show

sth

ete

nla

rges

tcus

tom

ers

ofH

erna

ndo

Cou

nty

forf

isca

lyea

rend

ing

Sept

embe

r30,

2017

:

Cus

tom

erC

lass

Met

erSi

zeTy

peof

Serv

ice

Syst

emR

even

ue

%of

Tota

lC

ount

ySa

les

Rev

enue

Oak

Hill

Hos

pita

lC

omm

erci

al6”

Wat

er&

Sew

er17

1,75

20.

5%H

erna

ndo

Cou

nty

Jail

Com

mer

cial

6”W

ater

&Se

wer

132,

692

0.4%

Oak

Hill

Hos

pita

lCoo

ling

Tow

erC

omm

erci

al2”

Wat

er10

6,97

40.

3%Br

ooks

ville

Reg

iona

lHos

pita

lC

omm

erci

al6”

Wat

er&

Sew

er94

,920

0.3%

Brid

gew

ater

Clu

bAp

artm

ents

Com

mer

cial

6”W

ater

&Se

wer

91,9

080.

3%H

erna

ndo

Cor

rect

iona

lIns

titut

ion

Com

mer

cial

6”W

ater

&Se

wer

81,1

370.

2%At

riaEv

ergr

een

Woo

dsC

omm

erci

al4”

Wat

er&

Sew

er58

,197

0.2%

Ever

gree

nW

oods

Com

mer

cial

4”W

ater

&Se

wer

40,4

640.

1%H

erna

ndo

Cou

nty

Scho

olBo

ard

Com

mer

cial

6”W

ater

&Se

wer

38,3

680.

1%Sp

ring

Hill

Hos

pita

lCoo

ling

Tow

erC

omm

erci

al2”

Wat

er32

,611

0.1%

Tota

l$

849,

023

Sour

ce:

Her

nand

oC

ount

yU

tiliti

esD

epar

tmen

t.



C-29


The following table represents the County’s determination of non-ad valorem revenues for the lastsix years (excludes non-ad valorem revenues of the County which are not legally available to paydebt service on the Series 2010 Bonds). Certain of such revenue may heretofore or hereinafter bespecifically pledged to secure other indebtedness by the County. Any such debt would be payablefrom such specific revenue sources prior to payment of debt service on the Series 2010 Bonds.Such table is not intended to represent revenues of the County which would necessarily beavailable to pay debt service on the Series 2010 Bonds; however, they are an indication of therelative amounts of non-ad valorem revenues of the County which may be available for thepayment of principal and interest on the Series 2010 Bonds taking into account generalgovernment expenditures. Certain categories may cease to exist altogether and new sources maycome about from time to time.

HER

NAN

DO

CO

UN

TY,F

LOR

IDA

SUPP

LEM

ENTA

LIN

FOR

MAT

ION

Sept

embe

r30,

2017

(UN

AUD

ITED

)

C-3

0

HIS

TOR

ICAL

NO

N-A

DVA

LOR

EMR

EVEN

UES

ING

ENER

ALFU

ND

(1)

Fisc

alYe

arEn

ding

Sept

embe

r30,

2012

2013

2014

2015

2016

2017

Rev

enue

sTa

xes:

Loca

lCom

mun

icat

ions

Serv

ices

Tax

$1,

449,

390

$1,

435,

395

$1,

633,

894

$1,

786,

365

$1,

725,

437

$1,

654,

590

Lice

nses

and

Perm

its:

Oth

er11

4,79

225

,045

29,2

8032

6,21

036

3,88

243

7,91

1

Inte

rgov

ernm

enta

l:Lo

calG

over

nmen

talH

alf-C

entS

ales

Tax

(2)

7,35

4,19

77,

607,

684

8,00

0,30

28,

646,

879

9,09

8,93

89,

305,

757

Stat

eR

even

ueSh

arin

g3,

653,

304

3,83

7,53

54,

063,

333

4,39

2,49

24,

519,

219

4,73

5,46

5O

ther

(3)

5,21

4,19

14,

442,

909

3,32

4,72

44,

082,

022

6,22

5,36

15,

068,

030

Cha

rges

forS

ervi

ces:

Gen

eral

Gov

ernm

ent

6,18

6,09

86,

333,

203

7,22

7,02

99,

389,

625

7,64

2,00

97,

745,

846

Publ

icSa

fety

1,44

6,82

11,

435,

883

1,56

9,74

31,

792,

748

1,66

8,83

61,

755,

579

Phys

ical

Envi

ronm

ent

13,5

3514

,387

46,4

8617

0,98

630

8,89

034

2,34

7Tr

ansp

orta

tion

105,

383

153,

139

146,

528

164,

232

174,

220

153,

856

Hum

anSe

rvic

es16

6,36

220

5,26

321

5,70

721

2,23

622

5,27

320

8,34

6R

ecre

atio

nan

dC

ultu

re72

0,27

369

6,20

071

6,08

168

7,86

474

6,59

085

4,87

2O

ther

18,8

6716

,997

16,4

1430

,890

25,3

6826

,640

Fine

san

dFo

rfeitu

res

72,8

9080

,083

94,5

2287

,637

76,4

2010

6,75

7In

tere

stIn

com

e43

9,91

3(5

0,67

9)31

1,28

835

8,18

440

2,93

320

4,63

3M

isce

llane

ous

Rev

enue

4,85

6,98

41,

854,

816

6,81

3,48

51,

740,

723

1,50

7,64

71,

403,

238

Tota

lSou

rces

ofN

on-A

dVa

lore

mR

even

ues

$31

,813

,000

$28

,087

,860

$34

,208

,816

$33

,869

,093

$34

,711

,023

$34

,003

,867

(1)

Incl

udes

non-

adva

lore

mre

venu

esin

Gen

eral

Fund

only

.(2

)Th

isre

venu

eso

urce

ispl

edge

das

the

sour

ceof

secu

rity

fort

heC

apita

lIm

prov

emen

tand

Ref

undi

ngR

even

ueBo

nds,

Serie

s20

04,a

ndpa

rity

bond

sis

sued

inth

efu

ture

,and

this

reve

nue

sour

cew

illon

lybe

avai

labl

eas

aso

urce

forp

aym

entf

orth

eSe

ries

2010

Bond

s,N

on-A

dVa

lore

mR

efun

ding

Rev

enue

Not

e,Se

ries

2012

,and

the

Non

-Rev

olvi

ngLi

nes

ofC

redi

tafte

rthe

satis

fact

ion

ofsu

chde

btse

rvic

epa

ymen

tobl

igat

ions

.(3

)In

crea

ses/

decr

ease

spr

edom

inan

tlydu

eto

chan

ges

ingr

antf

undi

ngpr

ovid

edby

othe

rgov

ernm

enta

lage

ncie

s.

(4)

Incr

ease

infis

caly

eare

ndin

g20

11du

eto

$3,0

00,0

00ne

who

spita

llea

seag

reem

ent.



C-31

OTHER OBLIGATIONS PAYABLE FROM NON-AD VALOREM REVENUES

The County has other debt issues outstanding which are secured by and payable from specific non-advalorem revenues (excluding gas taxes and net revenues of the water and sewer enterprise fund, neither ofwhich are legally available to pay debt service on the Series 2010 Bonds). Such indebtedness is summarizedbelow.

DescriptionSource ofSecurity

AmountOutstanding (1)

FinalMaturity

MaximumAnnual Debt

Service

Non-Revolving Line ofCredit

Covenant toBudget andAppropriate

Legally AvailableNon-Ad Valorem

Revenues

$ 11,145,574 05/01/2029 $ 3,491,125

Non-Ad ValoremRefunding RevenueBonds, Series 2010



Revenues

$ 2,680,000 02/01/2024 $ 1,290,806

Non-Ad ValoremRefunding RevenueNote, Series 2012



Revenues

$ 20,932,000 02/01/2028 $ 3,159,419

$ 34,757,574 $ 7,941,350

(1) The amount outstanding on each bond issue is calculated as of September 30, 2017.

HER

NAN

DO

CO

UN

TY,F

LOR

IDA

SUPP

LEM

ENTA

LIN

FOR

MAT

ION

Sept

embe

r30,

2017

(UN

AUD

ITED

)

C-3

2

GEN

ERAL

FUN

DR

EVEN

UES

AND

EXPE

ND

ITU

RES

The

Follo

win

gch

arts

how

sin

form

atio

nre

gard

ing

the

Gen

eral

Fund

fort

heC

ount

y’s

fisca

lyea

rsen

ding

Sept

embe

r30,

2012

thro

ugh

Sept

embe

r30,

2017

:Fi

scal

Year

Endi

ngSe

ptem

ber3

0,20

1220

1320

1420

1520

1620

17R

EVEN

UES

Taxe

s$

41,6

70,9

59$

42,8

73,6

73$

49,3

33,5

64$

50,4

05,2

80$

51,8

00,5

00$

52,9

91,1

02Li

cens

esan

dPe

rmits

114,

792

25,0

4529

,280

326,

210

363,

882

437,

911

Inte

rgov

ernm

enta

l16

,221

,692

15,8

88,1

2815

,388

,359

17,1

21,3

9317

,392

,796

19,1

09,2

52C

harg

esfo

rSer

vice

s8,

657,

339

8,85

5,07

29,

937,

988

12,4

48,5

8110

,791

,186

11,0

87,4

86Fi

nes

and

Forfe

iture

s72

,890

80,0

8394

,522

87,6

3776

,420

106,

757

Inte

rest

439,

913

(50,

679)

311,

288

358,

184

402,

933

204,

633

Mis

cella

neou

s4,

856,

984

1,85

4,81

66,

813,

485

1,74

0,72

31,

507,

647

1,40

3,23

8TO

TAL

REV

ENU

ES$

72,0

34,5

69$

69,5

26,1

38$

81,9

08,4

86$

82,4

88,0

08$

82,3

35,3

64$

85,3

40,3

79EX

PEN

DIT

UR

ESC

urre

nt:

Gen

eral

Gov

ernm

ent

$15

,207

,200

$16

,087

,274

$17

,582

,331

$18

,918

,049

$19

,799

,462

$20

,384

,193

Publ

icSa

fety

40,3

58,7

4739

,307

,247

40,1

74,3

2542

,363

,066

44,2

53,6

7145

,737

,271

Phys

ical

Envi

ronm

ent

231,

525

203,

783

217,

920

232,

043

264,

339

296,

056

Tran

spor

tatio

n1,

735,

042

1,70

0,08

12,

167,

372

1,55

6,82

52,

039,

001

2,39

7,63

1Ec

onom

icEn

viro

nmen

t1,

908,

289

1,48

9,08

371

9,48

956

9,07

546

8,92

951

0,63

1H

uman

Serv

ices

7,63

2,57

86,

044,

268

7,16

8,32

95,

623,

448

4,04

7,10

74,

274,

185

Cul

ture

and

Rec

reat

ion

4,18

8,49

34,

041,

556

4,30

0,86

84,

614,

532

4,65

1,78

04,

734,

319

Cou

rtO

pera

tions

1,02

9,06

11,

094,

414

1,14

2,68

01,

141,

355

1,22

3,90

21,

248,

242

Deb

tSer

vice

:Pr

inci

pal

-54

,144

473,

906

508,

414

469,

465

420,

070

Inte

rest

and

Fisc

alC

harg

es-

10,9

9210

5,41

281

,411

116,

433

70,6

32C

apita

lOut

lay

1,17

0,22

81,

849,

119

1,93

4,36

32,

401,

167

2,76

4,66

43,

306,

681

TOTA

LEX

PEN

DIT

UR

ES$

73,4

61,1

63$

71,8

81,9

61$

75,9

86,9

95$

78,0

09,3

85$

80,0

98,7

53$

83,3

79,9

11EX

CES

SO

FR

EVEN

UES

OVE

R(U

ND

ER)

EXPE

ND

ITU

RES

$(1

,426

,594

)$

(2,3

55,8

23)

$5,

921,

491

$4,

478,

623

$2,

236,

611

$1,

960,

468

OTH

ERFI

NAN

CIN

GSO

UR

CES

(USE

S)Tr

ansf

ers

In(1

)$

7,32

7,58

6$

767,

796

$45

1,40

7$

670,

107

$1,

192,

360

$56

7,13

6Tr

ansf

ers

Out

(1)

(3,5

13,7

68)

(6,6

61,9

99)

(2,9

45,0

88)

(4,7

27,0

66)

(4,0

92,5

19)

(5,1

99,9

78)

Addi

tions

toLo

ng-T

erm

Deb

t32

4,86

175

0,73

6-

--

TOTA

LO

THER

FIN

ANC

ING

SOU

RC

ES(U

SES)

$3,

813,

818

$(5

,569

,342

)$

(1,7

42,9

45)

$(4

,056

,959

)$

(2,9

00,1

59)

$(4

,632

,842

)N

etC

hang

ein

Fund

Bala

nces

2,38

7,22

4(7

,925

,165

)4,

178,

546

421,

664

(663

,548

)(2

,672

,374

)BE

GIN

NIN

GFU

ND

BALA

NC

E24

,275

,566

26,6

62,7

9018

,737

,625

22,9

16,1

7123

,337

,835

23,5

23,4

55EN

DIN

GBA

LAN

CE

$26

,662

,790

$18

,737

,625

$22

,916

,171

$23

,337

,835

$22

,674

,287

$20

,851

,081

(1)

Tran

sfer

sfro

mor

toot

herf

unds

ofth

eC

ount

y.

FINANCIAL STATEMENTSAND


CLERK OF THE CIRCUIT COURTHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017



CLERK OF THE CIRCUIT COURTHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017

TABLE OF CONTENTS

Independent Auditors’ Report................................................................................................................1-2

Financial StatementsBalance Sheet - Governmental Funds........................................................................................................ 3Statement of Revenues, Expenditures, and Changes in Fund

Balance - Governmental Funds .............................................................................................................. 4Statement of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - General Fund......................................................................................... 5Statement of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Records Modernization Fund................................................................ 6Statement of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Fines and Forfeitures Fund ................................................................... 7Statement of Fiduciary Assets and Liabilities - Agency Funds................................................................. 8Notes to Financial Statements ..............................................................................................................9-24

Other Financial InformationFiduciary Funds:

Combining Statement of Fiduciary Assets and Liabilities -All Agency Funds ............................................................................................................................. 25

Other ReportsIndependent Auditors’ Report on Internal Control Over

Financial Reporting and on Compliance and OtherMatters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards ...................................................26-27

Independent Accountants’ Report on Compliance withSection 218.415, Florida Statutes ...............................................................................................................28

Independent Accountants’ Report on Compliance withSections 28.35 and 28.36, Florida Statutes.................................................................................................29

Independent Accountants’ Report on Compliance withSection 61.181, Florida Statutes .................................................................................................................30

Management Letter.............................................................................................................................31-32

1


Honorable Don Barbee, Jr.Clerk of the Circuit CourtHernando County, Florida

Report on the Financial StatementsWe have audited the accompanying financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Clerk of the Circuit Court (the Clerk) as of and for the year ended September 30, 2017, and the related notes to the financial statements, as listed in the table of contents.

Management’s Responsibility for the Financial StatementsManagement 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 (GAAP); 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.



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

OpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund and the aggregate remaining fund information of the Clerk as of September 30, 2017, and the respective changes in financial position and budgetary comparisons thereof, where applicable, for the year then ended in accordance with accounting principlesgenerally accepted in the United States of America.

2

Honorable Don Barbee, Jr.Clerk of the Circuit CourtHernando County, Florida


Emphasis of Matter – Incomplete PresentationAs discussed in Note 1 to the financial statements, the financial statements referred to above were prepared solely for the purpose of complying with the Rules of the Auditor General of the State of Florida (the Rules). In conformity with the Rules, the accompanying financial statements are intended to present the financial position, changes in financial position, and budgetary comparisons of each major fund and the aggregate remaining fund information, where applicable, only for that portion of the major funds and the aggregate remaining fund information of Hernando County, Florida, that is attributable to the Clerk. They do not purport to, and do not, present fairly the financial position as a whole of Hernando County, Florida, as of September 30, 2017, and the changes in its financial position or budgetary comparisons for the year then ended in conformity with GAAP. Our opinion is not modified with respect to this matter.

Other Matters

Other Financial InformationOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Clerk’s financial statements. The other financial information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements.

The other financial information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financialstatements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other financial information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated February 21, 2018,on our consideration of the Clerk’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Clerk’s internal control over financial reporting and compliance.

February 21, 2018Sarasota, Florida

See accompanying notes.3

Records Fines and General Modernization Forfeitures Total

AssetsCash 8,425$ 0$ 0$ 8,425$Equity in Pooled Cash and

Investments 393,872 1,417,722 928,103 2,739,697Accounts Receivable 69,765 0 0 69,765Due from Other Government

Agencies 1,788 0 62,972 64,760Prepaid Items 87,350 43,535 1,438 132,323

Total Assets 561,200 1,461,257 992,513 3,014,970

Liabilities and Fund Balances

LiabilitiesAccounts Payable 34,675 7,510 12,599 54,784Accrued Wages and Benefits 80,150 3,295 100,027 183,472Due to Hernando County,

Florida, Board of CountyCommissioners 279,308 0 64,491 343,799

Due to Other GovernmentAgencies 0 0 606,855 606,855

Deposits 167,067 0 208,541 375,608Total Liabilities 561,200 10,805 992,513 1,564,518

Fund BalancesNonspendable:

Prepaid Items 0 43,535 0 43,535 Restricted for:

Record Modernization 0 1,406,917 0 1,406,917Total Fund Balances 0 1,450,452 0 1,450,452

Total Liabilities andFund Balances 561,200$ 1,461,257$ 992,513$ 3,014,970$

CLERK OF THE CIRCUIT COURT

BALANCE SHEETGOVERNMENTAL FUNDS

SEPTEMBER 30, 2017HERNANDO COUNTY, FLORIDA


Records Fines and General Modernization Forfeitures Total

RevenuesIntergovernmental 0$ 0$ 528,516$ 528,516$Charges for Services 1,223,424 444,469 2,817,146 4,485,039Fines and Forfeitures 0 137,227 907,043 1,044,270Interest Income 15,090 10,777 15,070 40,937Miscellaneous 29,366 0 324 29,690

Total Revenues 1,267,880 592,473 4,268,099 6,128,452

ExpendituresGeneral Government:

Personal Services 2,663,868 0 0 2,663,868Operating Expenditures 361,586 92,201 0 453,787

Court Operations:Personal Services 0 121,378 3,077,222 3,198,600Operating Expenditures 0 214,406 239,688 454,094

Capital Outlay 115,098 28,600 0 143,698(Total Expenditures) (3,140,552) (456,585) (3,316,910) (6,914,047)

(Deficiency) Excess of Revenues (Under) Over Expenditures (1,872,672) 135,888 951,189 (785,595)

Other Financing Sources (Uses)Transfers in:

General Fund 0 0 140,000 140,000Hernando County, Florida,

Board of County Commissioners 2,291,980 0 0 2,291,980

Transfers (out):Fines and Forfeitures Fund (140,000) 0 0 (140,000)Distribution of Excess

Appropriations to theHernando County, Florida,Board of County Commissioners (279,308) 0 (64,491) (343,799)

Distribution of Excess Court Revenue to the Stateof Florida 0 0 (1,026,698) (1,026,698)

Total Other Financing Sources (Uses) 1,872,672 0 (951,189) 921,483

Net Change in Fund Balance 0 135,888 0 135,888

Fund Balance, Beginning of Year 0 1,314,564 0 1,314,564

Fund Balance, End of Year 0$ 1,450,452$ 0$ 1,450,452$


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEGOVERNMENTAL FUNDS

FOR THE YEAR ENDED SEPTEMBER 30, 2017HERNANDO COUNTY, FLORIDA


VarianceWith Final

BudgetPositive

Original Final Actual (Negative)Revenues

Charges for Services 1,129,000$ 1,129,000$ 1,223,424$ 94,424$Interest Income 5,000 5,000 15,090 10,090Miscellaneous 2,000 2,000 29,366 27,366

Total Revenues 1,136,000 1,136,000 1,267,880 131,880


Personnel Services 2,712,100 2,712,100 2,663,868 48,232Operating Expenditures 710,880 454,880 361,586 93,294

Capital Outlay 5,000 121,000 115,098 5,902(Total Expenditures) (3,427,980) (3,287,980) (3,140,552) 147,428

(Deficiency) of Revenues (Under) Expenditures (2,291,980) (2,151,980) (1,872,672) 279,308


Hernando County, Florida, Boardof County Commissioners 2,291,980 2,291,980 2,291,980 0

Transfers (out):Fines and Forfeiture Fund 0 (140,000) (140,000) 0Distribution of Excess Appropriations

to the Hernando County, Florida, Board of County Commissioners 0 0 (279,308) (279,308)

Total Other Financing Sources (Uses) 2,291,980 2,151,980 1,872,672 (279,308)

Net Change in Fund Balance 0 0 0 0

Fund Balance, Beginning of Year 0 0 0 0

Fund Balance, End of Year 0$ 0$ 0$ 0$

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

Budget

BUDGET AND ACTUAL - GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2017

HERNANDO COUNTY, FLORIDACLERK OF THE CIRCUIT COURT


VarianceWith Final

BudgetPositive


Charges for Services 390,000$ 390,000$ 444,469$ 54,469$Fines and Forfeitures 200,000 200,000 137,227 (62,773)Interest Income 3,500 3,500 10,777 7,277

Total Revenues 593,500 593,500 592,473 (1,027)


Operating Expenditures 272,000 272,000 92,201 179,799Court Operations:

Personnel Services 401,000 401,000 121,378 279,622Operating Expenditures 296,500 296,500 214,406 82,094

Capital Outlay 150,000 150,000 28,600 121,400Reserves 740,500 740,500 0 740,500

(Total Expenditures) (1,860,000) (1,860,000) (456,585) 1,403,415


Fund Balance, Beginning of Year 1,266,500 1,266,500 1,314,564 48,064

Fund Balance, End of Year 0$ 0$ 1,450,452$ 1,450,452$

Budget

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - RECORDS MODERNIZATION FUND

FOR THE YEAR ENDED SEPTEMBER 30, 2017HERNANDO COUNTY, FLORIDACLERK OF THE CIRCUIT COURT


VarianceWith Final

BudgetPositive


Intergovernmental 328,500$ 407,017$ 528,516$ 121,499$Charges for Services 2,803,000 2,803,000 2,817,146 14,146Fines and Forfeitures 790,000 790,000 907,043 117,043Interest Income 5,000 5,000 15,070 10,070Miscellaneous 0 0 324 324

Total Revenues 3,926,500 4,005,017 4,268,099 263,082

ExpendituresCourt Operations:

Personnel Services 3,297,500 3,275,350 3,077,222 198,128Operating Expenditures 196,993 297,660 239,688 57,972

(Total Expenditures) (3,494,493) (3,573,010) (3,316,910) 256,100

Excess of Revenues Over Expenditures 432,007 432,007 951,189 519,182


General Fund 140,000 140,000 140,000 0Transfers (out):

Distribution of Excess Appropriationsto the Hernando County, Florida, Board of County Commissioners 0 0 (64,491) (64,491)

Distribution of Excess Court Revenueto State of Florida (572,007) (572,007) (1,026,698) (454,691)




Budget

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - FINES AND FORFEITURES FUND

FOR THE YEAR ENDED SEPTEMBER 30, 2017HERNANDO COUNTY, FLORIDACLERK OF THE CIRCUIT COURT


STATEMENT OF FIDUCIARY ASSETS AND LIABILITIESAGENCY FUNDS

SEPTEMBER 30, 2017HERNANDO COUNTY, FLORIDACLERK OF THE CIRCUIT COURT

AssetsEquity in Pooled Cash and Investments $ 2,853,739 Accounts Receivable 300

Total Assets 2,854,039

LiabilitiesAccounts Payable 10,318 Due to Other Government Agencies 597,160 Deposits 992,286 Other Current Liabilities 1,254,275

Total Liabilities $ 2,854,039

9

NOTES TO FINANCIAL STATEMENTSHERNANDO COUNTY, FLORIDACLERK OF THE CIRCUIT COURT

SEPTEMBER 30, 2017

Note 1 - Summary of Significant Accounting Policies

Reporting EntityHernando County, Florida (the County), is a political subdivision of the State of Florida. It is governed by an elected Board of County Commissioners (the Board) and managed by an appointed County Administrator. The Hernando County, Florida, Clerk of the Circuit Court (the Clerk), is an elected constitutional officer as provided for by the Constitution of the State of Florida. Pursuant to Section 28.36, Florida Statutes, the Clerk’s budget for the court activities in the Fines and Forfeitures Fund is submitted to the Clerks of Court Operations Corporation(CCOC).

The Clerk is responsible for the administration and operation of the Clerk’s office, including the Circuit and County court systems. The operations of the Clerk are funded primarily from fees and charges authorized under applicable Florida Statutes, or state general appropriations.

Certain costs of the court systems (communications services; existing radio systems; existing multi-agency criminal justice information systems; and the cost of construction or lease, maintenance, utilities, and security of facilities for the trial courts, public defenders’ offices, and state attorneys’ offices) are required by Article V, Florida Constitution, to be funded by the Board. Such costs are not included herein.

For financial reporting purposes, the Clerk is deemed to be part of the primary government of the County and, as such, is included in the County’s Comprehensive Annual Financial Report.

Basis of PresentationThe accompanying financial statements include all the funds and accounts of the Clerk’s office,but are not a complete presentation of the County as a whole. Except for this matter, they are otherwise in conformity with accounting principles generally accepted in the United States of America (GAAP). The accompanying financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(4), Rules of the Auditor General—Local Governmental Entity Audits.

The financial transactions of the Clerk are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balance accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. These funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions, or limitations.

The focus of governmental fund financial statements is on major funds rather than reporting funds by type. GAAP sets forth minimum criteria (percentage of total assets, liabilities, revenues, or expenditures) for the determination of major funds. Each major fund is reported in a separate column. The Clerk reports the following major governmental funds:

General Fund—The General Fund is used to account for the general operations of the Clerk and includes all transactions which are not accounted for in another fund.

10


SEPTEMBER 30, 2017(Continued)

Note 1 - Summary of Significant Accounting Policies (Continued)

Basis of Presentation (Concluded)Records Modernization Fund—The Records Modernization Fund was created pursuant to Florida Statutes 631 effective July 1, 1987. The Clerk charges a fee for each instrument recorded in the official records. The fee is deposited into this fund. The money in this fund is to be held by the Clerk and is restricted exclusively for equipment, personnel training, and technical assistance in modernizing the official records system. Effective July 1, 2004, an additional amount is collected pursuant to Section 28.24(12)(e), Florida Statutes, and is used exclusively for funding court-related technology needs. Beginning July 1, 2009, the fundalso receives 10% of the Clerk’s fees on civil and criminal fines collections to be used for additional court-related operational needs and program enhancements.

Fines and Forfeitures Fund—The Fines and Forfeitures Fund was created pursuant to Florida Statutes 28.36, effective July 1, 2004. The fund accounts for court-related functions pursuant to Florida Statutes 28.35(3)(a). From July 1, 2009 through June 30, 2013, related fees and charges were remitted monthly to the state, and the court-related functions were funded by a monthly state appropriation. Beginning July 1, 2013, the state appropriations were terminated, and related fees and charges (including those received in June 2013) are no longer remitted to the state, but are instead retained to fund court-related functions. Excess revenues are returned to the state.

The Clerk also reports the following fund type:

Agency Funds—To account for assets held by the Clerk in a trustee capacity or as an agent for individuals, private organizations, and other governments.

With the implementation of Revision 7 to Article V on July 1, 2004, the Clerk’s activities are now classified as court-related and noncourt-related. Noncourt-related activities are reported in the Clerk’s General Fund. These activities are funded primarily with service charges for recording instruments and documents into the official records, and through transfers in from the Board. Excess revenues at the end of the year are due back to the Board, and are shown as a liability and transfer out in the General Fund.

Court-related activities are reported in the Fines and Forfeitures Fund. Excess revenues are due back to the state periodically, except that one month’s revenues can be retained for cash flow needs. Based on the legal opinion provided by the CCOC general counsel of the provisions of Section 28.37(3), Florida Statutes, which was adopted as policy by the CCOC Finance and Budget Committee, all excess court-related funds have been included in a fund liability, due to other government agencies.

11




Measurement Focus and Basis of AccountingGovernmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the balance sheet. Operating statements for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Agency funds are custodial in nature (assets equal liabilities), and do not involve measurement of results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting.

The modified accrual basis of accounting is used by the governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance liabilities of the current fiscal year). For this purpose, the Clerk considers revenues to be available if they are collected within 25 days of the end of the current period. The monthly reimbursement for the Local Child Support Enforcement IV-D grant typically exceeds this 25 day period. For this grant only, the Clerk considers revenues to be available if they are collected within 45 days of the end of the current period. Expenditures are recorded when the related fund liability is incurred, except for certain compensated absences, which are recognized as expenditures to the extent they have matured.Prepaid expenses are recorded under the consumption method.

Charges for services, interest income, and other revenue are recognized as they are earned and become measurable and available to pay liabilities of the current period.

The general operations of the Clerk are funded principally by fees from third parties and appropriations from the Board. The appropriations from the Board are presented in the Clerk’s financial statements as transfers in.

Excess FeesFor the General Fund, Florida Statutes provide that the amount by which revenues and transfers exceed annual expenditures be remitted to the Board immediately following the fiscal year for which the funding was provided or following the fiscal year during which other revenue was recognized. The amount of this distribution is recorded as a liability and as another financing use in the General Fund in the accompanying financial statements.

For the Fines and Forfeitures Fund, the Clerk makes monthly payments to the state from its budget surplus and is required to return additional net revenues annually. Amounts returned were $801,746 and net revenues accrued were $232,747, for a total state distribution of $1,034,494.This distribution is recorded as an “other financing use” in the Fines and Forfeitures Fund. Net revenues are returned to the state on a basis that straddles the fiscal year; i.e., September revenues can be carried over for working capital needs. Amounts recorded as due to other governmental agencies in the Fines and Forfeitures Fund totaling $606,855, included net revenues of $322,753scheduled to be returned to the state in January 2018, $276,307 available for carryover and $7,795 for juror repayment which the state deducted from October 2017 revenues.

12




Equity in Pooled Cash and InvestmentsThe Clerk pools substantially all cash and temporary investments. During the year, such temporary investments included money market funds, mutual funds, deposits with the Florida State Board of Administrations’ (SBA) Florida PRIME (formerly known as the Local Government Surplus Funds Trust Fund Pooled Investment Account), and the Florida Local Government Investment Trusts’ (the Trust) Florida Trust Funds. The PRIME and Florida Trust Funds are external investment pools reported at amortized cost, which approximates fair value. Each fund’s equity in pooled cash is stated at the respective funds’ contributed cost plus interest which also approximates fair value. Earnings from pooled cash and investments are allocated to each fund based on a monthly weighted average of the equity balance of each fund. Additionally, all other investments, if any, are reported at fair value.

Compensated AbsencesAll full-time employees of the Clerk are entitled to annual paid time off (PTO) with pay. PTO is an employee benefit that combines traditional vacation and sick leave programs into one plan with two components.

The employees are generally allowed to accumulate PTO up to a certain maximum, based on length of employment. Upon termination before retirement, the employee is paid for up to 80% of accrued and unused PTO. Retiring employees receive up to 100% of their accrued PTO balance. PTO payments are included in operating costs when the payments are made to the employees. The Clerk does not, nor is he/she legally required to accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the governmental funds but rather is reported in the basic financial statements of the County.

Fund BalancesThe Clerk implemented the provisions of GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB Statement No. 54) in 2011, as required. The purpose of GASB Statement No. 54 was to improve the consistency and usefulness of fund balance information to the financial statement user. The statement established fund balance classifications that comprise a hierarchy based primarily on the extent to which the organization is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. Fund balance is repocommitted, assigned, and unassigned:

Nonspendablebecause: (a) they are not expected to be converted to cash, or (b) they are legally or contractually required to remain intact. Examples of this classification are prepaid items, inventories, and principal (corpus) of an endowment fund.

Restrictedeither: (a) externally by third parties (creditors, grantors, contributors, or laws or regulations of other governments), or (b) by law through constitutional provisions or enabling legislation.

This component of fund balance consists of amounts that can only be used for specific purposes pursuant to constraints imposed by formal action (e.g., policy) of the organization’s governing authority. By Statute, the Clerk himself is the governing authority. These committed amounts cannot be used for any other purpose unless the Clerk removes or changes the specified use by taking the same type of action (e.g., policy) he employed to constrain those amounts.

13




Fund Balances (Concluded)

Assignedless-than-formal action of the organization’s governing authority, or by an individual or body to whom the governing authority has delegated this responsibility. The Clerk has not delegated the responsibility to assign fund balances to any individual or body.

This classification is used for: (a) negative unrestricted fund balances in any governmental fund, or (b) fund balances within the General Fund that are not restricted, committed, or assigned.

When both restricted and unrestricted resources are available for use, it is the Clerk’s policy to use restricted resources first, then unrestricted resources (committed, assigned, and unassigned) as they are needed. When unrestricted resources (committed, assigned, and unassigned) are available for use, it is the Clerk’s policy to use committed resources first, then assigned, and then unassigned as needed.

Use of EstimatesThe preparation of financial statements in accordance with GAAP, requires management to make estimates and assumptions that affect the amounts reported or disclosed in the financial statements and accompanying notes. Actual results could differ from those estimates.

Governmental Accounting Standards Board (GASB) Statement No. 68The Clerk participates in the Florida Retirement System (FRS) defined benefit pension plan and the Health Insurance Subsidy (HIS) defined benefit plan administered by Florida Division of Retirement. As a participating employer, the Clerk implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as required in 2015. GASB Statement No. 68requires employers participating in cost-sharing multiple-employer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities and related pension amounts of the defined benefit pension plans. However, these liabilities would be recorded in government-wide financial statements, which are not required in this special-purpose presentation. As such, only the applicable disclosures required by GASB Statement No. 68 have been presented herein. In addition, the cost-sharing multiple-employer plans mentioned above operate on a fiscal year ended June 30.

Governmental Accounting Standards Board (GASB) Statement Nos. 72 and 79The Clerk has implemented GASB Statement No. 72, Fair Value Measurement and Application. This Statement requires disclosures to be made about fair value measurements, the level of fair value hierarchy, and valuation techniques. This statement clarifies the definition of fair value as an exit price. This statement also defines an investment security or other asset that: (a) a government holds primarily to generate income or profit; and (b) has a present service capacity based solely on the asset’s ability to generate cash or to generate cash when sold. Governmental entities are required to record investments at fair value unless an exception applies and disclose the fair value hierarchy.

14



Note 1 - Summary of Significant Accounting Policies (Concluded)

Governmental Accounting Standards Board (GASB) Statement Nos. 72 and 79 (Concluded)The Clerk has implemented GASB Statement No. 79, Certain External Investment Pools and Pool Participants. The Statement allows qualifying external investment pools to elect to measure all investments at amortized cost if the pool meets certain criteria and subsequently allows pool participants to record an investment in the pool at amortized cost.

Note 2 - Budgetary Process

Generally, Florida Statutes 129.021 and 129.03 govern the preparation, adoption, and administration of the Clerk’s annual budget. The Clerk prepares a budget for all funds. Subsequent amendments can be made to these budgets without Board approval, except when they increase the total General Fund budget. The Clerk also prepares an annual budget for the Fines and Forfeiture Fund that is submitted to the CCOC.

Budgets are prepared on a basis consistent with GAAP. The annual budget serves as the legal authorization for expenditures. Budgetary control is maintained at the departmental major object expenditure level. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year-end. Budgetary changes within major object expenditures categories are made at the discretion of the Clerk.

The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year, whenever legally authorized.

Note 3 - Cash and Equity in Pooled Cash and Investments

Cash and Cash EquivalentsAt September 30, 2017, the fair value of the Clerk’s cash and equity in pooled cash was as follows:

Fair CreditValue Rating

Cash on Hand $ 8,425 N/ADemand Deposits 1588,622 N/ATotal Cash and Cash Equivalents $ 1,597,047

The Clerk’s bank deposits are held in qualified public depositories (QPDs) pursuant to Chapter 280, Florida Statutes. Under this Chapter, each QPD is required to pledge collateral to the State Treasurer against the public deposits. In the event of default by a QPD, all claims for public deposits would be satisfied by the State Treasurer from the proceeds of federal deposit insurance, pledged collateral of the QPD in default and, if necessary, assessments against other QPDs of the same type as the depositor in default.

15



Note 3 - Cash and Equity in Pooled Cash and Investments (Continued)

InvestmentsThe Clerk’s investment policy follows guidance set forth in Section 219.075, Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. The policy authorizes the following investments:

Investment Pool - Florida PRIMEInvestment Pools - The Florida Trust FundsInvestment Pool - FLCLASSDirect Obligations of (or Unconditionally Guaranteed by) the United States (U.S.) GovernmentCertain Obligations Issued or Guaranteed by U.S. AgenciesCertificates of Deposit, Money Market Accounts, etc. in QPDsCertain Repurchase AgreementsCertain SEC - Registered Money Market FundsCertain Prime-rated Commercial PaperCertain Domestic Bankers’ AcceptancesQualified Municipal Debt General Obligation Securities Rated at Least “A or Equivalent”Certain Corporate Debt Securities Rated at Least “A or Equivalent”

The primary objective of the investment policy is to assure that investments are of minimum risk. The second criterion is the assurance of liquidity, and the third consideration is yield.

The Clerk participates in the Florida Local Government Investment Trust, (the Trust) which is administered by a Board of Trustees appointed by the Florida Association of Court Clerks and County Comptroller, and the Florida Association of Counties, Inc. The Trust was created in December 1991 to provide a means for public entities to pool surplus funds to maximize net earnings. The Trust invests in money market, and U.S. treasury notes, collateralized mortgage obligations, asset backed securities, agency notes, agency ARM pass-through, corporate bonds, government related securities, and certificates of deposit. The Trust reports all share information at net asset value. The Trust is rated AAAf for credit quality and S1 for bond fund volatility byStandard & Poor’s rating. The Clerk has also invested in the Florida Trust Day-to-Day Fund which is a money market fund.

Following is a list of investments held at September 30, 2017, (Ratings from Standard and Poor’s):

Maturity Fair Value RatingInvestment:Investment Pools:

Florida Local Government Investment Trust Immediate $ 1,394,108 AAAfFlorida Trust - Day to Day Fund 55 days 350,999 AAAmFLCLASS 56 days 752,302 AAAmFlorida PRIME Local Government Surplus Trust 51 days 1,507,405 AAAm

Total Investments $ 4,004,814

Credit RiskIn an effort to limit credit risk, the Clerk’s investment policy identifies and limits investments to only top ratings issued by nationally recognized statistical rating organizations.

16



Note 3 - Cash and Equity in Pooled Cash and Investments (Continued)

Credit Risk (Concluded)The Clerk’s cash equivalents consist of funds placed with the following entity:

The State Board of Administration for participation in the Local Government Investment Pool (Florida PrimeTM) created by Section 218.415, Florida Statutes. This investment pool operates under investment guidelines established by Section 215.47, Florida Statutes. The Clerk’s investments in Florida PrimeTM, an external investment pool, are reported at amortized cost.

The Clerk’s short-term investments consist of funds placed with the following entity:

The Clerk also has investments with Florida Local Government Investment Trust (FLGIT) operated by the Florida Association of Counties and Florida Court Clerks and Comptrollers. The pool is an authorized investment consistent with Section 218.415(16)(a), Florida Statutes, and the Clerk’s short-term investment policy. GASB Statement No. 31 requires all governments to mark to market the unrealized gains and losses incurred in its investments.

Concentration of Investment RiskTo manage concentration of investment risk, the Clerk’s investment policy stipulates maximum limitation guidelines for diversification by instrument. A maximum of 80% of the portfolio may be invested in each of the Florida Trust Funds or Florida PRIME. Investment maximum limitations range from 10% to 80% for each of the remaining types of investments.

Custodial Credit RiskTo manage custodial credit risk for investments, the Clerk’s investment policy specifies the Clerkwill execute a third party Custodial Safekeeping Agreement with a commercial bank’s trust department separately chartered by the U.S. Government or State of Florida. All securities purchased by the Clerk are properly designated as an asset of the Clerk and are held in safekeeping by the bank’s Trust department.

Interest Rate RiskTo manage interest rate risk, the Clerk maintains a formal investment policy that limits investment maturities not to exceed two years. This coupled with a diversified portfolio limits exposure to fair value losses arising from increasing interest rates.

Fair Value MeasurementThe Clerk holds assets that are defined as short-term investments. The Clerk’s investments are recorded at fair value unless the investment qualifies as an external investment pool under the guidance in GASB Statement No. 79.

The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels:

Level 1 inputs-are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.Level 2 inputs-are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly or indirectly.

17



Note 3 - Cash and Equity in Pooled Cash and Investments (Concluded)

Fair Value Measurement (Concluded)Level 3 inputs-are unobservable inputs for an asset or liability. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. If a price for an identical asset or liability is not observable, a government should measure fair value using another valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs.

The following short-term investments are recorded at fair value:Florida Local Government Investment Trust (FLGIT)FLCLASS

Under the fair value hierarchy, all of these investments are considered to be Level 1.

The Clerk’s holds investments in qualified external investments pools that measure all of its investment at amortized cost for financial reporting purposes. These investments are recorded at amortized cost. The following investments are recorded at amortized costs and are not subject to the fair value hierarchy:

Florida Local Government Investment Pool (Florida PrimeTM)

None of the pools have limitations or restrictions on participant withdrawals including items such as redemption notices, maximum transaction amounts, and the pool’s authority to impose liquidity fees or redemption gates.

The above cash and investments are reported as $2,748,122 and $2,853,739 in the governmental funds and agency funds, respectively.

Note 4 - Capital Assets

Pursuant to Florida Statutes, capital assets used by the Clerk are owned by the Board. The Clerk maintains custodial and record-keeping responsibility for the tangible and intangible capital assets used by the office. The office space used in the Clerk’s operations is provided at no cost by the Board.

Capital assets paid for by the Clerk are recorded as expenditures in the governmental funds of the Clerk and are capitalized in the basic financial statements of the County. Donated assets are recorded directly on the County’s books at their estimated fair value on the date received. Depreciation is recorded at the County level.

Note 5 - Long-term Liability

The following is a summary of changes in general long-term liabilities, which are reported in the basic financial statements of the County:

Balance Balance DueOctober 1, September 30, Within

2016 Additions Retirements 2017 One Year

Accrued Compensated Absences $ 292,276 $ 235,015 $ (253,914) $ 273,378 $ 273,378

18



Note 5 - Long-term Liability (Concluded)

The long-term liabilities above are not reported in the financial statements of the Clerk since they have not matured.

Note 6 - Employee Retirement Plan

General Information about the Florida Retirement System (FRS)The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan, to assist retired members of any state-administered retirement system in paying the costs of health insurance.

Essentially all regular employees of the Clerk are eligible to enroll as members of the state-administered FRS. Provisions relating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112 Part IV, Florida Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer defined-benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ web site (www.dms.myflorida.com).

The Clerk’s contributions to the FRS Plan totaled $392,049 for the fiscal year ended September 30, 2017, (all plans).

Payables to the Pension Plan. At September 30, 2017, the Clerk of Circuit Court reported a payable of $40,093 for the outstanding amount of contributions to the Plan required for the fiscal year ended September 30, 2017.

FRS Pension Plan

Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a DROP for eligible employees. The general classes of membership applicable to the Clerk are as follows:

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Note 6 - Employee Retirement Plan (Continued)

FRS Pension Plan (Continued)

Plan Description. (Concluded)Regular Class for membership in the other classes.

Members who hold specified elective offices in local government.

Members in senior management level positions.

Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members enrolled prior to July 1, 2011, are eligible for normal retirement benefits atage 62 or at any age after 30 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Members of the Plan may include up to four years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.

DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate, except that certain instructional personnel may participate for up to 96 months. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.

Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement class to which the member belonged when the service credit was earned. Certain members are eligible for in-line-of-duty or regular disability and survivors’ benefits. The following chart shows the percentage value for each year of service credit earned:

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Benefits Provided. (Concluded)

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3% per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3% determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

Contributions. The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2016-2017 fiscal year were as follows:

Class, Initial Enrollment, and Retirement Age/Years of Service % Value

Regular Class Members Initially Enrolled Before July 1, 2011 Retirement up to age 62 or up to 30 years of service 1.60

Retirement at age 63 or with 31 years of service 1.63


Retirement at age 65 or with 33 or more years of service 1.68

Regular Class Members Initially Enrolled on or After July 1, 2011 Retirement up to age 65 or up to 33 years of service 1.60




Elected County Officers 3.00

Senior Management Service Class 2.00

Employee Employer Employee Employer

FRS, Regular 3.00 5.80 3.00 6.20

FRS, Elected County Officers 3.00 40.75 3.00 43.78

FRS, Senior Management Service 3.00 20.05 3.00 20.99

DROP - Applicable to Members from All of the Above Classes 0.00 11.33 0.00 11.60

FRS, Reemployed Retiree (1) (1) (1) (1)

Notes: (1) Contribution rates are dependent upon retirement class in which reemployed.

Class

Year Ended June 30, 2017Percent of Gross Salary

Year Ended June 30, 2018 Percent of Gross Salary

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FRS Pension Plan (Concluded)

Contributions. (Concluded)The Clerk contributions (employer only) to the Plan totaled $291,063 for the fiscal year ended September 30, 2017. This excludes the HIS defined benefit pension plan contributions.

Pension Liabilities. At September 30, 2017, the Clerk’s proportionate share of the FRS net pension liability was $3,343,581.

Further details of the FRS Plan net pension liability, annual pension expense, actuarial assumptions, sensitivity analysis, and the other required disclosures can be found in the County-wide annual financial report.

HIS Pension Plan

Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of state-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.

Benefits Provided. For the fiscal year ended September 30, 2017, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under a state-administered retirement system must provide proof of health insurance coverage, which may include Medicare.

Contributions. The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal years ended June 30, 2018 and 2017, the contribution rate was 1.66% of payroll, respectively, pursuant to Section 112.363, Florida Statutes. The Clerk contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.

The Clerk’s contributions to the HIS Plan totaled $65,446 for the fiscal year ended September 30, 2017.

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HIS Pension Plan (Concluded)

Pension Liabilities. At September 30, 2017, the Clerk’s proportionate share of the HIS net pension liability was $1,319,157.

Further details of the HIS Plan net pension liability, annual pension expense, actuarial assumptions, sensitivity analysis, and the other required disclosures can be found in the County-wide annual financial report.

FRS – Defined Contribution Pension Plan

The Clerk contributes to the FRS Investment Plan (Investment Plan), a defined contribution pension plan, for its eligible employees electing to participate in the Investment Plan. The Investment Plan is administered by the SBA, and is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report. Service retirement benefits are based upon the value of the member’s account upon retirement.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. Clerk employees participating in DROP are not eligible to participate in the Investment Plan. Employer and employee contributions, including amounts contributed to individual member’s accounts, are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Benefit terms, including contribution requirements, for the Investment Plan are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contribution rates that are based on salary and membership class (Regular Class, Elected County Officers, etc.), as the FRS defined benefit plan. Contributions are directed toindividual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Allocations to the investment members’ accounts during the 2016-17 fiscal year were as follows:

Percent of GrossCompensation

FRS, Regular 6.30

FRS, Elected County Officers 11.34

FRS, Senior Management Service 7.67

Class

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Note 6 - Employee Retirement Plan (Concluded)

FRS – Defined Contribution Pension Plan (Concluded)

For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the Plan is transferred to the Investment Plan, the member must have the years of service required for Plan vesting (including the service credit represented by the transferred funds) to be vested for these fundsand the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five year period, the employee will regain control over their account. If the employee does not return within the five-year period, the employee will forfeit the accumulated account balance. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.04% of payroll and by forfeited benefits of Investment Plan members. For the fiscal year ended September 30, 2017, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the Clerk.

After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds invested for future distribution, or any combination of these options. Disability coverage is provided; the member may either transfer the account balance to the Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the Plan, or remain in the Investment Plan and rely upon that account balance for retirement income.

The Clerk’s contributions to the Investment Plan totaled $35,540 for the fiscal year ended September 30, 2017.

Note 7 - Postemployment Benefits Other Than Pensions

The Board offers post-retirement health care benefits and life insurance to all retired employees of the Clerk’s Office and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment, so that no net expense is initially recorded in the Board’s financial statements. However, these retirees are receiving an “implicit subsidy” because the premium is a group rate which includes active, lower cost employees.

This implicit subsidy has a cost which under GAAP is required to be disclosed in these financial statements. However, this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Clerk’s Office. Accordingly, these calculations and disclosures can be found in the County-wide annual financial report.

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SEPTEMBER 30, 2017(Concluded)

Note 8 - Risk Management

The Clerk participates in the insurance programs of the Board, including general liability, workers’ compensation, and employee health insurance. These risk management activities are handled through internal service funds maintained by the Board. All liabilities associated with these self-insured risks are reported in the basic financial statements of the Board. The purpose of these funds is to administer employee life, health, workers’ compensation, unemployment, disability insurance, and property and liability insurance. These funds account for the risk financing activities of the County, but do not constitute a transfer of risk from the County.

Significant losses are covered by commercial insurance for all major programs except workers’ compensation for which the County retains risk of loss. For insured programs, there have been no significant reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage in any of the last three years.

The Clerk paid premiums of $1,135,177 for life and health insurance coverage to the Board for the year ended September 30, 2017.

The Board’s Workers’ Compensation Internal Service Fund is a self-insurance program for workers’ compensation claims on losses up to $1,100,000 per occurrence. The Workers’ Compensation fund has indemnified the Clerk against any losses in a given year in excess of the fee charged. In the event actual losses are less than the fee charged, such amounts will be retained in the Workers’ Compensation fund. Claim settlements and losses are accrued and subsequently paid from the Workers’ Compensation fund. Premium payments to the Board by the Clerk,$8,012 for the year ended September 30, 2017.

Note 9 - Commitments, Claims, and Contingencies

LitigationThe Clerk is involved as defendant or plaintiff in certain litigation and claims arising from the ordinary course of operations. Any judgments against the Clerk in excess of insurance limits would be settled by the Board. In the opinion of the Clerk and legal counsel, the range of potential recoveries or liabilities will not materially affect the financial position of the Clerk.

Federal and State GrantsGrant funds received by the Clerk are subject to audit by grantor agencies. Audits of these grants may result in disallowed costs, which may constitute a liability of the Clerk. In the opinion of management, disallowed costs, if any, would be insignificant to the financial position and operations of the Clerk.

OTHER FINANCIAL INFORMATION

HERNANDO COUNTY, FLORIDACLERK OF THE CIRCUIT COURT

SEPTEMBER 30, 2017

FIDUCIARY FUNDS

Agency Funds are used to account for assets held by a governmental unit as trustee or agent for individuals, private organizations, and other governmental units.

Trust Fund This fund is used to account for the receipt and subsequent activity of monies temporarily held for others. Court related fines, fees, and service charges collected by the Clerk are deposited into this fund and remitted to the State of Florida on a monthly basis. Other deposits include monies for fines to be remitted to other government agencies, intangible and documentary taxes collected to be distributed to the State of Florida, Court ordered bonds, and other miscellaneous items.

Domestic Relations This fund is used to account for child support and alimony payments, and distribution of such funds processed through the Clerk.

Court Registry This fund is used to account for registry funds that have been ordered to be posted with the Clerk.

Ordinary Witness This fund was established pursuant to Florida Statute 40.29, effective July 1, 2004. The fund accounts for the payment of witnesses on behalf of the state attorney and public defender.

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Trust Domestic Court Ordinary Fund Relations Registry Witness Total

AssetsEquity in Pooled Cash and

Investments 1,595,957$ 0$ 1,254,275$ 3,507$ 2,853,739$Accounts Receivable 0 300 0 0 300

Total Assets 1,595,957 300 1,254,275 3,507 2,854,039

LiabilitiesAccounts Payable 6,811 0 0 3,507 10,318Due to Other Government

Agencies 596,860 300 0 0 597,160Deposits 992,286 0 0 0 992,286Other Current Liabilities 0 0 1,254,275 0 1,254,275

Total Liabilities 1,595,957$ 300$ 1,254,275$ 3,507$ 2,854,039$

COMBINING STATEMENT OF FIDUCIARY ASSETS AND LIABILITIESALL AGENCY FUNDS



OTHER REPORTS

26

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER

MATTERS BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

Honorable Don Barbee Jr.Clerk of the Circuit CourtHernando County, Florida

We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Clerk of the Circuit Court (the Clerk), as of and for the year ended September 30, 2017, and the related notes to the financial statements, and have issued our report thereon dated February 21, 2018.

Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the Clerk’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Clerk’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Clerk’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.

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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER

MATTERS BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS(Concluded)

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the Clerk’s financial statements are free frommaterial 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 thoseprovisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this ReportThe 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 the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


28

INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCEWITH SECTION 218.415, FLORIDA STATUTES


We have examined Hernando County, Florida, Clerk of the Circuit Court’s (the Clerk) compliance with the requirements of Section 218.415, Florida Statutes, as of and for the year ended September 30, 2017, as required by Section 10.556(10)(a), Rules of the Auditor General. Management is responsible for the Clerk’s compliance with those requirements. Our responsibility is to express an opinion on the Clerk’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Clerk complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Clerk complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the Clerk’s compliance with specified requirements.

In our opinion, the Clerk complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2017.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Clerk, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be, and should not be, used by anyone other than these specified parties.


29

INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCEWITH SECTIONS 28.35 AND 28.36, FLORIDA STATUTES


We have examined Hernando County, Florida, Clerk of the Circuit Court’s (the Clerk) compliance with the requirements of Sections 28.35 and 28.36, Florida Statutes, as of and for the year ended September 30, 2017, as required by Section 10.556(10)(b), Rules of the Auditor General. Management is responsible for the Clerk’s compliance with those requirements. Our responsibility is to express an opinion on the Clerk’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Clerk complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Clerkcomplied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the Clerk’s compliance with specified requirements.

In our opinion, the Clerk complied, in all material respects, with the aforementioned requirements duringthe year ended September 30, 2017.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Clerk, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intendedto be, and should not be, used by anyone other than these specified parties.


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We have examined Hernando County, Florida, Clerk of the Circuit Court’s (the Clerk) compliance with the requirements of Section 61.181, Florida Statutes, as of and for the year ended September 30, 2017, as required by Section 10.556(10)(d), Rules of the Auditor General. Management is responsible for the Clerk’s compliance with those requirements. Our responsibility is to express an opinion on the Clerk’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Clerk complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Clerk complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the Clerk’s compliance with specified requirements.

In our opinion, the Clerk complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2017.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Clerk, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be, and should not be, used by anyone other than these specified parties.


31

MANAGEMENT LETTER


Report on the Financial StatementsWe have audited the financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Clerk of the Circuit Court (the Clerk), as of and for the year ended September 30, 2017, and have issued our report thereon dated February 21, 2018.

Auditors’ ResponsibilityWe conducted our audit 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 Chapter 10.550, Rules of the Auditor General.

Other ReportsWe have issued our Independent Auditors’ Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards; Independent Accountants’ Report on Compliance with Section 218.415, Florida Statutes; Independent Accountants’ Report on Compliance with Sections 28.35 and 28.36, Florida Statutes; and Independent Accountants’ Report on Compliance with Section 61.181, Florida Statutes.Disclosures in those reports, which are dated February 21, 2018, should be considered in conjunction with this management letter.


Official Title and Legal AuthoritySection 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. In that regard, the Clerk was established by the Constitution of the State of Florida, Article VIII, Section 1(d). The Clerk does not have any component units.

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Financial Management Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

Additional MattersSection 10.554(1)(i)3., Rules of Auditor General, requires that we communicate noncompliance withprovisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred,that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this LetterOur management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Clerk, its management, and the Board of County Commissioners of Hernando County, Florida,and is not intended to be, and should not be, used by anyone other than these specified parties.

We wish to take this opportunity to thank you and your staff for the cooperation and courtesies extended to us during the course of our audit. Please let us know if you have any questions or comments concerning this letter, our accompanying reports, or other matters.




PROPERTY APPRAISERHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017



PROPERTY APPRAISERHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017

TABLE OF CONTENTS


Financial StatementsBalance Sheet - Governmental Funds........................................................................................................ 3Statement of Revenues, Expenditures, and Changes in Fund

Balance - Governmental Funds .............................................................................................................. 4Statement of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - General Fund......................................................................................... 5Statement of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Geographics Information System Fund ................................................ 6Notes to Financial Statements ..............................................................................................................7-20

Other Financial InformationCombining Balance Sheet - Nonmajor Governmental Funds.................................................................. 21Combining Statement of Revenues, Expenditures, and Changes in

Fund Balance - Nonmajor Governmental Funds.................................................................................. 22Schedule of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Addressing Fund ................................................................................. 23Schedule of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - GIS Business Units Fund .................................................................... 24

Other ReportsIndependent Auditors’ Report on Internal Control over Financial

Reporting and on Compliance and Other Matters Based on anAudit of Financial Statements Performed in Accordancewith Government Auditing Standards .............................................................................................25-26

Independent Accountants’ Report on Compliance with Section 218.415, Florida Statutes......................................................................................................... 27


1


Honorable John C. EmersonProperty AppraiserHernando County, Florida

Report on the Financial StatementsWe have audited the accompanying financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Property Appraiser (the Property Appraiser), as of and for the year ended September 30, 2017, and the related notes to the financial statements, as listed in the table of contents.





OpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund and the aggregate remaining fund information of the Property Appraiser, as of September 30, 2017, and the respective changes in financial position and budgetary comparisons for the year then ended in accordance with accounting principles generally accepted in the United States of America.

2



Emphasis of Matter – Incomplete PresentationAs discussed in Note 1 to the financial statements, the financial statements referred to above were prepared solely for the purpose of complying with the Rules of the Auditor General of the State of Florida (the Rules). In conformity with the Rules, the accompanying financial statements are intended to present the financial position, changes in financial position, and budgetary comparisons of each major fund and the aggregate remaining fund information, where applicable, only for that portion of the major funds and the aggregate remaining fund information of Hernando County, Florida, that is attributable to the Property Appraiser. They do not purport to, and do not, present fairly the financial position as a whole of HernandoCounty, Florida, as of September 30, 2017, and the changes in its financial position or budgetary comparisons for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Other Matters

Other Financial InformationOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Property Appraiser’s financial statements. The other financial information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financialstatements.

The other financial information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Suchinformation has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financialstatements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other financial information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated February 13,2018, on our consideration of the Property Appraiser’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreementsand other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Property Appraiser’s internal control over financial reporting and compliance.



GeographicsInformation Nonmajor

General System GovernmentalFund Fund Funds Total

AssetsCash and Cash Equivalents 252,795$ 960,255$ 60,164$ 1,273,214$

Total Assets 252,795 960,255 60,164 1,273,214


LiabilitiesVouchers Payable 6,475 579 170 7,224Due to the Hernando County, Florida,

Board of County Commissioners 241,301 0 59,811 301,112Due to Other Governments 5,019 0 183 5,202

Total Liabilities 252,795 579 60,164 313,538

Fund BalancesCommitted for GIS Function 0 959,676 0 959,676

Total Fund Balances 0 959,676 0 959,676

Total Liabilities and Fund Balances 252,795$ 960,255$ 60,164$ 1,273,214$


PROPERTY APPRAISER



GeographicsInformation Nonmajor

General System GovernmentalFund Fund Funds Total

RevenuesIntergovernmental Revenues:

Hernando County, Florida, Board of County Commissioners 2,505,415$ 535,504$ 239,833$ 3,280,752$

Other Taxing Districts 52,110 120,237 0 172,347Total Intergovernmental Revenues 2,557,525 655,741 239,833 3,453,099Charges for Services 0 12,798 62,845 75,643Interest 0 927 0 927Miscellaneous 144 0 0 144

Total Revenues 2,557,669 669,466 302,678 3,529,813


Personal Services 2,060,609 416,475 206,653 2,683,737Operating 245,410 224,677 36,031 506,118

Capital Outlay 5,330 1,613 0 6,943(Total Expenditures) (2,311,349) (642,765) (242,684) (3,196,798)

Excess of Revenues over Expenditures 246,320 26,701 59,994 333,015

Other Financing (Uses) SourcesTransfers (out):

Distribution of Excess Fees to theHernando County, Florida, Board of County Commissioners (241,301) 0 (59,811) (301,112)

Distribution of Excess Fees toOther Taxing Districts (5,019) 0 (183) (5,202)

Total Other Financing (Uses) Sources (246,320) 0 (59,994) (306,314)

Net Change in Fund Balances 0 26,701 0 26,701

Fund Balance, Beginning of Year 0 932,975 0 932,975

Fund Balance, End of Year 0$ 959,676$ 0$ 959,676$


PROPERTY APPRAISER



Variancewith Final

BudgetPositive


Intergovernmental Revenues:Hernando County, Florida,

Board of County Commissioners 2,505,415$ 2,505,415$ 2,505,415$ 0$Other Taxing Districts 52,110 52,110 52,110 0

Miscellaneous 0 0 144 144Total Revenues 2,557,525 2,557,525 2,557,669 144


Personal Services 2,175,280 2,175,280 2,060,609 114,671Operating 376,427 376,427 245,410 131,017

Capital Outlay 5,818 5,818 5,330 488(Total Expenditures) (2,557,525) (2,557,525) (2,311,349) 246,176

Excess of Revenues over Expenditures 0 0 246,320 246,320


Distribution of Excess Fees to the Hernando County, Florida,Board of County Commissioners 0 0 (241,301) (241,301)

Distribution of Excess Fees toOther Taxing Districts 0 0 (5,019) (5,019)

Total Other Financing (Uses) Sources 0 0 (246,320) (246,320)

Net Change in Fund Balances 0 0 0 0



Budget

HERNANDO COUNTY, FLORIDAPROPERTY APPRAISER

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND

FOR THE YEAR ENDED SEPTEMBER 30, 2017


Variancewith Final

BudgetPositive



Board of County Commissioners 535,504$ 535,504$ 535,504$ 0$Other Taxing Districts 120,237 120,237 120,237 0

Total Intergovernmental Revenues 655,741 655,741 655,741 0Charges for Services 0 0 12,798 12,798Interest 0 0 927 927Miscellaneous 0 75,004 0 (75,004)

Total Revenues 655,741 730,745 669,466 (61,279)


Personal Services 453,406 453,406 416,475 36,931Operating 266,839 266,839 224,677 42,162Capital Outlay 10,500 10,500 1,613 8,887

(Total Expenditures) (730,745) (730,745) (642,765) 87,980

Net Change in Fund Balances (75,004) 0 26,701 26,701

Fund Balance, Beginning of Year 75,004 0 932,975 932,975

Fund Balance, End of Year 0$ 0$ 959,676$ 959,676$

Budget


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GEOGRAPHICS INFORMATION SYSTEM FUND


7

NOTES TO FINANCIAL STATEMENTSHERNANDO COUNTY, FLORIDA

PROPERTY APPRAISERSEPTEMBER 30, 2017


Reporting EntityHernando County, Florida (the County), is a political subdivision of the State of Florida. It is governed by an elected Board of County Commissioners (the Board) and managed by an appointed County Administrator. The Hernando County, Florida, Property Appraiser (the Property Appraiser) is an elected constitutional officer of the County as provided for by the Constitution of the State of Florida. Pursuant to Chapters 129 and 195, Florida Statutes, the Property Appraiser’s budget is submitted to the Florida Department of Revenue for approval, and a copy is forwarded to the Board for coordination with the Board’s budget.

Funding of the Property Appraiser’s Office comes from quarterly billings to the Board and other taxing districts in proportion to prior year taxes levied, or in the case of non-ad valorem districts, by other reasonable methods. By statute, municipalities and school boards are exempt.

For financial reporting purposes, the Property Appraiser is deemed to be part of the primary government of the County and, as such, is included in the County’s Comprehensive Annual Financial Report.

Basis of PresentationThe accompanying financial statements include all the funds and accounts of the Property Appraiser’s office, but are not intended to be a complete presentation of the County as a whole.Except for this matter, they are otherwise in conformity with accounting principles generally accepted in the United States of America (GAAP). The accompanying financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(4), Rules of the Auditor General—Local Governmental Entity Audits.

The financial transactions of the Property Appraiser are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balance accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. These funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions, or limitations.

The focus of governmental fund financial statements is on major funds rather than reporting funds by type. GAAP sets forth minimum criteria (percentage of total assets, liabilities, revenues, or expenditures) for the determination of major funds. Each major fund is reported in a separate column.

The Property Appraiser reports the following major governmental funds:

General Fund—The general fund is used to account for the general operations of the Property Appraiser and includes all transactions which are not accounted for in other funds.

Geographics Information System (GIS) Fund—This fund is used to account for revenue received in accordance with a contract with the Board pursuant to Section 197.3632(2), Florida Statutes, which is designated to finance the establishment and maintenance of the GIS for Hernando County. Although neither the contract nor the law requires that a budget be prepared for the expenditures of these funds, the Property Appraiser prepares an annual budget internally for this revenue and follows the same recording and reporting procedures as those with legally required budgets for the purpose of management control.

8



(Continued)


Basis of Presentation (Concluded)The Property Appraiser also reports the following nonmajor governmental funds:

County Fees and Commissions Fund—This fund is used to account for revenues and expenditures pursuant to Section 119, Florida Statutes. The Property Appraiser uses this fund to track revenues and expenditures directly related to providing aerial maps, tax rolls, copies, and real property tags to the public.

Addressing Fund—The addressing fund was created to account for the revenues and expenditures for the creation and maintenance of the County-wide addressing system.

Addressing Fees Fund—The addressing fees fund was created to account for the revenues received under an agreement with the Board to provide address assignments, annual subscription renewal, and unnamed petition fees to the public.

GIS Business Units Fund—This fund was created in 2010 to account for the revenues and expenditures for the purpose of completing all planning and environmental services GIS work-related products. The Property Appraiser serves as the lead GIS entity or agency and ensures the Units develop operating procedures for the maintenance and processing of planning department and environmental services GIS functions and needs.

Measurement Focus and Basis of AccountingGovernmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the balance sheet. Operating statements for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets.

The modified accrual basis of accounting is used by governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance liabilities of the current fiscal year). For this purpose, the Property Appraiser considers revenues to be available if they are collected within 45 days of the end of the current period. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures tothe extent they have matured.

Substantially, all of the Property Appraiser’s revenue is received from taxing authorities. These monies are generally unrestricted and are revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenue at the time of receipt; earlier if the susceptible to accrual criteria are met.

Charges for services and interest income are recognized when earned, provided they are alsomeasurable and available to pay liabilities of the current period. Interest income is reported net of fees.

9



(Continued)


Measurement Focus and Basis of Accounting (Concluded)Florida Statutes provide that the amount by which revenues and transfers exceed annual expenditures be credited back to the Board and other taxing districts in the quarter immediately following the fiscal year during which the revenue was recognized. Florida Statutes further provide that this excess be distributed to each governmental agency in the same proportion as the fees paid by each governmental agency bear to total fees revenues. The amount of this distribution is recorded as a liability and another financing use in the accompanying financial statements.

Cash EquivalentsCash equivalents are defined as highly liquid investments with original maturities of three months or less.

Compensated AbsencesAll full-time employees of the Property Appraiser are entitled to paid time off. The employees are generally allowed to accumulate paid time off up to a maximum of 320 hours. Upon termination, the employee is paid for accumulated and unused paid time off. Paid time off payments are included in expenditures in the period paid or due. The Property Appraiser does not, nor is he legally required to, accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the governmental funds, but rather is reported in the basic financial statements of the County.

Fund BalancesThe Property Appraiser implemented the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, (GASB 54) in 2011, as required. The purpose of GASB 54 was to improve the consistency and usefulness of fund balance information to the financial statement user. The statement established fund balance classifications that comprise a hierarchy, based primarily on the extent to which the organization is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. Fund balance is reported in five components - nonspendable, restricted, committed, assigned, and unassigned:

Nonspendable This component of fund balance consists of amounts that cannot be spent because: (a) they are not expected to be converted to cash; or (b) they are legally or contractually required to remain intact. Examples of this classification are prepaid items, inventories, and principal (corpus) of an endowment fund. The Property Appraiser does not have any nonspendable funds.

Restricted fund balances consists of amounts that are constrained either: (a) externally by third parties (creditors, grantors, contributors, or laws or regulations of other governments); or (b) by law through constitutional provisions or enabling legislation.

10



(Continued)


Fund Balances (Concluded)Committed This component of fund balance consists of amounts that can only be used for specific purposes pursuant to constraints imposed by formal action (e.g., policy) of theorganization’s governing authority. By statute, the Property Appraiser himself is the governing authority. These committed amounts cannot be used for any other purpose unless the Property Appraiser removes or changes the specified use by taking the same type of action (e.g., policy) he employed to constrain those amounts.

Assigned This component of fund balance consists of amounts that are constrained by a less-than-formal action of the organization’s governing authority, or by an individual or body to whom the governing authority has delegated this responsibility. The Property Appraiser has not delegated the responsibility to assign fund balances to any individual or body.

Unassigned This classification is used for: (a) negative unrestricted fund balances in any governmental fund; or (b) fund balances within the general fund that are not restricted, committed, or assigned.

When both restricted and unrestricted resources are available for use, it is the Property Appraiser’s policy to use restricted resources first, then unrestricted resources (committed, assigned, and unassigned) as they are needed. When unrestricted resources (committed, assigned, and unassigned) are available for use, it is the Property Appraiser’s policy to use committed resources first, then assigned, and then unassigned as needed.

Use of EstimatesThe preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported or disclosed in the financial statements and accompanying notes. Actual results could differ from those estimates.

Governmental Accounting Standards Board (GASB) Statement No. 68The Property Appraiser participates in the Florida Retirement System (FRS) defined benefit pension plan and the Health Insurance Subsidy (HIS) defined benefit plan administered by Florida Division of Retirement. As a participating employer, the Property Appraiser implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions,which requires employers participating in cost-sharing multiple-employer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities and related pension amounts of the defined benefit pension plans. However, these liabilities would be recorded in government-wide financial statements, which are not required in this special-purpose presentation. As such, only the applicable disclosures required by GASB Statement 68 have been presented herein. In addition, the cost-sharing multiple-employer plans mentioned above operate on a fiscal year ended June 30.

11



(Continued)


Section 195.087, Florida Statutes, governs the preparation, adoption, and administration of the Property Appraiser’s annual budget. The Property Appraiser prepares a budget for the general fund and submits it to the Florida Department of Revenue for approval. Any subsequent amendments to the Property Appraiser’s total budget must be approved by the Florida Department of Revenue. The budget is prepared on a basis consistent with GAAP and serves as the legal authorization for expenditures.

Budgetary control is maintained at the major object expenditure level. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year-end. Budgetary changes within major object expenditure categories are made at the discretion of the Property Appraiser.

Budgets have also been prepared for the GIS, Addressing, and GIS Business Units funds, but not the County Fees and Commissions, or Addressing Fees funds. These budgets are not required to be submitted to the Department of Revenue for approval, and have no specific legal level of authority.

The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year.

Note 3 - Cash and Investments

At September 30, 2017, the carrying value of the Property Appraiser’s cash and cash equivalents was as follows:

Carrying CreditValue Rating

Cash on Hand $ 1,273,063 N/ADemand Deposits 150 N/ATotal Cash and Cash Equivalents $ 1,273,213

The Property Appraiser’s bank deposits are held in qualified public depositories (QPDs) pursuant to Chapter 280, Florida Statutes. Under this Chapter, each QPD is required to pledge collateral to the State Treasurer against the public deposits. In the event of default by a QPD,all claims for public deposits would be satisfied by the State Treasurer from the proceeds of federal deposit insurance, pledged collateral of the QPD in default and, if necessary, assessments against other QPDs of the same type as the depositor in default.

Authorized InvestmentsThe Property Appraiser has not adopted an investment policy and so, by statute, follows the state’s guidance set forth in Section 219.075, Florida Statutes regarding the deposit of funds received and the investment of surplus funds. That Section requires local governments without written investment policies, including County officers, to follow the state policy in Section 218.415(17), Florida Statutes. That Section authorizes the following investments:

12



(Continued)

Note 3 - Cash and Investments (Concluded)

Authorized Investments (Concluded)a. The Local Government Surplus Funds Trust Fund or any intergovernmental investment

pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Florida Statute 163.01.

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 qualified public depositories.

d. Direct obligations of the United States Treasury.

The Property Appraiser does not have policies that address credit risk, custodial credit risk, orinterest rate risk. The Property Appraiser had no investments at year-end or during the year.


Pursuant to Florida Statutes, capital assets used by the Property Appraiser are owned by the Board. The Property Appraiser maintains custodial and record-keeping responsibility for the tangible capital assets used by the office. The office space used in the Property Appraiser’s operations is provided at no cost by the Board.

Capital assets paid for by the Property Appraiser are recorded as expenditures in the governmental funds of the Property Appraiser and are capitalized in the basic financial statements of the County. Donated assets are recorded directly on the County’s books at their estimated fair value on the date received. Depreciation is recorded at the County level.



Balance BalanceOctober 1, September 30,

2016 Additions Deletions 2017Accrued Compensated

Absences $ 193,909 $ 157,462 $ 160,915 $ 190,456

Of the above obligations, $174,914 is expected to be paid from general fund revenues during the fiscal year ended September 30, 2018. These liabilities are not reported in the financial statements of the Property Appraiser since they have not matured.

13



(Continued)


General Information about the Florida Retirement System (FRS) The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan, to assist retired members of any state-administered retirement system in paying the costs of health insurance.

Essentially all regular employees of the Property Appraiser are eligible to enroll as members of the State-administered FRS. Provisions relating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112 Part IV, Florida Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer defined-benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ web site (www.dms.myflorida.com).

The Property Appraiser’s contributions to the FRS Plan totaled $228,839 for the fiscal year ended September 30, 2017 (all plans).

Payables to the Pension Plan. At September 30, 2017, the Property Appraiser’s reported a payable of $0 for the outstanding amount of contributions to the Plan required for the fiscal year ended September 30, 2017.

FRS Pension Plan

Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a DROP for eligible employees. The general classes of membership applicable to the Property Appraiser are as follows:

Regular Class in the other classes.

Members who hold specified elective offices in local government.

Members in senior management level positions.

Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service.

14



(Continued)



Plan Description. (Concluded)All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Members of thePlan may include up to four years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.


Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement class to which the member belonged when the service credit was earned. The following chart shows the percentage value for each year of service credit earned:


Regular Class Members Initially Enrolled Before July 1, 2011 Retirement at age 63 or with 31 years of service 1.63 Retirement at age 64 or with 32 years of service 1.65 Retirement at age 65 or with 33 or more years of service 1.68

Regular Class Members Initially Enrolled on or After July 1, 2011 Retirement up to age 65 or up to 33 years of service 1.60 Retirement at age 66 or with 34 years of service 1.63 Retirement at age 67 or with 35 years of service 1.65 Retirement at age 68 or with 36 or more years of service 1.68

Elected County Officers 3.00Senior Management Service Class 2.00

15



(Continued)



Benefits Provided. (Concluded)As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3% per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3% determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.


The Property Appraiser’s contributions (employer only) to the Plan totaled $193,946 for the fiscal year ended September 30, 2017. This excludes the HIS defined benefit pension plan contributions.

Pension Liabilities. At September 30, 2017, the Property Appraiser’s proportionate share of the FRS net pension liability was $2,163,021.


Class Employee Employer Employee Employer

FRS, Regular 3.00 5.80 3.00 6.20




FRS, Reemployed Retiree (1) (1) (1) (1)

Note: (1) Contribution rates are dependent upon retirement class in which reemployed.

Percent of Gross Salary Percent of Gross SalaryYear Ended June 30, 2018Year Ended June 30, 2017

16



(Continued)


HIS Pension Plan

Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.

Benefits Provided. For the fiscal year ended September 30, 2017, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which may include Medicare.

Contributions. The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal years ending June 30, 2018 and 2017,the contribution rate was 1.66% of payroll respectively, pursuant to Section 112.363, Florida Statues. The Property Appraiser contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.

The Property Appraiser’s contributions to the HIS Plan totaled $29,428 for the fiscal year ended September 30, 2017.

Pension Liabilities. At September 30, 2017, the Property Appraiser’s proportionate share of the HIS net pension liability was $619,995.


17



(Continued)


FRS – Defined Contribution Pension Plan The Property Appraiser contributes to the FRS Investment Plan (Investment Plan), a defined contribution pension plan, for its eligible employees electing to participate in the Investment Plan. The Investment Plan is administered by the SBA, and is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report. Service retirement benefits are based upon the value of the member’s account upon retirement.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. Property Appraiseremployees participating in DROP are not eligible to participate in the Investment Plan. Employer and employee contributions, including amounts contributed to individual member’s accounts, are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Benefit terms, including contribution requirements, for the Investment Plan are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contribution rates that are based on salary and membership class (Regular Class, Elected County Officers, etc.), as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Allocations to the investment members’ accounts during the 2016-17 fiscal year were as follows:

For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-coveredemployment within the five year period, the employee will regain control over their account. If the employee does not return within the five year period, the employee will forfeit the accumulated account balance. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.04% of payroll and by forfeited benefits of Investment Plan members. For the fiscal year ended September 30, 2017, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the Property Appraiser.

Percent of GrossClass Compensation

FRS, Regular 6.30



18



(Continued)


FRS – Defined Contribution Pension Plan (Concluded)After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds invested for future distribution, or any combination of these options. Disability coverage is provided; the member may either transfer the account balance to the FRS Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan, or remain in the Investment Plan and rely upon that account balance for retirement income.

The Property Appraiser’s contributions to the Investment Plan totaled $5,465 for the fiscal year ended September 30, 2017.

Note 7 - Postemployment Benefits Other than Pensions

The Board offers postemployment health care benefits and life insurance to all retired employees of the Property Appraiser’s Office and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment, so that no net expense is initially recorded in the Board’s financial statements. However, these retirees are receiving an “implicit subsidy” because the premium is a group rate which includes active, lower cost employees.

This implicit subsidy has a cost which under GAAP is required to be disclosed in these financial statements. However this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Property Appraiser’s Office. Accordingly, these calculations and disclosures can be found in the County-wide annual financial report.

Note 8 - Leases

The Property Appraiser has entered into certain noncancellable operating leases for vehicles and office equipment necessary for the conduct of operations that expire at various dates during the next two years. Lease expense for the year ended September 30, 2017, was $19,606.Future minimum lease payments under these noncancellable lease agreements provide for minimum annual rental payments as follows:

Year Ending September 30 Amount2018 $ 14,4872019 5,4422020 3,1742021 0

Thereafter 0Total $ 23,103

19



(Continued)


The Property Appraiser participates in the insurance programs of the Board including general liability, workers’ compensation, property and casualty, and employee health insurance. These risk management activities are handled through internal service funds maintained by the Board. All liabilities associated with these self-insured risks are reported in the basic financial statements of the Board. The purpose of these funds is to administer employee life, health, workers’ compensation, unemployment, disability insurance, and property and liability insurance. These funds account for the risk financing activities of the Board, but do not constitute a transfer of risk from the County.


The Property Appraiser paid premiums of $10,032 for general liability and $444,637 for employee life and health insurance coverage to the Board for the year ended September 30, 2017.

The Board’s Workers’ Compensation Internal Service Fund is a self-insurance program for workers’ compensation claims on losses up to $750,000 per occurrence. The workers’ compensation fund has indemnified the Property Appraiser against any losses in a given year in excess of the fee charged. In the event actual losses are less than the fee charged, such amounts will be retained in the Workers’ Compensation fund. Claim settlements and losses are accrued and subsequently paid from the workers’ compensation fund. Premium payments to the Board by the Property Appraiser, which are based on a percentage of salaries paid according to salary classifications, totaled $13,627 for the year ended September 30, 2017.

Note 10 - Litigation

The Property Appraiser is involved as defendant or plaintiff in certain litigation and claims arising from the ordinary course of operations, primarily relating to challenges on property value assessments. Any judgments against the Property Appraiser would be settled by the Board. In the opinion of the Property Appraiser and legal counsel, the range of potential recoveries or liabilities will not materially affect the financial position of the Property Appraiser.

20



(Concluded)

Note 11 - Commitment

The Property Appraiser has the following future commitment to one vendor for six separate aerial mapping projects:

Year Ending September 30 Amount2018 $ 175,0062019 175,0062020 215,5662021 175,0062022 175,0062023 215,566Total $ 1,131,156


21

County GISFees and Addressing Business

Commissions Addressing Fees UnitsFund Fund Fund Fund Total

AssetsCash and Cash Equivalents $ 9,166 $ 11,617 $ 26,825 $ 12,556 $ 60,164

Total Assets 9,166 11,617 26,825 12,556 60,164


LiabilitiesVouchers Payable 170 0 0 0 170 Due to the Hernando County, Florida,

Board of County Commissioners 8,813 11,617 26,825 12,556 59,811 Due to Other Governments 183 0 0 0 183

Total Liabilities 9,166 11,617 26,825 12,556 60,164

Fund BalancesCommitted for Specific Purpose 0 0 0 0 0

Total Fund Balances 0 0 0 0 0

Total Liabilities and Fund Balances $ 9,166 $ 11,617 $ 26,825 $ 12,556 $ 60,164


PROPERTY APPRAISER

COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS

22

County GISFees and Addressing Business

Commissions Addressing Fees UnitsFund Fund Fund Fund Total

RevenuesIntergovernmental Revenues:

Hernando County, Florida, Board of County Commissioners 0$ 128,943$ 0$ 110,890$ 239,833$

Charges for Services 36,020 0 26,825 0 62,845Total Revenues 36,020 128,943 26,825 110,890 302,678


Personal Services 0 110,861 0 95,792 206,653Operating 27,024 6,465 0 2,542 36,031

(Total Expenditures) (27,024) (117,326) 0 (98,334) (242,684)

Excess of Revenues overExpenditures 8,996 11,617 26,825 12,556 59,994


Distribution of Excess Fees to the Hernando County, Florida, Board of County Commissioners (8,813) (11,617) (26,825) (12,556) (59,811)

Distribution of Excess Fees toOther Taxing Districts (183) 0 0 0 (183)

Total Other Financing (Uses) Sources (8,996) (11,617) (26,825) (12,556) (59,994)

Net Change in Fund Balances 0 0 0 0 0

Fund Balance, Beginning of Year 0 0 0 0 0

Fund Balance, End of Year 0$ 0$ 0$ 0$ 0$


PROPERTY APPRAISER

COMBINING STATEMENT OF REVENUES, EXPENDITURES,

NONMAJOR GOVERNMENTAL FUNDSAND CHANGES IN FUND BALANCE

23

Variancewith Final

BudgetPositive



Board of County Commissioners 128,943$ 128,943$ 128,943$ 0$Total Revenues 128,943 128,943 128,943 0


Personal Services 120,122 120,122 110,861 9,261Operating 8,821 8,821 6,465 2,356




Distribution of Excess Fees to the Hernando County, Florida, Board of County Commissioners 0 0 (11,617) (11,617)





Budget


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - ADDRESSING FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2017

24

Variancewith Final

BudgetPositive



Board of County Commissioners 110,890$ 110,890$ 110,890$ 0$Total Revenues 110,890 110,890 110,890 0


Personal Services 105,695 105,695 95,792 9,903Operating 5,095 5,095 2,542 2,553

Nonoperating 100 100 0 100(Total Expenditures) (110,890) (110,890) (98,334) 12,556



Distribution of Excess Fees to the Hernando County, Florida, Board of County Commissioners 0 0 (12,556) (12,556)





Budget

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - GIS BUSINESS UNITS FUND


PROPERTY APPRAISER

OTHER REPORTS

25

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


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 Standardsissued by the Comptroller General of the United States, the financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Property Appraiser (the Property Appraiser), as of and for the year ended September 30, 2017, and the related notes to the financial statements, and have issued our report thereon dated February 13, 2018.

Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the Property Appraiser’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,but not for the purpose of expressing an opinion on the effectiveness of the Property Appraiser’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Property Appraiser’sinternal 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 acombination 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.


26




(Concluded)

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the Property Appraiser’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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this ReportThe 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 the entity’s internal control and compliance.Accordingly, this communication is not suitable for any other purpose.


27


Honorable John C. EmersonProperty Appraiser Hernando County, Florida

We have examined Hernando County, Florida, Property Appraiser’s (the Property Appraiser) compliance with the requirements of Section 218.415, Florida Statutes, as of and for the fiscal year ended September 30, 2017, as required by Section 10.556(10)(a), Rules of the Auditor General. Management is responsible for the Property Appraiser’s compliance with those requirements. Our responsibility is to express an opinion on the Property Appraiser’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Property Appraiser complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Property Appraiser complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the Property Appraiser’s compliance with specified requirements.

In our opinion, the Property Appraiser complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2017.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Property Appraiser, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be, and should not be, used by anyone other than these specified parties.


28

MANAGEMENT LETTER


Report on the Financial StatementsWe have audited the financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Property Appraiser (the Property Appraiser), as of and for the fiscal year ended September 30, 2017, and have issued our report thereon dated February 13, 2018.

Auditors’ ResponsibilityWe conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to the financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Auditor General.

Other Reporting RequirementsWe have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and onCompliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants’ Report on Compliance with Section 218.415, Florida Statutes. Disclosures in those reports, if any, which are dated February 13,2018, should be considered in conjunction with this management letter.


Official Title and Legal AuthoritySection 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. In that regard, the Property Appraiser was established by the Constitution of the State of Florida, Article VIII, Section 1(d). TheProperty Appraiser does not have any component units.


29



Additional MattersSection 10.554(1)(i)3., Rules of the Auditor General, requires that we communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this LetterOur management letter is intended solely for the information and use the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Property Appraiser, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be and should not be used by anyone other than these specified parties.




INDEPENDENT AUDITORS' REPORT

TAX COLLECTORHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017



TAX COLLECTORHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017

TABLE OF CONTENTS


Financial StatementsBalance Sheet - General Fund ................................................................................................................... 3Statement of Revenues, Expenditures, and Changes in Fund

Balance - General Fund.......................................................................................................................... 4Statement of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - General Fund......................................................................................... 5Statement of Fiduciary Assets and Liabilities - Agency Funds................................................................. 6Notes to Financial Statements ..............................................................................................................7-19

Other Financial InformationCombining Statement of Fiduciary Assets and Liabilities -

Agency Funds....................................................................................................................................... 20

Other ReportsIndependent Auditors’ Report on Internal Control Over

Financial Reporting and on Compliance and Other MattersBased on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards ...................................................21-22

Independent Accountants’ Report on Compliance withSection 218.415, Florida Statutes......................................................................................................... 23


1


Honorable Sally L. Daniel, C.F.C.Tax CollectorHernando County, Florida

Report on the Financial StatementsWe have audited the accompanying financial statements of the general fund (major fund) and the aggregate remaining fund information of the Hernando County, Florida, Tax Collector (the Tax Collector), as of and for the year ended September 30, 2017, and the related notes to the financial statements, as listed in the table of contents.





OpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the general fund and the aggregate remaining fund information of the Tax Collector, as of September 30, 2017, and the respective changes in financial position and budgetary comparisons for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America.

2


INDEPENDENT AUDITORS' REPORT(Concluded)

Emphasis of Matter – Incomplete PresentationAs discussed in Note 1 to the financial statements, the financial statements referred to above were prepared solely for the purpose of complying with the Rules of the Auditor General of the State of Florida (the Rules).In conformity with the Rules, the accompanying financial statements are intended to present the financial position, changes in financial position, and budgetary comparisons of the general fund and the aggregate remaining fund information, where applicable, only for that portion of the general fund (major fund) and the aggregate remaining fund information of Hernando County, Florida, that is attributable to the Tax Collector.They do not purport to, and do not, present fairly the financial position as a whole of Hernando County, Florida, as of September 30, 2017, and the changes in its financial position or budgetary comparisons for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Other Matters

Other Financial InformationOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Tax Collector’s financial statements. The other financial information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements.

The other financial information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Suchinformation has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other financial information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated February 13,2018, on our consideration of the Tax Collector’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Tax Collector’s internal control over financial reporting and compliance.



BALANCE SHEETGENERAL FUND


TAX COLLECTOR

AssetsEquity in Pooled Cash 2,296,122$Accounts Receivable 1,151Due from Other Government Agencies 7,133


Liabilities and Fund Balance

LiabilitiesAccounts Payable 5,964Salaries and Benefits Payable 66,390Due to the Hernando County, Florida,

Board of County Commissioners 2,055,863Due to Other Governmental Units 98,825Unearned Revenue 77,364

Total Liabilities 2,304,406

Fund Balance 0

Total Liabilities and Fund Balance 2,304,406$


RevenuesCommissions:

Hernando County, Florida, Board of County Commissioners 2,928,381$

Other Governmental Units 140,767Charges for Services 1,791,141Investment Income 3,947Other Income 5,150

Total Revenues 4,869,386


Personal Services 2,578,455Operating 132,618

Capital Outlay 3,625(Total Expenditures) (2,714,698)

Excess of Revenues Over Expenditures 2,154,688


Distribution of Excess Commissionsto the Hernando County, Florida,Board of County Commissioners (2,055,863)

Distribution of Excess Commissionsto Other Governmental Units (98,825)

Total Other Financing (Uses) Sources (2,154,688)

Net Change in Fund Balances 0

Fund Balance, Beginning of Year 0

Fund Balance, End of Year 0$


HERNANDO COUNTY, FLORIDATAX COLLECTOR

GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2017


VarianceWith Final

BudgetOriginal Final PositiveBudget Budget Actual (Negative)

RevenuesCommissions:

Hernando County, Florida, Board of County Commissioners 2,990,000$ 2,990,000$ 2,928,381$ (61,619)$

Other Governmental Units 127,700 127,700 140,767 13,067Charges for Services 1,441,760 1,441,760 1,791,141 349,381Investment Income 0 0 3,947 3,947Other Income 3,500 3,500 5,150 1,650

Total Revenues 4,562,960 4,562,960 4,869,386 306,426


Personal Services 2,760,113 2,760,113 2,578,455 181,658Operating 241,771 255,618 132,618 123,000

Capital Outlay 0 3,625 3,625 0(Total Expenditures) (3,001,884) (3,019,356) (2,714,698) 304,658

Excess of Revenues OverExpenditures 1,561,076 1,543,604 2,154,688 611,084

Other Financing Sources (Uses)Transfers (out):

Distribution of Excess Commissionsto the Hernando County, Florida,Board of County Commissioners (1,489,477) (1,472,806) (2,055,863) (583,057)

Distribution of Excess Commissionsto Other Governmental Units (71,599) (70,798) (98,825) (28,027)

Total Other Financing Sources (Uses) (1,561,076) (1,543,604) (2,154,688) (611,084)

Net Change in Fund Balances 0$ 0$ 0$ 0$







TAX COLLECTOR

AssetsCash 2,136,250$Equity in Pooled Cash 2,825,352Due from Other Government Agencies 421


LiabilitiesDue to Individuals 172,691Due to Other Government Agencies 2,653,082Installment Tax Escrow 2,136,250

Total Liabilities 4,962,023$

7


TAX COLLECTORSEPTEMBER 30, 2017


Reporting EntityHernando County, Florida (the County), is a political subdivision of the State of Florida. It is governed by an elected Board of County Commissioners (the Board) and managed by an appointed County Administrator. The Hernando County, Florida, Tax Collector (the Tax Collector) is an elected constitutional officer of the County as provided for by the Constitution of the State of Florida. Pursuant to Chapter 195.087, Florida Statutes, the Tax Collector’s budget is submitted to the Florida Department of Revenue for approval, and a copy is forwarded to the Board for coordination with the Board’s budget.

As an elected official of the County, the Tax Collector is charged with responsibility for the collection of ad valorem taxes levied by the County, the School Board, special taxing districts, municipalities, and other taxes and fees levied by the County. The Tax Collector’s office is funded by fees charged based on the amount of collections. Additionally, the Tax Collector performs services for various state agencies. The following are the State of Florida agencies for which the Tax Collector collects fees:

Department of Highway Safety and Motor Vehicles the Tax Collector serves as agent for the Division of Motor Vehicles, processes title applications and transfers, renews and issues license plates and decals, handles boat title transfers, and registers both pleasure and commercial boats on an annual basis.

Florida Department of Revenue collects sales tax on vessels, motor vehicles, and Lemon Law fees.

Florida Fish and Wildlife Conservation Commission issues hunting and fishing permit and licenses.

For financial reporting purposes, the Tax Collector is deemed to be part of the primarygovernment of the County and, as such, is included in the County’s Comprehensive Annual Financial Report.

Basis of PresentationThe accompanying financial statements include all the funds and accounts of the Tax Collector’s office, but are not intended to be a complete presentation of the County as a whole. Except for this matter, they are otherwise in conformity with accounting principles generally accepted in the United States of America (GAAP). The accompanying financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(4), Rules of the Auditor General—Local Governmental Entity Audits.

The financial transactions of the Tax Collector are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balance accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. These funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions, or limitations. The Tax Collector has one governmental type fund and two fiduciary type funds, both agency funds.

8



(Continued)


Basis of Presentation (Concluded)The focus of governmental fund financial statements is generally on major funds rather than reporting funds by type. GAAP sets forth minimum criteria (percentage of total assets, liabilities, revenues, or expenditures) for the determination of major funds. However, the general fund, by definition, is always a major fund. In the governmental fund financial statements, each major fund is reported in a separate column, but since the Tax Collector has only one governmental fund (the general fund); the governmental fund financial statements contain only one column.

The focus on fiduciary type fund financial statements is by fund type, not major fund. The Tax Collector only has one fiduciary fund type, the agency fund type, but has two such funds. Accordingly, the two agency funds are combined into one column in the fiduciary fund financial statement. Agency funds are used to account for assets held in a trustee capacity or as an agent for individuals, private organizations, and other governments.

Measurement Focus and Basis of AccountingGovernmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the balance sheet. Operating statements for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Agency funds are custodial in nature (assets equal liabilities), and do not involve measurement of results of operations or have a measurement focus.

The modified accrual basis of accounting is used by governmental funds. Agency funds use the accrual basis. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance liabilities of the current fiscal year). For this purpose, the Tax Collector considers revenues to be available if they are collected within 45 days of the end of the current period. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures to the extent they have matured.

Substantially, all of the Tax Collector’s revenue is received from taxing authorities. These monies are generally unrestricted and are revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenue at the time of receipt; earlier if the susceptible to accrual criteria are met.

Charges for services and interest income are recognized when earned, provided they are alsomeasurable and available to pay liabilities of the current period. Interest income is reported net of fees.

Florida Statutes provide that the amount by which revenues and transfers exceed annual expenditures be remitted to the Board and other taxing districts within one month following the fiscal year during which the funding was provided. Florida Statutes further provide that the excess of revenues over expenditures held by the Tax Collector be distributed to each governmental agency in the same proportion as the commissions and fees paid. The amounts of these distributions are recorded as liabilities and as other financing uses in the accompanying financial statements.

9



(Continued)


Equity in Pooled CashThe Tax Collector pools substantially all cash except for change funds and the installment tax escrow account. Each fund’s equity share of the total pooled cash is included on the balance sheet under the caption “Equity in Pooled Cash.” Interest earned on this money is allocated to the various funds based upon the average cash balances within the consolidated account.

Prepaid ItemsCertain prepayments to vendors reflect costs applicable to future accounting periods. These prepayments are recorded as expenditures in the year paid.

Unearned RevenueUnearned revenue represents the portion of biennial service fees attributable to future years.

Compensated AbsencesAll full-time employees of the Tax Collector are entitled to time off with pay in accordance with policy. The employees are generally allowed to accumulate leave time up to a maximum of 300 hours. Upon voluntary termination or retirement, the employee is paid for up to 75% or 100% of the accumulated paid time off, respectively. Leave payments are included in expenditures in the period paid or due. The Tax Collector does not, nor is she required to, accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the general fund, but rather is reported in the basic financial statements of the County.

Use of EstimatesThe preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported or disclosed in the financial statements and accompanying notes. Actual results could differ from those estimates.

Governmental Accounting Standards Board (GASB) Statement No. 68The Tax Collector participates in the Florida Retirement System (FRS) defined benefit pension plan and the Health Insurance Subsidy (HIS) defined benefit plan administered by Florida Division of Retirement. As a participating employer, the Tax Collector implemented GASBStatement No. 68, Accounting and Financial Reporting for Pensions, which requires employers participating in cost-sharing multiple-employer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities and related pension amounts of the defined benefit pension plans. However, these liabilities would be recorded in government-wide financial statements, which are not required in this special-purpose presentation. As such, only the applicable disclosures required by GASB Statement No. 68 have been presented herein. In addition, the cost-sharing multiple-employer plans mentioned above operate on a fiscal year ended June 30.

10



(Continued)

Note 2 - Property Taxes

Taxes in Hernando County are levied by the Board and other taxing authorities. The millage levies are determined on the basis of estimates of revenue needs and the total taxable valuations within the jurisdiction of the Board and other taxing authorities. No aggregate ad valorem tax millage in excess of 10 mills on the dollar can be levied by the Board against property in the County, as specified in Florida Statutes, Section 200.071.

Each year the total taxable property valuation is established by the Hernando County, Florida,Property Appraiser (the Property Appraiser), and the list of property assessments is submitted to the Florida Department of Revenue for approval. Taxes assessed as of January 1 of each year, are due and payable on November 1 of each year or as soon thereafter as the assessment roll is opened for collection. Pursuant to Florida law, all owners of property have the responsibility of ascertaining the amount due and paying it before April 1 of the year following the year in which the tax was assessed.

Property tax collections, sales, and liens are governed by Chapter 197 of the Florida Statutes.

Assessed value is established by the Property Appraiser as of January 1 for the subsequent fiscal year of the County for tax roll preparation. Taxable value is computed after deducting from assessed value various exemptions including governmental, educational, religious, health care,and scientific properties, and qualified exemptions, including $25,000 or $50,000 homestead exemptions and added exemptions if a widow or disabled. The list of property assessments issubmitted to the Florida Department of Revenue for approval.

All property taxes are levied and become due and payable on November 1 of each year, and are delinquent on April 1 of the following year. Discounts are allowed for early payment of 4%, 3%, 2%, and 1% in November through February, respectively. Delinquent taxes on real property may be paid after the date of delinquency but prior to the sale of a tax certificate by paying all taxes, costs, advertising charges, and interest of 18% per annum. For all real property with delinquent taxes, the Tax Collector advertises as required by Florida Statute and sells tax certificates. All unsold certificates are issued to the County.

Any persons owning real property upon which a tax certificate has been sold may redeem the property by paying the Tax Collector the face amount of the tax certificate plus interest and costs associated with the sale of the certificate. After taxes have been delinquent (April 1) for two years, the owner of a tax certificate may file an application for tax deed sale. The County is to do the same two years after taxes were due (November 1). All taxes imposed on any property become a first lien; superior to all other liens, as of January 1, of the year the taxes are levied.

11



(Continued)


Florida Statutes Section 195.087 governs the preparation, adoption, and administration of the Tax Collector’s annual budget. Prior to August 1, the Tax Collector submits to the Florida Department of Revenue for approval a proposed operating budget for the general fund for the fiscal year commencing the following October 1. The operating budget includes the proposed expendituresfor the upcoming year. Any subsequent amendments to the budget must be approved by the Florida Department of Revenue. The budget for the general fund is prepared on a basis consistent with GAAP. The annual budget serves as the legal authorization for expenditures. Budgetary control is maintained at the departmental major object expenditure level. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year-end. Budgetary changes within major object expenditure categories are made at the discretion of the Tax Collector.



At September 30, 2017, the carrying value of the Tax Collector’s cash and cash equivalents were as follows:


Cash on Hand $ 4,500 N/ADemand Deposits 7,253,224 N/ATotal Cash and Cash Equivalents $ 7,257,724

Such amounts are reported as equity in pooled cash of $2,296,122 and $2,825,352 in the governmental and agency funds, respectively, and cash of $2,136,250 in the agency funds.

The Tax Collector’s bank deposits are held in qualified public depositories (QPDs) pursuant to Chapter 280, Florida Statutes. Under this Chapter, each QPD is required to pledge collateral to the State Treasurer against the public deposits. In the event of default by a QPD, all claims for public deposits would be satisfied by the State Treasurer from the proceeds of federal deposit insurance, pledged collateral of the QPD in default and, if necessary, assessments against other QPDs of the same type as the depositor in default.

Authorized InvestmentsThe Tax Collector’s investment policy follows guidance set forth in Section 219.075, Florida Statutes regarding the deposit of funds received and the investment of surplus funds. The policy authorizes the following investments:

a. Florida Tax Collectors, Inc. Investment Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Florida Statute 163.01.

12



(Continued)


Authorized Investments (Concluded)b. Negotiable direct obligations of the United States Government, which are unconditionally

guaranteed by the United States Government. Such securities include, but are not limited to:

i. Treasury Billsii. Treasury Notes

iii. Treasury Bonds

c. Nonnegotiable interest-bearing time certificates of deposit, money market accounts or savings accounts in banks/savings and loan associations organized under the laws of the United States, doing business and situated in this state, provided that such deposits are secured by the Florida Security for Public Deposits Act, Chapter 280, Florida Statutes.

d. Repurchase agreements for any of the investments authorized above in item b.

Credit Quality RiskThe investment policy does not address credit quality. Instead, this risk is managed through the list of permitted investments.

Custodial Credit RiskThe investment policy requires independent third party custodians, and limits the portfolio composition as follows:

Florida Tax Collectors, Inc. Investment Trust Fund—Maximum of 80%Certificates of Deposit—Maximum of 50%United States Government Securities—Maximum of 50%

In addition, the policy requires assets to be diversified to control the risk of over-concentration of assets in a specific maturity, issuer, instrument, counterparty dealer, or bank. The policy requires counterparties to be qualified public depositories or primary securities broker/dealers, as designated by the New York Federal Reserve.

Interest Rate RiskThe Tax Collector does not own any fixed rate investments, nor owned any such investments during 2017. The investment policy identifies safety of capital as the first objective, followed by liquidity, then finally, investment return. In addition, the investment policy seeks to manage interest rate risk by matching maturities to known cash needs and limiting maturities of operating funds to no more than one year. Additional guidance is provided for times when rates are expected to rise or fall.


Pursuant to Florida Statutes, capital assets used by the Tax Collector are owned by the Board. The Tax Collector maintains custodial responsibility for the capital assets used by the office. The office space used in the Tax Collector’s operations is provided at no cost by the Board.

13



(Continued)

Note 5 - Capital Assets (Concluded)

Capital assets paid for by the Tax Collector are recorded as expenditures in the general fund of the Tax Collector and are capitalized in the basic financial statements of the County. Donated capital assets are recorded directly on the County’s books at their estimated fair value on the date received. Depreciation is recorded at the County level.




2016 Additions Retirements 2017Accrued Compensated

Absences $ 142,092 $ 148,011 $ (154,740) $ 135,363

Of these above obligations, $137,943 are expected to be paid during the fiscal year ended September 30, 2017, primarily from the general fund, and so are considered current. These liabilities are not reported in the fund financial statements of the Tax Collector since they have not matured.


General Information about the Florida Retirement System (FRS) The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan, to assist retired members of any state-administered retirement system in paying the costs of health insurance.

Essentially all regular employees of the Tax Collector are eligible to enroll as members of the state-administered FRS. Provisions relating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112 Part IV, Florida Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, andbenefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists oftwo cost-sharing, multiple-employer defined-benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements,required supplementary information, actuarial report, and other relevant information, isavailable from the Florida Department of Management Services’ web site (www.dms.myflorida.com).

14



(Continued)


General Information about the Florida Retirement System (FRS) (Concluded)The Tax Collector’s contributions to the FRS Plan totaled $261,322 for the fiscal year ended September 30, 2017 (all plans).

Payables to the Pension Plan. At September 30, 2017, the Tax Collector reported a payable of $7,633 for the outstanding amount of contributions to the Plan required for the year ended September 30, 2017.

FRS Pension Plan

Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a Deferred Retirement Option Program (DROP) for eligible employees. The general classes of membership applicable to the Tax Collector are as follows:

Regular Class Members of the FRS who do not qualify for membership in the other classes.

Elected County Officer Class Members who hold specified elective offices in local government.

Senior Management Service Class Members in senior management level positions.

Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Members of the Plan may include up to four years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.


15



(Continued)



Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement class to which the member belonged when the service credit was earned. The following chart shows the percentage value for each year of service credit earned:

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3% per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3% determined by dividing the sum of the pre-July 2011, service credit by the total service credit at retirement multiplied by 3%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.


Regular Class Members Initially Enrolled Before July 1, 2011 Retirement up to age 62 or up to 30 years of service 1.60




Regular Class Members Initially Enrolled on or After July 1, 2011 Retirement up to age 65 or up to 33 years of service 1.60



Retirement at age 68 or with 36 or more years of service 1.68Elected County Officers 3.00Senior Management Service Class 2.00

16



(Continued)




The Tax Collector’s contributions (employer only) to the Plan totaled $220,378 for the fiscal year ended September 30, 2017. This excludes the HIS defined benefit pension plan contributions.

At September 30, 2017, the Tax Collector’s proportionate share of the FRS net pension liability was $2,308,881.


HIS Pension Plan

Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under section 112.363, Florida Statutes, and may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of state-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.



FRS, Regular 3.00 5.80 3.00 6.20




FRS, Reemployed Retiree (1) (1) (1)

Notes: (1) Contribution rates are dependent upon retirement class in which reemployed.

Percent of Gross Salary Percent of Gross SalaryYear Ended June 30, 2017 Year Ended June 30, 2018

17



(Continued)



Contributions. The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal years ended June 30, 2018 and 2017,the contribution rate was 1.66% of payroll, respectively, pursuant to section 112.363, Florida Statues. The Tax Collector contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.

The Tax Collector’s contributions to the HIS Plan totaled $30,399 for the fiscal year ended September 30, 2017.

At September 30, 2017, the Tax Collector’s proportionate share of the HIS net pension liability was $576,561.


FRS – Defined Contribution Pension Plan The Tax Collector contributes to the FRS Investment Plan (Investment Plan), a defined contribution pension plan, for its eligible employees electing to participate in the Investment Plan. The Investment Plan is administered by the SBA, and is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report. Service retirement benefits are based upon the value of the member’s account upon retirement.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. Tax Collector employees participating in DROP are not eligible to participate in the Investment Plan. Employer andemployee contributions, including amounts contributed to individual member’s accounts, aredefined by law, but the ultimate benefit depends in part on the performance of investment funds. Benefit terms, including contribution requirements, for the Investment Plan are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contribution rates that are based on salary and membership class (Regular Class, Elected County Officers, etc.), as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Allocations to the investment members’ accounts during the 2016-17 fiscal year were as follows:

18



(Continued)



For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five year period, the employee will regain control over their account. If the employee does not return within the five year period, the employee will forfeit the accumulated account balance. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.04% of payroll and by forfeited benefits of Investment Plan members. For the fiscal year ended September 30, 2017, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the Tax Collector.

After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump-sum distribution, leave the funds invested for future distribution, or any combination of these options. Disability coverage is provided; the member may either transfer the account balance to the FRS Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Pension Plan, or remain in the Investment Plan and rely upon that account balance for retirement income.

The Tax Collector’s contributions to the Investment Plan totaled $10,545 for the fiscal year ended September 30, 2017.


FRS, Regular 6.30



19



(Concluded)

Note 8 - Postemployment Benefits Other Than Pensions

The Board offers postemployment health care benefits and life insurance to all retired employees of the Tax Collector’s Office and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment,so that no net expense is initially recorded in the Board’s financial statements. However, these retirees are receiving an “implicit subsidy” because the premium is a group rate which includes active, lower cost employees.

This implicit subsidy has a cost, which under GAAP is required to be disclosed in these financial statements. However this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Tax Collector’s Office. Accordingly, these calculations and disclosures can be found in the County-wide annual financial report.


The Tax Collector participates in the insurance programs of the Board including general liability, workers’ compensation, property and casualty, and employee health insurance. These risk management activities are handled through internal service funds maintained by the Board. All liabilities associated with these self-insured risks are reported in the basic financial statements of the Board. The purpose of these funds is to administer employee life, health, workers’compensation, unemployment, disability insurance, and property and liability insurance. Thesefunds account for the risk financing activities of the County, but do not constitute a transfer of risk from the County.


The Tax Collector paid premiums of $517,146 for employee life and health insurance coverage to the Board for the year ended September 30, 2017.

The Board’s Workers’ Compensation Internal Service Fund is a self-insurance program for workers’ compensation claims on losses up to $750,000 per occurrence. The workers’ compensation fund has indemnified the Tax Collector against any losses in a given year in excess of the fee charged. In the event actual losses are less than the fee charged, such amounts will be retained in the Workers’ Compensation fund. Claim settlements and losses are accrued and subsequently paid from the Workers’ Compensation fund. Premium payments to the Board by the Tax Collector, which are based on a percentage of salaries paid according to salary classifications, totaled $13,369 for the year ended September 30, 2017.


AGENCY FUNDS

Agency funds are used to account for assets held by a governmental unit as trustee or agent for individuals, private organizations, and other governmental units.

This fund is used to account for the receipt and distribution of ad valorem taxes, hunting and fishing licenses, boat registrations and titles, motor vehicle registrations, titles, and sales tax, and permits collected for Hernando County and other independent taxing authorities.

DELINQUENT TAX FUNDcertificates.

20

Tax Delinquent and Tag Tax Total

AssetsCash 2,136,250$ 0$ 2,136,250$Equity in Pooled Cash 2,660,559 164,793 2,825,352Due from Other Government Agencies 421 0 421

Total Assets 4,797,230 164,793 4,962,023

LiabilitiesDue to Individuals 7,898 164,793 172,691Due to Other Government Agencies 2,653,082 0 2,653,082Installment Tax Escrow 2,136,250 0 2,136,250

Total Liabilities 4,797,230$ 164,793$ 4,962,023$

COMBINING STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES


AGENCY FUNDSSEPTEMBER 30, 2017

OTHER REPORTS

21

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS


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 Standardsissued by the Comptroller General of the United States, the financial statements of the general fund and the aggregate remaining fund information of the Hernando County, Florida, Tax Collector (the Tax Collector),as of and for the year ended September 30, 2017, and the related notes to the financial statements, and have issued our report thereon dated February 13, 2018.

Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the Tax Collector’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstance for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Tax Collector’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Tax Collector’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.


22


INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS

(Concluded)

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the Tax Collector’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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.



23



We have examined Hernando County, Florida, Tax Collector’s (the Tax Collector) compliance with the requirements of Section 218.415, Florida Statutes, as of and for the fiscal year ended September 30, 2017,as required by Section 10.556(10)(a), Rules of the Auditor General. Management is responsible for the Tax Collector’s compliance with those requirements. Our responsibility is to express an opinion on the Tax Collector’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Tax Collector complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Tax Collector complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the Tax Collector’s compliance with specified requirements.

In our opinion, the Tax Collector complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2017.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Tax Collector, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be, and should not be, used by anyone other than these specified parties.


24

MANAGEMENT LETTER


Report on the Financial StatementsWe have audited the financial statements of the general fund and the aggregate remaining fund informationof the Hernando County, Florida, Tax Collector (the Tax Collector), as of and for the fiscal year ended September 30, 2017, and have issued our report thereon dated February 13, 2018.


Other Reporting RequirementsWe have issued our Independent Auditors’ 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, and Independent Accountants’ Report on Compliance with Section 218.415, Florida Statutes. Disclosures in those reports, which are dated February 13, 2018, should be considered in conjunction with this management letter.


Official Title and Legal AuthoritySection 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. In that regard, the Tax Collector was established by the Constitution of the State of Florida, Article VIII, Section 1(d). The Tax Collector does not have any component units.


25



Additional MattersSection 10.554(1)(i)3., Rules of the Auditor General, requires that we communicate noncompliance withprovisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred,that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this LetterOur management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Tax Collector, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be, and should not be, used by anyone other than these specified parties.



HERNANDO COUNTY, FLORIDASHERIFF



SEPTEMBER 30, 2017




SEPTEMBER 30, 2017

TABLE OF CONTENTS


Financial StatementsBalance Sheet - Governmental Funds........................................................................................................ 3Statement of Revenues, Expenditures, and Changes in Fund Balance -

Governmental Funds .............................................................................................................................. 4Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - General Fund......................................................................................................... 5Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - Federal Forfeitures Fund ....................................................................................... 6Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - E-911 Fund............................................................................................................ 7Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - Federal Inmates Fund............................................................................................ 8Statement of Net Position - Proprietary Fund Type - Internal Service Fund............................................. 9Statement of Revenues, Expenses, and Changes in Fund Net Position -

Proprietary Fund Type - Internal Service Fund.................................................................................... 10Statement of Cash Flows - Proprietary Fund Type - Internal Service Fund............................................ 11Statement of Fiduciary Assets and Liabilities - Agency Funds............................................................... 12Notes to Financial Statements ............................................................................................................13-28

Supplemental Information - Combining and Individual Fund Financial Statements and SchedulesCombining Balance Sheet - Nonmajor Governmental Funds.................................................................. 29Combining Statement of Revenues, Expenditures, and Changes in

Fund Balance - Nonmajor Governmental Funds.................................................................................. 30Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - 800 MHz Fund .................................................................................................... 31Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - Inmate Welfare Fund........................................................................................... 32Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - Law Enforcement Education Fund...................................................................... 33Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budget and Actual - Grants and Contributions Fund ........................................................................... 34Combining Statement of Net Position - Internal Service Funds.............................................................. 35Combining Statement of Revenues, Expenses and Changes in

Fund Net Position - Internal Service Funds.......................................................................................... 36Combining Statement of Cash Flows - Internal Service Funds............................................................... 37Combining Statement of Fiduciary Assets and Liabilities - All

Agency Funds....................................................................................................................................... 38




SEPTEMBER 30, 2017

TABLE OF CONTENTS(Concluded)


Reporting and on Compliance and Other Matters Based on anAudit of Financial Statements Performed in Accordance withGovernment Auditing Standards .....................................................................................................39-40

Independent Accountants’ Report on Compliance withSection 218.415, Florida Statutes......................................................................................................... 41


1


Honorable Al NienhuisSheriffHernando County, Florida

Report on the Financial StatementsWe have audited the accompanying financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Sheriff (the Sheriff), as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the Sheriff’s financial statements, as listed in the table of contents.


Auditors’ ResponsibilityOur 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 toobtain reasonable assurance about whether the financial statements are free from material misstatement.



OpinionsIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of each major fund and the aggregate remaining fund information of the Sheriff as of September 30, 2017, and the respective changes in financial position, budgetary comparisons, and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America.

2



Emphasis of Matter – Incomplete PresentationAs discussed in Note 1 to the financial statements, the financial statements referred to above were prepared solely for the purpose of complying with the Rules of the Auditor General of the State of Florida (the Rules).In conformity with the Rules, the accompanying financial statements are intended to present the financial position, changes in financial position, budgetary comparisons, and cash flows of each major fund and the aggregate remaining fund information, where applicable, only for that portion of the major funds and the aggregate remaining fund information of Hernando County, Florida, that is attributable to the Sheriff. They do not purport to, and do not, present fairly the financial position as a whole of Hernando County, Florida, as of September 30, 2017, and the changes in its financial position, budgetary comparisons, or cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Other MattersSupplementary InformationOur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Sheriff’s financial statements. The supplementary information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the financial statements.

The other financial information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other financial information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated February 21,2018, on our consideration of the Sheriff’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Sheriff’s internal control over financial reporting and compliance.



Nonmajor Federal Inmate Federal Governmental

General Forfeitures E-911 Welfare Inmates Funds Total Assets

Cash and CashEquivalents $ 2,372,022 $ 820,546 $ 782,532 $ 543,277 $ 476,774 $ 833,463 $ 5,828,614

Accounts Receivable 0 0 0 28,423 0 0 28,423 Due from Other Funds 21,924 0 0 7,853 0 0 29,777 Due from Other

Governments 18,179 0 189,267 145 112,203 85,789 405,583 Total Assets 2,412,125 820,546 971,799 579,698 588,977 919,252 6,292,397

Liabilities, DeferredInflows, and FundBalances

LiabilitiesAccounts Payable 407,118 0 143 1,456 0 1,704 410,421 Accrued Wages and

Benefits Payable 1,878,490 0 12,270 9,512 0 6,860 1,907,132 Due to Hernando

County, Florida,Board of CountyCommissioners 126,517 0 0 0 588,977 0 715,494

Deposits 0 0 0 0 0 40 40 Total Liabilities 2,412,125 0 12,413 10,968 588,977 8,604 3,033,087

Deferred InflowsUnavailable Revenues 0 0 126,178 0 0 0 126,178

Fund BalancesRestricted for:

Law Enforcement Activities 0 820,546 0 0 0 154,435 974,981

Communications 0 0 833,208 0 0 227,816 1,061,024 Education and

Training 0 0 0 0 0 522,533 522,533 Inmate Benefits 0 0 0 568,730 0 0 568,730 Other 0 0 0 0 0 5,864 5,864

Total Fund Balances 0 820,546 833,208 568,730 0 910,648 3,133,132

Total Liabilities,Deferred Inflows, and Fund Balances $ 2,412,125 $ 820,546 $ 971,799 $ 579,698 $ 588,977 $ 919,252 $ 6,292,397

SEPTEMBER 30, 2017




NonmajorFederal Inmate Federal Governmental

General Forfeitures E-911 Welfare Inmates Funds TotalRevenues

Intergovernmental $ 0 $ 0 $ 0 $ 0 $ 0 $ 220,401 $ 220,401 Charges for Services 298,884 0 808,267 428,220 1,428,665 173,336 3,137,372 Fines and Forfeitures 0 18,461 0 0 0 208,938 227,399 Interest Revenue 23,317 264 972 1,264 0 1,176 26,993 Miscellaneous 67,294 0 0 4,108 0 101,725 173,127

Total Revenues 389,495 18,725 809,239 433,592 1,428,665 705,576 3,785,292

ExpendituresPublic Safety:

Personnel Services 36,528,147 0 463,675 209,088 0 155,620 37,356,530 Operating Expenditures 6,165,468 16,053 220,294 97,309 0 392,591 6,891,715 Capital Outlay 1,411,104 14,678 0 0 0 47,847 1,473,629

Court Services:Personal Services 979,937 0 0 0 0 0 979,937 Operating Expenditures 242,602 0 0 0 0 0 242,602

(Total Expenditures) (45,327,258) (30,731) (683,969) (306,397) 0 (596,058) (46,944,413)

(Deficiency) Excess ofRevenues (Under) OverExpenditures (44,937,763) (12,006) 125,270 127,195 1,428,665 109,518 (43,159,121)

Other FinancingSources (Uses)

Transfers in:Hernando County,

Florida, Board ofCounty CommissionersAppropriations 45,342,089 0 0 0 0 0 45,342,089

Transfers (out):Hernando County,

Florida, Board ofCounty Commissioners: Other Revenues (389,495) 0 0 0 (2,791,542) 0 (3,181,037)

Excess Fees (14,831) 0 0 0 0 0 (14,831)Total Other Financing

Sources (Uses) 44,937,763 0 0 0 (2,791,542) 0 42,146,221 Net Change in Fund Balance 0 (12,006) 125,270 127,195 (1,362,877) 109,518 (1,012,900)Fund Balance, Beginning

of Year 0 832,552 707,938 441,535 1,362,877 801,130 4,146,032Fund Balance, End of Year $ 0 $ 820,546 $ 833,208 $ 568,730 $ 0 $ 910,648 $ 3,133,132





VarianceWith Final

BudgetPositive


Charges for Services 1,591,723$ 280,000$ 298,884$ 18,884$Interest Revenue 20,000 20,000 23,317 3,317Miscellaneous 62,700 62,700 67,294 4,594

Total Revenues 1,674,423 362,700 389,495 26,795


Personnel Services 38,137,375 36,522,291 36,528,147 (5,856)Operating Expenditures 5,900,845 6,395,491 6,165,468 230,023Capital Outlay 216,321 1,192,321 1,411,104 (218,783)

Court Services:Personnel Services 963,786 974,386 979,937 (5,551)Operating Expenditures 268,200 257,600 242,602 14,998

(Total Expenditures) (45,486,527) (45,342,089) (45,327,258) 14,831

(Deficiency) of Revenues (Under)Expenditures (43,812,104) (44,979,389) (44,937,763) 41,626


Hernando County, Florida, Board of County Commissioners Appropriations 44,174,804 45,342,089 45,342,089 0

Transfers (out):Hernando County, Florida, Board

of County Commissioners: Other Revenues (362,700) (362,700) (389,495) (26,795)

Excess Fees 0 0 (14,831) (14,831)Total Other Financing Sources (Uses) 43,812,104 44,979,389 44,937,763 (41,626)





Budget




VarianceWith Final

BudgetPositive


Fines and Forfeitures 0$ 0$ 18,461$ 18,461$Interest Revenue 200 200 264 64

Total Revenues 200 200 18,725 18,525


Operating Expenditures 9,600 23,600 16,053 7,547Capital Outlay 0 15,000 14,678 322


Excess of Revenues Over Expenditures (9,400) (38,400) (12,006) 26,394

Other Financing (Uses) SourcesReserve for Contingencies (823,152) (794,152) 0 794,152

Net Change in Fund Balance (832,552) (832,552) (12,006) (820,546)

Fund Balance, Beginning of Year 832,552 832,552 832,552 0

Fund Balance, End of Year 0$ $ 0 $ 820,546 (820,546)$


Budget


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - FEDERAL FORFEITURES FUND


VarianceWith Final

BudgetPositive


Charges for Services 731,000$ 731,000$ 808,267$ 77,267$Interest Revenue 3,500 3,500 972 (2,528)

Total Revenues 734,500 734,500 809,239 74,739


Personnel Services 463,839 463,839 463,675 164Operating Expenditures 352,200 352,200 220,294 131,906Capital Outlay 350,000 350,000 0 350,000

(Total Expenditures) (1,166,039) (1,166,039) (683,969) 482,070

Excess of Revenues Over Expenditures (431,539) (431,539) 125,270 556,809






Budget

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - E-911 FUND



VarianceWith Final

BudgetPositive


Charges for Services 860,000$ 860,000$ 1,428,665$ 568,665$Total Revenues (860,000) 860,000 1,428,665 568,665

ExpendituresPublic Safety 0 0 0 0

(Total Expenditures) 0 0 0 0

Excess of RevenuesOver Expenditures 860,000 860,000 1,428,665 568,665

Other Financing Sources (Uses)Transfers (out):

Hernando County, Florida, Board of County Commissioners:

Other Revenue (2,222,877) (2,222,877) (2,791,542) (568,665)

Net Change in Fund Balance (1,362,877) (1,362,877) (1,362,877) 0

Fund Balance, Beginning of Year 1,362,877 1,362,877 1,362,877 0


Budget


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - FEDERAL INMATES FUND



Internal

Service Assets

Cash and Cash Equivalents $ 430,422 Cash and Invesstments with Fiscal Agent 4,622,514 Accounts Receivable 67,796


LiabilitiesAccounts Payable 345,495 Liability for Unpaid Claims 307,563 Unearned Revenue 376,260

Total Liabilities 1,029,318

Net PositionUnrestricted 4,091,414

Total Net Position $ 4,091,414


STATEMENT OF NET POSITIONPROPRIETARY FUND TYPE - INTERNAL SERVICE FUND

SEPTEMBER 30, 2017


InternalService

Operating RevenuesInterfund Charges 4,029,809$Premiums - Employees 785,414Premiums - Retirees 481,752Miscellaneous 121,583

Total Operating Revenues 5,418,558

Operating ExpensesClaims 4,283,970Professional Services 1,139,301Insurance 274,419

(Total Operating Expenses) (5,697,690)

Operating (Loss) (279,132)

Nonoperating RevenuesInterest 17,225

Change in Net Position (261,907)

Net Position, Beginning of Year 4,353,321

Net Position, End of Year 4,091,414$


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITIONPROPRIETARY FUND TYPE - INTERNAL SERVICE FUND



InternalService

Cash Flows From Operating ActivitiesCash Received from Interfund Charges 4,047,403$Cash Received from Employees 785,414Cash Received from Retirees 481,752Other Cash Receipts 121,583Payments to Suppliers (1,413,720)Claims Paid (4,309,025)

Net Cash Provided by Operating Activities (286,593)

Cash Flows From Investing ActivitiesInterest Received 17,225

Net Decrease in Cash (269,368)

Pooled Cash and Investments, Beginning of Year 5,322,304

Pooled Cash and Investments, End of Year 5,052,936$

Reconciliation of Operating Income to Net Pooled Cash and Investments Provided byOperating Activities

Operating Loss (279,132)$Adjustment to Reconcile Operating Income to Net Cash

Provided by Operating Activities:Changes in Assets and Liabilities:

Decrease in Accounts Receivable (15,976)(Decrease) in Accounts Payable (19,579)(Decrease) in Liability for Unpaid Claims 10,500Increase in Unearned Revenue 17,594

Total Adjustments (7,461)

Net Pooled Cash and Investments Provided by Operating Activities (286,593)$


STATEMENT OF CASH FLOWSPROPRIETARY FUND TYPE - INTERNAL SERVICE FUND



AssetsCash and Cash Equivalents 117,513$

Total Assets 117,513

LiabilitiesAccounts Payable 44,774Due to Other Funds 29,777Due to Other Governments 8,470Deposits 34,492

Total Liabilities 117,513$

SEPTEMBER 30, 2017



13


NOTES TO FINANCIAL STATEMENTSSEPTEMBER 30, 2017


Reporting EntityHernando County, Florida, (the County) is a political subdivision of the State of Florida. It is governed by an elected Board of County Commissioners (the Board) and managed by an appointed County Administrator. The Hernando County, Florida, Sheriff (the Sheriff), is an elected constitutional officer as provided for by the Constitution of the State of Florida. Pursuant to Chapter 129, Florida Statutes, the Sheriff’s budget is submitted to the Board for approval.

The Sheriff is the chief law enforcement officer of the County. Funding for the Sheriff’s operations comes primarily from annual appropriations from the Board and all unexpended proceeds must be returned to the Board at year-end.

For financial reporting purposes, the Sheriff is deemed to be part of the primary government of the County and, as such, is included in the County’s Comprehensive Annual Financial Report.

Basis of PresentationThe accompanying financial statements include all the funds and accounts of the Sheriff’s office, but are not intended to be a complete presentation of the County as a whole. Except for this matter, they are otherwise in conformity with accounting principles generally accepted in the United States of America (GAAP). The accompanying financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(4), Rules of the Auditor General—Local Governmental Entity Audits.

The financial transactions of the Sheriff are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balance accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. These funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions, or limitations.

The focus of governmental fund financial statements is on major funds rather than reporting funds by type. GAAP sets forth minimum criteria (percentage of total assets, liabilities, revenues, or expenditures) for the determination of major funds. Each major fund is reported in a separate column.

The Sheriff reports the following major governmental funds:

General Fund—The General Fund is used to account for the general operations of the Sheriff and includes all transactions which are not accounted for in another fund.

Federal Forfeitures Fund—This fund is used to account for forfeited property passed down from the U.S. Department of Justice or by the U.S. Immigration and Customs Enforcement. Utilization of revenue can include enhancements to law enforcement delivery and operations.

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(Continued)


Basis of Presentation (Concluded)E-911 Fund—This fund is used to account for the proceeds of telephone charges collected for the installation and operation of an Emergency 911 System.

Inmate Welfare Fund—This fund is used to account for revenue from commissions from the commissary and pay phone. The funds are used for expenditures in the commissary operation, including compensation for commissary employees.

Federal Inmates Fund—This fund is used to account for the proceeds of housing federal inmates at the detention facility, as well as associated guard and transport reimbursements.

The Sheriff also reports the following nonmajor special revenue funds:

800 MHz Fund

Law Enforcement Educational Fund

Child Saver Program Fund

Grants and Contributions Fund

The Sheriff reports the following other fund types:

Proprietary Fund Type—Internal Service FundsThese funds are used to account for health and dental insurance benefits provided to the employees by the Sheriff. Their funding is based upon an annual actuarial study of expected benefit payouts.

Fiduciary Fund Type—Agency FundsThese funds are used to account for assets held by the Sheriff in a trustee capacity or as an agent for individuals, private organizations, and other governments.

Measurement Focus and Basis of AccountingGovernmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the balance sheet. Operating statements for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Agency funds are custodial in nature (assets equal liabilities), and do not involve measurement of results of operations or have a measurement focus.

The modified accrual basis of accounting is used by both governmental and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance liabilities of the current fiscal year). For this purpose, the Sheriff considers revenues to be available if they are collected within 60 days after year-end. Grants must also meet eligibility requirements to be accrued.

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(Continued)


Measurement Focus and Basis of Accounting (Concluded)For governmental funds, expenditures are recorded when the related fund liability is incurred, except for certain compensated absences, which are recognized as expenditures when paid.Substantially all of the Sheriff’s operating budget funding is appropriated by the Board. Theseresources are reflected as other financing sources at the time of receipt. Interest and other revenue are recognized as they are earned and become measurable and available to pay liabilities of the current period.

The proprietary fund type - internal service fund accounts for medical insurance coverage for the Sheriff’s employees. Proprietary fund types use the accrual basis of accounting, where revenues are recognized when they are earned and expenses are recognized when they are incurred,regardless of the timing of related cash flows. In addition, proprietary funds distinguish operatingrevenues and expenses from nonoperating items.

The focus on fiduciary type fund financial statements is by fund-type, not major fund. The Sheriff only has one fiduciary fund-type, the agency fund-type. Accordingly, there is only one column in the fiduciary fund financial statement.

Excess Fees and Other RevenuesFlorida Statutes provide that the amount by which revenues and transfers exceed annual expenditures be remitted to the Board within one month following the fiscal year for which the funding was provided or following the fiscal year during which other revenue was recognized. This requirement is reflected in the Sheriff’s General Fund where the amount of this distribution is recorded as a liability and as another financing use. Other revenues due to the Board consist of those third-party revenues received directly by the Sheriff for certain expenditures that are owed to the Board.

Cash EquivalentsCash equivalents are defined as highly-liquid investments with original maturities of three months or less.

Prepaid ItemsCertain prepayments to vendors reflect costs applicable to future accounting periods. These prepayments are recorded as expenditures in the year paid.

Deferred Inflows/Unearned RevenueDeferred inflows in governmental funds represent revenues that have been earned, but are not available (because they were received more than 60 days after year-end). Unearned revenue in proprietary fund types represents revenues attributable to future periods.

Compensated AbsencesEligible full time employees are entitled to accrue compensatory time, annual vacation, and sick leave up to predetermined thresholds, and received pay for those hours at termination or retirement. Effective October 1, 2009, for terminations in good standing, the employee is paid for 25% of accumulated sick leave up to a total of 500 hours. Upon retirement, the employee is entitled to an additional percentage up to a total of 100% of total accumulated hours if the employee had ten or more years of service as of October 1, 2009, or 50% of up to 500 hours if the employee had less than ten years of service at October 1, 2009. For all payments of sick leave, the employee is paid at their pay rate effective at termination or retirement.

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(Continued)


Compensated Absences (Concluded)Vacation and sick leave payments are included in personnel services when the payments are made to the employees. The Sheriff does not, nor is he legally required to accumulate financial resources for these obligations. Accordingly, the liability for compensated absences is not reported in the governmental funds but rather is reported in the basic financial statements of the County.

Fund BalancesThe Sheriff implemented the provisions of GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB Statement No. 54) in 2011, as required. The purpose of GASB Statement No. 54 was to improve the consistency and usefulness of fund balance information to the financial statement user. The statement established fund balance classifications that comprise a hierarchy based primarily on the extent to which the organization is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. Fund balance is reported in five components nonspendable, restricted, committed, assigned, and unassigned:

Nonspendable This component of fund balance consists of amounts that cannot be spent because: (a) they are not expected to be converted to cash; or (b) they are legally or contractually required to remain intact. Examples of this classification are prepaid items, inventories, and principal (corpus) of an endowment fund.

Restricted This component of fund balances consists of amounts that are constrained either:(a) externally by third parties (creditors, grantors, contributors, or laws or regulations of other governments); or (b) by law through constitutional provisions or enabling legislation.

Committed can only be used for specific purposes pursuant to constraints imposed by formal action (e.g., policy) of the organization’s governing authority. By statute, the Sheriff himself is the governing authority. These committed amounts cannot be used for any other purpose unless the Sheriff removes or changes the specified use by taking the same type of action (e.g., policy) he employed to constrain those amounts.

Assigned -than-formal action of the organization’s governing authority, or by an individual or body to whom the governing authority has delegated this responsibility. The Sheriff has not delegated the responsibility to assign fund balances to any individual or body.

Unassigned : (a) negative unrestricted fund balances in any governmental fund; or (b) fund balances within the General Fund that are not restricted, committed, or assigned.

When both restricted and unrestricted resources are available for use, it is generally the Sheriff’s policy to use unrestricted resources first (committed, assigned, and unassigned) then restricted resources as they are needed. When unrestricted resources (committed, assigned, and unassigned) are available for use, it is generally the Sheriff’s policy to use unassigned resources first, then assigned, and then committed as needed.

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(Continued)


Use of EstimatesThe preparation of financial statements in accordance with generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Actual results could differ from those estimates.

Governmental Accounting Standards Board (GASB) Statement No. 68The Sheriff participates in the Florida Retirement System (FRS) defined benefit pension plan and the Health Insurance Subsidy (HIS) defined benefit plan administered by Florida Division of Retirement. As a participating employer, the Sheriff implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions, which requires employers participating in cost-sharing multiple-employer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities and related pension amounts of the defined benefit pension plans. However, these liabilities would be recorded in government-wide financial statements, which are not required in this special-purpose presentation. As such, only the applicable disclosures required by GASB Statement No. 68 have been presented herein. In addition, the cost-sharing multiple-employer plans mentioned above operate on a fiscal year ended June 30.


Florida Statutes, Sections 30.49, 129.021, and 129.03 govern the preparation, adoption, and administration of the Sheriff’s annual budget. The Sheriff prepares individual budgets for the General Fund and the E-911 and 800 MHz Special Revenue Funds, and submits them to theBoard for approval. Any budgets that are not subject to the approval of the Board of County Commissioners shall follow the same procedures as those approved by the Board with the exception that the Sheriff is the approver rather than the Board.

The budgets are prepared on a basis consistent with GAAP and serve as the legal authorization for expenditures. Amendments increasing total fund expenditures must be approved by theSheriff and/or Board. Budgetary changes between or among expenditures within a fund may be made at the discretion of the Sheriff.

The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year and approved by the Board within 60 days after year-end.


At September 30, 2017, the carrying value of the Sheriff’s cash and cash equivalents was as follows:

CarryingValue

Cash on Hand $ 12,947Demand Deposits 6,363,602Total Cash and Cash Equivalents $ 6,376,549

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(Continued)


Such amounts are reported as $5,828,614, $430,422, and $117,513 in the governmental, internal service, and agency funds, respectively. In addition, there is cash and investments of $4,622,514held by the claims administrator reported in the internal service funds at year-end.

The Sheriff’s bank deposits are held in qualified public depositories (QPDs) pursuant to Chapter 280, Florida Statutes. Under this Chapter, each QPD is required to pledge collateral to the State Treasurer against the public deposits. In the event of default by a QPD, all claims for public deposits would be satisfied by the State Treasurer from the proceeds of federal deposit insurance, pledged collateral of the QPD in default and, if necessary, assessments against other QPDs of the same type as the depositor in default.

Authorized InvestmentsThe Sheriff ‘s Investment Policy follows the state’s guidance set forth in Section 219.075, Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. That section requires local governments without written investment policies, including County officers, to follow the state policy in Section 218.415(17), Florida Statutes. That Section authorizes the following investments:

a. The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Florida Statute 163.01.




Note 4 - Interfund Balances

Interfund balances at September 30, 2017, consisted of the following:

Interfund InterfundReceivable Payable

General Fund $ 21,924 $ 0Inmate Welfare Fund 7,853 0Agency Fund 0 29,777

Total Due to/Due from Other Funds $ 29,777 $ 29,777

The receivables represent primarily fees collected in an agency fund for other funds. These fees are from jail inmates for subsistence fees, booking fees, medical fees, and commissions oncommissary sales.

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(Continued)


Pursuant to Florida Statutes, the Sheriff can own tangible capital assets, and the Sheriff maintains custody and recordkeeping responsibility for these assets. However, office space and facilities used in the Sheriff’s operations are provided at no cost by the Board.

Capital assets paid for by the Sheriff are recorded as expenditures in the governmental funds of the Sheriff but are capitalized in the basic financial statements of the County. The capitalization threshold is $1,000. Donated capital assets are recorded at their estimated fair value on the date received. Effective October 1, 2010, the Sheriff is responsible for recording all grant-related assets regardless of whether the grant origin was Hernando County or the Sheriff. Depreciation is recorded at the County level. Most of the capital assets listed below are being depreciated over five years.

Capital asset activity for the tangible property over which the Sheriff has custodial and recordkeeping responsibility, for the year ended September 30, 2017, was as follows:

BalanceOctober 1, September 30,

2016 Additions Deletions 2017Automobiles and Other Vehicles $ 8,648,304 $ 1,133,309 $ (554,983) $ 9,226,630Furniture and Equipment 11,451,669 401,908 (1,499,670) 10,353,907Construction in Process 0 96,448 0 96,448Total at Cost 20,099,973 1,631,665 (2,054,653) 19,676,985(Less Accumulated Depreciation) (15,247,258) (1,664,355) 1,854,464 (15,057,149)Book Value $ 4,852,715 $ (32,690) $ (200,189) $ 4,619,836

Proceeds from the sale or disposal of vehicles are netted against capital outlay in the accompanying statement of revenues, expenditures, and changes in fund balance. Following is a reconciliation of 2017 capital asset additions above to capital outlay on the accompanying statement of revenues, expenditures, and changes in fund balance:

2017Capital Outlay $ 1,505,781Proceeds from Vehicle Sales/Disposals 63,987Purchased by Other Entities 61,896Total Additions $ 1,631,664




2016 Additions Retirements 2017Accrued Compensated

Absences $ 3,297,395 $ 2,697,828 $ (2,387,306) $ 3,607,917

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(Continued)

Note 6 - Long-term Liability (Concluded)

Of these above obligations, $2,734,461 are expected to be paid during the fiscal year endingSeptember 30, 2018, primarily from the general fund, and so are considered current. These liabilities are not reported in the fund financial statements of the Sheriff since they have not matured.

Note 7 - Detention Operations

For twenty-two years, the Hernando County jail was operated by a private corporation. Effective August 27, 2010, the Sheriff took over the detention operations based on an Interlocal Agreement between the Sheriff and the Board. The initial term of the agreement was through September 30, 2013, with an automatic renewal period of an additional three years.

Note 8 - General Fund Revenues and Expenditures

General Fund Revenues and Expenditures for the year ended September 30, 2017, were as follows:

Law EmergencyTotal Enforcement Detention Management Courthouse

RevenuesInmate Booking $ 61,960 $ 0 $ 61,960 $ 0 $ 0Inmate Medical 38,822 0 38,822 0 0Inmate Subsistence 174,302 0 174,302 0 0Inmate Social Security 23,800 0 23,800 0 0Charges for Services 298,884 0 298,884 0 0

Interest Income 23,317 23,317 0 0 0Miscellaneous 67,294 67,294 0 0 0

Total Revenues $ 389,495 $ 90,611 $ 298,884 $ 0 $ 0

ExpendituresPersonal Services $37,508,084 $ 26,215,839 $ 10,139,142 $ 173,166 $ 979,937Operating Expenditures 6,408,070 3,858,114 2,278,977 28,377 242,602Capital Outlay 1,411,104 1,381,138 29,966 0 0

Total Expenditures $45,327,258 $ 31,455,091 $ 12,448,085 $ 201,543 $ 1,222,539

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(Continued)


General Information about the Florida Retirement System (FRS)The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan, to assist retired members of any state-administered retirement system in paying the costs of health insurance.

Essentially all regular employees of the Sheriff are eligible to enroll as members of the state-administered FRS. Provisions relating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112 Part IV, Florida Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer defined-benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ web site (www.dms.myflorida.com).

The Sheriff’s contributions to the FRS Plan totaled $4,728,719 for the fiscal year ended September 30, 2017, (all plans).

Payables to the Pension Plan. At September 30, 2017, the Sheriff’s reported a payable of $528,012 for the outstanding amount of contributions to the Plan required for the fiscal year ended September 30, 2017.

FRS Pension Plan

Plan Description. The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a DROP for eligible employees. The general classes of membership applicable to the Sheriff are as follows:

Regular Class Members of the FRS who do not qualify for membership in the other classes.


Senior Management Service Class Members in senior management level positions.

Special Risk Class Members who are employed as law enforcement officers and meet the criteria to qualify for this class.

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(Continued)



Plan Description. (Concluded)Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service, except for members classified as special risk who are eligible for normal retirement benefits at age 55 or at any age after 25 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service, except for members classified as special risk who are eligible for normal retirement benefits at age 60 or at any age after 30 years of service. Members of the Plan may include up to four years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.


Benefits Provided. Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement class to which the member belonged when the service credit was earned. Members are eligible for in-line-of-duty or regular disability and survivors’ benefits. The following chart shows the percentage value for each year of service credit earned:

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(Continued)



Benefits Provided. (Concluded)

Class, Initial Enrollment, and PercentRetirement Age/Years of Service Value

Regular Class Members Initially Enrolled Before July 1, 2011:Retirement up to age 62 or up to 30 years of service 1.60Retirement at age 63 or with 31 years of service 1.63Retirement at age 64 or with 32 years of service 1.65Retirement at age 65 or with 33 or more years of service 1.68

Regular Class Members Initially Enrolled on or After July 1, 2011:Retirement up to age 65 or up to 33 years of service 1.60Retirement at age 66 or with 34 years of service 1.63Retirement at age 67 or with 35 years of service 1.65Retirement at age 68 or with 36 or more years of service 1.68

Senior Management Service Class 2.00

Special Risk Regular:Service from December 1, 1970 through September 30, 1974 2.00Service on and after October 1, 1974 3.00




FRS, Regular 3.00 5.80 3.00 6.20FRS, Senior Management Service 3.00 20.25 3.00 20.99FRS, Special Risk Regular 3.00 20.85 3.00 21.55DROP - Applicable to Members from All of the Above Classes 0.00 11.33 0.00 11.60FRS, Reemployed Retiree (1) (1) (1) (1)

Percent of Gross Salary Percent of Gross SalaryYear Ended June 30, 2017 Year Ended June 30, 2018

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(Continued)



Contributions. (Concluded)The Sheriff’s contributions (employer only) to the Plan totaled $3,955,887 for the fiscal year ended September 30, 2017. This excludes the HIS defined benefit pension plan contributions.

Pension Liabilities. At September 30, 2017, the Sheriff’s proportionate share of the FRS net pension liability was $44,521,984.


HIS Pension Plan

Plan Description. The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of state-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.


Contributions. The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal years ended June 30, 2018 and 2017,the contribution rate was 1.66% of payroll, respectively, pursuant to Section 112.363, Florida Statutes. The Sheriff contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.

The Sheriff’s contributions to the HIS Plan totaled $428,374 for the fiscal year ended September 30, 2017.

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(Continued)



Pension Liabilities. At September 30, 2017, the Sheriff’s proportionate share of the HIS net pension liability was $8,556,586.


FRS – Defined Contribution Pension PlanThe Sheriff contributes to the FRS Investment Plan (Investment Plan), a defined contribution pension plan, for its eligible employees electing to participate in the Investment Plan. The Investment Plan is administered by the SBA, and is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report. Service retirement benefits are based upon the value of the member’s account upon retirement.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. Sheriff employees participating in DROP are not eligible to participate in the Investment Plan. Employer and employee contributions, including amounts contributed to individual member’s accounts, are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Benefit terms, including contribution requirements, for the Investment Plan are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contribution rates that are based on salary and membership class (Regular Class, Elected County Officers, etc.), as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Allocations to the investment members’ accounts during the 2016-17 fiscal year were as follows:

For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five year period, the employee will regain control over their account. If the employee does not return within the five year period, the employee will forfeit theaccumulated account balance. Costs of administering the Investment Plan, including the FRS


FRS, Regular 6.30FRS, Senior Management Service 7.67FRS, Special Risk Regular 14.00

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(Continued)


FRS – Defined Contribution Pension Plan (Concluded)Financial Guidance Program, are funded through an employer contribution of 0.04% of payroll and by forfeited benefits of Investment Plan members. For the fiscal year ended September 30, 2016, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the Sheriff.


The Sheriff’s contributions to the Investment Plan totaled $344,458 for the fiscal year ended September 30, 2017.

Note 10 - Other Postemployment Benefits

The Sheriff offers postemployment health care benefits and life insurance to all retired former employees of the Sheriff’s Office and their eligible dependents. Participating retirees are required to reimburse the Sheriff for the entire premium cost. These retirees are receiving an “implicit subsidy” because the premium is a group rate which includes active, lower cost employees. The implicit subsidy has a cost which under GAAP is required to be disclosed in these financial statements. However, this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Sheriff’s Office. Accordingly, these calculations and disclosures can be found in the County-wide financial report.

In accordance with Florida Statutes 112.19(1)(g), if a law enforcement officer is killed as a result of an act of violence inflicted by another person while the officer is engaged in the performance of law enforcement duties, the entire premium of the health insurance plan for the officer’s surviving spouse, until remarried, and dependent children, is paid by the Sheriff. During the year ended September 30, 2017, $ 25,260 was paid on behalf of the survivors who qualified.


The Sheriff participates in the Florida Sheriff’s Risk Management Fund to insure against automobile, workers’ compensation, and general liabilities claims. Except as disclosed in the next paragraph, there have been no significant reductions in insurance coverage from the prior year. Settlement amounts have not exceeded insurance coverage for any of the last three years.

Effective October 1, 2011, the Sheriff became self-insured for employee and retiree health coverage. Effective October 1, 2014, the Sheriff became self-insured for employee and retiree dental coverage. Prior to those dates, the Sheriff carried commercial insurance for its health and dental coverage.

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(Continued)

Note 12 - Self-Insurance Internal Service Fund

The self-insurance program was established under Florida Statute 112.08 to reduce employee medical costs for the Sheriff’s Office. The program is administered by an outside third party, and uses a combination of self-insurance and specific and aggregate stop-loss coverage to minimize risk exposure. It is accounted for in an internal service fund. Fund revenues are primarily contributions from other funds, retirees, and employees, for amounts needed to pay insurance premiums, anticipated self-insured losses, and administrative expenses.

Changes in claims liability amounts for the years ended September 30, 2017 and 2016, were as follows:

2017 2016Unpaid Claims, Beginning of Year $ 297,063 $ 320,024Incurred Claims 4,319,525 4,744,409Claim Payments (4,309,025) (4,767,370)Unpaid Claims, End of Year $ 307,563 $ 297,063

Note 13 - Leases

Revenue of the 800 MHz Fund includes lease payments received for space leased on the County’s primary tower site. The lease began December 16, 1997, between the Board and Cingular (Tenant). There have been several amendments since then, extending the lease term and changing the monthly lease payment. The sixth amendment, effective July 1, 2016, amended the lease term to include a new initial term of sixty months, plus up to five additional sixty-month terms, built-in rate increases at the beginning of each renewal term. AT&T Mobility Corporation, who owns New Cingular Wireless, has a reduced monthly lease payment from $5,407 to $4,210. The Board has informally assigned the rights to the lease revenue to the Sheriff to operate the system. The amount of the lease revenue for the year ended September 30, 2017, was $50,520. The future lease revenues are as follows:

Year Amount2018 $ 50,5202019 50,5202020 50,5202021 52,4152022 58,098

2023-2027 301,3832028-2032 346,5912033-2037 398,5802038-2042 458,3662043-2047 482,665

Total $ 2,249,658

28



(Concluded)

Note 14 - Claims and Contingencies

LitigationThe Sheriff is involved as defendant or plaintiff in certain litigation and claims arising from the ordinary course of operations. Any judgments against the Sheriff in excess of insurance limits would be settled by the Board. In the opinion of the Sheriff and legal counsel, the range of potential recoveries or liabilities will not materially affect the financial position of the Sheriff.

Federal and State GrantsGrant funds received by the Sheriff are subject to audit by grantor agencies. Audits of these grants may result in the disallowed costs, which may constitute a liability of the Sheriff. In the opinion of management disallowed costs, if any, would be insignificant to the financial position and operations of the Sheriff.

SUPPLEMENTAL INFORMATION

Combining and Individual FundFinancial Statements and Schedules


SPECIAL REVENUE FUNDSSEPTEMBER 30, 2017

Special revenue funds are used to account for the proceeds of special revenue sources that are legally restricted to specified purposes. The Sheriff has the following nonmajor special revenue funds:

800MHz Fund—This fund derives its resources from lease payments for space leased on the County’s primary tower site, fees assessed to each radio user department for maintenance contract costs, and a $12.50 fee included in each fine paid for a traffic citation. The 800MHz system is maintained to ensure continuous and optimum radio communications for all public safety and County radio users.

Law Enforcement Education Fund (L.E.E.)—This fund derives its resources from court cost assessments pursuant to Sections 938.15 and 318.18 of the Florida Statutes. The assessments arecollected by the Clerk of the Circuit Court and remitted to the Sheriff monthly. Use of the funds received is restricted to criminal justice education and training in programs approved by the Florida Police Training and Standards Commission.

Child Saver Program Fund—This fund derives its resources from funds received for the rental of infant and toddler car seats. The nonrefundable service fees charged are to be used for the maintenance and repair of returned car seats and to assist in the purchase of additional seats to expand the program as the population of the County grows and there is additional demand for car seats.

Grants and Contributions Fund—This fund derives its resources from grants and donations. Each grant and donation is separately accounted for within the fund, to assure proper accounting in accordance with the grant agreements.

29

TotalLaw Child Nonmajor

Enforcement Saver Grants and Governmental800MHz Education Program Contributions Funds

AssetsCash and Cash

Equivalents 214,480$ 517,462$ 5,964$ 95,557$ 833,463$Due from Other

Governments 14,980 5,071 0 65,738 85,789Total Assets 229,460 522,533 5,964 161,295 919,252

LiabilitiesAccounts Payable 1,644 0 60 0 1,704Accrued Wages and

Benefits Payable 0 0 0 6,860 6,860Deposits 0 0 40 0 40

Total Liabilities 1,644 0 100 6,860 8,604

Fund BalancesRestricted for:

Law EnforcementActivities 0 0 0 154,435 154,435

Communications 227,816 0 0 0 227,816Education and

Training 0 522,533 0 0 522,533Other 0 0 5,864 0 5,864

Total Fund Balances 227,816 522,533 5,864 154,435 910,648

Total Liabilities andFund Balances 229,460$ 522,533$ 5,964$ 161,295$ 919,252$


SEPTEMBER 30, 2017

COMBINING BALANCE SHEET


NONMAJOR GOVERNMENTAL FUNDS

30

TotalLaw Child Grants Nonmajor

Enforcement Saver and Governmental800MHz Education Program Contributions Funds

RevenuesIntergovernmental 0$ 0$ 0$ 220,401$ 220,401$Charges for Services 172,476 0 860 0 173,336Fines and Forfeitures 137,836 71,102 0 0 208,938Interest Revenue 77 332 0 767 1,176Miscellaneous 50,520 0 0 51,205 101,725

Total Revenues 360,909 71,434 860 272,373 705,576


Personnel Services 0 0 0 155,620 155,620Operating

Expenditures 345,164 19,519 190 27,718 392,591Capital Outlay 0 0 0 47,847 47,847

(Total Expenditures) (345,164) (19,519) (190) (231,185) (596,058)

Net Change inFund Balance 15,745 51,915 670 41,188 109,518

Fund Balances,Beginning of Year 212,071 470,618 5,194 113,247 801,130

Fund Balances,End of Year $ 227,816 $ 522,533 $ 5,864 $ 154,435 $ 910,648



HERNANDO COUNTY, FLORIDA

COMBINING STATEMENT OF REVENUES, EXPENDITURES,SHERIFF

AND CHANGES IN FUND BALANCENONMAJOR GOVERNMENTAL FUNDS

31

VarianceWith Final

BudgetPositive


Charges for Services 188,000$ 188,000$ 172,476$ (15,524)$Fines and Forfeitures 140,000 140,000 137,836 (2,164)Interest Revenue 0 0 77 77Miscellaneous 50,520 50,520 50,520 0

Total Revenues 378,520 378,520 360,909 (17,611)


Personnel Services 46,553 46,553 0 46,553Operating Expenditures 378,750 378,750 345,164 33,586Capital Outlay 25,000 25,000 0 25,000

(Total Expenditures) 450,303 450,303 345,164 105,139







Budget

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - 800 MHz FUND


32

VarianceWith Final

BudgetPositive


Charges for Services 375,000$ 375,000$ 428,220$ 53,220$Interest Revenue 500 500 1,264 764Miscellaneous 2,500 2,500 4,108 1,608

Total Revenues 378,000 378,000 433,592 55,592


Personnel Services 204,944 204,944 209,088 (4,144)Operating Expenditures 197,951 197,951 97,309 100,642Capital Outlay 50,000 50,000 0 50,000



Other Financing Sources (Uses)Reserve for Contingencies (366,640) (366,640) 0 366,640




Budget


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - INMATE WELFARE FUND


33

VarianceWith Final

BudgetBudget Positive


Fines and Forfeitures 73,000$ 73,000$ 71,102$ (1,898)$Interest Revenue 250 250 332 82

Total Revenues 73,250 73,250 71,434 (1,816)


Operating Expenditures 46,850 46,850 19,519 27,331(Total Expenditures) (46,850) (46,850) (19,519) 27,331

Excess of Revenues Over Expenditures 26,400 26,400 51,915 25,515






STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - LAW ENFORCEMENT EDUCATION FUND


34

VarianceWith Final

BudgetPositive


Intergovernmental 240,248$ 314,630$ 220,401$ (94,229)$Interest Revenue 50 50 767 717Miscellaneous 51,005 51,005 51,205 200

Total Revenues 291,303 365,685 272,373 (93,312)


Personnel Services 172,982 236,700 155,620 81,080Operating Expenditures 89,934 100,598 27,718 72,880Capital Outlay 88,180 88,180 47,847 40,333







Budget


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEBUDGET AND ACTUAL - GRANTS AND CONTRIBUTIONS FUND



INTERNAL SERVICE FUNDSSEPTEMBER 30, 2017

Internal service funds are used when a fund primarily provides benefits for other funds, departments, or agencies of the primary government. The Sheriff has the following internal service funds:

Health—This fund is used to account for the Sheriff’s self-insurance program for employee healthbenefits.

Dental—This fund is used to account for the Sheriff’s self-insurance program for employee dental benefits.

Clinic—This fund is used to account for the Sheriff’s self-insurance program for the operation of the health clinic.

35

TotalInternal

Health Dental Clinic ServiceAssets

Cash with Fiscal Agent 4,885,354$ 148,042$ 19,540$ 5,052,936$Accounts Receivable 67,796 0 0 67,796

Total Assets 4,953,150 148,042 19,540 5,120,732

LiabilitiesAccounts Payable 335,226 10,269 0 345,495Liability for Unpaid Claims 283,357 24,206 0 307,563Unearned Revenue 355,593 20,667 0 376,260

Total Liabilities 974,176 55,142 0 1,029,318

Net PositionUnrestricted 3,978,974 92,900 19,540 4,091,414

Total Net Position 3,978,974$ 92,900$ 19,540$ 4,091,414$


COMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDS

SEPTEMBER 30, 2017

36

TotalInternal

Health Dental Clinic ServiceOperating Revenues

Interfund Charges $ 3,299,685 $ 165,144 $ 564,980 $ 4,029,809 Premiums - Employees 707,045 78,369 0 785,414 Premiums - Retirees 445,960 35,792 0 481,752 Miscellaneous 121,583 0 0 121,583

Total Operating Revenues 4,574,273 279,305 564,980 5,418,558

Operating ExpensesClaims 4,069,410 214,560 0 4,283,970 Professional Services 555,649 38,212 545,440 1,139,301 Insurance 274,419 0 0 274,419

(Total Operating Expenses) (4,899,478) (252,772) (545,440) (5,697,690)

Operating (Loss) (325,205) 26,533 19,540 (279,132)

Nonoperating RevenuesInterest 17,225 0 0 17,225

Change in Net Position (307,980) 26,533 19,540 (261,907)

Net Position, Beginning of Year 4,286,697 66,624 0 4,353,321

Net Position, End of Year 3,978,717$ 93,157$ 19,540$ 4,091,414$


COMBINING STATEMENT OF REVENUES, EXPENSES, AND

INTERNAL SERVICE FUNDSFOR THE YEAR ENDED SEPTEMBER 30, 2017

CHANGES IN FUND NET POSITION

37

TotalInternal

Health Dental Clinic Service

Cash Flows from Operating ActivitiesCash Received from Interfund Charges 3,317,203$ 165,220$ 564,980$ 4,047,403$Cash Received from Employees 707,045 78,369 0 785,414Cash Received from Retirees 445,960 35,792 0 481,752Other Cash Receipts 121,583 0 0 121,583Payments to Suppliers (830,068) (38,212) (545,440) (1,413,720)Claims Paid (4,093,982) (215,043) 0 (4,309,025)

Net Cash Provided by Operating Activities (332,259) 26,126 19,540 (286,593)

Cash Flows From Investing ActivitiesInterest Received 17,225 0 0 17,225

Net Increase (Decrease) in Cash (315,034) 26,126 19,540 (269,368)

Pooled Cash and Investments, Beginning of Year 5,200,128 122,176 0 5,322,304

Pooled Cash and Investments, End of Year 4,885,094$ 148,302$ 19,540$ 5,052,936$

Reconciliation of Operating Income (Loss) to Net Pooled Cash and Investments Provided by Operating Activities

Operating Income (Loss) (325,205)$ 26,533$ 19,540$ (279,132)$Adjustment to Reconcile Operating Income to Net

Cash Provided by Operating Activities:Changes in Assets and Liabilities:

Decrease in Accounts Receivable (15,976) 0 0 (15,976)(Decrease) in Accounts Payable (17,421) (2,158) 0 (19,579)(Decrease) Increase in Liability for Unpaid Claims 8,825 1,675 0 10,500Increase in Unearned Revenue 17,518 76 0 17,594

Total Adjustments (7,054) (407) 0 (7,461)

Net Pooled Cash and Investments Provided by Operating Activities (332,259)$ 26,126$ 19,540$ (286,593)$


COMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDS



AGENCY FUNDSSEPTEMBER 30, 2017

Agency funds are used to account for assets held by the Sheriff in a trustee capacity or as an agent for individuals, private organizations, and other governments. The Sheriff has the following agency funds:

Civil Trust Fund—This fund is used to account for fees received by the Sheriff for serving documents (civil process) pursuant to Florida Statute 30.231(5). The funds received are returned to the Board of County Commissioners on a monthly basis. This fund is also used for cost deposits provided by plaintiffs or their attorneys in advance, to pay for the Sheriff’s statutory fees and costs in executing Sheriff’s Levies and Writs of Attachment.

Inmate Trust Fund—This fund accounts for inmate personal accounts and the proceeds from certain inmate programs.

38

Civil Inmate TotalTrust Trust AgencyFund Fund Funds

AssetsCash and Cash Equivalents 15,758$ 101,755$ 117,513$

Total Assets 15,758 101,755 117,513

LiabilitiesAccounts Payable 0 44,774 44,774Due to Other Funds 0 29,777 29,777Due to Other Governments 8,470 0 8,470Deposits 7,288 27,204 34,492

Total Liabilities 15,758$ 101,755$ 117,513$

SEPTEMBER 30, 2017

HERNANDO COUNTY, FLORIDA

COMBINING STATEMENT OF FIDUCIARY ASSETS AND LIABILITIESSHERIFF

ALL AGENCY FUNDS

OTHER REPORTS

39




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 Standardsissued by the Comptroller General of the United States, the financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Sheriff (the Sheriff), as of and for the year ended September 30, 2017, and the related notes to the financial statements, and have issued our report thereon dated February 21, 2018.

Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the Sheriff’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstance for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Sheriff’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Sheriff’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.


40




(Concluded)

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the Sheriff’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreement, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.



41



We have examined Hernando County, Florida, Sheriff’s (the Sheriff) compliance with the requirements of Section 218.415, Florida Statutes, as of and for the year ended September 30, 2017, as required by Section 10.556(10)(a), Rules of the Auditor General. Management is responsible for the Sheriff’s compliance with those requirements. Our responsibility is to express an opinion on the Sheriff’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Sheriff complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Sheriff complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the Sheriff’s compliance with specified requirements.

In our opinion, the Sheriff complied, in all material respects, with the aforementioned requirements duringthe year ended September 30, 2017.

This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Sheriff, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be, and should not be, used by anyone other than these specified parties.


42

MANAGEMENT LETTER


Report on the Financial StatementsWe have audited the financial statements of each major fund and the aggregate remaining fund information of the Hernando County, Florida, Sheriff (the Sheriff), as of and for the year ended September 30, 2017,and have issued our report thereon dated February 21, 2018.


Other Reporting RequirementsWe have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and onCompliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountants’ Report on Compliance with Section 218.415, Florida Statutes. Disclosures in those reports, which are dated February 21, 2018, should be considered in conjunction with this management letter.


Official Title and Legal AuthoritySection 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. In that regard, the Sheriff was established by the Constitution of the State of Florida, Article VIII, Section 1(d). There were no component units related to the Sheriff.


43



Additional MattersSection 10.554(1)(i)3., Rules of Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of the LetterOur management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Sheriff, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be, and should not be, used by anyone other than these specified parties.





SUPERVISOR OF ELECTIONSHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017



SUPERVISOR OF ELECTIONSHERNANDO COUNTY, FLORIDA

SEPTEMBER 30, 2017

TABLE OF CONTENTS


Financial StatementsBalance Sheet - General Fund ................................................................................................................... 3Statement of Revenues, Expenditures, and Changes in Fund

Balance - General Fund.......................................................................................................................... 4Statement of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual (Budgetary Basis) - General Fund........................................................... 5Notes to Financial Statements .............................................................................................................6-17


Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance withGovernment Auditing Standards .....................................................................................................18-19

Independent Accountants’ Report on Compliance withFlorida Statute Section 218.415 Investments of Public Funds ...............................................................20


1


Honorable Shirley AndersonSupervisor of ElectionsHernando County, Florida

Report on the Financial StatementsWe have audited the accompanying financial statements of the general fund (major fund) of the HernandoCounty, Florida Supervisor of Elections (the Supervisor of Elections), as of and for the year ended September 30, 2017, and the related notes to the financial statements, as listed in the table of contents.


Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2



OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the general fund (major fund) of the Supervisor of Elections as of September 30, 2017, and the changes in financial position and budgetary comparison thereof, for the year then ended in accordance withaccounting principles generally accepted in the United States of America.

Emphasis of Matter – Incomplete PresentationAs discussed in Note 1 to the financial statements, the financial statements referred to above were prepared solely for the purpose of complying with the Rules of the Auditor General of the State of Florida (the Rules). In conformity with the Rules, the accompanying financial statements are intended to present the financial position, changes in financial position, and budgetary comparisons of the general fund(major fund), only for that portion of the general fund (major fund) of Hernando County, Florida, that is attributable to the Supervisor of Elections. They do not purport to, and do not, present fairly the financial position as a whole of Hernando County, Florida, as of September 30, 2017, and the changes in its financial position or budgetary comparisons for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Other Reporting Required by Government Auditing StandardsIn accordance with Government Auditing Standards, we have also issued our report dated February 13,2018, on our consideration of the Supervisor of Elections’ internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Supervisor of Elections’ internal control over financial reporting and compliance.



AssetsCash 234,732$Prepaid Items 27,091

Total Assets 261,823


LiabilitiesAccounts Payable 2,629Accrued Liabilities 27,323Unearned Revenue 105,142Due to the Hernando County, Florida,

Board of County Commissioners 99,638Total Liabilities 234,732

Fund BalancesNonspendable:

Prepaid Items 27,091

Total Liabilities and Fund Balances 261,823$

HERNANDO COUNTY, FLORIDASUPERVISOR OF ELECTIONS

BALANCE SHEET

SEPTEMBER 30, 2017GENERAL FUND


RevenuesIntergovernmental Revenue 2,700$Miscellaneous Revenue 2,272

Total Revenues 4,972


Personnel Services 759,553Operating 360,012Capital Outlay 200,400

(Total Expenditures) (1,319,965)

(Deficiency) of Revenues (Under) Expenditures (1,314,993)


Hernando County, Florida, Board of County Commissioners Appropriations 1,441,722

Transfers (out):Distribution of Excess Appropriations to the Hernando

County, Florida, Board of County Commissioners (99,638)Total Other Financing Sources (Uses) 1,342,084

Change in Fund Balance 27,091


Fund Balance, End of Year 27,091$



GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2017


Variancewith Final

BudgetPositive


Intergovernmental Revenue 0$ 0$ 2,700$ 2,700$Miscellaneous Revenue 0 0 2,272 2,272

Total Revenues 0 0 4,972 4,972


Personnel Services 805,218 805,218 759,553 45,665Operating 396,504 396,504 360,012 36,492

Capital Outlay 0 240,000 200,400 39,600(Total Expenditures) (1,201,722) (1,441,722) (1,319,965) 121,757

(Deficiency) of Revenues(Under) Expenditures (1,201,722) (1,441,722) (1,314,993) 126,729


Hernando County, Florida, Board of County Commissioners Appropriations 1,201,722 1,441,722 1,441,722 0

Transfers (out):Distribution of Excess Appropriations to

the Hernando County, Florida, Boardof County Commissioners 0 0 (99,638) (99,638)

Total Other Financing Sources (Uses) 1,201,722 1,441,722 1,342,084 (99,638)

Change in Fund Balance 0$ 0$ 27,091 27,091$


Fund Balance, End of Year 27,091$


Budget


BUDGET AND ACTUAL (BUDGETARY BASIS) - GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2017

6


SUPERVISOR OF ELECTIONSSEPTEMBER 30, 2017


Reporting EntityHernando County, Florida (the County), is a political subdivision of the State of Florida. It is governed by an elected Board of County Commissioners (the Board), and managed by an appointed County Administrator. The Hernando County, Florida Supervisor of Elections (the Supervisor of Elections) is an elected constitutional officer as provided for by the Constitution of the State of Florida. Pursuant to Chapter 129, Florida Statutes, the Supervisor of Elections’budget is submitted to the Board for approval.

Transfers are provided by appropriations from the Board pursuant to law. Estimated receipts and budgeted fund balances must equal appropriations. The Supervisor of Elections is required to refund to the Board all excess appropriations annually; therefore, no unappropriated fund balance is carried forward.

For financial reporting purposes, the Supervisor of Elections is deemed to be part of the primary government of the County, and as such, is included in the County’s Comprehensive Annual Financial Report.

Basis of PresentationThe accompanying financial statements include all the funds and accounts of the Supervisor of Elections’ office, but are not a complete presentation of the County as a whole. Except for this matter, they are otherwise in conformity with accounting principles generally accepted in the United States of America (GAAP). The accompanying financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(4), Rules of the Auditor General—Local Governmental Entity Audits.

The financial transactions of the Supervisor of Elections are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balance accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. These funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions, or limitations. The Supervisor of Elections has only one governmental type fund (the general fund) and no other funds.

The focus of governmental fund financial statements is generally on major funds rather than reporting funds by type. GAAP sets forth minimum criteria (percentage of total assets, liabilities, revenues, or expenditures) for the determination of major funds. However, the general fund, by definition, is always a major fund. In the governmental fund financial statements, each major fund is reported in a separate column, but since the Supervisor of Elections has only one governmental fund (the general fund), the governmental fund financial statements contain only one column.

Measurement Focus and Basis of AccountingGovernmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the balance sheet.Operating statements for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets.

7



(Continued)


Measurement Focus and Basis of Accounting (Concluded)The modified accrual basis of accounting is used by governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when itbecomes measurable and available to finance liabilities of the current fiscal year). For this purpose, the Supervisor of Elections considers revenues to be available if they are collected within 45 days of the end of the current period and can be used for paying current period expenditures. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures to the extent they have matured.

The appropriations from the Board are the primary source of funds considered to be susceptible to accrual.

Intergovernmental revenues are recognized when eligibility requirements are met and related amounts are available from the grantor. Charges for services are recognized as they are earned and become measurable and available to pay liabilities of the current period.

Florida Statutes provide that the amount by which revenues and transfers exceed annual expenditures be remitted to the Board immediately following the fiscal year during which the funding was provided or following the fiscal year during which other revenue was recognized.The amount of this distribution is recorded as a liability and as an “other financing use” in the accompanying financial statements.

Prepaid ItemsCertain prepayments to vendors reflect costs paid applicable to future accounting periods. These prepayments are recorded as expenditures in the year the goods are received or the services areperformed.

Deferred Inflows/Unearned RevenueDeferred inflows represent revenues that have been earned, but are not available (because they were received more than 45 days after year-end). Unearned revenue represents funds received for voter education and poll worker recruitment and training grants which had not been expended at fiscal year-end. Revenue will be recognized in subsequent years when all eligibility requirements have been met.

Compensated AbsencesAll full time employees of the Supervisor of Elections were previously entitled to annual vacation and sick leave with pay. In May 2013, the Supervisor converted to a paid time off (PTO) policy, where employees may accumulate PTO up to a maximum of 480 hours. Also, full time employees must use a minimum of 80 hours of PTO each fiscal year. Upon termination, the employee is paid at a minimum 50%, based on tenure, of accumulated PTO. Vacation and sick leave earned prior to implementation of the PTO policy remain intact, but must be used when it qualifies before any accrued PTO. If an employee were terminated with a vacation or sick leave balance, that employee would be paid for 25% of the accumulated sick

8



(Continued)


Compensated Absences (Concluded)leave up to a maximum of 520 hours, and all of the accumulated vacation. Vacation, sick leave, and PTO are included in expenditures in the period paid or due.

The Supervisor of Elections does not, nor is she legally required to, accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the general fund, but rather is reported in the basic financial statements of the County.

Use of EstimatesThe preparation of financial statements in accordance with GAAP requires management to make a number of estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Governmental Accounting Standards Board (GASB) Statement No. 68The Supervisor of Elections participates in the Florida Retirement System (FRS) defined benefit pension plan and the Health Insurance Subsidy (HIS) defined benefit plan administered by Florida Division of Retirement. As a participating employer, the Supervisor of Electionsimplemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in 2015, which requires employers participating in cost-sharing multiple-employer defined benefit pension plans to report the employers’ proportionate share of the net pension liabilities and related pension amounts of the defined benefit pension plans. However, these liabilities would be recorded in government-wide financial statements, which are not required in this special-purpose presentation. As such, only the applicable disclosures required by GASB Statement No. 68 have been presented herein. In addition, the cost-sharing multiple-employer plans mentioned above operate on a fiscal year ended June 30.


Florida Statutes 129.03, 129.201, and 129.202 govern the preparation, adoption, and administration of the Supervisor of Elections’ annual budget. The Supervisor of Elections submits a budget for the general fund to the Board for approval. Any subsequent amendments to the Supervisor of Elections’ total budget must be approved by the Board. The annual budget serves as the legal authorization for expenditures. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year-end. Budgetary control is maintained at the major object expenditure level. Budgetary changes within major object expenditure categories are made at the discretion of the Supervisor of Elections.


9



(Continued)


At September 30, 2017, the carrying value of the Supervisor of Elections’ cash was as follows:


Demand Deposits and Money Market Accounts $ 234,732 N/A

Of the $234,732 in cash, $105,142 is related to grant revenue received, but not earned. This amount is recorded as Unearned Revenue on the Balance Sheet.

The Supervisor of Elections’ bank deposits are held in qualified public depositories (QPDs) pursuant to Chapter 280, Florida Statutes. Under this Chapter, each QPD is required to pledge collateral to the State Treasurer against the public deposits. In the event of default by a QPD, all claims for public deposits would be satisfied by the State Treasurer from the proceeds of federal deposit insurance, pledged collateral of the QPD in default and, if necessary, assessments against other QPDs of the same type as the depositor in default.

Authorized InvestmentsThe Supervisor of Elections has not adopted an investment policy and so, by statute, follows the state’s guidance set forth in Section 219.075, Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. That Section requires local governments without written investment policies, including County officers, to follow the state policy in Section 218.415(17), Florida Statutes. That Section authorizes the following investments:

a. The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Florida Statute 163.01.




The Supervisor of Elections does not have policies that address credit risk, custodial credit risk, or interest rate risk. The Supervisor of Elections had no investments at year-end or during the year.

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(Continued)


Pursuant to Florida Statutes, capital assets used by the Supervisor of Elections are owned by the Board. The Supervisor of Elections maintains custodial responsibility for the capital assets used by the office. The office space used in the Supervisor of Elections’ operations is provided at no cost by the Board.

Capital assets paid for by the Supervisor of Elections are recorded as expenditures in the general fund of the Supervisor of Elections and are capitalized in the basic financial statements of the County. Donated capital assets are recorded directly on the County’s books at their estimated fair value on the date received. Depreciation is recorded at the County level.




2016 Additions Deletions 2017Accrued Compensated

Absences $ 10,245 $ 20,651 $ 25,016 $ 5,880

Of the above liabilities, all are expected to be paid during the fiscal year ending September 30, 2018. These liabilities are not reported in the financial statements of the Supervisor of Elections since they have not matured.

Note 6 - Florida Retirement System

General Information about the Florida Retirement System (FRS) The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program (DROP) under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan, Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan, to assist retired members of any state-administered retirement system in paying the costs of health insurance.

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(Continued)

Note 6 - Florida Retirement System (Continued)

General Information about the Florida Retirement System (FRS) (Concluded)Essentially all regular employees of the Supervisor of Elections are eligible to enroll as members of the State-administered FRS. Provisions relating to FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112 Part IV, Florida Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code; wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may be amended at any time by further action from the Florida Legislature. The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of two cost-sharing, multiple-employer defined-benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ web site (www.dms.myflorida.com).

The Supervisor of Elections’ contributions to the FRS Plan totaled $76,939 for the fiscal year ended September 30, 2017 (all plans).

Payables to the Pension Plan. At September 30, 2017, the Supervisor of Elections’ reported a payable of $7,476 for the outstanding amount of contributions to the Plan required for the fiscal year ended September 30, 2017.

FRS Pension Plan

Plan Description: The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a DROP for eligible employees. The general classes of membership applicable to the Supervisor of Elections are as follows:

Regular Class Members of the FRS who do not qualify for membership in the other class.


Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Members of the Plan may include up to four-years of credit for military service toward creditable service. The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.

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(Continued)



Plan Description: (Concluded)DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate, except that certain instructional personnel may participate for up to 96 months. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.

Benefits Provided: Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement class to which the member belonged when the service credit was earned. The following chart shows the percentage value for each year of service credit earned:



Regular Class Members Initially Enrolled Before July 1, 2011 Retirement up to age 62 or up to 30 years of service 1.60 Retirement at age 63 or with 31 years of service 1.63 Retirement at age 64 or with 32 years of service 1.65 Retirement at age 65 or with 33 or more years of service 1.68Regular Class Members Initially Enrolled on or After July 1, 2011 Retirement up to age 65 or up to 33 years of service 1.60 Retirement at age 66 or with 34 years of service 1.63 Retirement at age 67 or with 35 years of service 1.65 Retirement at age 68 or with 36 or more years of service 1.68Elected County Officers 3.00

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(Continued)



Contributions: The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2016-2017 fiscal year were as follows:

The Supervisor of Elections’ contributions (employer only) to the Plan totaled $62,994 for the fiscal year ended September 30, 2017. This excludes the HIS defined benefit pension plan contributions.

At September 30, 2017, the Supervisor of Elections’ proportionate share of the FRS net pension liability was $695,367.


HIS Pension Plan

Plan Description: The HIS Pension Plan (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes, and may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services.

Benefits Provided: For the fiscal year ended September 30, 2017, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under a State-administered retirement system must provide proof of health insurance coverage, which may include Medicare.

Year Ended June 30, 2017 Year Ended June 30, 2018


FRS, Regular 3.00 5.80 3.00 6.20FRS, Elected County Officers 3.00 40.75 3.00 43.78

Percent of Gross Salary Percent of Gross Salary

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(Continued)



Contributions: The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal years ended June 30, 2018 and 2017, the contribution rate was 1.66% of payroll respectively, pursuant to Section 112.363, Florida Statutes. The Supervisor of Elections contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.

The Supervisor of Elections’ contributions to the HIS Plan totaled $6,940 for the fiscal year ended September 30, 2017.

At September 30, 2017, the Supervisor of Elections’ proportionate share of the HIS net pension liability was $138,787.


FRS – Defined Contribution Pension Plan The Supervisor of Elections contributes to the FRS Investment Plan (Investment Plan), a defined contribution pension plan, for its eligible employees electing to participate in the Investment Plan. The Investment Plan is administered by the SBA, and is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report. Service retirement benefits are based upon the value of the member’s account upon retirement.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. Supervisor of Elections employees participating in DROP are not eligible to participate in the Investment Plan. Employer and employee contributions, including amounts contributed to individual member’s accounts, are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Benefit terms, including contribution requirements, for the Investment Plan are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contribution rates that are based on salary and membership class (Regular Class, Elected County Officers, etc.), as the FRS defined benefit plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Allocations to the investment members’ accounts during the 2016-17 fiscal year were as follows:

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(Continued)



For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the FRS Pension Plan is transferred to the Investment Plan, the member must have the years of service required for FRS Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five year period, the employee will regain control over their account. If the employee does not return within the five year period, the employee will forfeit the accumulated account balance. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.04% of payroll and by forfeited benefits of Investment Plan members. For the fiscal year ended September 30, 2017, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the Supervisor of Elections.


The Supervisor of Elections’ contributions to the Investment Plan totaled $7,005 for the fiscal year ended September 30, 2017.

Note 7 - Postemployment Benefits Other than Pensions

The Board offers postemployment health care benefits and life insurance to all retired employees of the Supervisor of Election’s Office and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment, so that no net expense is initially recorded in the Board’s financial statements. However, these retirees are receiving an “implicit subsidy” because the premium is a group rate which includes active, lower cost employees.

This implicit subsidy has a cost which under GAAP is required to be disclosed in these financial statements. However, this annual cost, the accrued obligation, and other required disclosureshave been calculated for the County as a whole, and not separately for the Supervisor ofElection’s Office. Accordingly, these calculations and disclosures can be found in the County-wide annual financial report.

Percent of GrossCompensation

FRS, Regular 6.30FRS, Elected County Officers 11.34

Class

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(Continued)


The Supervisor of Elections participates in the insurance programs of the Board including general liability, workers’ compensation, property and casualty, and employee health insurance. These risk management activities are handled through internal service funds maintained by the Board. All liabilities associated with these self-insured risks are reported in the basic financial statements of the Board. The purpose of these funds is to administer employee life, health, workers’ compensation, unemployment and disability insurance, and property and liability insurance. These funds account for the risk financing activities of the County, but do not constitute a transfer of risk from the County.


The Supervisor of Elections paid premiums of $9,055 for property and casualty, and $111,732for health insurance coverage to the Board for the year ended September 30, 2017.

The Workers’ Compensation internal service fund is a self-insurance program for workers’ compensation claims on losses up to $750,000 per occurrence. The workers’ compensation fund has indemnified the Supervisor of Elections against any losses in a given year in excess of the fee charged. In the event actual losses are less than the fee charged, such amounts will be retained in the Workers’ Compensation fund. Claim settlements and losses are accrued and subsequently paid from the Workers’ Compensation fund. Premium payments to the Board by the Supervisor of Elections, which are based on a percentage of salaries paid according to salary classifications, totaled $1,157 for the year ended September 30, 2017.

Note 9 - Lease Commitments

The Supervisor of Elections has commitments outstanding related to two noncancellable lease agreements for office equipment and maintenance. The agreements expire in September 2018 and 2019. Future minimum lease payments under these noncancellable lease agreements provide for aggregate minimum annual payments as follows:

Year EndingSeptember 30, Amount

2018 $ 7,5912019 5,623

Total Minimum Lease Payments $ 13,214

Lease expense for all operating leases aggregated $7,591 for the year ended September 30, 2017.

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(Concluded)

Note 10 - Claims and Contingencies

GrantsGrant funds received by the Supervisor of Elections are subject to audit by grantor agencies. Audits of these grants may result in disallowed costs, which may constitute a liability of the Supervisor of Elections. In the opinion of management, disallowed costs, if any, would be immaterial to the financial position of the Supervisor of Elections.

OTHER REPORTS

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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON

AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


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 Standardsissued by the Comptroller General of the United States, the financial statements of the general fund of the Hernando County, Florida, Supervisor of Elections (the Supervisor of Elections), as of and for the year ended September 30, 2017, and the related notes to the financial statements, and have issued our report thereon dated February 13, 2018.

Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the Supervisor of Elections’internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Supervisor of Elections’ internal control. Accordingly, we do not express an opinion on the effectiveness of the Supervisor of Elections’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 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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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON

AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

(Concluded)

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the Supervisor of Elections’ 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this ReportThe 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 Supervisor of Elections’ internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Supervisor of Elections’ internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


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INDEPENDENT ACCOUNTANTS’ REPORT ON COMPLIANCEWITH FLORIDA STATUTE SECTION 218.415 INVESTMENTS OF PUBLIC FUNDS


We have examined the Hernando County, Florida Supervisor of Elections’ (the Supervisor of Elections)compliance with Section 218.415, Florida Statutes, during the fiscal year ended September 30, 2017.Management is responsible for the Supervisor of Elections’ compliance with those requirements. Our responsibility is to express an opinion on the Supervisor of Elections’ compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Supervisor of Elections complied, in all material respects, with the requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Supervisor of Elections complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the Supervisor of Elections’ compliance with specified requirements.

In our opinion, the Supervisor of Elections complied, in all material respects, with the aforementioned requirements during the fiscal year ended September 30, 2017.

This report is intended solely for the information and use of the Florida Auditor General, the Supervisor of Elections, its management, and the Board of County Commissioners of Hernando County, Florida and is not intended to be and should not be used by anyone other than these specified parties.


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MANAGEMENT LETTER


Report on the Financial StatementsWe have audited the financial statements of the general fund of the Hernando County, Florida Supervisor of Elections (the Supervisor of Elections), as of and for the fiscal year ended September 30, 2017, and have issued our report thereon dated February 13, 2018.


Other Reporting RequirementsWe have issued our Independent Auditors’ 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; and Independent Accountants’ Report on Compliance with Florida Statute Section 218.415 – Investments of Public Funds. Disclosures in those reports, which are dated February 13, 2018, should be considered in conjunction with this management letter.

Prior Audit FindingsSection 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report.

Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. In that regard, the Supervisor of Elections was established by the Constitution of the State of Florida, Article VIII, Section 1(d). TheSupervisor of Elections does not have any component units.

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Financial ManagementSection 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

Additional MattersSection 10.554(1)(i)3., Rules of Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this LetterOur management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Supervisor of Elections, its management, and the Board of County Commissioners of Hernando County, Florida, and is not intended to be and should not be used by anyone other than these specified parties.



Documents

HERNANDOCOUNTY,FLORIDA … rpts/2017 hernando county.pdf · CERTIFICATEOFACHIEVEMENT VI ORGANIZATIONALCHART VII FINANCIALSECTION INDEPENDENTAUDITORS’REPORT 1 MANAGEMENT’SDISCUSSIONANDANALYSIS