Fiscal Year 2008 CAFR (PDF)
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This is Queen Anne’s County, Maryland’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2008, formally transmitted March 6, 2009. The report presents audited financial statements prepared in conformity with GAAP and includes a management transmittal asserting responsibility for the financial information and describing the county’s internal control framework. Clifton Gunderson LLP performed the independent audit and issued an unqualified opinion; a federally required Single Audit of federal awards is also noted. The table of contents shows the report includes the independent auditor’s report, Management’s Discussion & Analysis (MD&A), government‑wide and fund financial statements, notes to the financial statements, supplementary combining and budgetary schedules, and an extensive statistical section.
Comprehensive Annual Financial ReportQueen Anne’s CountyFiscal Year 2008Clifton Gunderson LLPunqualified audit opinionGAAPSingle AuditManagement’s Discussion & Analysis (MD&A)
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QUEENANNE'S COUNTY, MARYLAND COMPREHENSIVEANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE30,2008 TABLEOF CONTENTS Page(s) INTRODUCTORY SECTION LetterofTransmittal 1-4 Certificateof Achievementfor Excellence in Financial Reporting 5 Organization Chart 6 Certain Electedand Other Officials 7 FINANCIAL SECTION Independent Auditor's Report 9-10 Management's Discussionand Analysis (required supplementary information) 11-27 BASICFINANCIAL STATEMENTS 29 Government-WideFinancial Statements Statementof Net Assets 30-31 Statementof Activities 32-33 GovernmentalFundFinancial Statements Balance Sheet 34-35 Reconciliationof the Balance Sheetof GovernmentalFunds to the Statementof Net Assets 37 Statementof Revenues, Expendituresand Changes in Fund Balances 38-39 Reconciliationof the Statementof Revenues, Expenditures,and Changes in Fund Balancesof GovernmentalFunds to the Statementof Activities 40-41 EnterpriseFundFinancial Statements Statementof Net Assets 42-43 Statementof Revenues, Expenses,and Changes in Fund Net Assets 44-45 Statementof CashFlows 46-47 FiduciaryFund Statements StatementofFiduciary Net Assets 48 Statementof Changes in Fiduciary Net Assets 49 Notes toFinancial Statements 50-94 REQUIRED SUPPLEMENTARYINFORMATION 95 GeneralFund Scheduleof Revenues, Expendituresand Changes in Fund Balances - Budgetand Actual 97 Roads Board Special RevenueFund Scheduleof Revenues, Expendituresand Changes in Fund Balances - Budgetand Actual 98 QUEENANNE'S COUNTY, MARYLAND COMPREHENSIVEANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE30,2008 TABLEOF CONTENTS (CONTINUED) Page(s) FINANCIAL SECTION (CONTINUED) COMBINING ANDINDIVIDUALFUND STATEMENTS AND SCHEDULES (SUPPLEMENTARYINFORMATION) 99 GeneralFund 101 Scheduleof Revenuesand OtherFinancing Sources - Budgetary Basis 102-103 Scheduleof Expendituresand OtherFinancing Uses - Budgetary Basis 104-105 Non-Major GovernmentalFunds 107-109 Combining Balance Sheet 110-112 Combining Statementof Revenues, Expenditures,and Changes in Fund Balances 114-116 Scheduleof Revenues, Expenditures,and Changes in Fund Balances - Budgetary Basis 118-121 Capital ProjectsFunds 123 Scheduleof Appropriationsand Expenditures 124-127 School ImpactFees Capital ProjectsFund Scheduleof Revenues, Expendituresand Changes in Fund Balances - Budgetand Actual 128 Non-Major EnterpriseFunds 129-131 Combining Statementof Net Assets 132-133 Combining Statementof Revenues, Expenses,and Changes in Fund Net Assets 134-135 Combining Statementof CashFlows 136-137 FiduciaryFunds 139-140 AgencyFunds Combining StatementofFiduciary Net Assetsand Liabilities 141 Statementof Changes in Fiduciary Net Assetsand Liabilities 142-143 Interfund Receivablesand Payablesand InterfundTransfers 145 Detailed Scheduleof Interfund Receivablesand Payables 146-147 Detailed Scheduleof InterfundTransfers 148-151 Community Partnershipsfor Children Special RevenueFund 153 Combining Balance Sheets - By Grantor 154-155 Scheduleof Revenues, Expenditures,and Changes in Fund Balances - By Community Partnership Agreements (CPA) and Non-Community Partnership Agreements (Non-CPA) 156-159 Scheduleof Revenues, Expenditures,and Changes in Fund Balances - Budgetary Basis 160-161 STATISTICAL SECTION (UNAUDITED) 163 Table 1 Net Assetsby Component - Government-Wide 165 2a Changes in Net Assets - Government-Wide 166-167 2b GeneralTax Revenues - Governmental Activities 168 3 Fund Balances - GovernmentalFunds 169 4 Changes in Fund Balances - GovernmentalFunds 170-171 5 Assessed ValueofTaxableand Exempt Property 173 6a Real PropertyTax Rates - County Direct Rate 174 6b Real PropertyTax Rates - County SpecialTaxing Districts 175 6c Real PropertyTax Rates - Overlapping Governments - Towns 176-177 7 Ten Highest Commercial PropertyTaxpayers 178 8 PropertyTax Leviesand Collections 179 9 Ratiosof Outstanding DebtbyType 180-181 10 Ratiosof General Bonded Debt Outstanding 182 11 Computationof Net Directand Overlapping Debt 183 12 Computationof Legal Debt Margin 184-185 13 Principal Employers 186 14 Demographic Statistics 187 15 County Government Employees - Full-Time Equivalents 188 16 County Government Employees - Full-Time OnlybyFunction 189 17 Operating IndicatorsbyFunction 190 18 Capital Asset StatisticsbyFunction 191 Introductory Section March 6, 2009 The Board of County Commissioners and The Citizens of Queen Anne’s County, Maryland Formal transmittal of the Comprehensive Annual Financial Report State law requires that all general-purpose governments publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of Queen Anne’s County, Maryland for the fiscal year ended June 30, 2008. This report consists of management’s representations concerning the finances of Queen Anne’s County. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in the report. To provide a reasonable basis for making these representations, the management of Queen Anne’s County has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of Queen Anne’s County’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, Queen Anne’s County’s comprehensive framework on internal controls has been designed to provide a reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Queen Anne’s County’s financial statements have been audited by Clifton Gunderson LLP, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of Queen Anne’s County, for the fiscal year ended June 30, 2008, are free of material misstatement. The independent audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that Queen Anne’s County’s financial statements for the fiscal year ended June 30, 2008, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. - 1 - The independent audit of the financial statements of Queen Anne’s County is part of a broader, federally mandated “Single Audit’ designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in Queen Anne’s County’s separately issued single audit report. GAAP require that management provide a narrative introduction, overview, and analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. Queen Anne’s County’s MD&A can be found immediately following the report of the independent auditor. Profile of the Government Queen Anne’s County is situated on the Eastern Shore of Maryland. It is bordered to the north by Kent County, to the east by the State of Delaware, to the south by Caroline and Talbot counties, and to the west by the Chesapeake Bay. Access to the western shore of Maryland is provided by the Chesapeake Bay Bridge. The County is 373 square miles in area and has approximately 47,886 citizens. The County seat is located in Centreville. The County Commissioners of Queen Anne’s County are empowered to levy a property tax on both real and personal properties located within its boundaries. Queen Anne’s County was formed in 1706 and is governed by a five-member Board of County Commissioners. County code provides that one Commissioner be elected purely at large. The remaining four Commissioners must reside in specific districts, but are elected at large. The Commissioners operate under Maryland’s Code Home Rule form of government. The Board operates under the Code of Local Laws of Queen Anne’s County. Both the executive and legislative functions of the County are vested with the Board of County Commissioners. Queen Anne’s County provides a full range of services including public safety (police, volunteer fire protection, emergency services, detention center, and animal control), highways and streets, sanitation, planning and zoning, economic development, culture and recreation, education, libraries, and general administrative services. In conjunction with the State, the County also operates services related to general community health and social services. In addition, the County operates a water and wastewater utility, an airport, and certain recreational facilities as Enterprise Funds. The appropriated budget is prepared by fund, function (e.g. public safety), and department (e.g. detention center). Department heads may make transfers of appropriations within a department of up to $10,000 with the approval of the County Administrator. Transfers of appropriations or appropriation of new revenues in excess of $10,000 require the approval of the County Commissioners. Budget to actual comparisons are provided in this report for individual governmental funds for which an appropriated annual budget has been adopted. The budget comparisons for the general fund and major special revenue funds are presented on pages 97 to 98 as part of the Required Supplementary Information portion of this report. For the General Fund, on a departmental level, and for non-major funds with appropriated annual budgets, budget to actual comparisons are presented in the Supplementary Information subsection of this report on pages 102 to 105; on pages 118 to 121; on page 128; and on pages 160 to 161. Information Useful in Assessing the Government’s Economic Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which Queen Anne’s County operates. - 2 - Local Economy. Queen Anne’s County currently enjoys a stable economic environment and local indicators point to continued stability. The local employment base is somewhat limited and centers on the maritime industry, services, agriculture, and retail trade. Nearly 70% of the workforce commutes to locations outside the County, primarily to higher paying jobs in the Baltimore/Washington area. Three of the five largest employers are governmental units, including the County, the Board of Education, and Chesapeake College. There is a small, but growing, base of specialty manufacturers. Housing demand and prices are relatively flat compared to prior years. Unemployment is typically below the state and national averages. The June 2008 rate for the County was 4.0% compared to the state’s rate of 4.2% and the U.S.’s rate of 5.6%. The 2008 average rate for the county was 3.7%. Long Term Financial Planning. The County Commissioner’s six-year capital program, starting with fiscal year 2009, is set up to meet numerous pressing needs. The six-year program includes: $97.6 million for construction and renovation of various school facilities; $39.5 million for the Southern Kent Island sewer service; $22.0 million for the Southern Kent Island water service; $17.0 million for construction of new and expanded facilities for the Detention Center; $15.0 million for a new circuit courthouse; and $7.3 million for the Bay Bridge Airport. Offsetting two thirds of these project expenses, grants and other non-operating, non-debt resources are anticipated: $54.8 million for the school construction and renovation; $39.5 million for the sewer service; $22.0 million for the water service; $8.0 million for the Detention Center facilities; and $7.1 million for the Airport. Construction of a new wastewater treatment plant is complete. This facility is designed to improve the quality of the treated wastewater as well as provide expanded capacity for existing communities without sewer service. The construction of the plant was financed through a loan from the Maryland Water Quality Revolving Loan Fund. Repayment of the loan will be from connection fees, benefit assessments, and user fees. Cash Management Policies and Practices. Cash held temporarily idle during the year by the County, excluding component units, was invested in the Maryland Local Government Investment Pool (MLGIP). At June 30, 2008, $44,339,783 was invested in the pool. The average yield on MLGIP investments was 3.95%, with a total amount earned in all governmental fund types of $2,128,509. Of this amount, $1,174,877 was credited to the General Fund of the County and used to pay current expenditures. The County has a written investment policy that insures that the security of County investments is maximized. Insurance/Risk Management. Queen Anne’s County is a charter member of the Maryland Local Government Insurance Trust (LGIT). The trust is a public entity risk pool, which is owned and directed by the local governments that subscribe to its coverage, and operates under the terms of a Trust Agreement. The County obtains property, general, excess, and vehicle coverage from the Trust and pays LGIT an annual premium. Claims are processed and recoveries are subject to deductibles and to annual aggregate/per occurrence dollar limits. The County obtains worker’s compensation insurance through a commercial insurance company. Employee medical coverage is provided through a self-insurance group operated by the Eastern Shore of Maryland Educational Consortium. Pension and Other Post Employment Benefits. The employees of the County are covered by the Employee’s Pension System or the Law Enforcement Officers Pension System, which are cost-sharing multiple employer pension systems. The Pension System of Maryland administers these pension plans. The State Personnel and Pension Article of the Annotated Code of Maryland specifies all plan benefits to plan members. Additional information on the plans can be found in Note 12 of the notes to the financial statements. - 3 - The County provides access to medical insurance benefits to retirees who retire from County service in accordance with County policy. Retirees with at least fifteen years of continuous County service may qualify for membership in the County’s retiree group medical plan(s) at a reduced rate; those with less than fifteen years service may remain in this plan if they pay the full rate. Full time employees who retire may also insure their spouses. Retirees pay between 10% and 100% of the full premium equivalent cost based upon their years of County service at retirement. The County’s subsidies are financed on a pay-as-you-go basis. Additional information can be found in Note 14 of the notes to the financial statements. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Queen Anne’s County, Maryland for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2007. The Certificate of Achievement is a prestigious national award that recognizes conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the County must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. Queen Anne’s County, Maryland has received a Certificate of Achievement for the last nine consecutive years (fiscal years 1999-2007). We believe our current comprehensive annual financial report continues to conform to the Certificate of Achievement program requirements and we are submitting it to GFOA to determine its eligibility for another certificate. The preparation of the comprehensive annual financial report was made possible by the dedicated service of the entire staff of the Finance Office. Each member of the department has my sincere appreciation for the contributions made in preparation of this report. Special recognition is given to Eren L. Rose for her dedication and professionalism in the preparation of Queen Anne’s County financial statements. Respectfully submitted, John P. Borders, Jr., CPA County Administrator - 4 - - 5 - - 6 - TNEMNREVOG YTNUOC S’ENNA NEEUQ TRAHC NOITAZINAGRO TON ERA SEXOB YARG NI NWOHS SEICNEGA DNA STNEMTRAPED YTNUOC S’ENNA NEEUQ FO NOISIVREPUS RO LORTNOC EHT REDNU YTNUOC YB DEDNUF YLLOHW RO YLLAITRAP ERA TUB TNEMNREVOG .WAL ETATS REDNU SNOITAIRPORPPA SRETOV YTNUOC S'ENNA NEEUQ TRUOC TIUCRIC TRUOC S'NAHPRO YTNUOC ECIFFO S'FFIREHS YENROTTA S'ETATS SRENOISSIMMOC YTNUOC YTNUOC & SDRAOB YENROTTA ROTARTSINIMDA SNOISSIMMOC WAL ETATS REDNU STNEMTRAPED RECIFFO GNITAREPO FEIHC GNITAREPO DEDNUF YLLOHW RO YLLAITRAP SEICNEGA & STNEMTRAPED SNOITAIRPORPPA YTNUOC YB EKAEPASEHC FO DRAOB ECNANIF SECRUOSER NAMUH EGELLOC NOITACUDE TNEMTRAPED TNEMTRAPED FO DRAOB EERF CAQ & SKRAP & GNISUOH SNOITCELE YRARBIL NOITAERCER SECIVRES YTINUMMOC GNISUOH HTLAEH ,TNEMPOLEVED CIMONOCE FO TNEMTRAPED YTIROHTUA TNEMTRAPED MSIRUOT & ERUTLUCIRGA SKROW CILBUP EVITAREPOOC LIOS EGDIRB YAB SPIHSRENTRAP YTINUMMOC ECIVRES NOISNETXE ECIVRES NOITAVRESNOC TROPRIA NERDLIHC ROF FO TNEMTRAPED LAMINA GNIGA SECIVRES ROUQIL/LACIRTCELE FO TNEMTRAPED DRAOB SECIVRES YCNEGREME RETNEC NOITNETED HTWORG ,ESU DNAL TNEMNORIVNE & TNEMEGANAM QUEEN ANNE’S COUNTY, MARYLAND GOVERNMENTAL ORGANIZATION CERTAIN ELECTED AND OTHER OFFICIALS AS OF JUNE 30, 2008 CERTAIN ELECTED OFFICIALS * County Commissioners Eric S. Wargotz, M.D., At Large Courtney M. Billups, District 1 Paul L. Gunther, District 2 Gene M. Ransom, III, District 3 Carol R. Fordonski, District 4 State’s Attorney Lance G. Richardson Sheriff Raymond G. Hofmann * As of January 6, 2009. CERTAIN DEPARTMENT HEADS AND OTHER OFFICIALS ** County Administrator John P. Borders, Jr., CPA Chief Operating Officer Gregg A. Todd Director of Public Works Todd R. Mohn Director of Economic Development, Agriculture, and Tourism Faith E. Rossing Chief of Land Use and Zoning J. Steve Cohoon Chief of Community and Environmental Planning Helen M. Spinelli Chief Accounting Officer Eren L. Rose, CPA Chief Treasury Officer Marie K. Lange County Attorney Patrick E. Thompson, Esq. Independent Auditor Bond Counsel Financial Advisor Clifton Gunderson LLP McKennon, Shelton Public Advisory Consultants Certified Public Accountants & Henn, LLP Baltimore, Maryland Timonium, Maryland Baltimore, Maryland ** As of November 13, 2008. - 7 - - 8 - A1 Independent Auditor’s Report The Board of Commissioners ofQueen Anne’s County, Maryland Centreville, Maryland We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Queen Anne’s County, Maryland (the “County”) as of and for the year ended June 30, 2008, which collectively comprise the County’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the component unit financial statements of the Board of Education of Queen Anne’s County and the Queen Anne’s County Free Library. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the above mentioned component units, is based solelyon the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that, our audit and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. h Offices in 17states and Washington, DC In accordance with Government Auditing Standards, we have also issued our report dated March 6, 2009, on our consideration of the County’s internal controlover 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 ofinternalcontrolover financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The Management’s Discussion and Analysis and Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund and Roads Board Special Revenue Fund as referenced in the table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The accompanying supplementary information, such as the introductory section, combining statements and schedules, as listed in the table of contents, and statistical tables, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining statements and schedules have been subjected to the auditing procedures applied by us and other auditors in the audit ofthe basic financial statements and, in our opinion, based on our audit and the report of other auditors, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductorysection and statistical tables listed in the table of contents have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. A1 Baltimore, Maryland March 6, 2009 Management’s Discussion and Analysis This section of the Comprehensive Annual Financial Report of Queen Anne’s County, Maryland (the County) presents a narrative overview and analysis of the financial activities of Queen Anne’s County Government for the fiscal year ended June 30, 2008. We encourage readers to use the information presented here in conjunction with the accompanying letter of transmittal, the basic financial statements and the accompanying notes to those financial statements. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Queen Anne’s County Government’s basic financial statements. The County’s basic financial statements are comprised of three components: Government-Wide Financial Statements Fund Financial Statements Notes to the Financial Statements This report also contains other required and non-required supplementary information in addition to the basic financial statements themselves. Government-Wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of Queen Anne’s County Government’s finances, in a manner comparable to a private sector business. The statement of net assets presents information on all of Queen Anne’s County Government’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position and condition of Queen Anne’s County Government is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of Queen Anne’s County Government that are principally supported by taxes and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of Queen Anne’s County Government include general government, public safety, public works, health, social services, education, parks and recreation, library, conservation of natural resources, and economic and community development. The business- type activities of Queen Anne’s County Government include water and sewer services, an airport, public marinas, parks and various recreational facilities. The government-wide financial statements include not only Queen Anne’s County Government itself (known as the primary government), but also legally separate component units. Queen Anne’s County Government has the following component units: Queen Anne’s County Board of Education, Queen Anne’s County Free Library, and the Queen Anne’s County Public Housing Authority. Financial information for these component units is reported separately from the - 11 - financial information presented for the primary government itself. The government-wide financial statements can be found on pages 30 to 33 of this report. Fund Financial Statements: A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Queen Anne’s County Government, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of Queen Anne’s County Government can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Fund financial statements can be found throughout this report, with basic statements found on pages 34 to 49. Governmental funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near term financing decisions. Both the balance sheet for governmental funds and the statement of revenues, expenditures, and changes in fund balances for governmental funds provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. These two reconciliations begin with governmental fund financial data; describe all transactions that are added or subtracted to yield governmental activities; and end with governmental activities financial data. Queen Anne’s County maintains three types of governmental funds: the general fund, a variety of special revenue funds, and five capital projects funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for all three types of governmental funds. Queen Anne’s County adopts an annual appropriated budget for its general fund; school and fire impact fee capital projects funds; and the following special revenue funds: roads board, department of aging, housing and community services, community partnerships for children, dredging special assessments, Kent Narrows, inmate welfare, and agricultural transfer. A budgetary comparison statement has been provided for each of these funds, which can be found on pages 97 to 98; 102 to 105; 118 to 121; 128; and 160 to 161 of this report. Proprietary funds: Queen Anne’s County maintains enterprise funds to report the same functions presented as business-type activities in the government-wide financial statements. Queen Anne’s County Government uses enterprise funds to account for its water and sewer services, airport, marinas, parks, and other recreational facilities. The basic proprietary fund financial statements can be found on pages 42 to 47 of this report, as well as non-major statements on pages 132 to 137. Fiduciary funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support Queen Anne’s County Government’s own programs. The County acts as a fiduciary for one trust and six agency funds. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 48 to 49 of this report, while further detail can be found on pages 141 to 143. - 12 - Notes to the financial statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 50 to 94 of this report. Government-wide Financial Analysis Statement of Net Assets A summary of government-wide assets, liabilities, and net assets is as follows: Governmental Activities Business Type Activities Total SSummary of Net Assets 2008 2007 2008 2007 2008 2007 Current and Other Assets $ 71,853,636 $ 88,467,348 $ 24,681,001 $ 26,507,305 $ 96,534,637 $ 114,974,653 Capital Assets 1 32,874,886 1 21,351,951 1 01,870,541 1 00,998,644 2 34,745,427 222,350,595 Total Assets 204,728,522 209,819,299 126,551,542 127,505,949 331,280,064 337,325,248 Noncurrent liabilities 72,632,089 77,235,030 25,249,167 27,190,411 97,881,256 104,425,441 Other liabilities 1 3,963,945 14,655,252 5 ,788,592 6 ,718,141 1 9,752,537 21,373,393 Total Liabilities 86,596,034 91,890,282 31,037,759 33,908,552 117,633,793 125,798,834 Net assets: Invested in capital assets, net of related debt 117,831,360 105,449,706 77,237,512 74,463,912 195,068,872 179,913,618 Restricted 15,376,330 18,012,695 18,276,271 19,133,485 33,652,601 37,146,180 Unrestricted (15,075,202) (5,533,384) - - (15,075,202) (5,533,384) Total Net Assets $ 118,132,488 $ 117,929,017 $ 95,513,783 $ 93,597,397 $ 213,646,271 $ 211,526,414 The County’s total current and other assets decreased by $18.4 million, or 16.0 percent, to $96.5 million. The County’s assets exceeded its liabilities at the close of fiscal year 2008 by $213.6 million. Net assets are divided into three categories: invested in capital assets (net of related debt); restricted net assets; and unrestricted net assets. By far, the largest portion, $195.1 million, of the County’s total net assets reflects its investment in capital assets (e.g. land, buildings, machinery and equipment, vehicles, and infrastructure), less any related and outstanding debt used to construct or acquire those assets. The County uses these capital assets to provide services to citizens; consequently, they are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay the debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. It is important to note that, although counties in the State of Maryland issue debt for the construction of schools, the school buildings are owned by each county’s Board of Education. Ownership reverts to the County only if the local Board determines a building is no longer needed for educational purposes. Therefore, while the County’s financial statements include this outstanding debt, they do not include the capital assets funded by the debt. Debt outstanding for the Board of Education amounted to $53.8 million at June 30, 2008. Absent the effect of this relationship, the County would have reported positive unrestricted net assets of $38.7 million on its government-wide financial statements, rather than the negative unrestricted net assets of $15.1 million reported herein. An additional portion of the County’s total net assets, $33.7 million or 15.8 percent, represents resources that are subject to restrictions on how they may be used. This amount includes $7.1 million in net assets restricted for contingency/revenue stabilization during periods of economic downturn (general fund); $2.9 million restricted per loan receivable requirements (housing, dredging special assessments, and revolving loan funds); $2.1 million restricted per grantor and state-shared tax requirements (critical areas and agriculture transfer tax); $1.6 million for unspent Federal confiscated funds; $1.0 million of 2006 bond proceeds restricted by bond covenants to be - 13 - used for specific capital projects (general capital projects fund); and the balance restricted according to donor and/or grantor specifications. At the end of the current fiscal year, Queen Anne’s County Government is able to report positive balances in two out of three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. Statement of Activities The following table summarizes changes in net assets for governmental and business-type activities during the year: Governmental Activities Business Type Activities Total SSummary of Changes in Net Assets 2008 2007 2008 2007 2008 2007 Revenues: Program revenues: Charges for services $ 6,700,093 $ 4,941,688 $ 9,626,951 $ 13,891,253 $ 16,327,044 $ 18,832,941 Operating grants and contributions 11,325,892 10,571,798 59,663 1,373,108 1 1,385,555 11,944,906 Capital grants and contributions 7,583,786 6,651,723 3,063,206 5,827,613 1 0,646,992 12,479,336 General revenues: Property taxes 50,021,587 46,185,050 - - 5 0,021,587 46,185,050 Local income tax 35,700,111 35,346,494 - - 3 5,700,111 35,346,494 Other local taxes Admission and amusement taxes 223,233 285,768 - - 2 23,233 285,768 Recordation taxes 3,825,394 6,039,956 - - 3 ,825,394 6,039,956 Hotel taxes 503,979 511,153 - - 5 03,979 511,153 County transfer taxes 1,578,912 2,542,428 - - 1 ,578,912 2,542,428 Investment income 2,128,509 3,162,830 875,509 956,687 3 ,004,018 4,119,517 Gain on sale of capital assets - 13,605 - 4,691 - 18,296 Miscellaneous 721,946 1,928,398 919,828 876,714 1 ,641,774 2,805,112 Total Revenues 120,313,442 118,180,891 14,545,157 22,930,066 134,858,599 141,110,957 Expenses: Governmental Activities: General government 11,167,743 9,854,468 - - 1 1,167,743 9,854,468 Public safety 20,721,185 19,149,388 - - 2 0,721,185 19,149,388 Public works 10,420,547 9,913,917 - - 1 0,420,547 9,913,917 Health 1,441,143 1,450,866 - - 1 ,441,143 1,450,866 Social services 4,978,883 4,474,784 - - 4 ,978,883 4,474,784 Education 58,034,317 56,118,585 - - 5 8,034,317 56,118,585 Parks and recreation 3,330,087 3,158,455 - - 3 ,330,087 3,158,455 Libraries 1,270,718 1,266,183 - - 1 ,270,718 1,266,183 Conservation of natural resources 2,172,443 497,926 - - 2 ,172,443 497,926 Econ and Comm development 3,527,908 3,258,876 - - 3 ,527,908 3,258,876 Interest and fiscal charges 3,033,416 2,864,493 - - 3 ,033,416 2,864,493 Business-type Activities: Water and sewer - - 9,621,784 7,802,798 9 ,621,784 7,802,798 Parks and recreation - - 2,179,157 3,273,986 2 ,179,157 3,273,986 Public marinas - - 27,344 57,372 2 7,344 57,372 Airport - - 812,067 674,337 8 12,067 674,337 Total Expenses 120,098,390 112,007,941 12,640,352 11,808,493 132,738,742 123,816,434 Increase in Net Assets before Transfers 215,052 6,172,950 1,904,805 11,121,573 2,119,857 17,294,523 Transfers in (out) (11,581) (1,070,297) 11,581 1,070,297 - - Increase in Net Assets 2 03,471 5 ,102,653 1 ,916,386 1 2,191,870 2 ,119,857 17,294,523 Net Assets - Beginning of Year 117,929,017 112,826,364 93,597,397 81,405,527 2 11,526,414 194,231,891 Net Assets - End of Year $ 118,132,488 $ 117,929,017 $ 95,513,783 $ 93,597,397 $ 213,646,271 $ 211,526,414 - 14 - Governmental activities: Revenues for governmental activities were $120.3 million for fiscal year 2008. The following chart depicts revenues by source for governmental activities: Revenues by Source - Governmental Activities For the Year Ended June 30, 2008 County Investment Hotel taxes transfer taxes Income Miscellaneous 0.4% 1.3% 1.8% 0.6% Recordation taxes Charges for services 3.2% 5.5% Admission and amusement taxes 0.2% Operating, capital & restricted grants Local income tax 15.7% 29.7% Property taxes 41.6% • Taxes comprise the largest source of County revenue, totaling $91.9 million or 76.4 percent of total revenue for fiscal year 2008. Of that amount, property and local income tax together yielded $85.7 million or 71.3 percent of all revenue. Each County sets its own property and income tax rates, within parameters established by the State. For fiscal years 2008 and 2007, the County’s property tax rate dropped slightly to $.770 per $100 of assessed value of real property, based on full cash value of that property, from $.800 in the prior fiscal year. The County’s local income tax rate remained at 2.85 percent of the State taxable income for calendar years 2008 and 2007. There is no local sales tax in the State of Maryland. • Operating grants and contributions, totaling $11.3 million, primarily reflect grants from Federal and State agencies. Of these revenues, most support specific County programs: public works and roads ($6.3 million or 55.7 percent), social services ($2.9 million or 25.7 percent), and public safety ($1.3 million or 11.1 percent). • Capital grants and contributions, totaling $7.6 million, reflect contributions from Federal and State agencies as well as developers. These revenues primarily support parks and recreation programs ($5.7 million or 74.7 percent), with smaller amounts supporting general government ($760 thousand or 10.0 percent), social services ($610 thousand or 8.1 percent) and public works and roads ($540 thousand or 7.2 percent). Note that, of these amounts, developers contributed land and roads infrastructure valued at $665 thousand and $491 thousand, respectively. - 15 - Costs for all governmental activities were $120.1 million for fiscal year 2008. The following chart depicts expenses by function for governmental activities: Expenses - Governmental Activities For the Year Ended June 30, 2008 Interest and fiscal Econ and Comm charges Conservation of natural development 2.5% resources 2.9% General government 1.8% 9.3% Libraries Public safety 1.1% 17.3% Parks and recreation 2.8% Public works 8.7% Health Education 1.2% 48.3% Social services 4.1% As noted in the chart above and the table below, by far the County’s largest program and highest priority is education, with expenses totaling $58.0 million (48.3 percent). In order of priority, public safety expenses totaled $20.7 million (17.3 percent); general government expenses were $11.2 million (9.3 percent); public works and roads expenses were $10.4 million (8.7 percent); social services expenses totaled $5.0 million (4.1 percent); economic and community development expenses were $3.5 million (2.9 percent); parks and recreation expenses were $3.3 million (2.8 percent); and other expenses were $8.0 million (6.6 percent). The following table summarizes costs and program-related revenues for the same programs in order of priority, yielding net service costs: Expenses Program-Related Revenues Net Cost of Services NNet Cost of Governmental Activities 2008 2007 2008 2007 2008 2007 Education $ 58,034,317 $ 56,118,585 $ 1,011,013 $ 963,216 $ (57,023,304) $ (55,155,369) Public Safety 20,721,185 19,149,388 4,422,872 3,170,062 (16,298,313) (15,979,326) General Government 11,167,743 9,854,468 2,101,244 1,510,149 (9,066,499) (8,344,319) Public Works 10,420,547 9,913,917 7,864,175 8,282,823 (2,556,372) (1,631,094) Social Services 4,978,883 4,474,784 3,589,641 2,836,196 (1,389,242) (1,638,588) Economic and Community Development 3,527,908 3,258,876 168,494 124,337 (3,359,414) (3,134,539) Parks and Recreation 3,330,087 3,158,455 6,041,080 4,580,325 2,710,993 1,421,870 Other 7,917,720 6,079,468 411,252 698,101 (7,506,468) (5,381,367) Total $ 120,098,390 $ 112,007,941 $ 25,609,771 $ 22,165,209 $ (94,488,619) $ (89,842,732) - 16 - Of the total cost of $120.1 million for governmental activities, $25.6 million, or 21.3 percent, of those costs were covered by program-related revenues paid by individuals and external governmental entities. Individuals who benefited directly from County programs were charged user fees of $6.7 million, while governments and other organizations that benefited indirectly from these programs contributed operating grants of $11.3 million and capital grants of $7.6 million. County taxpayers paid for most of the remaining $94.5 million in net program costs, through a variety of County taxes ($91.9 million). Net costs of services provided to the public, in order of net cost, were: $57.0 million for education; $16.3 million for public safety; $9.1 million for general government; $3.4 million for economic and community development; $2.5 million for public works; $1.4 million for social services; and $7.5 million for other services. Parks and recreation had program revenues in excess of expenditures by $2.7 million. See Changes in Net Assets and General Fund Budgetary Highlights for further details. Changes in net assets: Governmental activities increased the County’s net assets overall by $203,471, compared to an increase of $5,102,653 in the prior fiscal year. Net Revenues increased by $2.1 million (1.8 percent): Key governmental revenue changes, compared to last year, are: • Property tax revenue increased by $3.8 million or an 8.3 percent increase. This gain was mostly offset by a decrease in recordation and county transfer taxes of $2.2 million (36.7 percent decrease) and $1.0 million (37.9 percent decrease), respectively. Taken as a whole, property, recordation and county transfer taxes increased by only $660 thousand. These relatively flat real estate-related tax revenues reflect a stagnant housing market, which is contrary to much of the County’s past history. Over the last ten years, the County issued commercial and residential permits for a variety of reasons, mostly relating to sales, construction and renovation of real estate. The number of such permits has dropped from the following highs to 2008 lows, as follows: 295 commercial permits were issued in fiscal year 2004, while only 23 such permits were issued in fiscal year 2008; and 1,040 residential permits were issued in fiscal year 2003, while only 677 such permits were issued in fiscal year 2008. See Statistics Table 17 in this document for details. • Local income tax revenues remained virtually flat, increasing by only $350 thousand or a 1.0 percent increase. Flat income tax revenue is another indication that the County is not immune to the current economic recession. • Program revenue increased by $3.4 million (15.5 percent), of which $1.6 million related to Federal confiscated funds received by the Sheriff’s Department. The remaining increase of $1.8 million was driven almost entirely by increased operating and capital grants, which were offset by corresponding expenses. • Investment income decreased by $1.0 million (32.7 percent), reflecting the change in cash on hand from fiscal year 2007 to fiscal year 2008 as well as lower interest rates. Cash decreased by $14.4 million, from $60.0 million at the end of fiscal year 2007 to $45.6 million at the end of fiscal year 2008. This occurred because the County (1) repaid debt of $4.7 million, net of new debt and reimbursements; and (2) invested $5.7 million in land, $6.2 million in other capital projects, and $1.3 million in routine capital outlay. Moreover, the average daily rate of interest earned on County investments in the MLGIP decreased throughout the fiscal year, from 5.19% at June 30, 2007 to 2.35% at June 30, 2008. This rate fell more sharply during the last five months. - 17 - Expenses increased by $8.1 million (7.2 percent) and transfers out decreased by $1.1 million, for a net change in expenses of $7.0 million: Key governmental expense changes, in order of magnitude, are: • Education expenses increased by $1.9 million (3.4 percent). This increase reflected an operating increase of $4.0 million to the Board of Education and $100 thousand to the local Community College. These allocations were offset by decreased capital project expenses of $2.2 million. During fiscal year 2008, the County’s appropriation on behalf of education totaled $58.1 million, of which $45.6 million was committed to operating the schools ($43.9 million) and the college ($1.7 million). Another $12.5 million funded construction and other capital projects on behalf of the schools ($12.2 million) and the College ($300 thousand). • Conservation of Natural Resources expenses increased by $1.7 million (336.0 percent). This change resulted from one-time dredging costs for Grove Creek ($510 thousand), which is funded by a loan from the Department of Natural Resources to be repaid from benefit assessments, as well as payments to land owners to buy development easements ($1.1 million), which is virtually all funded with state-shared Agricultural Transfer tax that can be used in no other manner. • Public Safety expenses increased by a net of $1.6 million (8.2 percent), which was funded entirely by the County. Although overall personnel costs increased by $2.0 million from fiscal year 2007 to 2008, Emergency Services’ personnel costs increased by the largest amount ($1.2 million or 60.0 percent). This was primarily because it received authorization to hire a number of new positions at the end of the prior fiscal year, to be fully-funded during the current fiscal year. In addition, the County allocation to the Volunteer Fire Companies increased by $300 thousand, while distributions of fire impact fees to the fire companies decreased by $1 million as impact fee requirements had not been met for additional distributions. See General Fund Budgetary Highlights in this MD&A for details. • General Government expenses increased by $1.3 million (13.3 percent). Of this amount, personnel costs increased by $600 thousand (11.4 percent), most of which related to routine changes in personnel and benefit costs. However, certain departments sustained significant re-allocations of existing staff and/or changes in compensation. (1) Legislative personnel costs increased by $160 thousand (44.8 percent) because two existing positions were re-assigned from other departments to the Public Information Office to expand production of original content for the County’s TV channel. (2) State’s Attorney’s Office personnel costs increased by $170 thousand (18.6 percent) primarily because certain key personnel were given additional compensation in response to increased workload and responsibility. (3) County Administrator’s Office personnel costs increased by $80 thousand (30.7 percent) because the new County Administrator retained certain financial responsibilities from his previous tenure as Finance Director. Therefore, a new position of Chief Operating Officer was created and existing staff was promoted to assist with global projects, land purchases, and similar issues. Of the total expense increase for General Government, operating costs increased by $530 thousand (19.2 percent), most of which related to routine cost fluctuations. However, the Board of Election Office’s operating costs increased by $170 thousand (66.3 percent) due to changes in election equipment, mandated by the State of Maryland, and in voter registration software, mandated by the Federal government. In addition, General Services’ operating costs increased by $150 thousand (13.6 percent) due to increased costs for: contracted repairs and maintenance services ($100 thousand); gasoline to run departmental vehicles ($11 thousand); and energy to heat and electrify buildings and properties ($16 thousand and $20 thousand, respectively). - 18 - Business-type activities: Revenues and expenses for business-type activities were $14.5 million and $12.6 million, respectively, for fiscal year 2008. The following two charts depict revenues by source and expenses by service for business-type activities: Revenues by Source - Business-Type Activities For the Year Ended June 30, 2008 Miscellaneous Investment income 6.3% 6.0% Operating & capital grants & Charges for contributions services 21.5% 66.2% Expenses by Service - Business-Type Activities For the Year Ended June 30, 2008 Airport Public marinas 6.4% 0.2% Parks and recreation Water and sewer 17.3% 76.1% Business-type activities increased the County’s net assets by $1.9 million in fiscal year 2008, which was dramatically less than the prior year’s increase of $12.2 million. The fiscal year 2008 change in net assets resulted primarily from: • Charges for services decreased by $4.3 million (30.7 percent), from $13.9 million to $9.6 million. This change was almost exclusively due to reduced demand for sewer allocations, compared to the prior fiscal year. During fiscal year 2008, the County completed a new sewer treatment plant, which was expanded from 2 to 3 million gallons per day of capacity, as well as five additional miles of sewer and water lines. Allocations of sewer plant capacity were exceptionally high in fiscal year 2007 ($5.1 million due to two large new residential developments), but dropped to $890 thousand in fiscal year 2008. These allocations are one-time revenues to the Sanitary District’s restricted fund. In addition, during fiscal year 2008, the County began the process to contract two separate, but related, studies; those studies were awarded in fiscal year 2009. One study focuses on how the County could provide sewer service to over 1,500 existing - 19 - homes with failing septic systems using the sewer treatment plant’s expanded capacity (Southern Kent Island Sanitary Project), while the other study will recommend a new sewer and water rate schedule to ensure that the rates established will provide sufficient revenue to cover anticipated operating and maintenance expenses, debt service on the wastewater treatment plant and other system improvements. • Operating grants decreased by $1.3 million (95.7 percent), due to completion of the prior year’s Kent Narrows dredging project and its associated operating grant in Public Landings. • Capital grants decreased by $2.8 million (47.4 percent), but still added over $3.1 million to funding. The decrease in funding resulted from $2.0 million less for sewer construction, since the treatment plant was now operational; $500 thousand less for water capital items; and $280 thousand less for airport capital projects. • Operating expenses before transfers increased by $830 thousand, from $11.8 million to $12.6 million, for all business-type activities. This change is comprised of several conflicting dynamics. (1) Sewer and Water costs increased by $1.8 million or 23.3 percent, which was a one-time loss on disposal of capital assets relating to commission of the new treatment plant. (2) Airport operational costs increased by $140 thousand. This increase was almost entirely due to increased costs for aviation fuel ($133 thousand) and was more than offset by increased revenue from sale of materials ($155 thousand). Net Income before contributions and transfers improved by $74 thousand. (3) Public Landings’ changed from fiscal year 2007 transfers in of $660 thousand to fiscal year 2008 transfers out of $580 thousand, for a net change of $1.2 million. The former transaction was a transfer in from the General Fund to cover Kent Narrows dredging costs until grant funding could be secured, while the latter was a transfer out to reimburse the General Fund because State dredging grant funds were received during fiscal year 2008. (4) Property Management changed from fiscal year 2007 transfers in of $150 thousand to fiscal year 2008 transfers out of $250 thousand, for a net change of $400 thousand. The former transaction consisted of a transfer in from the General Fund ($27 thousand) to cover Board of Education grounds keeping costs, plus another transfer in from the General Capital Projects Fund ($127 thousand) to cover Matapeake Club House water and sewer costs. The latter was a transfer out from Property Management to the Sanitary District Sewer and Water Funds ($177 thousand and $71 thousand, respectively) to cover infrastructure constructed as part of the Matapeake Club House capital project. Financial Analysis of the Government’s Funds As noted earlier, Queen Anne’s County Government uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Detailed financial data based on the government’s fund accounting can be found in the governmental fund statements in this report. Governmental Funds: The focus of Queen Anne’s County Government’s governmental funds is to provide information on near term inflows, outflows, and balances of spendable resources. Such information is useful in assessing Queen Anne’s County Government’s near term financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of a fiscal year. As of the end of the current fiscal year, Queen Anne’s County Government’s governmental funds reported combined ending fund balances of $46.2 million, compared to $63.1 million for the prior year. Approximately 33.5 percent of this total ($15.5 million) constitutes unreserved undesignated fund balance, which is available for spending at the government’s discretion. - 20 - The reserved fund balance, at 55.5 percent of total fund balance ($25.7 million), is not available for new spending because it has already been reserved for prior period commitments and legal restrictions. Reserved fund balances have been committed: (1) to liquidate contracts, purchase orders, and capital commitments of the prior period ($9.8 million); (2) to cover loan receivable balances ($2.9 million) and contingencies ($7.1 million); (3) to restrict unspent 2006 Bond proceeds until they are used to fund specific general capital projects, per the terms of the 2006 Bond agreement ($1.0 million); (4) to segregate Agriculture Transfer Tax collections that are legally committed to land preservation programs ($2.0 million); (5) to restrict the unspent portion of Federal confiscated funds received ($1.6 million); and (6) to earmark other monies for a variety of other specific purposes ($1.3 million). The remaining 11.0 percent of fund balance ($5.1 million) constitutes unreserved designated fund balances. These amounts have been designated for subsequent year’s operating and capital budgets ($1.3 million and $3.8 million, respectively) and are recorded in the County’s budget documents as beginning resources to fund expenditures. The General Fund is the chief operating fund of Queen Anne’s County Government. At the end of the current fiscal year, the unreserved undesignated fund balance of the General Fund is $2.7 million, which is available for spending, for a total fund balance of $12.9 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved undesignated fund balance and total fund balance to total General Fund expenditures and other financing uses ($94.0 million plus 15.0 million = $109.0 million). The unreserved undesignated fund balance of $2.7 million represents 2.5 percent of the total General Fund expenditures and other financing uses, while total fund balance of $12.9 million represents 11.9 percent of that same amount. Of this total fund balance, $7.1 million has been set aside to cover unforeseen contingencies. During the current fiscal year, the total fund balance of the government’s General Fund decreased by $9.5 million, compared to a small increase of $1.3 million in total fund balance at the end of fiscal year 2007. This $10.8 million net change was almost entirely due to increased spending of $12.9 million (offset by $1.6 million of unspent Federal confiscated funds received), as shown in the following table: General Fund Increase EExpenditures and Transfers Out 2008 2007 (Decrease) Expenditures Education $ 45,610,824 $ 41,506,099 $ 4,104,725 Public Safety 18,438,978 15,778,978 2,660,000 Debt Service 8,011,934 6,029,697 1,982,237 General Government 9,419,224 8,291,750 1,127,474 Other 12,460,910 12,469,384 (8,474) Subtotal Expenditures 93,941,870 84,075,908 9,865,962 Other Financing Uses - Transfers Out to: General Capital Projects Fund 12,176,028 8,738,339 3,437,689 Department of Aging 1,663,342 1,415,938 247,404 Sanitary District - Water/Sewer/Admin 157,482 163,746 (6,264) Agricultural Transfer Tax Fund 167,000 88,874 78,126 Other Funds 868,676 1,559,467 (690,791) Subtotal Transfers Out 15,032,528 11,966,364 3,066,164 Total Expenditures and Transfers Out $ 108,974,398 $ 96,042,272 $ 12,932,126 - 21 - In order of priority, the County increased expenditures in the General Fund by a total of $9.9 million as follows: education ($4.1 million); public safety ($2.7 million); debt service ($2.0 million); and general government ($1.1 million). The County increased transfers out by a net of $3.1 million, consisting almost exclusively of an increased transfer out from the General Fund to the General Capital Projects Fund of $3.4 million. Altogether, the General Fund spent and transferred $12.9 million more in fiscal year 2008 than it did in fiscal year 2007. These outflows were offset by inflows of $570 thousand that were transferred in to the General Fund from other funds, for a net change of $12.5 million. For detailed explanations of General Fund revenues and expenditures, see the General fund Budgetary Highlights section of this MD&A. The General Capital Projects Fund is the capital projects fund for all governmental funds of Queen Anne’s County Government except the Roads Board fund, which has its own capital projects fund so that Highway User revenues remain separate. As of June 30, 2008, the General Capital Projects Fund has a total fund balance of $19.1 million, of which $10.0 million is reserved to meet capital commitments of the prior period, leaving an unrestricted balance of $9.1 million. A total of $12.2 million was transferred from the General Fund to the General Capital Projects Fund during fiscal year 2008, mostly to meet financing needs of specific capital projects. Proprietary funds: Queen Anne’s County Government’s enterprise fund statements provide the same type of information found in the government-wide financial statements, but in more detail. Also, due to/due from other funds are combined in the government-wide statements and reported as Internal Balances between governmental and business-type activities, which net to zero. The total unrestricted net assets of the Sanitary District Enterprise Funds at the end of the year amounted to $14.6 million. The growth in total net assets for the Sanitary District, during fiscal year 2008, was $2.4 million. This resulted primarily from increases in: State capital grants to expand and enhance the Sanitary District sewer facility plus developer-contributed sewer infrastructure ($615 thousand and $955 thousand, respectively) and developer-contributed water infrastructure ($1.0 million). The total unrestricted net assets of the Bay Bridge Airport Enterprise Fund at year end amounted to a deficit of $730 thousand. However, total net assets increased during the year by $209 thousand, compared to the prior year. This resulted predominantly from Federal capital grants ($380 thousand) used to purchase and develop land adjacent to the airport. This purchase expanded the airport’s perimeter, thereby improving safety and security of the area. A discussion of Enterprise Fund capital assets and long-term debt can be found in those sections presented later in this MD&A. General Fund Budgetary Highlights The final expenditure budget for the General Fund, including transfers out, increased during fiscal year 2008 by $7.3 million when compared to the original budget. Major components of these appropriation increases are as follows: • $1.1 million for Public Safety operations, of which $560 thousand was for Emergency Services; $240 thousand was for the Sheriff’s Office; $170 thousand was for the Volunteer Fire Companies; and $120 thousand was for the Detention Center. (1) Budget amendments increased Emergency Services’ expenditures by $560 thousand. The largest increase, of $347 thousand, resulted from contractual commitments recorded as - 22 - encumbrances at the end of fiscal year 2007 and as budget amendments at the onset of fiscal year 2008. Since the original budget is adopted prior to the end of the previous fiscal year, these contractual commitments are unknown at that time and must be budgeted as amendments each year. Another $145 thousand was added during the year in response to new grant revenues awarded during the year by the 911 Numbers Board to purchase office furniture and equipment. A final $64 thousand was added, to augment salaries and benefit costs, which were offset by reductions in staff in other departments. (2) The Sheriff’s Office budget was increased during the fiscal year by $240 thousand. Of this amount, $92 thousand reflects grants awarded in fiscal year 2008 to pay overtime and benefits for deputies to provide security for County school and community events. Another $71 thousand reflects County funding for a deputy removed during the budget process, and determined later to be necessary. Another $15 thousand utilizes proceeds of the sale of used vehicles and insurance claims received during fiscal year 2007 to provide new technology for mobile data units in fiscal year 2008. (3) The original budget for the County’s base allocation to the Volunteer Fire Companies ($1.7 million) is calculated as a percentage of the County’s assessable base, as assessed by the State of Maryland prior to adoption of the County’s original budget. However, there is an additional allocation to the Fire Companies that is calculated as a percentage of the County’s mid-year assessable base, as assessed by the State about six months into the fiscal year. Because of the timing difference, this supplemental allocation ($200 thousand) must be budgeted as an amendment, once the numbers become available. (4) The original budget for the Detention Center was increased by $120 thousand during the year, primarily due to increased inmate hospital bills, most of which will be reimbursed by the State Department of Corrections, plus upgrading an emergency electric panel. • $5.9 million for transfers out from the General Fund to other Funds. (1) The General Fund transferred $6.0 million to the General Capital Projects Fund to provide “pay-as- you-go” funding for capital projects. (2) The General Fund also transferred $156 thousand to the Fire Impact Fee Funds. Impact Fees are collected from commercial and residential property buyers to help the County offset the costs of providing additional services as new growth places increased demand on existing services. To encourage development in areas designated as growth areas, the County discounts those fees for commercial and residential properties based on if the property meets criteria for growth or non-growth, resulting in 50% or 25% discounts, respectively. Each year, the County reimburses the Fire Impact Fee funds for the discounted amounts. Since the discounts are based on fees received during the year, the discounts are budgeted as amendments. (3) The General Fund originally budgeted to transfer $580 thousand to the Sanitary District to reimburse it for debt service payments made on behalf of the County, plus debt service related to the plant upgrade. During the fiscal year 2008, the County determined that the latter transfer would not be needed and the transfer was reduced by $280 thousand. Actual revenues for the General Fund, including other financing sources and before appropriated fund balance were less than final budgetary estimates by $665 thousand. Actual expenditures and other financing uses were less than final budgetary estimates by $3.0 million. The major differences between actual amounts spent and the final budgeted amounts are summarized as follows: Revenues: • Property tax revenue was $1.2 million more than expected or 2.5 percent greater than budgeted. The County estimates property tax revenue using figures developed by the State of Maryland Assessment Office, which is based on properties existing at the beginning of the tax year and excludes new properties subdivided or otherwise created at the middle of the tax year. For fiscal year 2008, the half-year levy for new properties was - 23 - $218 thousand, which was included in actual revenue but excluded from budgeted revenue. Absent the half-year levy, the variance would be only $1.0 million or 2.1 percent greater than the amount budgeted. • Recordation tax revenue was $1.7 million less than expected or 30.5 percent less than budgeted. See the Statement of Activities – governmental changes in net assets, earlier in this report, for a discussion of recordation tax receipts. • Fines and Forfeitures revenue was $1.7 million higher than expected due to Federal confiscated funds that were received in the amount of $1.6 million at the end of the year. • Local income tax revenue was $1.2 million less than expected or 3.4 percent less than budgeted, due to the current economic downturn. • Investment income was less than estimates by $775 thousand or 39.8 percent less than the estimated amount. This variance resulted from decreasing interest rates applied to a 33 percent decrease in cash on hand, as explained earlier in this MD&A. • Miscellaneous revenue was $416 thousand or 528.7 percent more than estimated. Of this amount, the County received $240 thousand as a reimbursement for prior year workmen’s compensation contributions. Based on annual audited wages, this reimbursement can be positive or negative, depending on circumstances for the particular year, therefore, the amount is not usually budgeted. Another $144 thousand was received for rubble surcharge fees, which are reserved at year end to support the County’s multi-year recycling effort, and as such, is not budgeted. Expenditures: • Final Budgeted Salaries and Benefits were $26,108,522 for the year, while actual costs were $24,263,991. They remained unspent at year-end by $1.8 million or 7.1 percent. Of this amount, public safety was responsible for the majority of the unspent portion ($1.0 million), while general government accounted for most of the rest ($520 thousand). This was due to routine turnover and vacant positions, as well as a concerted effort to eliminate and/or reclassify top management positions. • Final Budgeted Other Operating Charges were $84,470,553 for the year, while actual costs were $83,798,446. These costs were lower than budget at year end by $672 thousand or 8.0 percent. Operating Charges include contracted services, supplies, debt service, transfers out, and other charges. o Contracted Services were underutilized by $475 thousand, primarily in public safety ($313 thousand) and general government ($82 thousand). The largest savings were for: detention center medical fees ($209 thousand); finance and legal departments’ professional fees ($34 thousand); emergency medical services data processing ($25 thousand); and fire chiefs association monitoring costs ($19 thousand). o Supplies were under spent by $147 thousand, primarily in public works ($59 thousand). The largest savings were for supplies related to solid waste equipment repairs. o Transfers Out were underutilized by $59 thousand, mainly for the Department of Aging ($33 thousand) and Community Partnership ($20 thousand). These transfers did not take place because eligibility criteria were not met. - 24 - • Final Budgeted Capital Outlay was $1,441,383 for the year, while actual costs were $911,961. Capital outlay was unspent by $529 thousand or 36.7 percent, mostly in public safety ($251 thousand); general government ($152 thousand); and public works ($126 thousand) and for a variety of reasons relating to the specific items to be purchased. Capital Assets and Debt Administration Capital assets: Queen Anne’s County Government’s investment in capital assets for its governmental and business-type activities as of June 30, 2008 amounts to $234.7 million (net of accumulated depreciation). This investment in capital assets includes land and land improvements, construction in progress, buildings, improvements other than buildings, infrastructure, autos, machinery and equipment. Capital asset activities are summarized as follows: Governmental Activities Business Type Activities Total CCapital Assets, Net of Depreciation 2008 2007 2008 2007 2008 2007 Land and Land Improvements $ 78,661,539 $ 71,555,216 $ 1 4,012,881 $ 1 4,012,881 $ 92,674,420 $ 8 5,568,097 Construction in Progress 10,070,812 7,617,927 2 ,072,670 3 3,236,130 12,143,482 4 0,854,057 Buildings 20,310,045 17,788,060 1 3,308,995 8 ,338,786 33,619,040 2 6,126,846 Improvements other than Buildings 4,005,066 3,955,638 3 ,931,371 2 ,412,734 7,936,437 6 ,368,372 Infrastructure 8,892,964 8,999,797 5 0,998,221 4 1,131,001 59,891,185 5 0,130,798 Auto, Machinery, and Equipment 10,934,460 11,435,313 1 7,546,403 1 ,867,112 28,480,863 1 3,302,425 Total $ 132,874,886 $ 121,351,951 $ 1 01,870,541 $ 1 00,998,644 $ 234,745,427 $ 2 22,350,595 Queen Anne’s County’s total investment in capital assets for the current fiscal year increased by 5.6 percent, or $12.4 million. Of this amount, governmental investment in capital assets increased by $11.5 million, of which $1.0 million related to general government land purchases; $5.4 related to parkland purchases; $2.5 million related to building purchases (primarily for social services and the general government); and construction in progress increased by $2.5 million (mainly in public works) . Business-type investment in capital assets increased by $872 thousand. This amount included developer contributed infrastructure for the Sanitary District ($2.0 million) offset by obsolete equipment retired from service when the new sewer treatment plant came on line ($1.3 million). In addition, construction in progress for the Airport increased by $402 thousand relating to the Northside Expansion project. The current year depreciation expense of $1.8 million offset much of the purchases for the business-type capital assets. Additional information on the County’s capital assets can be found in Note 6 of this report. - 25 - Long-term debt: At the end of the current fiscal year, Queen Anne’s County Government had total bonded debt, loan, capital lease, and compensated absence obligations of $97.9 million for its governmental and business-type activities. The full faith, credit and unlimited taxing power of the County are irrevocably pledged to the levy and collection of taxes in order to provide for the payment of principal and interest due on the bonded debt. Debt activities are summarized as follows: BBonded Debt, Loans, and Governmental Activities Business Type Activities Total Compensated Absences 2008 2007 2008 2007 2008 2007 Bonds, Notes, Premiums and Deferred Debt Costs $ 70,663,063 $ 75,527,109 $ 2 5,005,991 $ 2 6,947,733 $ 95,669,054 $ 1 02,474,842 Compensated Absences 1,969,026 1,707,921 2 43,176 2 42,678 2,212,202 1 ,950,599 Total Long-term Debt $ 72,632,089 $ 77,235,030 $ 2 5,249,167 $ 2 7,190,411 $ 97,881,256 $ 1 04,425,441 Of this total debt, $25.2 million is considered to be self-supported bonds and loans, e.g., they will be funded through various charges and assessments related to the operation of the various enterprise operations of the County. Of this debt, assets held by the Sanitary District Debt Service Fund total $7.5 million and are restricted to payment of subsequent year debt service. See Note 10 on pages 84 to 86 for restricted assets and subsequent year debt service liability. During the current fiscal year, the governmental activities’ total debt decreased by a net of $4.6 million. The County repaid existing debt in accordance with established repayment schedules for bonds, notes, and capital lease agreements. Additional information on the County’s long-term debt can be found in Note 9 of this report. During the fiscal year, Queen Anne’s County Government maintained an “AA” rating from Fitch Rating Service and an “A1” rating from Moody’s Investors Service. The public local laws of Queen Anne’s County limit the amount of general obligation debt to no more than $8.0 million, unless authorized under specific legislation. Currently, approximately $7.2 million of this authority is available. All other debt is authorized under specific legislation. Additional information on the computation of the legal debt margin can be found in Table 12 of the Statistical Section of this report. Economic Factors and Next Year’s Budget and Rates The following economic factors were considered in preparing Queen Anne’s County Government’s budget for the 2009 fiscal year: • Property assessments are projected to grow by 7.6 percent over the previous year, based on State Assessment Office values used to compute the Constant Yield rate. • For the 2009 fiscal year, the County Commissioners adopted a property tax rate of $.770 per $100 of assessed value of real property, based on full cash value of that property. This is the same rate used for the 2008 fiscal year. • Growth in income tax revenue is expected to continue during the 2009 fiscal year, but at a slower rate. - 26 - • During budget deliberations, the County considered the following risk management options and incorporated them into the finished document to a limited degree: o Postponing capital projects based on cost/benefit considerations; o Using bond proceeds to fund capital projects in lieu of pay-as-you-go to preserve cash; and o Abolishing certain employee positions and re-assigning job duties. • During fiscal year 2009, the County will implement GASB Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and No. 45, Accounting and Financial Reporting By Employers for Postemployment Benefits Other Than Pensions. Implementing these statements requires that the County report information on an accrual basis related to retiree benefits, which have previously been reported on a pay-as-you-go basis. As of June 30, 2008, certain preliminary steps had been taken for this implementation and some financial resources had been budgeted for this purpose. For more information, see Note 21 of the Notes to Financial Statements. Requests for information This financial report is designed to provide a general overview of Queen Anne’s County Government’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Chief Accounting Officer, Finance Office, Queen Anne’s County, 107 N. Liberty Street, Centreville, Maryland 21617. - 27 - - 28 - Basic Financial Statements - 29 - QUEENANNE'S COUNTY,MARYLAND STATEMENT OF NET ASSETS JUNE 30, 2008 PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES TOTAL ASSETS Equity in Pooled CashandInvestments $ 45,600,382 $ 8,318,593 $ 53,918,975 Cashand Cash Equivalents - - - Taxes Receivable (Net) 3 41,416 - 341,416 Accountsand Loans Receivable (Net) 3,512,028 465,588 3,977,616 SpecialAssessments (Net) 9 12,286 - 912,286 Internal Balances 2,548,123 (2,548,123) - Due from Primary Government - - - Due from Component Units 4 3,547 - 43,547 Due from Other Governments 18,370,065 173,173 18,543,238 Inventories 473,839 376,144 849,983 PrepaidItems 5 1,950 - 51,950 RestrictedAssets: Equity in Pooled CashandInvestments - 13,342,329 13,342,329 Investments - - - Accounts Receivable (Net) - 48,917 48,917 SpecialAssessments Receivable (Net) - 4,504,380 4,504,380 CapitalAssets: NondepreciableAssets 88,732,351 16,085,551 104,817,902 DepreciableAssets, Net 44,142,535 85,784,990 129,927,525 TotalAssets 204,728,522 126,551,542 331,280,064 LIABILITIES Accounts Payableand Other Current Liabilities 5,796,516 520,944 6,317,460 AccruedInterest Payable 880,381 179,797 1,060,178 Due to Primary Government - - - Due to Component Units 2,406,194 - 2,406,194 Due to Other GovernmentalAgencies 4 93,968 - 493,968 Unearned Revenue 4,386,886 752,776 5,139,662 Escrow Deposits - 34,551 34,551 Liabilities Payable from RestrictedAssets: Unearned Revenue - 4,300,524 4,300,524 Noncurrent Liabilities: Duewithin OneYear 6,560,543 2,171,652 8,732,195 Due in More than OneYear 66,071,546 23,077,515 89,149,061 Total Liabilities 86,596,034 31,037,759 117,633,793 NETASSETS Invested in CapitalAssets, Netof Related Debt 117,831,360 77,237,512 195,068,872 Restricted for: General Government 2 5,000 - 25,000 Public Safety 1 ,730,633 - 1,730,633 Public Works 2 08,505 - 208,505 Social Services 1 ,050 - 1,050 Parksand Recreation 1 69,167 - 169,167 Conservationof Natural Resources 2 ,141,235 - 2,141,235 Economic/Community Development 2 ,917,820 - 2,917,820 General Revenue - Contingency 7,144,049 - 7,144,049 Debt Service - 4,399,378 4,399,378 Capital/Debt Service - 7,967,150 7,967,150 Business-type Operations - 5,156,443 5,156,443 Capital Projects 1,038,871 753,300 1,792,171 Other Purposes - - - Unrestricted ( 15,075,202) - (15,075,202) Total NetAssets $ 118,132,488 $ 95,513,783 $ 213,646,271 Theaccompanying notes to the basic financial statementsarean integral partof this statement. - 30 - QUEENANNE'S COUNTY,MARYLAND STATEMENT OF NET ASSETS JUNE 30, 2008 (CONTINUED) COMPONENT UNITS BOARD OF FREE HOUSING EDUCATION LIBRARY AUTHORITY $ - $ - $ 1,250,973 9,781,054 496,266 333,042 - - - 431,055 67,350 63,779 - - - - - - 2 ,406,194 - - - - - 9 81,175 - 795,847 3 9,828 - - 97,933 4,478 228 - 617,868 - - - 84,375 - - - - - - 16,764,286 29,850 9,337,765 111,340,325 947,875 12,854,916 141,841,850 2,163,687 24,720,925 10,703,838 59,566 990,866 - - 12,817 - - 43,547 - - - - - - 4 54,194 - 123,223 - - 84,375 - - - 2 20,263 - 67,231 8 28,815 - 1,799,380 12,207,110 59,566 3,121,439 127,843,435 977,725 20,326,070 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 0,552 - 1,483,553 30,824 10,500 - 1,749,929 1,115,896 (210,137) $ 129,634,740 $ 2,104,121 $ 21,599,486 Theaccompanying notes to the basic financial statementsarean integral partof this statement. - 31 - QUEENANNE'S COUNTY,MARYLAND STATEMENT OF ACTIVITIES FORTHE YEAR ENDED JUNE 30, 2008 PRIMARY GOVERNMENT OPERATING CAPITAL CHARGES FOR GRANTS AND GRANTS AND TOTAL FUNCTIONS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS REVENUE PRIMARY GOVERNMENT Governmental Activities General Government $ 11,167,743 $ 1,047,371 $ 295,898 $ 757,975 $ 2,101,244 Public Safety 20,721,185 3,167,090 1,254,611 1,171 4,422,872 PublicWorks 10,420,547 1,014,600 6,304,965 544,610 7,864,175 Health 1 ,441,143 - - - - Social Services 4,978,883 64,041 2,911,796 613,804 3,589,641 Education 58,034,317 1 ,011,013 - - 1,011,013 Parks & Recreation 3,330,087 302,195 72,659 5,666,226 6,041,080 Library 1 ,270,718 - - - - Conservation of Natural Resources 2,172,443 88,534 322,718 - 411,252 Economic/Community Development 3,527,908 5,249 163,245 - 168,494 Interest and Fiscal Charges 3 ,033,416 - - - - Total Governmental Activities 120,098,390 6,700,093 11,325,892 7,583,786 25,609,771 Business-type Activities Water and Sewer 9,621,784 8 ,014,366 - 2,584,371 10,598,737 Parks & Recreation 2,179,157 1,459,725 55,953 95,890 1,611,568 Public Marinas 27,344 105,900 3 ,710 - 109,610 Airport 812,067 46,960 - 382,945 429,905 Total Business-type Activities 12,640,352 9,626,951 59,663 3,063,206 12,749,820 Total Primary Government $ 132,738,742 $ 16,327,044 $ 11,385,555 $ 10,646,992 $ 38,359,591 COMPONENT UNITS Board of Education $ 89,958,699 $ 1,645,651 $ 16,249,569 $ - $ 17,895,220 Free Library 1,609,496 7,484 157,648 - 165,132 Housing Authority 2,728,283 977,556 1,132,346 4,078,536 6,188,438 Total Component Units $ 94,296,478 $ 2,630,691 $ 17,539,563 $ 4,078,536 $ 24,248,790 General Revenues Local Property Tax Local Income Tax Other Local Taxes Admission and Amusement Taxes Recordation Taxes Hotel Taxes County Transfer Taxes Grants and Contributions Not Restricted to Specific Programs Investment Income Miscellaneous Transfers In (Out) Total General Revenues and Transfers Change in Net Assets Total Net Assets - Beginning ofYear Total Net Assets - End ofYear Theaccompanyingnotes to thebasic financial statementsarean integralpartof this statement. - 32 - QUEENANNE'S COUNTY,MARYLAND STATEMENT OF ACTIVITIES FORTHE YEAR ENDED JUNE 30, 2008 (CONTINUED) NET (EXPENSE) REVENUE AND CHANGES IN NET ASSETS PRIMARY GOVERNMENT COMPONENT UNITS GOVERNMENTAL BUSINESS-TYPE BOARD OF FREE HOUSING ACTIVITIES ACTIVITIES TOTAL EDUCATION LIBRARY AUTHORITY $ ( 9,066,499) $ - $ (9,066,499) $ - $ - $ - ( 16,298,313) - (16,298,313) - - - (2,556,372) - (2,556,372) - - - ( 1,441,143) - (1,441,143) - - - ( 1,389,242) - (1,389,242) - - - ( 57,023,304) - (57,023,304) - - - 2 ,710,993 - 2,710,993 - - - ( 1,270,718) - (1,270,718) - - - ( 1,761,191) - (1,761,191) - - - ( 3,359,414) - (3,359,414) - - - ( 3,033,416) - (3,033,416) - - - ( 94,488,619) - (94,488,619) - - - - 976,953 9 76,953 - - - - (567,589) (567,589) - - - - 82,266 82,266 - - - - (382,162) (382,162) - - - - 109,468 1 09,468 - - - $ (94,488,619) $ 109,468 $ (94,379,151) $ - $ - $ - - - - (72,063,479) - - - - - - (1,444,364) - - - - - - 3,460,155 - - - (72,063,479) (1,444,364) 3,460,155 5 0,021,587 - 50,021,587 - - - 3 5,700,111 - 35,700,111 - - - 2 23,233 - 223,233 - - - 3 ,825,394 - 3,825,394 - - - 5 03,979 - 503,979 - - - 1 ,578,912 - 1,578,912 - - - - - - 83,658,401 1,361,161 348,296 2,128,509 875,509 3,004,018 43,230 39,227 42,777 721,946 919,828 1,641,774 207,882 101,124 - (11,581) 1 1,581 - - - - 94,692,090 1,806,918 96,499,008 83,909,513 1,501,512 391,073 203,471 1,916,386 2,119,857 11,846,034 57,148 3,851,228 117,929,017 93,597,397 211,526,414 117,788,706 2,046,973 17,748,258 $ 118,132,488 $ 95,513,783 $ 213,646,271 $ 129,634,740 $ 2,104,121 $ 21,599,486 Theaccompanyingnotes to thebasic financial statementsarean integralpartof this statement. - 33 - QUEENANNE'S COUNTY,MARYLAND BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 SCHOOL GENERAL GENERAL ROADS IMPACT FEES FUND CAPITAL CAPITAL CAPITAL ASSETS Cash and Cash Equivalents $ 9,776,586 $ 21,255,551 $ 3,299,267 $ 2,257,777 PrepaidItems 1,950 - - - Receivables Taxes Receivable (Net) 200,787 140,629 - - Accounts and Loans Receivable (Net) 361,951 37,652 13,893 - Special Assessments (Net) - - 627,264 - Due fromOtherGovernments 15,986,975 1,041,086 - - Due fromOther Funds 2,692,222 80,000 - - Due from Component Units 43,547 - - - Inventory 4,000 - - - Total Assets $ 29,068,018 $ 22,554,918 $ 3,940,424 $ 2,257,777 LIABILITIES AND FUND BALANCES Liabilities Accrued Liabilities $ 3,495,077 $ 964,293 $ - $ 2,317 Due to Other Funds - - - - Due to Component Units - 2,406,194 - - Due to OtherGovernmental Agencies 41,691 - - - Deferred Revenue 12,610,172 94,985 703,905 - Total Liabilities 16,146,940 3,465,472 703,905 2,317 Fund Balances Reserved Encumbrances 67,599 8,702,963 963,791 - Loans Receivable - - - - PrepaidItems 1,950 - - - Inventory 4,000 - - - Donor-Specified Purposes 94,736 65,786 - - Contingencies 7,144,049 - - - Other Reserved Purposes - Other 1,635,897 1,038,871 - - Other Reserved Purposes - Capital Projects - 169,526 143,550 - Total Reserved 8,948,231 9,977,146 1,107,341 - Unreserved Designated for Subsequent Years' Expenditures 1,247,995 - - - Designated for Capital Projects - - 668,408 2,255,460 Undesignated, reported in General Fund 2,724,852 - - - Capital Project Funds - 9,112,300 1,460,770 - Special Revenue Funds - - - - Total Unreserved 3,972,847 9,112,300 2,129,178 2,255,460 Total Fund Balances 12,921,078 19,089,446 3,236,519 2,255,460 Total Liabilities and Fund Balances $ 29,068,018 $ 22,554,918 $ 3,940,424 $ 2,257,777 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 34 - QUEENANNE'S COUNTY,MARYLAND BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 (CONTINUED) TOTAL ROADS NON-MAJOR GOVERNMENTAL BOARD GOVERNMENTAL FUNDS $ 2,845,724 $ 6,165,477 $ 45,600,382 - 50,000 51,950 - - 341,416 58,645 3,039,887 3,512,028 - 285,022 912,286 851,978 490,026 18,370,065 - - 2,772,222 - - 43,547 469,839 - 473,839 $ 4,226,186 $ 10,030,412 $ 72,077,735 $ 317,517 $ 1,017,312 $ 5,796,516 - 224,099 224,099 - - 2,406,194 - 452,277 493,968 3,185,934 339,410 16,934,406 3,503,451 2,033,098 25,855,183 18,713 - 9,753,066 - 2,929,603 2,929,603 - 50,000 51,950 469,839 - 473,839 - 1,050 161,572 - - 7,144,049 23,810 2,129,452 4,828,030 - - 313,076 512,362 5,110,105 25,655,185 - - 1,247,995 - 912,278 3,836,146 - - 2,724,852 - - 10,573,070 210,373 1,974,931 2,185,304 210,373 2,887,209 20,567,367 722,735 7,997,314 46,222,552 $ 4,226,186 $ 10,030,412 $ 72,077,735 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 35 - - 36 - QUEENANNE'S COUNTY, MARYLAND RECONCILIATIONOFTHEBALANCE SHEETOF GOVERNMENTAL FUNDS TOTHE STATEMENTOFNETASSETS JUNE 30, 2008 Total Fund Balance - Governmental Funds $ 46,222,552 Amounts reported for Governmental activities in the Statement of NetAssets are different because: Capitalassets used in governmentalfundactivitiesare notfinancial resources and thereforeare not reported in thefunds. ADD Nondepreciablecapitalassets Landand Land Improvements $ 38,736,041 Infrastructure 39,925,498 Construction in Progress 10,070,812 88,732,351 ADD Depreciablecapitalassets Buildings 27,516,120 Improvements Other than Buildings 4,667,381 Machineryand Equipment 17,117,303 AutomobilesandTrucks 8,141,233 Infrastructure 14,876,235 Less Accumulated depreciation (28,175,737) 44,142,535 Revenues thatare deferred in the governmentalfunds because they do not providecurrentfinancial resourcesare recognizedas revenues in the Statementof Activities. ADD PropertyTaxes deferred in governmentalfunds 93,916 ADD IncomeTaxes deferred in governmentalfunds 10,201,570 ADD Loans receivable deferred in governmentalfunds 2,252,034 12,547,520 Long-term liabilities related to governmentalfundactivitiesare not dueand payable in thecurrent periodand thereforeare not reported in thefunds. SUBTRACT Accrued Interest Payable (880,381) SUBTRACT Long-Term Liabilities Duewithin OneYear Accrued Compensated Absences (1,376,098) Bondsand Notes Payable (5,184,445) (6,560,543) SUBTRACT Long-Term Liabilities Due in More than OneYear Accrued Compensated Absences (592,928) Bondsand Notes Payable (65,478,618) (66,071,546) TotalNetAssets - GovernmentalActivities $ 118,132,488 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 37 - QUEEN ANNE'S COUNTY, MARYLAND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE30,2008 SCHOOL GENERAL GENERAL ROADS IMPACT FEES FUND CAPITAL CAPITAL CAPITAL REVENUES Taxes Local Property Tax $ 49,975,236 $ - $ - $ - LocalIncome Tax 34,767,725 - - - Admissionand Amusement Taxes 167,425 - - - Recordation Taxes 3,825,394 - - - Hotel Taxes 503,979 - - - County Transfer Taxes - 1,578,912 - - State Shared Taxes - - - - Licensesand Permits 890,821 - - - Intergovernmental 2,002,097 7,032,832 2 22,473 - Charges for Current Services 1,764,197 135,308 81,243 1,011,014 Finesand Forfeitures 1,678,138 - - - InvestmentIncome 1,174,877 410,055 152,014 109,753 Donations 126,329 66,671 - - Miscellaneous 494,387 6,940 2 ,740 - Total Revenues 97,370,605 9,230,718 458,470 1,120,767 EXPENDITURES Current General Government 9,419,224 611,563 - - Public Safety 18,438,978 455,048 - - PublicWorks 3,421,818 183,159 2 43,220 - Health 1,430,670 - - - Social Services 227,631 5,276 - - Education 45,610,824 12,475,459 - - Parksand Recreation 2,702,610 380,428 - - Library 1,247,108 - - - Conservationof Natural Resources 529,490 - - - Economic/Community Development 1,257,851 1,722,111 - - Miscellaneous 731,771 - - - Capital Outlay 911,961 11,946,264 4 14,616 - Debt Service - Principal 4,864,405 - - - DebtIssuance Costs - 3,972 - - Interestand Fiscal Charges 3,147,529 - - - Total Expenditures 93,941,870 27,783,280 6 57,836 - Excessof Revenues Over (Under) Expenditures 3,428,735 (18,552,562) (199,366) 1,120,767 OTHER FINANCING SOURCES (USES) Issuanceof Debt - - - - Re-allocationof2006 Bonds - (345,955) - - Bond Premiums - 3,972 - - Proceedsof Capital Asset Disposals 21,644 - - - Insurance Proceeds - 8,898 - - TransfersIn 2,060,097 12,200,378 - - Transfers (Out) (15,032,528) (488,487) - (1,408,120) Other Financing Sources (Uses) (12,950,787) 11,378,806 - (1,408,120) NetIncrease (Decrease) in Fund Balances (9,522,052) (7,173,756) (199,366) (287,353) Fund Balances, July1 22,443,130 26,263,202 3,435,885 2,542,813 Fund Balances, June30 $ 12,921,078 $ 19,089,446 $ 3,236,519 $ 2,255,460 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 38 - QUEEN ANNE'S COUNTY, MARYLAND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE30,2008 (CONTINUED) TOTAL ROADS NON-MAJOR GOVERNMENTAL BOARD GOVERNMENTAL FUNDS $ - $ 31,818 $ 50,007,054 - - 34,767,725 - 55,808 223,233 - - 3,825,394 - - 503,979 - - 1,578,912 4,995,165 311,598 5,306,763 - - 890,821 19,337 2,922,772 12,199,511 417,473 640,667 4,049,902 - 81,232 1,759,370 104,363 177,447 2,128,509 - 54,002 247,002 144,308 70,692 719,067 5,680,646 4,346,036 118,207,242 - 97,912 10,128,699 - 398,635 19,292,661 5 ,334,421 - 9,182,618 - - 1,430,670 - 4,514,584 4,747,491 - - 58,086,283 - - 3,083,038 - - 1,247,108 - 1,648,330 2,177,820 - 533,191 3,513,153 - - 731,771 394,613 9,115 13,676,569 - 24,000 4,888,405 - - 3,972 - - 3,147,529 5,729,034 7,225,767 135,337,787 (48,388) (2,879,731) (17,130,545) - 510,617 510,617 - - (345,955) - - 3,972 19,520 4,330 45,494 - - 8,898 28,868 2,724,964 17,014,307 - (96,753) (17,025,888) 48,388 3,143,158 211,445 - 263,427 (16,919,100) 722,735 7,733,887 63,141,652 $ 722,735 $ 7,997,314 $ 46,222,552 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 39 - QUEENANNE'S COUNTY,MARYLAND RECONCILIATIONOF THE STATEMENTOF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOFGOVERNMENTAL FUNDS TO THE STATEMENTOFACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 Change in Fund Balances - Total governmental funds, per Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds $ (16,919,100) Amounts reported for governmental activities in the Statement of Activities are different because: Capital outlay expenditures are reported inGovernmental Funds during the year. However,in the Statement of Activities,costs for capital asset purchases are allocated over the estimated usefullives of those assets and reported as depreciation expense over a number of years. Therefore, the changein assets differs from the changein fund balance by the amount of capital asset purchases that will be capitalized and depreciated over a number of years,less the offsetting depreciation expense for the currentyear. Proceeds received on disposal of capital assets are reported inGovernmental Funds ascurrent financial resources. In the Statement of Activities, only the gain or (loss) realized on disposal of capital assetsis reported. Thus, the changein net assets differs from the changein fund balance by the cost of capital assetssold, net of accumulated depreciation (i.e., bookvalue). In addition, developercontributions of capital assets (primarilyinfrastructure) are not reported inGovernmental Funds because they do not representcurrent financial resources available to cover thisyear's expenditures. Thus, the changein net assets differs from the changein fund balance by the value of capital assets received. Donated Capital Assets are not reported inGovernmental Funds because they are not current financial resources. However,in the Statement of Activities, they are recognized ascapitalcontributions and ascapital assets. The followingis a summary of the net increaseincapital assets,whichis detailedin Note 6 - Capital Assets - PrimaryGovernment. ADDcapital assets acquired ascapital outlay $ 1,315,689 ADD bookvalue of traded/transferred assets 66,608 ADDcapital assets resulting from force-in-kind expenditures 117,840 ADDcapital assets resulting from generalcapital projects 11,946,264 ADDcapital assets resulting from roadscapital projects 414,616 ADD donated roadsinfrastructure 491,250 ADD donated governmentalland 665,152 SUBTRACT bookvalue of disposedcapital assets, net of accumulated depreciation (287,747) SUBTRACTcurrentyear depreciation expense (3,206,737) NetIncreasein Capital Assets $ 11,522,935 The accompanying notes to the basic fi nancial statements are an integral part of this statement. CONTINUED - 40 - QUEENANNE'S COUNTY,MARYLAND RECONCILIATIONOF THE STATEMENTOF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESOFGOVERNMENTAL FUNDS TO THE STATEMENTOFACTIVITIES FOR THE YEAR ENDED JUNE 30, 2008 (CONTINUED) Revenues that are earned but not collectedwithinsixty days after the end of the fiscalyear are not considered to be "available" to meetcurrentcash requirements and are deferred in the Governmental Funds to the followingyear. However, these revenues are recognizedin the Statement of Activities. The amount bywhich this type of deferred revenueincreased or (decreased) relative to the prioryearis as follows: ADDcurrentyear's PropertyTax Deferred Revenue $ 93,916 SUBTRACT prioryear's PropertyTax Deferred Revenue (79,383) $ 14,533 ADDcurrentyear'sIncomeTax Deferred Revenue 10,201,570 SUBTRACT prioryear'sIncomeTax Deferred Revenue (9,269,184) 932,386 Issuance of long-term debt (e.g., bonds, notes, and capitalleases) providescurrent financial resources to Governmental Funds,while repayment of principal due for long-term debt consumescurrent resources. In the Statement of Net Assets,issuing debt increaseslong termliabilities,while repayment reduces thoseliabilties. ADD retirements and repaymentsmade on long term debt General Bonds Payable 5,185,941 Notes Payable 249,000 Bond Premiums, Net of Issuance Costs 64,723 Deferred Refunding Costs (170,483) Capital Leases 45,482 5,374,663 SUBTRACT proceeds of Note Payable to DNR (510,617) SUBTRACT College reimbursement received (200,580) ADD County's allocation to College for debt 51,965 Some accrued expenses, reported in the Statement of Activities, do not require the use of current financial resources and are not reported as expendituresin the Governmental Funds. The net amount bywhich these accrualsincreased or (decreased) over the prior periodis as follows: ADD prioryear's AccruedInterest Payable 1,078,772 SUBTRACTcurrentyear's AccruedInterest Payable (880,381) 198,391 ADD prioryear's Accrued Compensated Absences 1,707,921 SUBTRACTcurrentyear's Accrued Compensated Absences (1,969,026) (261,105) Change in Net Assets - governmental activities, per Statement of Activities $ 203,471 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 41 - QUEEN ANNE'S COUNTY,MARYLAND STATEMENT OF NET ASSETS ENTERPRISE FUNDS JUNE 30, 2008 SANITARY DISTRICT SEWER WATER RESTRICTED ASSETS OPERATIONS OPERATIONS FUND CurrentAssets Unrestricted Equity in Pooled Cash $ 5,211,672 $ 2 ,092,527 $ - Accounts Receivable (Net) 252,891 1 23,635 - Due from Other Funds 17,199 - - Due from Other Governments - - - Inventories 327,466 - - Restricted Restricted Equity in Pooled Cash - - 8,790,508 RestrictedAccounts Receivable (Net) - - 9,942 Total CurrentAssets 5,809,228 2,216,162 8,800,450 NoncurrentAssets Restricted SpecialAssessments Receivable (Net) - - 1,580,653 CapitalAssets Land, Improved andUnimproved 816,331 - - Buildings and Improvements to Buildings 14,265,248 1 39,477 - Improvements OtherThan Buildings 1,615,474 1 28,152 - Automotive Equipment 926,651 1 27,402 - Equipment 19,779,741 9 93,343 - Furniture and Fixtures 46,715 5 ,727 - Infrastructure Improvements 47,620,184 1 9,712,980 - Construction in Progress 30,000 - - CapitalAssetsbefore Depreciation 85,100,344 2 1,107,081 - LessAccumulated Depreciation (19,716,574) ( 5,074,234) - Total CapitalAssets,Net of Accumulated Depreciation 65,383,770 1 6,032,847 - TotalNoncurrentAssets 65,383,770 16,032,847 1,580,653 TotalAssets 71,192,998 18,249,009 10,381,103 LIABILITIES Current Liabilities Payable fromUnrestrictedAssets Accounts Payable 214,689 6 8,051 - Accrued Interest Payable 146,838 1 3,383 - Escrow Deposits 19,865 - - Due to Other Funds - - 80,000 Unearned Revenue 749,469 - - Current Portion of CompensatedAbsences 108,364 3 6,218 - Current Portion of Bonds/Notes Payable 1,398,741 4 62,269 - Payable from RestrictedAssets Current Portion of Bonds Payable - - - Total Current Liabilities 2,637,966 579,921 80,000 Noncurrent Liabilities Payable fromUnrestrictedAssets CompensatedAbsences 46,692 1 5,605 - Bonds/Notes Payable 19,390,188 1 ,896,118 - Payable from RestrictedAssets Unearned Revenue - - 1,580,653 TotalNoncurrent Liabilities 19,436,880 1,911,723 1,580,653 Total Liabilities 22,074,846 2,491,644 1,660,653 NETASSETS Invested in CapitalAssets,Net of Related Debt 44,594,841 1 3,674,460 - Restricted for: Debt Service - - - Capital Projects - - 753,300 Unrestricted 4,523,311 2,082,905 7,967,150 TotalNetAssets $ 49,118,152 $ 15,757,365 $ 8,720,450 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 42 - QUEEN ANNE'S COUNTY,MARYLAND STATEMENT OF NET ASSETS ENTERPRISE FUNDS JUNE 30, 2008 (CONTINUED) TOTAL PRIMARY SANITARY DISTRICT NON-MAJOR GOVERNMENT DEBT SERVICE BAY BRIDGE ENTERPRISE ENTERPRISE FUND TOTAL AIRPORT FUNDS FUNDS $ - $ 7,304,199 $ - $ 1,014,394 $ 8,318,593 - 376,526 77,842 11,220 465,588 - 17,199 - 40,000 57,199 - - 54,412 118,761 173,173 - 327,466 43,422 5,256 376,144 4,551,821 13,342,329 - - 13,342,329 38,975 48,917 - - 48,917 4,590,796 21,416,636 175,676 1,189,631 22,781,943 2,923,727 4,504,380 - - 4,504,380 - 816,331 10,524,474 2,672,076 14,012,881 - 14,404,725 1,121,799 2,196,386 17,722,910 - 1,743,626 2,131,964 1,836,981 5,712,571 - 1,054,053 9,000 83,445 1,146,498 - 20,773,084 4,205 796,321 21,573,610 - 52,442 3,344 18,253 74,039 - 67,333,164 - - 67,333,164 - 30,000 740,431 1,302,239 2,072,670 - 106,207,425 14,535,217 8,905,701 129,648,343 - (24,790,808) (1,926,854) (1,060,140) (27,777,802) - 81,416,617 12,608,363 7,845,561 101,870,541 2,923,727 85,920,997 12,608,363 7,845,561 106,374,921 7,514,523 107,337,633 12,784,039 9,035,192 129,156,864 - 282,740 48,574 189,630 520,944 5,175 165,396 6,783 7,618 179,797 - 19,865 7,130 7,556 34,551 17,199 97,199 831,509 1,676,614 2,605,322 - 749,469 - 3,307 752,776 - 144,582 5,496 19,871 169,949 - 1,861,010 32,537 64,993 1,958,540 43,163 43,163 - - 43,163 65,537 3,363,424 932,029 1,969,589 6,265,042 - 62,297 2,368 8,562 73,227 329,799 21,616,105 448,627 939,556 23,004,288 2,719,871 4,300,524 - - 4,300,524 3,049,670 25,978,926 450,995 948,118 27,378,039 3,115,207 29,342,350 1,383,024 2,917,707 33,643,081 - 58,269,301 12,127,199 6,841,012 77,237,512 4,399,316 4,399,316 - 62 4,399,378 - 753,300 - - 753,300 - 14,573,366 (726,184) (723,589) 13,123,593 $ 4,399,316 $ 77,995,283 $ 11,401,015 $ 6,117,485 $ 95,513,783 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 43 - QUEENANNE'S COUNTY, MARYLAND STATEMENTOFREVENUES, EXPENSES, AND CHANGESINFUNDNET ASSETS ENTERPRISEFUNDS FORTHEYEAR ENDEDJUNE 30, 2008 SANITARY DISTRICT SEWER WATER RESTRICTED OPERATIONS OPERATIONS FUND OPERATING REVENUES Chargesfor Services $ 4,667,107 $ 1,905,974 $ 887,567 Intergovernmental - - - Material Sales 5,809 19,441 - Miscellaneous Revenues 31,889 113,904 - Total Operating Revenues 4,704,805 2,039,319 887,567 OPERATING EXPENSES Costof Salesand Services Collection 1,898,813 - - Distribution - 125,764 - Treatment 1,235,556 946,848 - Shop 234,928 - - Airport - - - Parksand Recreation - - - Public Marinas - - - Total Costof Salesand Services 3,369,297 1,072,612 - Administrationand Inspection 813,717 461,173 - Depreciation 1,058,107 436,100 - Total Operating Expenses 5,241,121 1,969,885 - Operating Income (Loss) (536,316) 69,434 887,567 NON-OPERATING REVENUES (EXPENSES) Investment Income 128,720 52,991 465,823 Interest Expense (157,680) (151,798) - (Loss)on Disposalof Capital Assets (2,061,188) (9,200) - Miscellaneous Non-Operating (Expense) - - - Total Non-Operating Revenues (Expenses) (2,090,148) (108,007) 465,823 Income (Loss) Before ContributionsandTransfers (2,626,464) (38,573) 1,353,390 Capital Contributions,Feesand Grants 1,571,967 1,012,404 - Transfers In 1,893,371 605,192 142,464 Transfers (Out) (61,914) (80,550) (2,118,937) NetTransfers In (Out) 1,831,457 524,642 (1,976,473) Change in Net Assets 776,960 1,498,473 (623,083) Total Net Assets - Beginningof Year 48,341,192 14,258,892 9,343,533 Total Net Assets - Endof Year $ 49,118,152 $ 15,757,365 $ 8,720,450 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 44 - QUEENANNE'S COUNTY, MARYLAND STATEMENTOFREVENUES, EXPENSES, AND CHANGESINFUNDNET ASSETS ENTERPRISEFUNDS FORTHEYEAR ENDEDJUNE 30, 2008 (CONTINUED) TOTAL PRIMARY SANITARY DISTRICT NON-MAJOR GOVERNMENT DEBT SERVICE BAY BRIDGE ENTERPRISE ENTERPRISE FUND TOTAL AIRPORT FUNDS FUNDS $ 553,718 $ 8,014,366 $ 46,960 $ 1,565,625 $ 9,626,951 - - - 59,663 59,663 - 25,250 399,791 32,772 457,813 - 145,793 167,816 148,406 462,015 553,718 8,185,409 614,567 1,806,466 10,606,442 - 1,898,813 - - 1,898,813 - 125,764 - - 125,764 - 2,182,404 - - 2,182,404 - 234,928 - - 234,928 - - 631,041 - 631,041 - - - 1,811,162 1,811,162 - - - 19,447 19,447 - 4,441,909 631,041 1,830,609 6,903,559 - 1,274,890 - - 1,274,890 - 1,494,207 162,757 157,986 1,814,950 - 7,211,006 793,798 1,988,595 9,993,399 553,718 974,403 (179,231) (182,129) 613,043 227,559 875,093 416 - 875,509 (30,912) (340,390) (17,189) (50,072) (407,651) - (2,070,388) (1,080) - (2,071,468) - - - (167,834) (167,834) 196,647 (1,535,685) (17,853) (217,906) (1,771,444) 750,365 (561,282) (197,084) (400,035) (1,158,401) - 2,584,371 382,945 95,890 3,063,206 2,118,937 4,759,964 22,926 410,747 5,193,637 (2,092,727) (4,354,128) - (827,928) (5,182,056) 26,210 405,836 22,926 (417,181) 11,581 776,575 2,428,925 208,787 (721,326) 1,916,386 3,622,741 75,566,358 11,192,228 6,838,811 93,597,397 $ 4,399,316 $ 77,995,283 $ 11,401,015 $ 6,117,485 $ 95,513,783 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 45 - QUEENANNE'S COUNTY, MARYLAND STATEMENTOF CASH FLOWS ENTERPRISE FUNDS FORTHEYEAR ENDED JUNE30,2008 SANITARY DISTRICT SEWER WATER RESTRICTED OPERATIONS OPERATIONS FUND CASH FLOW FROM OPERATING ACTIVITIES Receiptsfrom customersandusers $ 4,546,075 $ 1,892,402 $ 882,037 Receiptsfromotheroperating sources 1,709,398 133,345 - Payments to suppliers (1,831,694) (689,122) - Payments toemployeesandonbehalfofemployees (2,547,909) (864,001) - Net Cash Providedby Operating Activities 1,875,870 472,624 882,037 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Reclassificationofoperatinggrant togovernmentalfund - - - Transfers infromotherfunds 1,893,371 605,192 142,464 Receiptsfrom interfund loans (16,175) - 80,000 Transfers tootherfunds (61,914) (80,550) (2,118,937) Principalpaidon interfund loans - - (120,000) Net Cash Provided (Used)by Noncapital Financing Activities 1,815,282 524,642 (2,016,473) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceedsfrom thedispositionof capitalassets 2,040 250 - Receiptsfrom capitalgrants 616,545 - - Principalpaidon capitaldebt (1,378,707) (467,949) - Receiptsfrom2006 Bonds - - - Receiptsfrom state loan 697,258 - - Interestpaidon capitaldebt (168,631) (129,561) - Acquisitionand constructionof capitalassets (2,128,262) (96,851) - Net Cash (Used)by Capitaland Related Financing Activities (2,359,757) (694,111) - CASH FLOWS FROM INVESTING ACTIVITIES Net Cash Providedby Investing Activities - Investment Income 128,720 52,991 465,823 Net Increase (Decrease) in Cashand Cash Equivalents 1,460,115 356,146 (668,613) Balances - Beginningof theyear 3,751,557 1,736,381 9,459,121 Balances - Endof theyear $ 5,211,672 $ 2,092,527 $ 8,790,508 Reconciliationofoperating income (loss) tonet cashprovided byoperatingactivities Operating income (loss) $ (536,316) $ 69,434 $ 887,567 Adjustments to reconcileoperating income (loss) tonet cashprovidedbyoperatingactivities: Depreciation 1,058,107 436,100 - Effectof changes inoperatingassetsand liabilities: Accounts receivable,net (41,554) (13,572) (5,530) Specialassessments receivable,net - - 188,641 Operatinggrants receivable 1,671,700 - - Inventoriesand Prepaid Expenses (55,065) - - Vendoraccountspayable (140,107) (33,979) - Compensatedabsences (1,417) 14,641 - Escrowdepositspayable (36,797) - - Deferred revenue collected inadvance (42,681) - (188,641) Net Cash Providedby Operating Activities $ 1,875,870 $ 472,624 $ 882,037 Noncash investing, capitalandfinancingactivities: Donationof capitalassets (infrastructure)bydevelopers $ 955,422 $ 1,012,404 $ - The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 46 - QUEENANNE'S COUNTY, MARYLAND STATEMENTOF CASH FLOWS ENTERPRISE FUNDS FORTHEYEAR ENDED JUNE 30, 2008 (CONTINUED) TOTAL PRIMARY SANITARY DISTRICT NON-MAJOR GOVERNMENT DEBT SERVICE BAY BRIDGE ENTERPRISE ENTERPRISE FUND TOTAL AIRPORT FUNDS FUNDS $ 591,112 $ 7,911,626 $ 3,524 $ 1,667,518 $ 9,582,668 - 1,842,743 1,049,416 506,503 3,398,662 - (2,520,816) (438,380) (858,684) (3,817,880) - (3,411,910) (195,142) (983,261) (4,590,313) 591,112 3,821,643 419,418 332,076 4,573,137 - - - (167,834) (167,834) 2,118,937 4,759,964 22,926 410,747 5,193,637 17,199 81,024 831,509 1,636,614 2,549,147 (2,092,727) (4,354,128) - (827,928) (5,182,056) (985,612) (1,105,612) (1,230,358) (1,390,143) (3,726,113) (942,203) (618,752) (375,923) (338,544) (1,333,219) - 2,290 1 ,112 - 3,402 - 616,545 382,945 95,890 1,095,380 (40,286) (1,886,942) (31,467) (62,885) (1,981,294) - - 21,238 36,934 58,172 - 697,258 - - 697,258 (31,226) (329,418) (16,128) (46,693) (392,239) - (2,225,113) (401,611) (167,169) (2,793,893) (71,512) (3,125,380) (43,911) (143,923) (3,313,214) 227,559 875,093 4 16 - 875,509 (195,044) 9 52,604 - (150,391) 802,213 4,746,865 19,693,924 - 1,164,785 20,858,709 $ 4,551,821 $ 20,646,528 $ - $ 1,014,394 $ 21,660,922 $ 553,718 $ 974,403 $ (179,231) $ (182,129) $ 613,043 - 1,494,207 162,757 157,986 1,814,950 8,011 (52,645) (41,736) 122,926 28,545 469,344 6 57,985 - - 657,985 - 1,671,700 481,809 265,662 2,419,171 - (55,065) (6,935) 14,439 (47,561) - (174,086) 5,379 (13,974) (182,681) - 13,224 (925) (11,801) 498 - (36,797) (1,700) 2,373 (36,124) (439,961) (671,283) - (23,406) (694,689) $ 591,112 $ 3,821,643 $ 419,418 $ 332,076 $ 4,573,137 $ - $ 1,967,826 $ - $ - $ 1,967,826 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 47 - QUEENANNE'S COUNTY, MARYLAND STATEMENTOFFIDUCIARYNET ASSETS PRIVATEPURPOSETRUST AND AGENCYFUNDS JUNE 30, 2008 PRIVATE PURPOSE TRUSTFUND TAX SALE AGENCY DEPOSITS FUNDS ASSETS Cashand Cash Equivalents $ 367,448 $ 357,185 Other Assets - 2,355 Miscellaneous Receivables - 111,997 Total Assets 367,448 $ 471,537 LIABILITIES Due to Other Governments - $ 194,816 Depositsand Escrows - 276,721 Total Liabilities - $ 471,537 NET ASSETS Held in Trust $ 367,448 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 48 - QUEENANNE'S COUNTY, MARYLAND STATEMENTOF CHANGESINFIDUCIARYNET ASSETS PRIVATEPURPOSETRUSTFUND FORTHEYEAR ENDEDJUNE 30, 2008 PRIVATE PURPOSE TRUSTFUND TAX SALE DEPOSITS ADDITIONS Tax Sale Collections in ExcessofTax Due $ 148,950 Total Additions 148,950 DEDUCTIONS Total Deductions 83,045 Change in Assets 65,905 NET ASSETS HELD IN TRUST Net Assets-Beginningof Year 301,543 Net Assets-Endof Year $ 367,448 The accompanying notes to the basic fi nancial statements are an integral part of this statement. - 49 - QUEENANNE'S COUNTY, MARYLAND NOTESTO BASIC FINANCIAL STATEMENTS INDEX Note 1 Summary of Significant Accounting Policies 51-60 2 Budgets and Budgetary Accounting 60-61 3 Cash, Investments and Investment Income 62-63 4 Accounts Receivable 64-65 5 Deferred or Unearned Revenue 66 6 Capital Assets 67-73 7 Interfund Receivables and Payables 74 8 Interfund Transfers 75 9 Noncurrent Liabilities 76-83 10 Restricted Assets and Liabilities and Reserved/Designated Fund Balances 84-86 11 Risk Management 87 12 Retirement Plans 88-90 13 Deferred Compensation Plan 90 14 Other Post Employment Benefits 91 15 Deficit Equity Balances 92 16 Commitments and Contingencies 92 17 Joint Venture 93 18 Contingent Liability and Receivable 93 19 Pollution Remediation Obligations 94 20 Closing a Fund 94 - 50 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the County conform to accounting principles generally accepted in the United States of America (GAAP) applicable to local government entities. The following is a summary of significant policies. A. REPORTING ENTITY Queen Anne’s County, Maryland (the County) was founded in 1706. The County is governed by five Commissioners who are elected to serve four-year terms. This board assumes responsibilities conferred upon them by the Maryland General Assembly under Code Home Rule and provides the following services: public safety, public improvements, sanitation, health and social services, education, recreation and culture, library, conservation of natural resources, economic and community development, and general administrative services. As required by GAAP, these financial statements present the primary government and its component units, which are entities for which the primary government is considered financially accountable. The decision to include a potential component unit in the financial reporting entity was made by applying the criteria set forth in the Government Accounting Standards Board (GASB) Statements No. 14 and 39. Blended component units, although separate entities, are, in substance, part of the government’s operations. However, each discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for descriptions) to emphasize that it is legally separate from the government. Blended Component Units The Queen Anne’s County Sanitary District serves all the citizens of the government and is governed by a board comprised of the government’s elected Commissioners. The rates for user charges and bond issuance authorizations are approved by the Board of Commissioners and the legal liability for the general obligation portion of the District’s debt remains with the government. The Sanitary District is reported as an enterprise fund. The Queen Anne’s County Roads Board serves all the citizens of the government and is governed by a board comprised of the government’s elected Commissioners. All operations of the Roads Board are approved by the Board of Commissioners and the legal liability for any debt remains with the government. The Roads Board is reported as a special revenue fund. Discretely Presented Component Units The Board of Education of Queen Anne’s County is a five-member body responsible for the operation of Queen Anne’s County Schools. In the past, members were appointed by the Governor of Maryland. However, beginning with the November 2008 election, the members are now elected by the County voters. The Board of Education is a component unit of Queen Anne’s County, Maryland by virtue of the County’s responsibility for levying taxes and its budgetary control over the Board of Education. The Queen Anne’s County Free Library is a component unit of the Queen Anne’s County Government by virtue of the Library’s fiscal dependency on the County. The County levies taxes and approves the Library’s budget. The Library Board of Trustees governs the Library. Vacancies on the Board of Trustees are filled by vote of the remaining members of that Board. The Queen Anne’s County Public Housing Authority is a component unit of the Queen Anne’s County Government because the County Commissioners appoint the members of the Housing Authority’s Board of Commissioners. In addition, the County contributes substantial financial and administrative resources to the Housing Authority on an on-going basis, including an annual appropriation, office space and utilities, and administrative services for human resources, accounting, and other functions. - 51 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. REPORTING ENTITY (CONTINUED) Complete financial statements of the individual component units can be obtained from their respective administrative offices listed below: Board of Education of Queen Anne’s County Queen Anne’s County Housing Authority 202 Chesterfield Avenue c/o Queen Anne’s County Centreville, Maryland 21617 Finance Office 107 N. Liberty Street Centreville, Maryland 21617 The Queen Anne’s County Free Library 121 S. Commerce Street Centreville, Maryland 21617 JOINT VENTURE The operation of the Midshore Regional Landfill is considered a joint venture of the County. Disclosure of the County’s participation in this joint venture is presented in Note 17. Complete financial statements can be obtained at the joint ventures’ administrative office listed below: Maryland Environmental Service 259 Najoles Road Millersville, Maryland 21108 B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-Wide Financial Statements – The government-wide financial statements report information on all of the non-fiduciary activities of the Primary Government and its component units. Since, by definition, assets of fiduciary funds are held for the benefit of a third party (other local governments, private parties, etc.) and cannot be used to address activities or obligations of the County, these funds are not incorporated into the government-wide statements. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities of the Primary Government, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Statement of Net Assets – This statement is designed to display the financial position of the reporting entity as of year-end. Governments report all capital assets, including infrastructure, in the government-wide Statement of Net Assets and report depreciation expense, the cost of “using up” capital assets, in the Statement of Activities. Net assets are divided into three categories: 1) invested in capital assets, net of related debt; 2) restricted; and 3) unrestricted. - 52 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) Statement of Activities – This statement demonstrates the degree to which the direct expenses of a given function for the fiscal year are offset by program revenues. Therefore, this statement reflects both the gross and net costs per functional category (general government; public safety; public works; health; social services; education; parks and recreation; library; conservation of natural resources; and economic/community development) that are otherwise supported by general revenues. Direct expenses (including depreciation) are those that are clearly identifiable with a specific function. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. The operating grants column includes operating-specific and discretionary (either operating or capital) grants, while the capital grants column reflects capital-specific grants. Taxes and other items not properly included among program revenues are reported as general revenues. The County does not allocate indirect expenses. Fund Financial Statements – Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. In the fund financial statements, financial transactions and accounts of the County are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise assets, liabilities, fund balance/net assets, revenues, and expenditures/expenses. Governmental Fund Budget-to-Actual Comparison Statements – Demonstrating compliance with the adopted budget is an important component of government’s accountability to the public. The County provides budget-to- actual comparisons of the General Fund and individual major special revenue funds as part of the required supplementary information subsection located after the Notes to the basic financial statements. In addition, budget- to-actual comparisons are provided for the General Fund, on a departmental level, and for all other individual funds with legally adopted budgets in the supplementary information subsection. The County and many other governments revise their original budgets over the course of the year for a variety of reasons; the County’s amended budget is reflected in a separate column in the budget-to-actual comparison statements. Variances are calculated based on final budgets. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Measurement Focus and Basis of Accounting Full Accrual Basis Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year in which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. Capital assets and related depreciation are recorded in these statements, as well as debt, accrued compensated absences, and other accruals. Modified Accrual Basis Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. - 53 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (CONTINUED) Revenues are recorded as soon as they are susceptible to accrual (i.e., when they are both measurable and available). Revenues are considered to be available when they are collectible within the current period, or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment has matured and is due. Similarly, expenditures related to claims and judgments and compensated absences are recorded only to the extent that they are expected to be liquidated with expendable available financial resources. Also, capital assets and related depreciation as well as long-term liabilities are not recorded in these statements. In applying the susceptible to accrual concept to income taxes (distributed by the State), property taxes, and inter- governmental revenues other than grants, the County defines “available” as received within 60 days after year-end. In the State of Maryland, the State has assumed responsibility for the collection of all income taxes and for distributing those collections to the respective counties. The counties set their individual tax rates within limits provided by State law. However, collections and pursuit of delinquent taxes are the responsibility of the State. The County records estimated receivables relating to income taxes when the underlying income is earned. Amounts not received within 60 days are reported as deferred revenue. At year-end, deferred revenue relating to income taxes primarily includes the final fiscal year distribution (which is normally received in September after the fiscal year-end) and amounts related to late filers, delinquent returns and audits, and unallocated withholding, all of which are not received within the County’s availability period. Most deferred revenue is expected to be received from the State within the next fiscal year; however, collections related to delinquent returns and audits as well as unallocated withholding may not be remitted to the County for several years. In applying the susceptible to accrual concept to operating and capital grants, which are classified with intergovernmental revenues in the fund financial statements, the County records receivables when the applicable eligibility requirements including time requirements are met. Related revenues are recognized to the extent that cash is expected to be received within one year of year-end. Resources received before the eligibility requirements are met are reported as deferred revenue. Licenses and permits, charges for services, and miscellaneous revenues (except earnings on investments) are generally recorded as revenues when received in cash during the year. At year-end, receivables are recorded for significant amounts due. If such amounts are received in cash after year-end within the County’s 60-day availability period, they are recognized as revenue. Benefit assessment receivables not billed at year end are reported as deferred revenue. Fiduciary Funds – The County’s private purpose trust fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, as is used by proprietary funds. Agency funds report only assets and liabilities; they do not report changes in net assets. Therefore, agency funds are reported using the accrual basis of accounting to recognize receivables and payables. Activity during the year is accounted for as additions to and deductions from asset and liability accounts (for Agency Funds) and Net Assets (for Private Purpose Trust Fund). Since fiduciary funds are, by their very nature, independent of the County, they are omitted from all government-wide statements. Financial Statement Presentation - The County reports the following major governmental and proprietary funds, as well as fiduciary funds. General Fund – This fund is the general operating fund of the County. It is used to account for all financial resources except those required to be accounted for in another fund. - 54 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (CONTINUED) Capital Projects Funds – General Capital Projects - This fund accounts for financial resources to be used for the acquisition or construction of major capital facilities, as well as other large multi-year projects that relate to capital assets, that are financed from general governmental resources. Roads Capital Projects - This fund accounts for financial resources to be used for the construction of County Road infrastructure, as well as other large multi-year projects that relate to capital assets, that are financed from Highway User Funds and grants received from State and Federal Governments. School Impact Fees - This fund accounts for financial resources generated by new residential construction and used for the construction of public school facilities or payment of school debt relating to such construction. Roads Board - This fund accounts for financial resources received from the State for the maintenance of County road infrastructure. Enterprise Funds - Enterprise Funds are used to account for those activities of the Primary Government that are financed and operated in a manner similar to private business enterprises in that all costs and expenses, including depreciation, are recovered primarily or partially through user charges. The Sanitary District Funds are intended to be self-supporting as a whole, while the Airport is intended to be only partially self-supporting. The County reports the following major enterprise funds: Sanitary District - Sewer Operations - This fund is used to account for the operation of the sewer system serving approximately 6,500 customers. Sanitary District - Water Operations - This fund is used to account for the operation of the water supply system serving approximately 4,000 customers. Sanitary District - Restricted Fund - This fund is used to account for the proceeds of sewer and water capacity charges and is used to fund capital and debt service expenses. Sanitary District - Debt Service Funds - This fund is used to account for the collection of special benefit assessments to fund debt associated with construction of water and sewer facilities in accordance with debt covenants. Bay Bridge Airport – This fund is used to account for the operation of the County’s airport that serves small, private aircraft. Fiduciary Funds – Fiduciary Funds are used to report assets held in a trustee or agency capacity for entities other than the County. The County reports the following fiduciary fund types: Private-Purpose Trust Fund – This fund accounts for an arrangement under which monies received at tax sale, in excess of taxes due, are legally held in trust for property owners who have not been located within a legally-defined time frame. - 55 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (CONTINUED) Agency Funds - These funds are used to account for assets, such as property taxes, held in a purely custodial capacity, where the County receives, temporarily invests, and remits such resources to individuals, private organizations or other governments. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of GASB. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The County has elected not to follow subsequent private-sector guidance. In the process of aggregating data for the Statement of Net Assets and the Statement of Activities, some amounts reported as interfund activity and balances in the funds should be eliminated or reclassified. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. The effect of interfund services provided and used between functions has not been eliminated in the Statement of Activities, since to do so would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY 1) Cash and Investments Cash and Cash Equivalents – For Statement of Cash Flows reporting purposes, the County has defined “cash equivalents” as short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present an insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less at time of purchase meet this definition. The balance sheet classification for “cash and cash equivalents” in the Statement of Cash Flows includes the following: “Equity in pooled cash and investments,” “Cash and cash equivalents,” and “Restricted Equity in pooled cash and investments.” 2) Receivables and Payables Due From/To Other Funds and Internal Balances – Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are current and are referred to as “due to/from other funds.” On the Statement of Net Assets, these balances are referred to as “internal balances.” Trade Accounts Receivable – Trade and other receivables are shown net of an allowance for uncollectible accounts. The allowance for uncollectible accounts is calculated based on historical collection data and, in some cases, specific account analysis. - 56 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED) 3) Inventories, Prepaids, and Other Assets Inventories of materials, parts and supplies are stated at cost as determined by the first-in, first-out method. For budgetary purposes, the cost is recorded as an expenditure at the time individual inventory items are purchased (purchase method). The consumption method is used for financial reporting, whereby reported inventories are equally offset by a fund balance reserve. Inventories in the Proprietary Funds are treated as expenses at the time the items are used (the consumption method). 4) Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The County defines capital assets as assets with an initial, individual cost of $5,000 ($1,000 for computers) or more and an estimated useful life in excess of one year. Such assets are valued at cost where historical records are available and at estimated historical cost where no historical records exist. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as the projects are constructed. Interest is capitalized on proprietary fund assets acquired with tax-exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense, incurred from the date of the borrowing until completion of the project, with interest earned on invested proceeds over the same period. Capital projects that are under construction and not yet ready for their intended use at year- end are classified as “construction in progress”. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and structures 20 - 50 Improvements other than buildings 15 - 50 Infrastructure 20 - 50 Machinery and equipment 3 - 20 Office furniture, fixtures and equipment 5 - 15 Automobiles and trucks 7 - 10 5) Compensated Absences Primary Government – The County’s policy is to pay employees for any unused vacation time, up to a maximum of 50 days, upon termination of employment. Compensated absences are reported in governmental funds only if they have matured, such as payments upon termination of employment or vacation and compensatory time paid as they are used during the year. Such time is paid as regular wages. Compensated absences are reported in enterprise funds as they are accrued. In the government-wide statements, liability for compensated absences is adjusted at the end of each fiscal year to current salary costs. Accumulated unpaid leave of the County amounted to $2,212,202 at June 30, 2008, including both governmental ($1,969,026) and business-type activities ($243,176). - 57 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED) Component Unit – Queen Anne’s County Housing Authority –The Housing Authority’s employees are employees of the primary government, which is ultimately liable for their salaries and benefits. Therefore, for the year ended June 30, 2008 the county recognized a liability for compensated absences for these employees as part of its governmental activities in the amount of $36,019. Component Unit - Board of Education – Accumulated unpaid annual leave is accrued when earned in the Unrestricted Current Expense Fund using the modified accrual basis of accounting. In fiscal year 1992, the Board adopted the practice of paying for any unused vacation time, up to the maximum number of days that employees can carry over from one year to the next, upon termination of employment. Maximum number of days varies from 20 to 30 days, depending on classification. Liabilities for compensated absences are inventoried at the end of each fiscal year and adjusted to current salary costs. Accumulated compensated absences as of June 30, 2008 amounted to $787,902. Because payment of sick leave is contingent upon employees’ future illness or retirement, the Board of Education expects its commitment to provide sick leave to be met during the normal course of activities over the working lives of its present employees. Any accumulated unused sick leave at retirement will ultimately be taken into consideration and paid through retirement benefits by the State of Maryland. 6) Long-Term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statements of net assets. Bond premiums and discounts are deferred and amortized over the life of the bonds using the bonds outstanding method. Bonds payable in the proprietary fund financial statements and noncurrent liabilities in the government-wide financial statements are reported net of the applicable bond premium or discount. Bond issuance costs are generally reported as a deferred asset and amortized over the term of the related debt using the straight-line method. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures. When debt is refunded, payments to the Bond Refunding Agent and associated bond issuance costs are reported as other financing uses. 7) Net Assets/Fund Equity In the government-wide financial statements, the County has reported negative unrestricted net assets of $15,075,202. This deficit is due to the fact that the County issues general obligation bonded debt for purposes of capital construction on behalf of the Queen Anne’s County Board of Education. The capital assets constructed with the proceeds of this debt are reported on the financial statements of Queen Anne’s County Board of Education. This amount is also classified as net assets invested in capital assets, net of related debt (of which there is none), in the Board of Education column of the Component Units section of the County’s government-wide Statement of Net Assets. - 58 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED) 7) Net Assets/Fund Equity (continued) Since the issuance of such debt has not resulted in capital assets owned by the Primary Government, the effect of this debt is reflected in a deficit balance in unrestricted net assets in the Governmental Activities column of the government-wide Statement of Net Assets. At June 30, 2008, the County has reported outstanding general obligation debt related to assets held by the Board of Education amounting to $53,758,049. Absent the effect of this relationship, the County would have reported positive unrestricted net assets of governmental activities in the amount of $38,682,847. The County reports a portion of its net assets in its government-wide financial statements as restricted. In this context, restricted means that, as of June 30, 2008, this portion of net assets was restricted for a particular purpose either by external parties; by provision of the County Charter; or by enabling legislation. Net assets restricted by enabling legislation represent legislative restrictions that a party external to the government can compel the government to honor. For the County, such amounts represent primarily accumulated net assets attributed to revenue streams that are restricted for specified purposes in the County Code. This generally includes Capital Projects Fund impact fee collections and developer exactions on hand for outside entities; ending fund balances of substantially all special revenue funds; and ending unrestricted net assets of the Sanitary District and other enterprise funds. Such amounts, which are restricted net assets in the government-wide statement of Net Assets, are as follows at year-end: Restricted Net Assets Governmental activities $ 15,376,330 Business-type activities 18,276,271 Total $ 33,652,601 In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. 8) Property Tax The County's real property tax is levied each July 1 on the assessed values certified as of that date for all taxable real property located in the County. The levy functions as a lien against the property. Assessed values are established by the Maryland State Department of Assessments and Taxation at estimated market value. A revaluation of all property is required to be completed every three years. Taxes are then billed to property owners and collected by the County. Property represented by delinquent taxes is sold at a public auction in May of the following calendar year, with title transferring after foreclosure proceedings have been completed. For principal residences only, an installment plan is offered whereby total tax is paid in two equal installments. The first installment is due by September 30. Beginning October 1, a 1% penalty is charged on the first day of each month that the installment remains unpaid. This 1% penalty is based on the amount of the first installment only. The second installment is due by December 31. Beginning January 1, the 1% penalty would then include all outstanding balances. The County accepts partial payments. - 59 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED) 8) Property tax (continued) For non-principal residences, payment is due in full by September 30. Beginning October 1, a penalty is charged for each month that taxes remain unpaid. For new construction, completed and assessed between July 1 and Dec 31, a supplementary tax is levied equal to half of the full-year levy. Payment in full is due by March 31. Beginning April 1, a penalty is charged for each month that taxes remain outstanding. Real and personal property taxes are levied at rates enacted by the County Commissioners in the annual budget on the assessed value as determined by the Maryland Department of Assessments and Taxation. The rates of levy cannot exceed the constant yield rate furnished by the Maryland State Department of Assessments and Taxation without public notice and only after public hearings. The County tax rate for the fiscal year ended June 30, 2008 was $0.770 per $100 of assessed value. NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING Pursuant to the Code of Public Local Laws of Queen Anne's County, the County Commissioners adopt an annual operating budget and real property tax rate prior to July 1 each year. This action, taken after public hearings, provides the spending authority for the fiscal year beginning on July 1. Unexpended and unencumbered appropriation authority expires the following June 30, except in the case of Capital Projects where appropriations lapse only upon completion or cancellation of the project by the County Commissioners. The appropriated budgets are prepared at the fund, function, and department level. Expenditures/expenses and encumbrances may not legally exceed appropriations at the department level. During the fiscal year, the Commissioners may adopt supplemental appropriations. For the year ended June 30, 2008, supplemental appropriations that increased are as follows: Original Final Supplemental Appropriations Budget Budget Increase General Fund - expenditures and transfers $ 104,741,262 $ 112,020,458 $ 7,279,196 Special Revenue Funds that adopt annual budgets Non-Major that adopt annual budgets - Department of Aging - expenditures and transfers $ 2,766,360 $ 2,846,691 $ 80,331 Housing and Community Services - expenditures and transfers 1,196,929 1,654,041 457,112 Community Partnerships for Children - expenditures and transfers 2,045,523 2,164,385 118,862 Dredging Special Assessments - expenditures 24,000 534,617 510,617 Agricultural Transfer - expenditures 666,667 1,400,000 733,333 Total Special Revenue Funds that adopt annual budgets $ 6,699,479 $ 8,599,734 $ 1,900,255 All final budgets are presented as amended. The County Administrator may approve budget amendments of $10,000 or less throughout the year. Amendments greater than $10,000 require the approval of the County Commissioners. - 60 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING (CONTINUED) Annual Budgets are legally adopted for the General Fund; School Impact Fees Capital Projects Funds; Roads Board Operating Fund; and the following non-major governmental funds: Department of Aging, Housing and Community Services, Community Partnerships for Children, Dredging Special Assessments, Kent Narrows, Inmate Welfare, Agricultural Transfer, and Fire Impact Fee Capital Projects Fund. Proprietary Fund budgets are adopted for management control only and include all enterprise funds. Budgets are adopted using the same method of accounting as that used for reporting purposes. Budgets for the General Capital Projects Fund and the Roads Capital Projects Fund reflect multi-year appropriations at the individual project level. Expenditures and encumbrances may not legally exceed appropriations at that level and unencumbered appropriations lapse at the completion or cancellation of individual projects. In that these capital projects funds do not adopt an annual budget per project, a Statement of Revenues, Expenditures, and Changes in Fund Balances on a budget-to-actual basis is not presented for these funds. GENERAL FUND The following General Fund Departments exceeded their appropriated expenditure budgets for the year ended June 30, 2008; note that Salary Reversions are realized in the individual departments: Final (Negative) General Fund Budget Actual Variance Debt Service $ 7 ,961,365 $ 8,011,934 $ (50,569) Transfer to Law Library 6 ,120 7,390 (1,270) Transfer to Economic Development - 130 (130) Transfer to Sanitary District - Sewer 4 ,050 4,330 (280) Transfer to Sanitary District - Water 2 21,618 231,340 (9,722) Other Allocations 750 942 (192) Reversions - salary reversions ( 370,000) - (370,000) SPECIAL REVENUE AND CAPITAL PROJECTS FUNDS There were no Special Revenue or Capital Projects Funds which exceeded their appropriated expenditure budgets for the fiscal year ended June 30, 2008. - 61 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME A. DEPOSITS AND INVESTMENTS PRIMARY GOVERNMENT, PUBLIC HOUSING AUTHORITY, AND FIDUCIARY FUNDS Cash and investments were as follows at year-end: Collected Primary Government, Public Housing & Fiduciary Carrying Bank Balances Total Cash and Investments Amount or Fair Value Collateral Demand Deposit Accounts, Short-Term Certificates of Deposit and Petty Cash $ 2 5,314,544 $ 24,832,790 $ 27,454,203 Investment in Maryland Local Government Investment Pool (MLGIP) 4 4,339,783 44,254,232 45,139,317 $ 6 9,654,327 $ 69,087,022 $ 72,593,520 Cash and investments reconcile to the basic financial statements as follows: Primary Component Unit- Cash and Investments Government Housing Authority Fiduciary Total Unrestricted Equity in Pooled Cash and Investments $ 5 3,918,975 $ 1,250,973 $ 724,633 $ 55,894,581 Cash and Cash Equivalents - 333,042 - 333,042 Restricted Equity in Pooled Cash and Investments 1 3,342,329 - - 13,342,329 Investments - 84,375 - 84,375 $ 6 7,261,304 $ 1,668,390 $ 724,633 $ 69,654,327 At year-end, the carrying amount of combined deposits was $25,314,544 and the collected bank balances were $24,832,790. At all banks, deposits were fully collateralized by FDIC coverage plus the market value of securities placed with the respective banks’ escrow agents and held in the County’s name. Statutes authorize the County to invest in obligations of the United States Government, Federal government agency obligations, secured time deposits in Maryland banks, bankers’ acceptances, the Maryland Local Government Investment Pool, money market mutual funds, commercial paper and repurchase agreements secured by direct government or agency obligations. Of these options, the County participates in the Maryland Local Government Investment Pool (MLGIP), which provides all local government units of the state with a safe investment vehicle for short-term investment of funds. The State Legislature created MLGIP by enacting Section 22G of Article 94 of the Annotated Code of Maryland. PNC Financial manages the MLGIP, under administrative control of the State Treasurer. A MLGIP Advisory Committee of current participants reviews the activities of the Fund on a quarterly basis and provides suggestions to enhance the pool. Standard and Poors rates the MLGIP as AAAm. The MLGIP seeks to maintain a constant value of $1 per unit. Unit value is computed using the amortized cost method. In addition, the net asset value of the pool, marked to market, is calculated and maintained on a weekly basis to ensure a $1 per unit constant value. - 62 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME (CONTINUED) A. DEPOSITS AND INVESTMENTS (CONTINUED) PRIMARY GOVERNMENT, PUBLIC HOUSING AUTHORITY, AND FIDUCIARY FUNDS (CONTINUED) As of June 30, 2008, the County’s investments, for both custodial and credit risk purposes, consisted solely of shares in the MLGIP. This investment is not deemed to have either risk and is in conformity with the County’s policy relating to minimal credit risk of investments. COMPONENT UNITS (BOARD OF EDUCATION AND LIBRARY) Component Unit - Board of Education - At year-end, the carrying amount of deposits was $9,781,054, including $300,000 in certificates of deposit and $1,611 cash on hand for petty cash and excluding the carrying amount of fiduciary funds. The bank balances were $10,618,780. Of the bank balances, $362,000 was insured by federal depository insurance (FDIC). The uninsured balances were fully collateralized by securities held by the agent of the Board, in the Board’s name. Component Unit – Library - At year-end, the carrying amount of all bank deposits, including a $617,868 certificate of deposit, was $1,114,134, while collected bank balances were $1,122,126. At all banks, FDIC coverage plus the market value of securities placed with the respective banks’ escrow agents and held in the Library’s name fully collateralized the deposits. B. INVESTMENT INCOME PRIMARY GOVERNMENT Total investment income earned in all governmental funds was credited for use as follows: Investment Governmental Funds Income General Fund $ 1,174,877 Other Funds 410,055 Unrestricted Revenue 1,584,932 Restricted Revenue 543,577 Total Investment Income $ 2,128,509 - 63 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 4 - ACCOUNTS RECEIVABLE Receivables as of June 30, 2008 for the governmental and business-type activities are as follows: Total General Roads Non-Major Total Total Governmental General Capital Capital Roads Governmental Governmental Enterprise and Enterprise Accounts Receivable Fund Projects Projects Board Funds Funds Funds Funds Receivables Taxes - Real Property $ 103,269 $ - $ - $ - $ - $ 1 03,269 $ - $ 1 03,269 Taxes - Other 97,518 140,629 - - - 2 38,147 - 238,147 Subtotal Taxes 2 00,787 140,629 - - - 3 41,416 - 341,416 Other Accounts Receivable: Reimbursements related to Detention Center 2 73,414 - - - - 2 73,414 - 273,414 Reimbursements from the Board of Education - - - 44,021 - 4 4,021 - 4 4,021 Maintenance Charges - 2 9,938 - - - 2 9,938 - 2 9,938 Retirees Insurance 20,839 - - - - 2 0,839 - 2 0,839 Recordation Tax Interest 17,445 - - - - 1 7,445 - 1 7,445 Rubble Surcharge 11,774 - - - - 1 1,774 - 1 1,774 Other Licenses and Permits 8 ,835 - - - - 8 ,835 - 8 ,835 Solid Waste 8 ,116 - - - - 8 ,116 - 8 ,116 Transfer Tax Interest - 7 ,316 - - - 7 ,316 - 7 ,316 User Fees - Governmental Funds - - 13,893 - - 1 3,893 - 1 3,893 User Fees - Sanitary District - - - - - - 3 10,834 310,834 User Fees - Parks & Recreation - Programs - - - - - - 9 ,210 9 ,210 User Fees - Airport - - - - - - 9 ,290 9 ,290 Septage Fees - Sanitary District - - - - - - 6 4,296 6 4,296 Rental Fees - Airport - - - - - - 1 7,475 1 7,475 Fuel Sales - Airport - - - - - - 5 1,077 5 1,077 Miscellaneous Receivables 21,528 3 98 - 14,624 110,284 1 46,834 3 ,406 150,240 Subtotal Other Accounts Receivable 3 61,951 3 7,652 13,893 58,645 110,284 5 82,425 4 65,588 1,048,013 Loans Receivable - - - - 2,929,603 2 ,929,603 - 2 ,929,603 Subtotal Other Accounts and Loans Receivable 3 61,951 3 7,652 13,893 58,645 3,039,887 3 ,512,028 4 65,588 3 ,977,616 Special Assessments - - 6 27,264 - 285,022 9 12,286 - 912,286 Intergovernmental Income Taxes Held by State 12,902,125 - - - - 12,902,125 - 12,902,125 Grants Receivable 832,816 1 ,041,086 - - 490,026 2 ,363,928 1 73,173 2,537,101 State-Shared Highway User Tax - - - 851,978 - 8 51,978 - 851,978 Bonds Receivable 2 ,252,034 - - - - 2 ,252,034 - 2,252,034 Subtotal Intergovernmental 15,986,975 1 ,041,086 - 851,978 490,026 18,370,065 1 73,173 18,543,238 Restricted Receivables Accounts Receivable - - - - - - 4 8,917 4 8,917 Special Assessments - - - - - - 4 ,504,380 4 ,504,380 Total Receivables $ 16,549,713 $ 1,219,367 $ 6 41,157 $ 910,623 $ 3,814,935 $ 2 3,135,795 $ 5,192,058 $ 28,327,853 Note that receivables from Component Units are not included in the above table. Intergovernmental receivables include bonds receivable from four other counties. In years 1994, 2000, and 2003, Queen Anne’s County sold $1,000,000, $2,815,000, and $710,000, respectively, of its general obligation bonds for the purpose of providing the local share of capital projects at Chesapeake College. Five counties, including Queen Anne’s County, provide local support for the College. The other four counties supporting Chesapeake College have provided their bonds to Queen Anne’s County as evidence of their requirement to reimburse their portion of the debt service. Bonds are amortized over the 20-year life of each of the original Queen Anne's County Bonds. The current carrying value for the bonds receivable from the four counties are $330,600, $1,515,000, and $406,434, respectively, for a total of $2,252,034. The College bills and collects from the five counties an amount sufficient to cover this debt service and reimburses this amount to Queen Anne’s County on a semi-annual basis. - 64 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 4 - ACCOUNTS RECEIVABLE (CONTINUED) The County expects to receive all receivables listed in the table within one year, excluding: Loans Receivable in the amount of $2,929,603 relate to the Housing, Dredging, and Revolving Loan Special Revenue Funds. Loans receivable in the amount of $2,798,835 for Housing and Community Services will be paid back within a longer range of time, or in most cases not until the home is sold. These loans support housing rehabilitation and home-ownership. When the loans are paid back to the County, the funds are then loaned back out to serve the same purpose. In addition, loans for the Revolving Loan Fund in the amount of $118,985 are also paid back over a number of years. The remaining balance of $11,783 relates to a loan receivable for dredging. Income taxes held by the State in the amount of $12,902,125 will be received by the State and passed on to the County over a number of years. It may take five years or longer to receive the entire amount listed above. In some cases, there may be a percentage of this amount that is not received in that time, as it depends on when people file their income taxes. Special Assessments in the amount of $912,286 represent receivables for governmental activities. They consist of $627,264 for Roads Capital Projects for assessments levied on homeowners for the County’s construction of the surrounding roads, and $285,022 for assessments levied on homeowners relating to dredging costs. Both of these assessments are paid back over a number of years. Restricted Special Assessments in the amount of $4,504,380 represent restricted receivables for the Sanitary District. These receivables relate to assessments levied on homeowners for the construction of sewer and water lines, and also for the hook up costs. Only the current portion due is billed and the remaining balances are repaid over a number of years, as determined by the original agreement. As the funds are paid back, the County uses the money to repay debt. - 65 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 5 – DEFERRED OR UNEARNED REVENUE Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but unearned. At the end of the current fiscal year, the components of unavailable revenue and unearned revenue were reported in the governmental funds as deferred revenue as follows: Deferred Revenue Unavailable Unearned Total General Fund Income Taxes Due from State $ 10,201,570 $ - $ 10,201,570 Property Taxes Receivable 9 3,916 - 9 3,916 Property Tax Deferrals - 6,936 6 ,936 Inter-governmental Bonds Receivable 2,252,034 - 2 ,252,034 Grant Drawdowns in Excess of Expenditures - 55,716 5 5,716 Subtotal 1 2,547,520 62,652 12,610,172 General Capital Projects Fund Grant Drawdowns in excess of Expenditures - 94,985 9 4,985 Roads Capital Projects Fund Grant Drawdowns in Excess of Expenditures - 16,673 1 6,673 Benefit Assessments Receivable Not Currently Due - 627,264 627,264 Benefit Assessments Paid in Advance - 59,968 5 9,968 Subtotal - 703,905 703,905 Roads Board Operating Fund Inspection Fees Collected In Advance - 634,838 634,838 State-Shared Highway User Tax Received In Excess of Expenditures - 2,551,096 2 ,551,096 Subtotal - 3,185,934 3 ,185,934 Non-Major Governmental Funds Grant Drawdowns in Excess of Expenditures - 54,388 5 4,388 Benefit Assessments Receivable Not Currently Due - 285,022 285,022 Subtotal - 339,410 339,410 Total Deferred Revenue $ 12,547,520 $ 4,386,886 $ 16,934,406 - 66 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 – CAPITAL ASSETS PRIMARY GOVERNMENT Capital asset activity for the year ended June 30, 2008 for governmental activities is as follows: Balance Balance GGovernmental Activities June 30, 2007 Increases Decreases June 30, 2008 Capital Assets, not being depreciated: Land $ 30,611,334 $ 6,414,472 $ - $ 37,025,806 Land Improvements 1,502,049 2 08,186 - 1,710,235 Construction in Progress 7,617,927 5 ,159,620 (2,706,735) 1 0,070,812 Land - Inexhaustible Infrastructure Improvements 39,441,833 4 83,665 - 3 9,925,498 Total Capital Assets, not being depreciated 79,173,143 12,265,943 (2,706,735) 8 8,732,351 Capital Assets, being depreciated: Buildings & Building Improvements 24,469,618 3 ,046,502 - 2 7,516,120 Improvements other than buildings 4,496,617 1 70,764 - 4,667,381 Vehicles 7,748,911 8 40,796 (448,474) 8,141,233 Equipment 7,467,465 8 15,049 (236,004) 8,046,510 Furniture & Fixtures 8,782,139 2 94,482 (5,828) 9,070,793 Infrastructure Improvements - Depreciable 14,685,543 1 90,692 - 1 4,876,235 Total Capital Assets, being depreciated 67,650,293 5 ,358,285 (690,306) 7 2,318,272 Less Accumulated Depreciation for: Buildings 6,136,576 4 44,666 - 6,581,242 Building Improvements 544,982 7 9,851 - 6 24,833 Improvements other than buildings 540,979 1 21,336 - 6 62,315 Vehicles 4,116,146 7 68,506 (437,965) 4,446,687 Equipment 4,642,968 6 18,357 (60,417) 5,200,908 Furniture & Fixtures 3,804,088 8 76,496 (4,103) 4,676,481 Infrastructure Improvements - Depreciable 5,685,746 2 97,525 - 5,983,271 Total Accumulated Depreciation 25,471,485 3 ,206,737 (502,485) 2 8,175,737 Total Capital Assets, being depreciated, net 42,178,808 2 ,151,548 (187,821) 4 4,142,535 Governmental activities Capital Assets, net $ 121,351,951 $ 14,417,491 $ (2,894,556) $ 132,874,886 - 67 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 – CAPITAL ASSETS (CONTINUED) PRIMARY GOVERNMENT (CONTINUED) Capital asset activity separated by transaction type for the year ended June 30, 2008 for governmental activities is as follows: Less Book Value Less Traded & Governmental General Roads Donated of Disposed Current Year Change in Balance Governmental Transferred Force in Kind Capital Capital Roads Donated Land Capital Depreciation Balance Capital GGovernmental Activities June 30, 2007 Capital Outlay Capital Outlay Expenditures Projects Projects Infrastructure Governmental Assets Expense June 30, 2008 Assets Capital Assets, not being depreciated: Land $ 30,611,334 $ - $ - $ - $ 5 ,749,320 $ - $ - $ 6 65,152 $ - $ - $ 3 7,025,806 $ 6,414,472 Land Improvements 1,502,049 - - - 2 08,186 - - - - - 1 ,710,235 208,186 Construction in Progress 7,617,927 - - 1 15,650 2 ,192,282 2 33,699 - - ( 88,746) - 1 0,070,812 2,452,885 Land - Inexhaustible Infrastructure Improvements 39,441,833 - - 1 ,752 - 8 8,913 3 93,000 - - - 3 9,925,498 483,665 Total Capital Assets, not being depreciated 79,173,143 - - 1 17,402 8 ,149,788 3 22,612 3 93,000 6 65,152 ( 88,746) - 8 8,732,351 9,559,208 Capital Assets, being depreciated: Buildings & Building Improvements 24,469,618 31,254 - - 3 ,015,248 - - - - - 2 7,516,120 3,046,502 Improvements other than buildings 4,496,617 - - - 1 70,764 - - - - - 4 ,667,381 170,764 Vehicles 7,748,911 791,576 1 1,180 - 4 9,220 - - - ( 459,654) - 8 ,141,233 392,322 Equipment 7,467,465 310,059 5 5,428 - 4 49,562 - - - ( 236,004) - 8 ,046,510 579,045 Furniture & Fixtures 8,782,139 182,800 - - 1 11,682 - - - ( 5,828) - 9 ,070,793 288,654 Infrastructure Improvements - Depreciable 14,685,543 - - 4 38 - 9 2,004 9 8,250 - - - 1 4,876,235 190,692 Total Capital Assets, being depreciated 67,650,293 1,315,689 6 6,608 4 38 3 ,796,476 9 2,004 9 8,250 - ( 701,486) - 7 2,318,272 4,667,979 Less Accumulated Depreciation (25,471,485) - - - - - - - 502,485 (3,206,737) ( 28,175,737) (2,704,252) Total Capital Assets, being depreciated, net 42,178,808 1,315,689 6 6,608 4 38 3 ,796,476 9 2,004 9 8,250 - ( 199,001) (3,206,737) 4 4,142,535 1,963,727 Total Increase (Decrease) in Capital Assets $ 121,351,951 $ 1,315,689 $ 6 6,608 $ 1 17,840 $ 1 1,946,264 $ 4 14,616 $ 4 91,250 $ 6 65,152 $ ( 287,747) $ (3,206,737) $ 1 32,874,886 $ 11,522,935 - 68 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 – CAPITAL ASSETS (CONTINUED) PRIMARY GOVERNMENT (CONTINUED) Capital asset activity for the year ended June 30, 2008 for business-type activities is as follows: Balance Balance BBusiness-Type Activities June 30, 2007 Increases Decreases June 30, 2008 Capital Assets, not being depreciated: Land $ 12,828,312 $ - $ - $ 12,828,312 Land Improvements 16,162 - - 16,162 Construction in Progress 33,236,129 2,524,735 (33,688,194) 2,072,670 Land - Inexhaustible Infrastructure Improvements 1,168,407 - - 1,168,407 Total Capital Assets, not being depreciated 47,249,010 2,524,735 (33,688,194) 16,085,551 Capital Assets, being depreciated: Buildings and Improvements to Buildings 13,251,556 6,403,152 (1,931,798) 17,722,910 Improvements other than Buildings 4,020,840 1,857,083 (165,352) 5,712,571 Automotive Equipment 1,067,697 185,107 (106,306) 1,146,498 Equipment 6,851,144 15,838,540 (1,116,074) 21,573,610 Furniture & Fixtures 71,520 2,519 - 74,039 Infrastructure Improvements - Depreciable 57,025,565 11,629,327 (1,321,728) 67,333,164 Total Capital Assets, being depreciated 82,288,322 35,915,728 (4,641,258) 113,562,792 Less Accumulated Depreciation for: Buildings and Improvements to Buildings 4,912,770 244,568 (743,423) 4,413,915 Improvements other than Buildings 1,608,107 178,605 (5,512) 1,781,200 Automotive Equipment 713,683 82,368 (92,230) 703,821 Equipment 5,356,737 191,206 (1,060,976) 4,486,967 Furniture & Fixtures 52,828 4,128 - 56,956 Infrastructure Improvements - Depreciable 15,894,564 1,114,075 (673,696) 16,334,943 Total Accumulated Depreciation 28,538,689 1,814,950 (2,575,837) 27,777,802 Total Capital Assets, being depreciated, net 53,749,633 34,100,778 (2,065,421) 85,784,990 Business-type Activities Capital Assets, net $ 100,998,643 $ 36,625,513 $ (35,753,615) $ 101,870,541 - 69 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 – CAPITAL ASSETS (CONTINUED) PRIMARY GOVERNMENT (CONTINUED) Depreciation expense was charged to functions/programs of the primary government as follows: GGovernmental Activities Depreciation General Government $ 116,278 Public Safety 1,296,808 Public Works 1,217,405 Health 10,117 Social Services 210,060 Parks & Recreation 307,383 Library 23,610 Conservation of Natural Resources 17,657 Economic/Community Development 7,419 $ 3,206,737 Business-Type Activities Sanitary District $ 1,494,207 Parks & Recreation Enterprise Funds 152,748 Public Marinas Enterprise Funds 5,238 Airport 162,757 $ 1,814,950 - 70 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 – CAPITAL ASSETS (CONTINUED) COMPONENT UNITS Board of Education: Capital asset activity for the year ended June 30, 2008 is as follows: Balance Balance BBoard of Education June 30, 2007 Increases Decreases June 30, 2008 Capital Assets, not being depreciated: Land $ 3,868,870 $ - $ - $ 3,868,870 Construction in Progress 25,795,029 15,009,964 (27,909,577) 12,895,416 Total Capital Assets, not being depreciated - 29,663,899 15,009,964 (27,909,577) 16,764,286 Capital Assets, being depreciated: Land Improvements 4,424,772 79,229 - 4,504,001 Building improvements 106,161,651 26,615,221 - 132,776,872 Furniture and equipment 9,723,367 775,890 (371,194) 10,128,063 Total Capital Assets, being depreciated - 120,309,790 27,470,340 (371,194) 147,408,936 Less Accumulated Depreciation for: Land Improvements 2,564,950 210,890 - 2,775,840 Building improvements 23,210,188 2,533,915 - 25,744,103 Furniture and equipment 7,316,873 576,988 (345,193) 7,548,668 Total Accumulated Depreciation 33,092,011 3,321,793 (345,193) 36,068,611 Total Capital Assets, being depreciated, net 87,217,779 24,148,547 (26,001) 111,340,325 Capital Assets, net $ 116,881,678 $ 39,158,511 $ (27,935,578) $ 128,104,611 - 71 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 – CAPITAL ASSETS (CONTINUED) COMPONENT UNITS (CONTINUED) Queen Anne’s County Free Library: Capital asset activity for the year ended June 30, 2008 is as follows: Balance Balance LLibrary June 30, 2007 Increases Decreases June 30, 2008 Capital Assets, not being depreciated: Artwork $ 2 9,850 $ - $ - $ 29,850 Capital Assets, being depreciated: Books and media 2 ,153,578 109,570 - 2,263,148 Building improvements 2 39,072 - - 239,072 Furniture and equipment 3 5,466 - ( 35,466) - Total Capital Assets, being depreciated 2 ,428,116 109,570 ( 35,466) 2,502,220 Less Accumulated Depreciation for: Books and media 1 ,365,845 103,475 - 1,469,320 Building improvements 7 8,895 6,130 - 85,025 Furniture and equipment 3 5,466 - ( 35,466) - Total Accumulated Depreciation 1 ,480,206 109,605 ( 35,466) 1,554,345 Total Capital Assets, being depreciated, net 9 47,910 (35) - 947,875 Capital Assets, net $ 9 77,760 $ (35) $ - $ 977,725 - 72 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 – CAPITAL ASSETS (CONTINUED) COMPONENT UNITS (CONTINUED) Queen Anne's County Housing Authority: Capital asset activity for the year ended June 30, 2008 is as follows: Balance Balance HHousing Authority June 30, 2007 Increases Decreases June 30, 2008 Capital Assets, not being depreciated: Land $ 5 98,505 $ 137,056 $ - $ 735,561 Land Improvements 1 5,489 - - 15,489 Construction in Progress 3 ,742,429 4,917,612 (73,326) 8,586,715 Total Capital Assets, not being depreciated 4 ,356,423 5,054,668 (73,326) 9,337,765 Capital Assets, being depreciated: Buildings & improvements 1 5,044,678 309,463 - 15,354,141 Vehicles 2 3,490 - - 23,490 Furniture, fixtures & equipment 2 33,114 - - 233,114 Total Capital Assets, being depreciated 1 5,301,282 309,463 - 15,610,745 Less Accumulated Depreciation for: Buildings & improvements 2 ,322,472 310,298 - 2,632,770 Vehicles 1 2,332 2,349 - 14,681 Furniture, fixtures & equipment 9 5,710 12,668 - 108,378 Total Accumulated Depreciation 2 ,430,514 325,315 - 2,755,829 Total Capital Assets, being depreciated, net 1 2,870,768 (15,852) - 12,854,916 Capital Assets, net $ 1 7,227,191 $ 5,038,816 $ (73,326) $ 22,192,681 - 73 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 7 - INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables are usually used by the County to cover temporary cash deficits in individual funds until grant funds are received. Occasionally, these receivables and payables are used in lieu of short-term external borrowing, such as for capital lease agreements. Intra-entity receivables and payables usually relate to capital construction projects, wherein the primary government records a liability to its component unit at year-end while the component unit records a payable to the contractor. The interfund and intra-entity receivables and payables consist of the following at June 30, 2008: Due from Fund General Non-Major Sanitary Bay Bridge Non-Major Housing Authority - Total Due From Capital Projects Governmental District Airport Enterprise Component Unit Other Funds Due to Fund General $ - $ 224,099 $ - $ 831,509 $ 1,636,614 $ 43,547 $ 2,735,769 General Capital Projects - - 80,000 - - - 80,000 Sanitary District - - 17,199 - - - 17,199 Non-Major Enterprise - - - - 40,000 - 40,000 Board of Education - Component Unit 2,406,194 - - - - - 2,406,194 Total Due to Other Funds $ 2,406,194 $ 224,099 $ 97,199 $ 831,509 $ 1,676,614 $ 43,547 $ 5,279,162 Further information about the interfund and intra-entity receivables and payables can be found in the Detailed Schedule of Interfund Receivables and Payables following the Notes. - 74 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 8 - INTERFUND TRANSFERS Interfund transfers represent a transfer of resources from one fund to another without expectation of repayment. Usually, these transfers are undertaken to enable the receiving entity to provide services that the government has determined to be in the best interest of the County. The following interfund transfers were made during the fiscal year ended June 30, 2008: Transfers In Fund General General Roads Non-Major Major Non-Major Total Fund Capital Projects Board Governmental Enterprise Enterprise Transfers Out Transfers Out Fund General Fund $ - $ 12,176,028 $ 28,868 $ 2,489,964 $ 180,408 $ 1 57,260 $ 15,032,528 General Capital Projects - - - 235,000 - 2 53,487 488,487 Impact Fees - Schools 1,408,120 - - - - - 1,408,120 Total Capital Projects Funds 1,408,120 - - 235,000 - 2 53,487 1,896,607 Non-Major Governmental 72,403 24,350 - - - - 96,753 Sanitary District - Sewer and Water Operating - - - - 142,464 - 142,464 Sanitary District - Restricted - - - - 2,118,937 - 2,118,937 Sanitary District - Debt Service - - - - 2,092,727 - 2,092,727 Total Sanitary District Funds - - - - 4,354,128 - 4,354,128 Non-Major Enterprise 579,574 - - - 248,354 - 827,928 Total Transfers In $ 2,060,097 $ 12,200,378 $ 28,868 $ 2,724,964 $ 4,782,890 $ 4 10,747 $ 22,207,944 Further information about the interfund transfers can be found in the Detailed Schedule of Interfund Transfers following the Notes. - 75 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES A. CHANGES IN NONCURRENT LIABILITIES During the year ended June 30, 2008, the following changes occurred in the noncurrent liabilities of the Primary Government: PPRIMARY GOVERNMENT Retirements Due in Balance Additions and Balance Due Within More than Governmental Activities June 30, 2007 of new debt Repayments June 30, 2008 One Year One Year General Bonds Payable $ 75,938,286 $ - $ 5,185,941 $ 70,752,345 $ 5,218,709 $ 65,533,636 Notes Payable 5 61,000 510,617 2 49,000 8 22,617 24,000 798,617 Bond Premiums, Net of Issuance Costs 7 80,772 - 6 4,723 7 16,049 64,723 651,326 Deferred Refunding Costs ( 2,001,409) - ( 170,483) ( 1,830,926) (170,483) (1,660,443) Capital Leases 2 48,460 - 4 5,482 2 02,978 47,496 155,482 75,527,109 510,617 5 ,374,663 70,663,063 5,184,445 65,478,618 Compensated Absences 1,707,921 1,467,047 1 ,205,942 1 ,969,026 1,376,098 592,928 $ 77,235,030 $ 1,977,664 6 ,580,605 $ 72,632,089 $ 6,560,543 $ 66,071,546 Less College Reimbursements ( 200,580) $ 6,380,025 Note that the General Bonds Payable retirements and repayments of $5,185,941 above includes $345,956 of debt that was distributed during fiscal year 2008 from governmental activities to: the Airport for $21,238, Kent Narrows Marina for $36,934, and the Housing Authority for $287,784 for the 2006 bonds. These distributions of $345,956 are excluded from principal payments reported in governmental funds. Note also that college reimbursements of $200,580, for debt payments made by the County for bonds undertaken on behalf of the college, were offset by the County’s allocation to the college in the amount of $51,965 for this debt. This reimbursement of $200,580 is excluded from principal payments reported in governmental funds. - 76 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES (CONTINUED) A. CHANGES IN NONCURRENT LIABILITIES (CONTINUED) Retirements Due in Balance Additions and Balance Due Within More than BBusiness -Type Activites June 30, 2007 of new debt Repayments June 30, 2008 One Year One Year Golf Course $ 1 ,031,075 $ - $ 5 5,000 $ 976,075 $ 6 0,000 $ 916,075 Airport 5 03,578 21,238 31,467 4 93,349 3 3,552 459,797 Public Marinas 3 8,267 36,934 7 ,885 6 7,316 8 ,230 59,086 Sanitary District 2 5,552,847 697,258 2,634,284 23,615,821 1 ,931,383 21,684,438 Subtotal Debt 2 7,125,767 755,430 2,728,636 25,152,561 2 ,033,165 23,119,396 Bond Premiums, Net of Issuance Costs Golf Course 3 4,469 - 2 ,652 3 1,817 2 ,651 29,166 Airport 1 0,814 - 8 32 9 ,982 8 32 9,150 Deferred Refunding Costs Golf Course ( 76,548) - (5,889) ( 70,659) ( 5,888) (64,771) Airport ( 24,015) - (1,848) ( 22,167) ( 1,847) (20,320) Sanitary District ( 122,754) - (27,211) ( 95,543) (27,210) (68,333) Subtotal Bond Premiums, Issuance and Deferred Refunding Costs ( 178,034) - ( 31,464) ( 146,570) (31,462) (115,108) Compensated Absences 2 42,678 171,851 1 71,353 2 43,176 169,949 73,227 $ 27,190,411 $ 927,281 $ 2,868,525 $ 25,249,167 $ 2,171,652 $ 23,077,515 Additions of new debt listed above in the amounts of $21,238 for the Airport and $36,934 for Public Marinas represent a distribution of the 2006 bonds. Retirements and repayments of debt in the amount of $2,634,284 for the Sanitary District includes repayments of $1,886,942 plus retirements of a loan agreement in the amount of $747,342, which was replaced with a long term payable for $697,258. - 77 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES (CONTINUED) A. CHANGES IN NONCURRENT LIABILITIES (CONTINUED) During the year ended June 30, 2008, the following changes occurred in the noncurrent liabilities of the primary government’s Component Units: CCOMPONENT UNITS Retirements Due in Board of Education Balance Additions and Balance Due Within More than and Housing Authority June 30, 2007 of new debt Repayments June 30, 2008 One Year One Year Queen Anne's County Board of Education Capital Lease $ 194,350 $ 1 79,542 $ 112,716 $ 261,176 $ 110,407 $ 1 50,769 Compensated Absences 785,271 8 2,992 80,361 787,902 109,856 6 78,046 Subtotal 979,621 2 62,534 193,077 1,049,078 220,263 8 28,815 Housing Authority Terrapin Grove Phase II Loan 777,125 - 40,908 736,217 40,908 6 95,309 Scattered Site Housing Reimbursement to County for Portion of 2003 Bonds 284,381 - 12,070 272,311 12,563 2 59,748 Repay Loan from County Housing Revolving Loan Fund 202,224 3 00,000 - 502,224 - 5 02,224 Reimbursement to County for Portion of 2006 Bonds 78,481 2 87,784 10,406 355,859 13,760 3 42,099 Subtotal 1,342,211 5 87,784 63,384 1,866,611 67,231 1 ,799,380 $ 2,321,832 $ 8 50,318 $ 256,461 $ 2,915,689 $ 287,494 $ 2 ,628,195 The addition of new debt listed above in the amount of $287,784 for the Housing Authority represents a distribution of the 2006 bonds. B. GENERAL OBLIGATION BONDS, NOTES, AND COMPENSATED ABSENCES PRIMARY GOVERNMENT All general obligation bonds are valid and legally binding general obligations of Queen Anne’s County and constitutes an irrevocable pledge of its full faith and credit and unlimited taxing power. Governmental bonds are payable from ad valorem taxes, unlimited as to rate or amount on all real, tangible, personal, and certain intangible property subject to taxation at full rate for local purposes in the County. Business-type bonds, while representing general obligations of the County government, are to be paid from income earned by the related enterprise fund. Enterprise funds that have such debt are: Water, Sewer, Bay Bridge Airport, Blue Heron Golf Course, and Public Marinas. Compensated absences that mature during the fiscal year, in that they are paid when the employee takes vacation or compensatory leave or upon the employee’s termination, are typically liquidated from the governmental or enterprise fund in which that employee charges the majority of their productive time. It is paid as regular wages. Compensated absences that do not mature during the fiscal year are accrued at year-end as an adjustment to liability for compensated absences. For governmental funds, these adjustments are reported in the government-wide statements in the function in which that employee usually charges their productive time. For enterprise funds, these adjustments are reported in the enterprise fund in which that employee charges the majority of their productive time. In the case of grant-funded activities that disallow compensated absences as an eligible cost, they are paid as administrative wages in the same Fund. Compensated absences in governmental funds are primarily charged to the General Fund or Special Revenue Funds; they are usually not charged to Capital Projects Funds. - 78 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES (CONTINUED) B. GENERAL OBLIGATION BONDS, NOTES, AND COMPENSATED ABSENCES (CONTINUED) PRIMARY GOVERNMENT (CONTINUED) As of June 30, 2008, general obligation bonds and notes payable are comprised of the following, along with accrued compensated absences: Year Amount Outstanding Due in Paying Interest Series of Original June 30, Due Within More than GGovernmental Activities Fund Rate Matures Issue 2008 One Year One Year General Obligation Bonds Payable 1995 Refunding General 3.70%-4.70% 2009 $ 3 ,030,000 $ 370,000 $ 370,000 $ - 2000 Public Facilities General 4.25%-5.50% 2020 3 1,175,000 3,355,000 1,630,000 1,725,000 2002 Refunding Bonds General 3.00%-5.00% 2013 6 ,310,000 4,460,000 795,000 3,665,000 2003 Public Facilities General 3.50%-4.50% 2023 1 3,265,000 10,782,690 497,437 10,285,253 2005 Refunding Bonds General 3.00%-5.00% 2019 3 0,026,336 29,746,336 1,150,000 28,596,336 2006 Public Facilities General 4.000%-5.375% 2027 2 3,049,812 22,038,319 776,272 21,262,047 Subtotal Bonds Payable 70,752,345 5,218,709 65,533,636 Notes Payable State of Maryland - Price Ck. Spec. Rev. 0.00% 2021 6 25,000 312,000 24,000 288,000 State of Maryland - Grove Ck. Spec. Rev. 0.00% 2034 5 10,617 498,834 - 498,834 Loan Agreement Payable - Grove Ck. 0.00% 11,783 - 1 1,783 Subtotal Notes Payable 8 22,617 2 4,000 798,617 Subtotal Bonds and Notes Payble 71,574,962 5,242,709 66,332,253 2005 Bond Premiums 840,691 76,391 764,300 2005 Bond Issuance Costs (124,642) (11,668) (112,974) 2005 Deferred Refunding Costs (1,830,926) (170,483) (1,660,443) 2006 Bond Premiums 228,827 12,044 216,783 2006 Bond Issuance Costs (228,827) (12,044) (216,783) Total Governmental Activities 70,460,085 5,136,949 65,323,136 Long-term Obligation under Capital Lease Agreements General 4.38% 2012 2 48,460 202,978 47,496 155,482 Accrued Compensated Absences 1,969,026 1,376,098 592,928 $ 72,632,089 $ 6,560,543 $ 66,071,546 Details relating to the capital lease obligation can be found in Note 9, Section E – Capital Lease Obligations. - 79 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES (CONTINUED) B. GENERAL OBLIGATION BONDS, NOTES, AND COMPENSATED ABSENCES (CONTINUED) PRIMARY GOVERNMENT (CONTINUED) The annual requirements to amortize general obligation bonds and notes payable outstanding as of June 30, 2008 for governmental activities are as follows: Governmental Activities Year Ending Governmental Bonds Payable Governmental Notes Payable June 30, Principal Interest Total Principal Interest Total 2009 $ 5,218,709 $ 2 ,951,674 $ 8 ,170,383 $ 24,000 $ - $ 24,000 2010 5,062,083 2 ,718,219 7 ,780,302 44,425 - 44,425 2011 5,250,428 2 ,492,160 7 ,742,588 44,425 - 44,425 2012 5,458,502 2 ,287,692 7 ,746,194 44,425 - 44,425 2013 5,196,725 2 ,079,982 7 ,276,707 44,425 - 44,425 2014-2018 23,822,250 7 ,334,686 3 1,156,936 222,125 - 222,125 2019-2023 14,502,472 2 ,915,733 1 7,418,205 174,125 - 174,125 2024-2034 6,241,176 6 29,552 6 ,870,728 224,667 - 224,667 $ 70,752,345 $ 2 3,409,698 $ 9 4,162,043 $ 822,617 $ - $ 822,617 These repayment schedules exclude amortization of bond premiums ($1,069,518), issuance costs (negative $353,469), and deferred refunding costs (negative $1,830,926). For the year ended June 30, 2008, total principal, debt issuance costs, and interest incurred by governmental funds relating to general obligation bonds and notes payable, less College reimbursements, were $4,888,405, $3,972, and $3,147,529, respectively. - 80 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES (CONTINUED) B. GENERAL OBLIGATION BONDS, NOTES, AND COMPENSATED ABSENCES (CONTINUED) PRIMARY GOVERNMENT (CONTINUED) General obligation bonds and notes payable outstanding as of June 30, 2008 for business-type activities are comprised of the following, as well as accrued compensated absences: Year Amount Outstanding Due in Interest Series of Original June 30, Due Within More than Business -Type Activities Rate Matures Issue 2008 One Year One Year Golf Course 2005 Refunding Bonds 3.00%-5.00% 2019 $ 1,076,075 $ 976,075 $ 6 0,000 $ 9 16,075 2005 Bond Premiums 36,493 3 ,041 3 3,452 2005 Bond Issuance Costs (4,676) (390) ( 4,286) 2005 Deferred Refunding Costs (70,659) (5,888) ( 64,771) Subtotal Golf Course 937,233 5 6,763 8 80,470 Airport 2005 Refunding Bonds 3.00%-5.00% 2019 337,588 292,588 2 5,000 2 67,588 2006 Public Facilities Bonds 4.000%-5.375% 2027 185,990 200,761 8 ,552 1 92,209 2005 Bond Premiums 1 1,449 9 54 1 0,495 2005 Bond Issuance Costs (1,467) (122) ( 1,345) 2005 Deferred Refunding Costs (22,167) (1,847) ( 20,320) 2006 Bond Premiums 2,523 1 33 2 ,390 2006 Bond Issuance Costs (2,523) (133) ( 2,390) Subtotal Airport 481,164 3 2,537 4 48,627 Public Marinas 2006 Public Facilities Bonds 4.000%-5.375% 2027 4,198 40,061 1 ,416 3 8,645 2006 Bond Premiums 424 2 2 4 02 2006 Bond Issuance Costs (424) (22) ( 402) State of Maryland 0% 2015 102,208 27,255 6 ,814 2 0,441 Subtotal Marinas 67,316 8 ,230 5 9,086 Sanitary District 1995 Refunding Bonds-Wtr 3.70%-4.70% 2009 625,000 70,000 7 0,000 - 2002 Refunding Bonds 3.00%-5.00% 2013 3,385,000 2,515,000 4 35,000 2 ,080,000 Maryland Water Quality-Cloverfields 5.09% 2013 4,282,209 1,070,552 214,110 8 56,442 Maryland Water Quality-Digester 4.41% 2013 1,121,377 437,034 7 9,982 3 57,052 Maryland Water Quality-Bay City 3.50% 2015 3,476,961 1,619,220 2 08,142 1,411,078 Maryland Water Quality-2005 Enhancement 1.00% 2027 18,252,291 17,408,592 8 37,223 1 6,571,369 State of Maryland 6.10% 2010 500,000 100,348 3 1,560 6 8,788 Bank of America 5.60% 2010 200,000 45,908 1 7,682 2 8,226 Queenstown Bank-Cloverfields Hookup 8.13% 2015 435,000 228,498 2 6,410 2 02,088 Queenstown Bank-Bay City Hookup 7.90% 2015 205,000 120,669 1 1,274 1 09,395 Subtotal Debt 23,615,821 1 ,931,383 2 1,684,438 Prior Issue Deferred Refunding Costs (95,543) (27,210) ( 68,333) Subtotal Sanitary District 23,520,278 1 ,904,173 2 1,616,105 Total Enterprise Debt before Compensated Absences 25,005,991 2 ,001,703 2 3,004,288 Accrued Compensated Absences 243,176 1 69,949 7 3,227 Total Enterprise Funds $ 25,249,167 $ 2 ,171,652 $ 2 3,077,515 - 81 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES (CONTINUED) B. GENERAL OBLIGATION BONDS, NOTES, AND COMPENSATED ABSENCES (CONTINUED) PRIMARY GOVERNMENT (CONTINUED) The annual requirements to amortize business-type bonds and notes outstanding at June 30, 2008, are as follows: Business-Type Activities Year Ending Business-Type Bonds Payable Business-Type Notes Payable June 30, Principal Interest Total Principal Interest Total 2009 $ 599,968 $ 1 72,302 $ 7 72,270 $ 1,433,197 $ 444,792 $ 1,877,989 2010 560,341 1 47,064 7 07,405 1,458,490 386,922 1,845,412 2011 595,778 1 20,320 7 16,098 1,474,205 349,913 1,824,118 2012 616,276 9 1,314 7 07,590 1,453,234 312,853 1,766,087 2013 431,712 6 6,957 4 98,669 1,471,182 277,187 1,748,369 2014-2018 946,720 1 52,834 1 ,099,554 5,118,380 876,404 5,994,784 2019-2023 305,709 3 4,080 3 39,789 4,717,486 581,065 5,298,551 2024-2027 37,981 8 ,084 4 6,065 3,931,902 292,174 4,224,076 $ 4,094,485 $ 7 92,955 $ 4 ,887,440 $ 21,058,076 $ 3,521,310 $ 24,579,386 For the year ended June 30, 2008, total principal and interest incurred by business-type activities relating to bonds and notes payable were $2,728,636 and $407,651, respectively. C. DEFEASANCE OF DEBT Prior Years’ Refunding Bonds – In prior years, Queen Anne’s County defeased certain general obligation bonds by placing the proceeds of new bonds with an escrow agent in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liability for the defeased bonds are not included in the financial statements for Queen Anne’s County. At June 30, 2008, $38,760,000 of bonds are considered defeased during prior years. Of this amount, $34,270,000 of bonds are related to Governmental Activities and $4,490,000 of bonds are related to Business-Type Activities. - 82 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 – NONCURRENT LIABILITIES (CONTINUED) D. ISSUANCE OF NEW DEBT PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES During fiscal year 2008, Queen Anne’s County received loan proceeds from the State of Maryland Department of Natural Resources (DNR) in the amount of $498,834. In addition, the County recorded $11,783 as a loan agreement payable for the balance of this loan. The total loan was for $510,617, of which the final draw down of $11,783 did not occur until the 2009 fiscal year. The loan to DNR is an interest free loan and will be paid back in twenty five payments beginning November 1, 2009. The loan proceeds provided funding for the Grove Creek Dredging Project which was completed in fiscal year 2008. In fiscal year 2009, the County levied a benefit assessment on property owners around Grove Creek and will use the assessments collected over time to repay the loan. E. CAPITAL LEASE OBLIGATIONS PRIMARY GOVERNMENT In September 2006, Queen Anne’s County entered into a capital lease agreement for two roll-off trucks for a net total of $248,460, after trade-ins. Financing for the two trucks was through BB&T Bank for a five-year term at a rate of 4.380 percent and maturity in 2012. The trucks were purchased for the Solid Waste Department. This lease agreement qualifies as a capital lease; therefore, it has been recorded at the present value of future minimum lease payments as of the inception of the lease. As of June 30, 2008, the assets acquired and placed in service, net of depreciation, are as follows: Vehicles $ 2 48,460 Less accumulated depreciation ( 39,340) Total asset value for capital lease $ 2 09,120 The future minimum lease obligations and the net present value of the minimum lease payments as of June 30, 2008, are as follows: Fiscal Year Ending lease June 30, payments 2009 $ 55,872 2010 55,872 2011 55,872 2012 55,871 Total minimum lease payments 223,487 Less amount representing interest ( 20,509) Present value of minimum lease payments $ 202,978 - 83 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 10 – RESTRICTED ASSETS AND LIABILITIES AND RESERVED/DESIGNATED FUND BALANCES A. RESTRICTED ASSETS AND RELATED LIABILITIES PRIMARY GOVERNMENT BUSINESS-TYPE ACTIVITIES Queen Anne’s County Sanitary District Restricted Fund - The County Commissioners created a restricted fund within the Sanitary District Enterprise Fund in November of 1989 by enabling legislation. Revenue sources to the fund are sales of water and sewer allocations and interest earned on investments. Authorized uses of restricted funds are major capital expenses for repairs, construction, plant expansion, debt service, or other similar uses within the Sanitary District. To date, such funds have been used almost exclusively for debt service. Debt Service Fund - Principal and interest payments for water and wastewater debt used to expand the service area are payable primarily from water and sewer special benefit assessments. These assessments, made at the time the expansion is ready for use, are created by enabling legislation and amortized over the same life as underlying debt. They constitute a lien on the served property and may be prepaid at any time. The amount of assessments collectable in future years is recorded as benefit assessments receivable. A portion of those assessments receivable is not due currently and is recorded as unearned revenue. Water Quality Revolving Loan Fund debt covenants stipulate that sufficient financial resources must be available in the Debt Service Fund as of June 30 of each year to cover the subsequent year’s debt service payments. If such resources are not available at that time, the covenants require that the County increase service rates, impose benefit assessments, or otherwise increase financial resources so that debt service payments are covered before they are due throughout the year. The assets and related liabilities restricted for the above purposes at June 30, 2008 are as follows: Sanitary District BBusiness -Type Activities Restricted Debt Service Total Current Restricted Assets Equity in Pooled Cash $ 8,790,508 $ 4,551,821 $ 13,342,329 Accounts Receivable (Net) 9 ,942 38,975 4 8,917 Subtotal 8 ,800,450 4,590,796 1 3,391,246 LESS Current Liabilities Payable from Current Restricted Assets Current Portion of Bonds Payable from Restricted Assets - (43,163) ( 43,163) Net Current Restricted Assets 8,800,450 4,547,633 1 3,348,083 Noncurrent Restricted Assets Special Assessments Receivable (Net) 1 ,580,653 2,923,727 4 ,504,380 LESS Noncurrent Liabilities Payable from Noncurrent Restricted Assets Unearned Revenue (1,580,653) (2,719,871) ( 4,300,524) Net Noncurrent Restricted Assets - 203,856 2 03,856 Net Restricted Assets $ 8,800,450 $ 4,751,489 $ 13,551,939 - 84 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 10 – RESTRICTED ASSETS AND LIABILITIES AND RESERVED/DESIGNATED FUND BALANCES (CONTINUED) B. RESTRICTED NET ASSETS PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES Net Assets Invested in Capital Assets, net of related debt is calculated as follows: GGovernmental Activities Total Debt excluding Compensated Absences $ ( 70,663,063) Add back: Debt relating to Board of Education Assets $ 53,758,049 Add back: Debt relating to non-capital assets (Dredging) 822,617 Add back: Unspent portion of 2006 Bonds 1,038,871 Add back debt unrelated to Capital Assets 5 5,619,537 Net Assets Invested in Capital Assets 1 32,874,886 Total Capital Assets, net of related debt $ 1 17,831,360 BUSINESS-TYPE ACTIVITES Net Assets Invested in Capital Assets Net of Related Debt, Restricted, and Unrestricted Net Assets for business-type activities are as follows: Sanitary District Non-Major Total Sewer Water Restricted Debt Service Total Bay Bridge Enterprise Enterprise BBusiness-Type Activities Operating Operating Fund Fund Sanitary Airport Funds Funds Capital Assets, net of Accumulated Depreciation $ 65,383,770 $ 1 6,032,847 $ - $ - $ 81,416,617 $ 12,608,363 $ 7,845,561 $ 101,870,541 Less: Debt excluding Compensated Absences 20,788,929 2 ,358,387 - - 23,147,316 481,164 1,004,549 24,633,029 Invested in Capital Assets, Net of Related Debt 44,594,841 1 3,674,460 - - 58,269,301 12,127,199 6,841,012 77,237,512 Restricted Net Assets Debt Service - - - 4,399,316 4,399,316 - 62 4,399,378 Capital Projects - - 7 53,300 - 753,300 - - 753,300 Total Restricted Net Assets - - 7 53,300 4,399,316 5,152,616 - 62 5,152,678 Total Unrestricted Net Assets 4,523,311 2 ,082,905 7 ,967,150 - 14,573,366 (726,184) (723,589) 13,123,593 Total Net Assets $ 49,118,152 $ 1 5,757,365 $ 8 ,720,450 $ 4,399,316 $ 77,995,283 $ 11,401,015 $ 6,117,485 $ 95,513,783 Debt excluding compensated absences for the Sanitary District in the amount of $23,147,316 above excludes $372,962 from the Debt Service Fund, as there are no capital assets related to that debt. Note that in the above table, Unrestricted Net Assets total $13,123,593 for business type activities. However, these assets become restricted when included in the Government-Wide Financial Statements found on pages 30-31. The Sanitary District’s Restricted Fund amount of $7,967,150 is restricted in that these funds can only be used for capital purchases or debt payments, hence they are reported in the ‘Restricted Fund’. The remaining unrestricted net assets listed above total $5,156,443 and are restricted in the Government-Wide Financial Statements because they may be used for business-type operations but not for governmental operations. - 85 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 10 – RESTRICTED ASSETS AND LIABILITIES AND RESERVED/DESIGNATED FUND BALANCES (CONTINUED) C. RESERVED/DESIGNATED FUND BALANCES PRIMARY GOVERNMENT Reserved, Designated and Unreserved/Undesignated Fund Balances for governmental funds are as follows: General Roads School Roads Total General Capital Capital Impact Board Non-Major Governmental GGovernmental Funds Fund Projects Projects Fees Operating Governmental Funds Reserved Fund Balances Loan Receivables $ - $ - $ - $ - $ - $ 2 ,929,603 $ 2,929,603 Donor-Specified Purposes 94,736 6 5,786 - - - 1 ,050 161,572 Contingencies per County Code-Mandated 7% Reserve 7,144,049 - - - - - 7,144,049 Other Legally Restricted Purposes - Escrow-Type 1,635,897 1 ,038,871 - - 23,810 2 ,129,452 4,828,030 Other Legally Restricted Purposes - Capital Projects - 1 69,526 1 43,550 - - - 313,076 Subtotal 8 ,874,682 1 ,274,183 1 43,550 - 2 3,810 5 ,060,105 1 5,376,330 Prepaid Items 1,950 - - - - 5 0,000 51,950 Encumbrances 67,599 8 ,702,963 9 63,791 - 18,713 - 9,753,066 Inventory 4,000 - - - 469,839 - 473,839 Subtotal 73,549 8 ,702,963 9 63,791 - 488,552 5 0,000 10,278,855 Total Reserved Fund Balances 8,948,231 9 ,977,146 1 ,107,341 - 512,362 5 ,110,105 25,655,185 Designated Fund Balances Subsequent Year's Expenditures 1,247,995 - - - - - 1,247,995 Capital Projects - - 6 68,408 2,255,460 - 9 12,278 3,836,146 Total Designated Fund Balances 1,247,995 - 6 68,408 2,255,460 - 9 12,278 5,084,141 Total Unreserved/Undesignated Fund Balances 2,724,852 9 ,112,300 1 ,460,770 - 210,373 1 ,974,931 15,483,226 Total Fund Balances $ 12,921,078 $ 1 9,089,446 $ 3 ,236,519 $ 2,255,460 $ 722,735 $ 7 ,997,314 $ 46,222,552 - 86 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 11 - RISK MANAGEMENT The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The government carries commercial insurance to cover such risks. Certain assets of the County such as roads, bridges, and other infrastructure are not insurable due to their nature. General Insurance Coverage - The County is a participant in the Local Government Insurance Trust (LGIT), which is a consortium of Maryland local governments created to provide insurance coverage and services to Maryland local governments. The LGIT provides general liability, public officials’ liability, fleet insurance, and building and property insurance to its members. Workmen’s compensation and fidelity insurance are obtained from various commercial insurance companies. Risk Sharing - Subscribers to coverage provided by LGIT share the risk among participants of the pools. As a result, the County's annual premium requirements will be affected by the loss experience of the various insurance pools in which it participates. Also, the County may be subject to additional assessments from time to time. These amounts would be recorded as expenditures when they are probable and can be reasonably estimated. Conversely, favorable performance of certain insurance pools may result in reduced premiums. Health Insurance - Effective with the 1996 fiscal year, the County joined together with other Eastern Shore county governments, libraries, and Boards of Education to form the Eastern Shore of Maryland Education Consortium Health Insurance Alliance (ESMEC), a public entity risk pool currently operating as a common risk management and insurance program for health insurance coverage. CareFirst BlueCross BlueShield, of Maryland, administers this program. The agreement for formulation of the alliance provides that the pool will be self-sustaining through member premiums. In addition to the annual premiums, the pooling agreement provides for additional assessments, if needed, but not to exceed certain limits. No additional assessments were needed for fiscal 2008 and, as of the date of this report, it is believed that there are no outstanding claims in excess of the equity of the trust. Settlements - For the last three years, settlements have not exceeded insurance coverage for any type of policy in effect. - 87 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 12 - RETIREMENT PLANS Substantially all full and part-time employees of Queen Anne's County, Maryland, and its related agencies including the Housing Authority, are covered by one of the statewide contributory systems of the State of Maryland. PRIMARY GOVERNMENT AND PUBLIC HOUSING AUTHORITY COST-SHARING MULTIPLE-EMPLOYER DEFINED BENEFIT PENSION PLANS Description of Plans The County participates in the following cost-sharing multiple-employer pension plans that are administered by the State of Maryland. The Employees Pension System of the State of Maryland (Pension System) was established January 1, 1980. The Pension System covers employees hired after December 31, 1979, as well as Retirement System participants who have voluntarily joined the Pension System. The Employees Contributory Pension System of the State of Maryland (Contributory Pension System) was established July 1, 1998. As of July 1, 1999, and retroactively to July 1, 1998, the County elected to participate in the Contributory Pension System for all service earned on or after July 1, 1998. Effective the first payroll in fiscal year 2007, the County elected to provide its employees with the “Alternate Contributory Pension Selection Plan of the State of Maryland” (Alternate Contributory Pension System), under Title 23 of the State Pension Article. This plan is an enhanced version of the two pension systems described above, and, as such, includes provisions that originate in those plans. Eligible employees not covered by LEOPS, which is described below, are required to participate in this alternate plan in lieu of other plans previously offered. At this time, all current employees not covered by LEOPS participate in the Alternate Contributory Pension System. The Law Enforcement Officers Pension System (LEOPS) was established July 2, 1990 and adopted by the County on July 1, 2004. LEOPS currently covers uniformed law enforcement officers of the Sheriff’s Department. Under the terms of the Alternate Contributory Pension System, a member may retire after 30 years of service regardless of age; at age 65 with two years of service; at age 64 with three years of service; at age 63 with four years of service; or at age 62 with at least five years of service. An employee may also take early retirement with reduced benefits at age 55 with 15 years of service. A member terminating employment before attaining retirement age, but after completing five years of eligible service, becomes eligible for a vested pension allowance upon reaching age 62. Under the terms of the LEOPS, a member may retire with full benefits upon attaining age 50 or after completing 25 years of eligible service regardless of age. LEOPS members are not eligible for early service retirement allowances. A member terminating employment before attaining retirement age, but after completing five years of eligible service, becomes eligible for a vested pension allowance upon reaching age 50. - 88 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 12 - RETIREMENT PLANS (CONTINUED) PRIMARY GOVERNMENT AND PUBLIC HOUSING AUTHORITY (CONTINUED) On retirement from service, a member of any of these plans shall receive an annual service retirement allowance based on the member's average final compensation (based on the highest three years’ wages) and years of creditable service multiplied by a factor. This factor varies from 1.2% to 1.8% for the Alternate Plan or 2.0% for LEOPS. The factor is applied per eligible service year, depending on employee/employer contributions and other plan-specific provisions. Early retirement, where available, is subject to provisions that reduce the benefit received. Benefits under these plans are established under the State Personnel and Pensions Article of the Annotated Code of Maryland. The State Retirement and Pension System of Maryland issues a comprehensive annual financial report that includes disclosures regarding: actuarial value of assets; total actuarial accrued liability; unfunded actuarial accrued liability, if any; and funded liability ratio. This report can be obtained from the agency’s office as follows: State Retirement and Pension System of Maryland 120 E. Baltimore St, Suite 1601 Baltimore, Maryland 21202-1600 Funding Policy Obligations to contribute to the plans are established under the Annotated Code of Maryland. Employees who are members of these two plans contribute a percentage of their gross employee compensation. For both the Alternate Contributory Pension System and LEOPS, members contribute 4 percent. Required contributions under the plans, which are not funded by employee contributions, are funded entirely by the County. Contributions by the County to both State plans take place during the fiscal year and are based upon salaries for the preceding fiscal year. The County contribution for the year ending June 30, 2008 is based on salaries for the year ending June 30, 2007. The contribution requirements of plan members of the reporting entity are established and may be amended by the Maryland State Pension System Board of Trustees. The County’s contributions for the fiscal years ending June 30th were equal to the actuarially determined amounts as follows: Fiscal Year Ending Retirement Plan Contributions June 30, 2008 June 30, 2007 June 30, 2006 Total Payroll $ 25,633,969 $ 23,050,582 $ 21,055,534 Covered Payroll Pension System 20,349,987 18,299,851 16,861,167 LEOPS 2,156,204 1,901,081 1,743,780 Expenditure/Expense Pension System 1,639,121 1,383,040 1,138,792 LEOPS 536,266 399,856 388,794 - 89 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 12 - RETIREMENT PLANS (CONTINUED) OTHER COMPONENT UNITS Queen Anne’s County Free Library The employees of the Library (other than part-time employees not eligible for participation in the plans) are covered under one of four defined-benefit retirement plans that are administered by the State Retirement and Pension System of Maryland. The Library’s share of contributions for employees is primarily the responsibility of the State. In fiscal year 2008, State contributions on behalf of the Library are approximately $73,879. These contributions are recognized as both revenue and expenditures for the Library. An additional $30,153 is contributed by the Library for other covered employees. Detailed information concerning the Queen Anne's County Free Library retirement plan is presented in their June 30, 2008 financial statements, which are publicly available. Queen Anne’s County Board Of Education The employees of the Board of Education (other than part-time employees not eligible for participation in the plans) are covered by one of four defined-benefit retirement plans that are administered by the State Retirement and Pension System of Maryland. The Board’s share of contributions for teachers and administration employees is primarily the responsibility of the State. In fiscal year 2008, State contributions on behalf of the Board are approximately $4,503,138. This contribution is recognized as both revenue and expenditure for the Board. An additional $604,185 is contributed by the Board of Education for other covered employees. Detailed information concerning the Queen Anne's County Board Of Education retirement plan is presented in their June 30, 2008 financial statements, which are publicly available. NOTE 13 - DEFERRED COMPENSATION PLAN The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan, available to all County employees, permits them to defer a portion of their salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All amounts of compensation deferred under the plan; all property and rights purchased with those amounts; and all income attributable to those amounts, property or rights are solely the property and rights of the participants. The County has no liability for losses under the plan. Investments are managed by the plan’s administrator based on several different investment options, or combinations thereof. The choice of the investment option(s) to be used is made by each participant. The County has no management control over the assets of the plan. Accordingly, per GASB Statement No. 32, the assets of the plan are not included in these financial statements. - 90 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 14 - OTHER POST EMPLOYMENT BENEFITS Queen Anne's County, Maryland –It is the County's policy to pay a portion of the cost of major medical insurance for eligible retired employees. All retirees, including those on disability retirement, with at least fifteen years of continuous County service may qualify for membership in the County’s retiree group medical plan(s) at a reduced rate; those with less than fifteen years service may remain in this plan if they pay the full rate. Coverage may include the retiree, spouse and dependents. Coverage does not cease upon death of the retiree. The County recognizes the cost of its contribution in the year it is made. The total cost of the plan to the County for the year ended June 30, 2008 was approximately $433,070 for all 66 eligible and participating retirees. During fiscal year 2009, the County will adopt GASB Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and No. 45, Accounting and Financial Reporting By Employers for Postemployment Benefits Other Than Pensions. The primary impact of these statements on the County’s financial statements will relate to the determination of annual postemployment healthcare benefits costs as well as reporting and disclosure requirements for the County’s postemployment healthcare benefits activities. Implementing these statements will require that the County report information on an accrual basis related to retiree benefits, rather than on a pay-as-you-go basis as noted above. As of June 30, 2008, several preliminary steps had been taken: (1) an actuarial study had been completed for the County’s employees; (2) the County had approved funds for this purpose in its fiscal year 2009 budget, both for the County as well as for the Library and Board of Education; and (3) the Board of Education and Library had accepted a proposal that the County, Library and Board of Education pool their funds for this purpose. Board of Education of Queen Anne's County, Maryland - It is the Board's policy to contribute a portion of the cost of including its retired employees in its group major medical insurance program. The Board’s contribution can be applied to the coverage of the retiree, spouse, and dependents, but it is limited to the amounts below and it ceases upon the death of the retiree. Teachers are required to provide at least ten years of service to the Board before becoming eligible for retiree healthcare benefits. Once ten years of service is reached, the Board covers 36 percent of the cost of the individual’s EPO health plan. The percentage subsidized by the Board increases 3.6 percent per year for every year of service in excess of ten. At 25 years of service, the maximum subsidy of 90 percent is reached. The plan for administrators is similar to that for teachers, with the following exceptions. Administrators are required to provide at least five years of service to the Board before becoming eligible for retiree healthcare benefits. Once five years of service is reached, the Board covers 35 percent of the cost of the individual’s EPO health plan. The percentage subsidized by the Board increases 5.5 percent per year for every year of service in excess of five. At 15 years of service, the maximum subsidy of 90 percent is reached. In addition, the Board is contractually obligated to pay the full cost of medical insurance for certain retired directors and superintendents and their spouses. The Board recognizes the cost of its contribution in the year it is made. The total cost of the plan to the Board for the year ended June 30, 2008 was approximately $879,000 for 212 retired employees. In addition, the Board pays the cost of providing term life insurance for its retirees in varying amounts, depending upon the employee’s length of service and date of retirement. The cost of this program in fiscal year 2008 was approximately $19,000. - 91 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 15 – DEFICIT EQUITY BALANCES The following Funds ended the year with deficit equity balances: Bay Bridge Airport Enterprise Fund The Bay Bridge Airport Enterprise Fund has a deficit balance in unrestricted net assets of $726,184 as of June 30, 2008, which increased from a deficit of $689,096 at the end of the prior year. Parks and Recreation – Golf Course Enterprise Fund The Golf Course Enterprise Fund has a deficit balance in unrestricted net assets of $1,445,867 as of June 30, 2008, which increased from a deficit of $1,278,121 at the end of the prior year. Parks and Recreation – Property Management Enterprise Fund The Property Management Enterprise Fund has a deficit balance in unrestricted net assets of $197,063 of June 30, 2008, which increased from a deficit of $131,360 at the end of the prior year. Note that these enterprise funds were never intended to be entirely self-supporting. In early fiscal year 2009, the County transferred cash sufficient to cover all negative cash balances in the Airport, Golf Course, and Property Management Funds. These transfers brought each net asset deficit to a zero or near-zero balance. NOTE 16 - COMMITMENTS AND CONTINGENCIES PRIMARY GOVERNMENT Grants - The County and its component units are recipients of various federal and state grant and/or loan programs, which are governed by various rules and regulations of grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by the grantor agencies. If the County has not complied with the rules and regulations governing the programs, refunds of money received may be required and the collectability of any related receivable as of June 30, 2008 may be impaired. In the opinion of the County, there are no significant contingent liabilities that must be recorded relating to compliance with the rules and regulations governing these programs. Further, certain grants for capital projects, such as various park projects funded by the State, must be used for the intended purpose of the grant. If, at any time during the useful lives of these projects, the facilities cease to operate in their intended capacity, the County may be required to reimburse the granting agency that portion of the grant or note that is equal to the percentage of useful life remaining. In the opinion of the County, no such grant reimbursements are foreseeable. Loan Guarantees - The County Government has agreed to provide a guarantee on a loan to Crossroads Community, Inc., a non-profit corporation. The original amount of the loan was $294,627; the amount outstanding as of June 30, 2008 is $46,577. The County Government has also agreed to provide a guarantee on a loan to Day Care, Inc. The original amount of this loan was $224,728, of which $70,461 is outstanding as of June 30, 2008. - 92 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 17 – JOINT VENTURE The County Commissioners, in conjunction with Talbot, Caroline, and Kent Counties, created the Midshore Regional Landfill in 1991. The landfill, located in Talbot County, is owned and operated by the Maryland Environmental Service and is designed to serve the four-county area for a twenty-year period. At that time, a new landfill will be constructed in Caroline County, with Queen Anne's County and Kent County to follow in turn. Each County is required to, and has, set aside sufficient land to construct a landfill within their borders. The agreement expires when the last of the four landfills is closed. Each County is required to place its municipal waste in the landfill. The facility is also available to commercial waste disposal firms at the same price per ton as charged to the County governments. Queen Anne's County paid $488,731 in tipping fees to the facility during fiscal 2008. Each of the participating Counties is contingently liable for the project debt. Queen Anne’s County’s share of this contingent liability is $3,979,921 as of June 30, 2008. Additionally, the participating Counties are contingently liable for closure costs of the landfill; the County’s potential share of this liability is $3,012,577. Based on the capacity of the landfill used to date, it is expected that the landfill will be closed in 2010. The Maryland Environmental Service has instituted a plan to fund all debt and closure costs from the facility’s revenues. The project has sufficient revenues and reserves at this time to lead the County to believe that no expenditure of County funds will be required. Audited financial statements for this project can be obtained as follows: Maryland Environmental Service 259 Najoles Road Millersville, Maryland 21108 NOTE 18 – CONTINGENT LIABILITY AND RECEIVABLE The County allocates funds to the local volunteer fire companies to be used to purchase capital items, which will be owned and used by the fire companies. During fiscal year 2007, $143,661 of this allocation was misappropriated, in that the money was spent but no capital items were purchased and $11,700 of the allocation was misappropriated in fiscal year 2008, for a total amount of $155,361. During those years, the amount was recorded as part of the County’s allocation to the fire companies. This year, the two individuals responsible for misappropriating the funds were charged and found guilty by the District Court of Maryland for Queen Anne’s County. As part of the sentencing, the two individuals were ordered to pay Queen Anne’s County restitution for the full amount or else be required to serve the balance of their suspended sentences, which was up to 30 years for one and 14 years for the other. Based on the facts, the misappropriated amount allocated to the fire companies is considered a contingent liability for the County. In addition, the ordered restitution from the guilty party to the County is considered a contingent receivable. As both amounts offset each other and net to zero, the County does not owe any funds and has not recorded any contingencies on the books relating to this matter. - 93 - QUEEN ANNE’S COUNTY, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 19 – POLLUTION REMEDIATION OBLIGATIONS Queen Anne’s County Commissioners responded positively to a new voluntary Methyl Tertiary Butyl Ether (MTBE) testing program for underground fuel tanks at the old fuel depot at the Department of Public Works. The testing program has been and will continue to be approved by the Maryland Department of Environment (MDE). We believe that this remediation effort will consist of the work performed to date, a feasibility study to be conducted in 2009, and whatever actions are deemed necessary to resolve future unknown remediation requirements. As of June 30, 2008, the General Capital Projects Fund had spent approximately $170 thousand on remediation and consultant fees for testing, studies and monitoring. These costs include the demolition and removal of the old fuel depot at Public Works-Centreville, remediation of the soils via excavation, offsite controlled disposal and backfill, installation of monitoring wells, and miscellaneous environmental consulting services. These outlays did not meet the requirements for capitalization noted in GASB Statement 50 and were not capitalized. No additional liability has been recorded, as remediation requirements are not known and costs cannot be reliably estimated. The final remediation solution may be decided and agreed upon by MDE during fiscal year 2009 following the feasibility study to be conducted in that year. This 2009 Feasibility Study scope has been agreed upon by MDE and will be accomplished using the same environmental consultant involved with the project to date. We expect a letter from MDE before the end of February 2009 confirming this study. Remediation involving significant excavation, offsite controlled disposal, and backfill with clean material should be concluded before the end of fiscal year 2010. NOTE 20 – CLOSING A FUND Closing of Economic Development Commission Fund: During fiscal year 2007, as a one-time event, the Economic Development Commission decided to move the remainder of their donations ($42,242) to a separate, non-profit foundation as a “donor-advised fund”. The funds were irrevocably transferred from the Commission to the Foundation. However, after this transfer, the fund was left with a deficit fund balance of $130. During fiscal year 2008, this small deficit was cleared with a transfer in from another fund, thereby closing this fund. - 94 - Required Supplementary Information Required Supplementary Information provides budget-to-actual comparisons for the General Fund and major special revenue funds. For the General Fund, the Schedules provide summary budgetary information. Detailed information reported separately by revenues and expenditures with budget variances can be found in the Combining and Individual Fund Statements and Schedules section. For the Roads Board Operating Fund, the Schedules provide summary budgetary information. Budgets are adopted using the same method of accounting as that used for reporting purposes, i.e. according to generally accepted accounting principles as used in the United States of America (GAAP). - 95 - - 96 - QUEENANNE'S COUNTY, MARYLAND SCHEDULEOF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES - BUDGETANDACTUAL GENERAL FUND FORTHEYEAR ENDED JUNE30,2008 ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES Taxes Local PropertyTax $ 48,200,170 $ 48,757,179 $ 49,975,236 $ 1,218,057 Local IncomeTax 35,973,956 36,000,993 34,767,725 (1,233,268) Admissionand AmusementTaxes 240,000 240,000 167,425 (72,575) RecordationTaxes 5,500,000 5,500,000 3,825,394 (1,674,606) HotelTaxes 500,000 500,000 503,979 3,979 Licensesand Permits 836,500 836,500 890,821 54,321 Intergovernmental 1,711,346 2,175,280 2,002,097 (173,183) Chargesfor Current Services 1,882,376 1,981,774 1,764,197 (217,577) Finesand Forfeitures 18,100 18,100 1,678,138 1,660,038 Investment Income 1,950,000 1,950,000 1,174,877 (775,123) Donations 11,000 17,238 126,329 109,091 Miscellaneous 61,180 78,633 494,387 415,754 Total Revenues 96,884,628 98,055,697 97,370,605 (685,092) EXPENDITURES Current General Government 10,095,462 10,067,195 9,419,224 647,971 Public Safety 19,577,261 19,640,735 18,438,978 1,201,757 PublicWorks 3,950,172 3,769,731 3,421,818 347,913 Health 1,474,518 1,474,517 1,430,670 43,847 Social Services 236,892 236,892 227,631 9,261 Education 45,610,824 45,610,824 4 5,610,824 - Parksand Recreation 2,891,030 2,837,969 2,702,610 135,359 Library 1,240,854 1,247,154 1,247,108 46 Conservationof Natural Resources 560,333 538,733 529,490 9,243 Economic/Community Development 1,432,196 1,334,117 1,257,851 76,266 Miscellaneous 1,126,834 1,138,392 731,771 406,621 Reversions (370,000) (370,000) - (370,000) Capital Outlay - 1,441,383 911,961 529,422 Debt Service Principal 4,590,552 4,846,296 4,864,405 (18,109) Interestand Fiscal Charges 3,179,013 3,115,069 3,147,529 (32,460) Total Expenditures 95,595,941 96,929,007 93,941,870 2,987,137 Excessof Revenues Over (Under) Expenditures 1,288,687 1,126,690 3,428,735 2,302,045 OTHER FINANCING SOURCES (USES) Insurance Proceedsand Capital Asset Disposals - - 21,644 21,644 Transfers In 1,477,482 2,061,147 2,060,097 (1,050) Transfers (Out) (9,145,321) (15,091,451) (15,032,528) 58,923 Total Other Financing Sources (Uses) (7,667,839) (13,030,304) (12,950,787) 79,517 Net Increase (Decrease) in Fund Balance $ (6,379,152) $ (11,903,614) (9,522,052) $ 2,381,562 Fund Balances, July1 22,443,130 Fund Balances, June30 $ 12,921,078 - 97 - QUEENANNE'S COUNTY, MARYLAND SCHEDULEOF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES - BUDGETANDACTUAL ROADSBOARD SPECIAL REVENUE FUND FORTHEYEAR ENDED JUNE30,2008 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES State SharedTaxes $ 5,580,859 $ 5,580,859 $ 4,995,165 $ (585,694) Intergovernmental 35,000 35,000 19,337 (15,663) Chargesfor Current Services 332,517 332,517 417,473 84,956 Investment Income 6,000 6,000 104,363 98,363 Miscellaneous 20,000 20,000 144,308 124,308 Total Revenues 5,974,376 5,974,376 5,680,646 (293,730) EXPENDITURES Current PublicWorks 5,833,498 5,833,498 5,334,421 499,077 Capital Outlay 649,874 649,874 394,613 255,261 Total Expenditures 6,483,372 6,483,372 5,729,034 754,338 Excessof Revenues Over (Under) Expenditures (508,996) (508,996) (48,388) 460,608 OTHER FINANCING SOURCES (USES) Proceedsof Saleof Capital Assets - - 19,520 19,520 Transfers In 73,996 73,996 28,868 (45,128) Total Other Financing Sources (Uses) 73,996 73,996 48,388 (25,608) Net Increase (Decrease) in Fund Balances $ (435,000) $ ( 435,000) - $ 435,000 Fund Balances, July1 722,735 Fund Balances, June30 $ 722,735 - 98 - Combining and Individual Fund Statements and Schedules The Combining and Individual Fund Statements and Schedules provide detailed information concerning the financial position, results of operations, and budgetary comparisons for the general fund, non-major funds, capital projects, and fiduciary funds. - 99 - - 100 - General Fund Thisfundis the general operatingfundforthe County. Itis used to accountfor allfinancial resources exceptthose required to be accountedforinanotherfund. Thefollowingschedules provide detailedinformationreportedseparately by revenues and expenditureswith budgetvariances. Asummaryschedule can befoundinthe Required SupplementaryInformationsection. - 101 - QUEENANNE'S COUNTY, MARYLAND SCHEDULEOF REVENUES ANDOTHER FINANCING SOURCES - BUDGETARYBASIS GENERAL FUND FORTHEYEAR ENDED JUNE30,2008 VARIANCE ORIGINAL FINAL ACTUAL POSITIVE TAXES - LOCAL BUDGET BUDGET REVENUES (NEGATIVE) Local PropertyTaxes Realand Personal Property (Net) $ 46,900,170 $ 47,302,179 $ 48,541,837 $ 1,239,658 Railroadand Public Utilities 1,300,000 1,300,000 1,229,466 (70,534) Penaltiesand Interest - 155,000 203,933 48,933 TotalLocal PropertyTaxes 48,200,170 48,757,179 49,975,236 1,218,057 Local IncomeTax 35,973,956 36,000,993 34,767,725 (1,233,268) OtherLocalTaxes Admissionand AmusementTax 240,000 240,000 167,425 (72,575) RecordationTax 5,500,000 5,500,000 3,825,394 (1,674,606) HotelTax 500,000 500,000 503,979 3,979 Total OtherLocalTaxes 6,240,000 6,240,000 4,496,798 (1,743,202) TotalTaxes - Local 90,414,126 90,998,172 89,239,759 (1,758,413) LICENSES AND PERMITS Beer,WineandLiquor 90,500 90,500 105,260 14,760 Traders 83,500 83,500 84,130 630 MarriageLicenses 3,000 3,000 7,750 4,750 Animal Control 55,000 55,000 46,234 (8,766) Electrical Boardof Examiners 49,000 49,000 21,285 (27,715) Electrical Inspections 18,000 18,000 9,817 (8,183) CableTV 200,000 200,000 288,682 88,682 Zoning Permits 81,000 81,000 57,733 (23,267) Plumbing Permits 91,000 91,000 116,355 25,355 Sediment Fees 17,300 17,300 17,550 250 Building Permits 147,000 147,000 134,109 (12,891) Other 1,200 1,200 1,916 716 TotalLicensesand Permits 836,500 836,500 890,821 54,321 INTERGOVERNMENTAL Police Protection 341,068 341,068 345,188 4,120 Fire/Rescue/Ambulance 600,000 600,000 551,241 (48,759) Conservationof Natural Resources 35,000 35,000 35,000 - Other 735,278 1,199,212 1,070,668 (128,544) Total Intergovernmental 1,711,346 2,175,280 2,002,097 (173,183) CONTINUED - 102 - QUEENANNE'S COUNTY, MARYLAND SCHEDULEOF REVENUES ANDOTHER FINANCING SOURCES - BUDGETARYBASIS GENERAL FUND FORTHEYEAR ENDED JUNE30,2008 (CONTINUED) VARIANCE ORIGINAL FINAL ACTUAL POSITIVE BUDGET BUDGET REVENUES (NEGATIVE) CHARGES FOR CURRENT SERVICES Discovery Fees $ 1,750 $ 1,750 $ 1,735 $ (15) Rezoning Filing 3,000 3,000 - (3,000) Zoning Appeals 15,000 15,000 10,500 (4,500) Development Review 252,500 252,500 185,123 (67,377) Sheriff 81,890 75,788 84,009 8,221 Ambulance Fee 562,400 562,400 359,354 (203,046) Detention Center Fees 345,000 450,000 539,852 89,852 Recycling 119,000 119,000 159,035 40,035 Disposal Fees 350,000 350,000 311,030 (38,970) Inspection Fees - - 7,444 7,444 Recreation Fees 69,970 69,970 58,405 (11,565) Johnsongrass Spraying 75,000 75,000 40,366 (34,634) Merchandise Sales 1,366 1,366 2,519 1,153 4-H Park Fees 5,500 5,500 4,825 (675) Miscellaneous User Fees - 500 - (500) Total Chargesfor Current Services 1,882,376 1,981,774 1,764,197 (217,577) FINES AND FORFEITURES Court Fines 18,100 18,100 21,409 3,309 Confiscated Assets - - 1,656,729 1,656,729 Total Finesand Forfeitures 18,100 18,100 1,678,138 1,660,038 INVESTMENT INCOME 1,950,000 1,950,000 1,174,877 (775,123) MISCELLANEOUS REVENUES AND DONATIONS Rental Income 4,500 - - - Donations 11,000 17,238 126,329 109,091 Miscellaneous 56,680 78,633 494,387 415,754 Total Miscellaneous Revenuesand Donations 72,180 95,871 620,716 524,845 OTHER FINANCING SOURCES Insurance Proceeds - - 17,913 17,913 Proceedsof Capital Asset Disposals - - 3,731 3,731 Transfers In: Impact Fees - School 1,408,120 1,408,120 1,408,120 - Parks & Rec - PublicLandings - 579,574 579,574 - Kent Narrows 39,427 45,427 45,427 - Community Partnerships 23,935 28,026 26,976 (1,050) Economic Development Commission 6,000 - - - TotalTransfers In 1,477,482 2,061,147 2,060,097 (1,050) Total Other Financing Sources 1,477,482 2,061,147 2,081,741 20,594 Total General Fund Revenuesand Other Financing Sources Before Appropriated Fund Balance 98,362,110 100,116,844 99,452,346 (664,498) Fund Balance - Appropriation (Surplus) 6,379,152 5,903,614 - (5,903,614) Total General Fund Revenues, Other Financing Sources and Fund Balance Appropriation $ 104,741,262 $ 106,020,458 $ 99,452,346 $ (6,568,112) - 103 - QUEENANNE'S COUNTY,MARYLAND SCHEDULE OF EXPENDITURESAND OTHERFINANCING USES - BUDGETARY BASIS GENERALFUND FORTHE YEAR ENDED JUNE 30, 2008 ACTUAL VARIANCE PERSONNEL OTHER CAPITAL ORIGINAL FINAL POSITIVE COSTS OPERATING OUTLAY TOTAL BUDGET BUDGET (NEGATIVE) GENERAL GOVERNMENT Legislative $ 529,637 $ 247,786 $ 15,249 $ 792,672 $ 693,318 $ 825,776 $ 33,104 Judicial Circuit Court/Family Services/CourtMaster 177,648 169,556 - 347,204 547,847 446,555 99,351 Orphan's Court 50,925 5 ,150 - 56,075 57,055 57,055 980 State's Attorney/Victim Witness/CeaseFire 1,061,080 44,958 1,227 1,107,265 1,129,387 1,157,800 50,535 Executive County Administrator 347,814 3 4,946 - 382,760 233,810 386,210 3,450 Elections Boardof Election Supervisors 23,522 4 26,384 - 449,906 480,970 464,970 15,064 Financial Administration 767,695 1 92,382 - 960,077 1,171,396 1,098,096 138,019 Human Resources Administration 389,967 99,107 - 489,074 537,565 516,565 27,491 Planning 357,909 3 3,001 - 390,910 1,419,354 448,290 57,380 Zoning 1,262,896 315,576 1,487 1,579,959 865,864 1,775,409 195,450 Management Information Systems 418,232 1 76,635 - 594,867 636,618 632,618 37,751 General Services 678,568 1,253,857 - 1,932,425 1,982,637 2,045,237 112,812 Other General Government Liquor Board 69,332 3 ,784 - 7 3,116 - 78,127 5,011 Electrical Board 1,946 1 ,519 - 3 ,465 - 10,206 6,741 Legal - 277,412 - 277,412 339,641 294,641 17,229 Total General Government 6,137,171 3,282,053 17,963 9,437,187 10,095,462 10,237,555 800,368 PUBLIC SAFETY Sheriff's Office 4,436,963 627,149 111,422 5,175,534 5,180,433 5,420,844 245,310 VolunteerFire and Rescue Services - 3,197,473 8,035 3,205,508 3,061,005 3,231,781 26,273 Detention Center 2,667,986 916,014 38,030 3,622,030 4,033,583 4,154,183 532,153 Animal Control 655,710 1 38,776 - 794,486 795,977 818,057 23,571 Emergency Services 4,772,011 1,026,896 642,119 6,441,026 6,506,263 7,066,093 625,067 Total Public Safety 12,532,670 5,906,308 799,606 19,238,584 19,577,261 20,690,958 1,452,374 PUBLIC WORKS Administration 565,903 12,305 21,817 600,025 667,804 649,604 49,579 Other Public Roads - 22,164 - 22,164 19,733 22,233 69 Solid Waste Disposal 1,151,578 891,754 23,875 2,067,207 2,445,719 2,452,978 385,771 Engineering Division 696,508 8 1,606 - 778,114 816,916 816,916 38,802 Total Public Works 2,413,989 1,007,829 45,692 3,467,510 3,950,172 3,941,731 474,221 HEALTH Health Department 102,542 1,328,128 - 1,430,670 1,474,518 1,474,517 43,847 SOCIAL SERVICES MEAP - MD Energy Assistance Program 105,497 - - 105,497 114,078 114,078 8,581 Other Social Services 115,634 6 ,500 - 122,134 122,814 122,814 680 Total Social Services 221,131 6 ,500 - 227,631 236,892 236,892 9,261 CONTINUED - 104 - QUEENANNE'S COUNTY,MARYLAND SCHEDULE OF EXPENDITURESAND OTHERFINANCING USES - BUDGETARY BASIS GENERALFUND FORTHE YEAR ENDED JUNE 30, 2008 (CONTINUED) ACTUAL VARIANCE PERSONNEL OTHER CAPITAL ORIGINAL FINAL POSITIVE COSTS OPERATING OUTLAY TOTAL BUDGET BUDGET (NEGATIVE) EDUCATION Boardof Education $ - $ 43,940,413 $ - $ 43,940,413 $ 43,940,413 $ 4 3,940,413 $ - Chesapeake College - 1,670,411 - 1,670,411 1,670,411 1 ,670,411 - Total Education - 45,610,824 - 45,610,824 45,610,824 45,610,824 - PARKS, RECREATION, AND CULTURE Parks 1,514,463 394,100 27,100 1,935,663 1,970,372 1,971,111 35,448 Recreation 303,841 1 ,808 - 305,649 375,527 375,527 69,878 Administration 441,315 4 7,083 - 488,398 545,131 518,531 30,133 Total Parks, Recreation, and Culture 2,259,619 442,991 27,100 2,729,710 2,891,030 2,865,169 135,459 LIBRARY Queen Anne's CountyFree Library - 1,247,108 - 1,247,108 1,240,854 1,247,154 46 CONSERVATION OF NATURAL RESOURCES Cooperative Extension Services 45,416 1 84,581 - 229,997 229,689 230,269 272 Soil Conservation Services 124,357 6 ,000 - 130,357 127,442 131,042 685 Weed Control 77,222 26,940 21,600 125,762 132,024 127,844 2,082 4-H Park - 64,974 - 64,974 71,178 71,178 6,204 Total Conservationof Natural Resources 246,995 282,495 21,600 551,090 560,333 560,333 9,243 ECONOMIC AND COMMUNITY DEVELOPMENT Public Housing Authority - 348,296 - 348,296 348,296 3 48,296 - Business & Tourism 585,138 3 24,417 - 909,555 1,083,900 985,821 76,266 Total Economic and Community Development 585,138 672,713 - 1,257,851 1,432,196 1,334,117 76,266 DEBT SERVICE Debt Service - Principal - 4,864,405 - 4,864,405 4,590,552 4,846,296 (18,109) Debt Service - Interest andFiscal Charges - 3,147,529 - 3,147,529 3,179,013 3,115,069 (32,460) Total Debt Service - 8,011,934 - 8,011,934 7,769,565 7,961,365 (50,569) MISCELLANEOUS Aid toMunicipalities - 202,740 - 202,740 199,186 202,786 46 Aid to Other Agencies - 60,909 - 60,909 60,909 75,909 15,000 Other Allocations - 942 - 942 750 750 (192) Insurance & Benefits / (Reimbursements) (235,264) 6 42,181 - 406,917 761,000 746,000 339,083 Contingencies - 60,263 - 60,263 104,989 112,947 52,684 TotalMiscellaneous (235,264) 9 67,035 - 731,771 1,126,834 1,138,392 406,621 REVERSIONS Salary Reversions - - - - (370,000) (370,000) (370,000) OTHERFINANCING USES Transfers OutTo: Law Library - 7,390 - 7 ,390 - 6,120 (1,270) Departmentof Aging - 1,663,342 - 1,663,342 1,696,233 1,696,233 32,891 Departmentof Housing and Community Services - 391,990 - 391,990 407,943 407,943 15,953 Economic Development - 130 - 1 30 - - (130) AgriculturalTransferTaxFund - 167,000 - 167,000 167,000 1 67,000 - Roads Board Operating - 28,868 - 28,868 30,000 30,000 1,132 Sanitary District - Sewer/Admin - 4,330 - 4,330 358,151 4,050 (280) Sanitary District - Water - 153,152 - 153,152 143,430 143,430 (9,722) Impact Fees - Fire Companies/Contingencies - 156,191 - 1 56,191 - 156,192 1 General Capital ProjectsFund - 12,176,028 - 12,176,028 6,076,028 1 2,176,028 - Parks & Recreation Enterprise - Programs - 43,000 - 43,000 43,000 4 3,000 - Parks & Recreation Enterprise - PropertyMgmt - 25,000 - 25,000 25,000 2 5,000 - Parks & Recreation Enterprise - Airport - 22,926 - 22,926 22,926 2 2,926 - Parks & Recreation Enterprise - Public Landings - 33,998 - 3 3,998 - 3 3,998 - Parks & Recreation Enterprise - Marinas - 55,262 - 55,262 55,262 5 5,262 - Community Partnerships (Admin) - - - - 20,348 20,348 20,348 Community Partnerships (CSafe) - 3,921 - 3 ,921 - 3 ,921 - Community Partnerships (Education program) - 100,000 - 100,000 100,000 1 00,000 - TotalTransfers Out - 15,032,528 - 15,032,528 9,145,321 15,091,451 58,923 Total Expenditures and OtherFinancing Uses $ 24,263,991 $ 83,798,446 $ 911,961 $ 108,974,398 $ 104,741,262 $ 112,020,458 $ 3,046,060 - 105 - Shop Historic Stevensville or just stroll around and enjoy one of our many small towns. Non-Major Governmental Funds Non-MajorGovernmental Funds are used to accountfor the proceeds of specific revenue sources (other than capital projects and debt servicefunds) that are legally restricted to expendituresforspecific purposes. - 107 - NON-MAJOR GOVERNMENTAL FUNDS Non-major governmental fundsare special revenue funds, unless otherwise noted: Department of Aging –Thisfundaccountsforactivitiesfundedprimarily bygrants to provide servicesfor theelderly and is included in the social servicesfunction. Housing and Community Services– Thisfund accountsforactivitiesfunded mostlyby grants and revolving loanfundsthat supporthousing rehabilitationandhome-ownership and is included in theeconomic and community developmentfunction. Community Partnerships for Children – Thisfundaccountsfor activitiesfundedby grants allocatedto the Countythatprovide servicesfor children andfamilies and is included in the social servicesfunction. Dredging Special Assessments– Thisfundaccountsfor activitiesfundedbyspecial assessmentfunds collectedto repay loansfor specificdredgingprojects that benefited Price’s Creek and Grove Creekand is included inthe conservation of natural resources function. Kent Narrows– Thisfund accountsfor activitiesfunded by tax revenues to repay parking improvementbonds and is included in theeconomicand community developmentfunction. Critical Areas– Thisfundaccountsforactivitiesfunded bypayments in lieu of performancebondsthat supportefforts to mitigateandpreserve criticalareasalongthe shoreline of tidal waters within the Countyand is included inthe conservation of natural resourcesfunction. Economic Development Commission– Thisfund accountsforactivitiesfundedby communitydonationstoencourageeconomicdevelopmentand is included in the economicand communitydevelopmentfunction. Law Library– Thisfundaccountsforactivitiesfundedby courtfees,fines,and contributionsfrom localattorneys to update legal reference materialshoused in the courthouseand is included in thegeneral governmentfunction. Sheriff’s Drug Task Force– Thisfundaccountsfor activitiesfundedbydrug-related forfeitures that supportdrug interdiction efforts bya multi-faceted taskforceand is included in thepublic safetyfunction. Inmate Welfare Fund– Thisfundaccountsfor activitiesfundedby profitsearnedfrom Detention Center inmate-related servicesthatpromotethe welfare of the inmates and is included in thepublic safetyfunction. - 108 - Agriculture TransferTax– Thisfundaccountsfor activitiesfundedprimarily by the Agriculture Transfer Taxto purchaseagricultural easements thatpreclude development and is included in the conservation of natural resourcesfunction. Revolving Loan Fund– Thisfund accountsfor activitiesfundedby community donationsandgrantstopromoteandprovideeconomicdevelopment loans to local businessesand is included in theeconomic andcommunitydevelopmentfunction. Capital Projects Fund– Fire CompanyImpact Fees– Thisfundaccountsforactivities fundedby impactfees specifically earmarked to enhance local volunteerfire company preparedness resultingfrom new constructionand is included in thepublic safety function. Capital Projects Fund– Parksand Recreation Impact Fees– Thisfundaccountsfor activitiesfundedby impactfeesspecificallyearmarked toenhanceparks and recreation and is included in theparks and recreationfunction. - 109 - QUEENANNE'S COUNTY, MARYLAND COMBININGBALANCE SHEET NON-MAJOR GOVERNMENTALFUNDS JUNE 30, 2008 COMMUNITY HOUSING AND PARTNERSHIPS DREDGING DEPARTMENT COMMUNITY FOR SPECIAL OF AGING SERVICES CHILDREN ASSESSMENTS ASSETS Cashand Cash Equivalents $ 153,859 $ 291,496 $ 1,088,399 $ 15,584 Prepaid Items - 50,000 - - Receivables Accounts Receivable (Net) - 483 91,733 52 Loans Receivable - 2,798,835 - 11,783 Special Assessments (Net) - - - 285,022 Duefrom Other Governments 203,398 34,562 252,066 - Total Assets $ 357,257 $ 3,175,376 $ 1,432,198 $ 312,441 LIABILITIES AND FUND BALANCES Liabilities Accrued Liabilities $ 182,184 $ 20,099 $ 713,598 $ - Due to OtherFunds 65,040 38,630 29,148 11,720 Due to Other Governmental Agencies - - 421,218 - Deferred Revenue - 6,424 47,964 285,022 Total Liabilities 247,224 65,153 1,211,928 296,742 Fund Balances Reserved Loans Receivable - 2,798,835 - 11,783 Prepaid Items - 50,000 - - Donor-Specified Purposes - - 1,050 - Other Reserved Purposes - Other - - - - Total Reserved - 2,848,835 1,050 11,783 Unreserved Capital ProjectsFunds - - - - Special RevenueFunds 110,033 261,388 219,220 3,916 Total Unreserved 110,033 261,388 219,220 3,916 TotalFund Balances 110,033 3,110,223 220,270 15,699 Total LiabilitiesandFund Balances $ 357,257 $ 3,175,376 $ 1,432,198 $ 312,441 - 110 - QUEENANNE'S COUNTY, MARYLAND COMBININGBALANCE SHEET NON-MAJOR GOVERNMENTALFUNDS JUNE 30, 2008 (CONTINUED) SHERIFF'S DRUG INMATE KENT CRITICAL LAW TASK WELFARE NARROWS AREAS LIBRARY FORCE FUND $ 98,148 $ 97,719 $ 58,167 $ 319,987 $ 218,932 - - - - - 14,107 - - - 3,699 - - - - - - - - - - - - - - - $ 112,255 $ 97,719 $ 58,167 $ 319,987 $ 222,631 $ 390 $ - $ 14,421 $ 82,474 $ 3,649 - - - - - - - - - 7,214 - - - - - 390 - 14,421 82,474 10,863 - - - - - - - - - - - - - - - - 97,719 - - - - 97,719 - - - - - - - - 111,865 - 43,746 237,513 211,768 111,865 - 43,746 237,513 211,768 111,865 97,719 43,746 237,513 211,768 $ 112,255 $ 97,719 $ 58,167 $ 319,987 $ 222,631 CONTINUED - 111 - QUEENANNE'S COUNTY, MARYLAND COMBININGBALANCE SHEET NON-MAJOR GOVERNMENTALFUNDS JUNE 30, 2008 (CONTINUED) CAPITAL CAPITAL PROJECTS - PROJECTS- PARKS AND TOTAL AGRICULTURAL REVOLVING FIRE COMPANY RECREATION NON-MAJOR TRANSFER LOANFUND IMPACTFEES IMPACTFEES GOVERNMENTAL ASSETS Cashand Cash Equivalents $ 2,606,016 $ 224,834 $ 876,349 $ 115,987 $ 6,165,477 Prepaid Items - - - - 50,000 Receivables Accounts Receivable (Net) - 2 10 - - 110,284 Loans Receivable - 1 18,985 - - 2,929,603 Special Assessments (Net) - - - - 285,022 Duefrom Other Governments - - - - 490,026 Total Assets $ 2,606,016 $ 344,029 $ 876,349 $ 115,987 $ 10,030,412 LIABILITIES AND FUND BALANCES Liabilities Accrued Liabilities $ - $ - $ 497 $ - $ 1,017,312 Due to OtherFunds - - 79,561 - 224,099 Due to Other Governmental Agencies 2 3,845 - - - 452,277 Deferred Revenue - - - - 339,410 Total Liabilities 23,845 - 80,058 - 2,033,098 Fund Balances Reserved Loans Receivable - 1 18,985 - - 2,929,603 Prepaid Items - - - - 50,000 Donor-Specified Purposes - - - - 1,050 Other Reserved Purposes - Other 2 ,031,733 - - - 2,129,452 Total Reserved 2,031,733 1 18,985 - - 5,110,105 Unreserved Capital ProjectsFunds - - 796,291 115,987 912,278 Special RevenueFunds 550,438 2 25,044 - - 1,974,931 Total Unreserved 550,438 225,044 796,291 115,987 2,887,209 TotalFund Balances 2,582,171 344,029 796,291 115,987 7,997,314 Total LiabilitiesandFund Balances $ 2,606,016 $ 344,029 $ 876,349 $ 115,987 $ 10,030,412 - 112 - Enjoy vistas fi lled with expansive areas of preserved farmland. QUEENANNE'SCOUNTY,MARYLAND COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 COMMUNITY HOUSINGAND PARTNERSHIPS DREDGING DEPARTMENT COMMUNITY FOR SPECIAL OFAGING SERVICES CHILDREN ASSESSMENTS REVENUES Taxes Local PropertyTax $ - $ - $ - $ - Other LocalTaxes - AdmissionandAmusementTaxes - - - - State SharedTaxes - - - - Intergovernmental 981,183 135,171 1,786,418 - Charges for Current Services 6 4,041 - - 23,762 Finesand Forfeitures - - - - InvestmentIncome 2,738 13,703 23,985 249 Donations 52,002 1,500 500 - Miscellaneous 1 ,150 - 10,774 - Total Revenues 1,101,114 150,374 1,821,677 24,011 EXPENDITURES Current General Government - - - - Public Safety - - - - Social Services 2 ,746,196 - 1,768,388 - Conservationof Natural Resources - - - 510,555 Economic/Community Development - 528,541 - - Capital Outlay - - - - Debt Service Principal - - - 24,000 Total Expenditures 2,746,196 528,541 1,768,388 534,555 Excessof Revenues Over (Under) Expenditures (1,645,082) (378,167) 53,289 (510,544) OTHER FINANCING SOURCES (USES) Issuanceof Debt - - - 510,617 Proceedsof CapitalAsset Disposals 2 ,880 - - - TransfersIn 1,663,342 491,990 1 03,921 - Transfers (Out) ( 24,350) - (26,976) - Other Financing Sources (Uses) 1,641,872 491,990 76,945 510,617 NetIncrease (Decrease) in Fund Balances (3,210) 113,823 130,234 73 Fund Balances (Deficits), July 1 113,243 2,996,400 90,036 15,626 Fund Balances, June 30 $ 110,033 $ 3,110,223 $ 220,270 $ 15,699 - 114 - QUEENANNE'SCOUNTY,MARYLAND COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 (CONTINUED) SHERIFF'S ECONOMIC DRUG INMATE KENT CRITICAL DEVELOPMENT LAW TASK WELFARE NARROWS AREAS COMMISSION LIBRARY FORCE FUND $ 3 1,818 $ - $ - $ - $ - $ - 5 5,808 - - - - - - - - - - - - - - 20,000 - - - 19,581 - 10,491 - 77,383 - - - 12,340 68,892 - - - - 3,007 10,709 7,314 - - - - - - - - - 16,490 - 42,278 87,626 19,581 - 62,328 79,601 126,975 - - - 97,912 - - - - - - 46,270 96,355 - - - - - - - 20,250 - - - - 4 ,650 - - - - - - - - - 4,000 5,115 - - - - - - 4,650 20,250 - 97,912 50,270 101,470 82,976 (669) - (35,584) 29,331 25,505 - - - - - - - - - - 1,450 - - - 130 7,390 - - ( 45,427) - - - - - ( 45,427) - 130 7,390 1 ,450 - 37,549 (669) 130 (28,194) 30,781 25,505 74,316 98,388 (130) 71,940 206,732 186,263 $ 111,865 $ 9 7,719 $ - $ 43,746 $ 237,513 $ 211,768 - 115 - QUEENANNE'SCOUNTY,MARYLAND COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 (CONTINUED) CAPITAL CAPITAL PROJECTS - PROJECTS- PARKSAND TOTAL AGRICULTURAL REVOLVING FIRE COMPANY RECREATION NON-MAJOR TRANSFER LOAN FUND IMPACT FEES IMPACT FEES GOVERNMENTAL REVENUES Taxes Local PropertyTax $ - $ - $ - $ - $ 31,818 Other LocalTaxes - AdmissionandAmusementTaxes - - - - 55,808 State SharedTaxes 311,598 - - - 311,598 Intergovernmental - - - - 2,922,772 Charges for Current Services - - 329,422 115,987 640,667 Finesand Forfeitures - - - - 81,232 InvestmentIncome 88,660 1,490 25,592 - 177,447 Donations - - - - 54,002 Miscellaneous - - - - 70,692 Total Revenues 400,258 1,490 355,014 115,987 4,346,036 EXPENDITURES Current General Government - - - - 97,912 Public Safety - - 256,010 - 398,635 Social Services - - - - 4,514,584 Conservationof Natural Resources 1,117,525 - - - 1,648,330 Economic/Community Development - - - - 533,191 Capital Outlay - - - - 9,115 Debt Service Principal - - - - 24,000 Total Expenditures 1,117,525 - 256,010 - 7,225,767 Excessof Revenues Over (Under) Expenditures (717,267) 1,490 99,004 115,987 (2,879,731) OTHER FINANCING SOURCES (USES) Issuanceof Debt - - - - 510,617 Proceedsof CapitalAsset Disposals - - - - 4,330 TransfersIn 302,000 - 156,191 - 2,724,964 Transfers (Out) - - - - (96,753) Other Financing Sources (Uses) 302,000 - 156,191 - 3,143,158 NetIncrease (Decrease) in Fund Balances (415,267) 1,490 255,195 115,987 263,427 Fund Balances (Deficits), July 1 2,997,438 342,539 541,096 - 7,733,887 Fund Balances, June 30 $ 2,582,171 $ 344,029 $ 796,291 $ 115,987 $ 7,997,314 - 116 - Farming is still one of the main industries in Queen Anne’s County, MD. QUEEN ANNE'S COUNTY, MARYLAND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 DEPARTMENT OF AGING HOUSING AND COMMUNITY SERVICES VARIANCE VARIANCE ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES Taxes Local Property Tax $ - $ - $ - $ - $ - $ - $ - $ - Other Local Taxes - Admission and Amusement Taxes - - - - - - - - State Shared Taxes - - - - - - - - Intergovernmental 9 54,757 982,012 9 81,183 ( 829) 1 63,786 1 69,398 1 35,171 (34,227) Charges for Current Services 3 8,900 58,900 6 4,041 5 ,141 - - - - Fines and Forfeitures - - - - 2 00 2 00 - (200) Investment Income - 2,100 2 ,738 6 38 - - 1 3,703 1 3,703 Donations 6 4,470 85,170 5 2,002 ( 33,168) - 1 ,500 1 ,500 - Miscellaneous 2 ,000 2,000 1 ,150 ( 850) - - - - Total Revenues 1 ,060,127 1,130,182 1 ,101,114 ( 29,068) 1 63,986 1 71,098 1 50,374 (20,724) EXPENDITURES Current Operating Expenditures 2 ,660,660 2,757,241 2 ,746,196 11,045 1 ,196,929 1 ,504,041 5 28,541 9 75,500 Capital Outlay 8 1,350 65,100 - 6 5,100 - - - - Debt Service Principal - - - - - - - - Total Expenditures 2 ,742,010 2,822,341 2 ,746,196 7 6,145 1 ,196,929 1 ,504,041 5 28,541 9 75,500 Excess of Revenues Over (Under) Expenditures ( 1,681,883) (1,692,159) (1,645,082) 4 7,077 ( 1,032,943) ( 1,332,943) ( 378,167) 9 54,776 OTHER FINANCING SOURCES (USES) Issuance of Debt - - - - - - - - Proceeds of Capital Asset Disposals 1 0,000 20,276 2 ,880 ( 17,396) - - - - Transfers In 1 ,696,233 1,696,233 1 ,663,342 ( 32,891) 6 57,943 6 57,943 4 91,990 ( 165,953) Transfers (Out) ( 24,350) (24,350) (24,350) - - ( 150,000) - 1 50,000 Total Other Financing Sources (Uses) 1 ,681,883 1,692,159 1 ,641,872 ( 50,287) 6 57,943 5 07,943 4 91,990 (15,953) Net Increase (Decrease) in Fund Balances $ - $ - (3,210) $ ( 3,210) $ ( 375,000) $ ( 825,000) 113,823 $ 9 38,823 Fund Balances, July 1 1 13,243 2 ,996,400 Fund Balances, June 30 $ 1 10,033 $ 3,110,223 - 118 - QUEEN ANNE'S COUNTY, MARYLAND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2008 (CONTINUED) COMMUNITY PARTNERSHIPS FOR CHILDREN DREDGING SPECIAL ASSESSMENTS KENT NARROWS VARIANCE VARIANCE VARIANCE ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE) $ - $ - $ - $ - $ - $ - $ - $ - $ 22,000 $ 2 2,000 $ 3 1,818 $ 9,818 - - - - - - - - 60,000 6 0,000 5 5,808 (4,192) - - - - - - - - - - - - 1 ,877,900 2,016,464 1 ,786,418 (230,046) - - - - - - - - - - - - 2 4,200 24,200 2 3,762 (438) - - - - - - - - - - - - - - - - - - 2 3,985 2 3,985 - - 2 49 2 49 75 7 5 - (75) - 500 5 00 - - - - - - - - - 4 7,275 23,152 1 0,774 (12,378) - - - - - - - - 1 ,925,175 2,040,116 1 ,821,677 (218,439) 2 4,200 24,200 24,011 (189) 82,075 8 2,075 8 7,626 5,551 2 ,019,588 2,134,359 1 ,768,388 3 65,971 - 510,617 5 10,555 6 2 8,500 8 ,500 4 ,650 3,850 2 ,000 2,000 - 2 ,000 - - - - - - - - - - - - 2 4,000 24,000 2 4,000 - - - - - 2 ,021,588 2,136,359 1 ,768,388 3 67,971 2 4,000 534,617 5 34,555 6 2 8,500 8 ,500 4 ,650 3,850 (96,413) (96,243) 5 3,289 1 49,532 2 00 (510,417) ( 510,544) (127) 73,575 7 3,575 8 2,976 9,401 - - - - - 510,617 5 10,617 - - - - - - - - - - - - - - - - - 1 20,348 124,269 1 03,921 (20,348) - - - - - - - - (23,935) (28,026) ( 26,976) 1 ,050 - - - - ( 45,427) ( 45,427) ( 45,427) - 9 6,413 96,243 7 6,945 (19,298) - 510,617 5 10,617 - ( 45,427) ( 45,427) ( 45,427) - $ - $ - 1 30,234 $ 1 30,234 $ 2 00 $ 200 7 3 $ (127) $ 28,148 $ 2 8,148 3 7,549 $ 9,401 9 0,036 1 5,626 7 4,316 $ 2 20,270 $ 1 5,699 $ 111,865 CONTINUED - 119 - QUEEN ANNE'S COUNTY, MARYLAND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS NON-MAJOR GOVERNMENTAL FUNDS FORTHE YEAR ENDED JUNE 30, 2008 (CONTINUED) INMATEWELFARE FUND AGRICULTURAL TRANSFER VARIANCE VARIANCE ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES Taxes Local Property Tax $ - $ - $ - $ - $ - $ - $ - $ - Other Local Taxes - Admission and Amusement Taxes - - - - - - - - State Shared Taxes - - - - 155,000 155,000 311,598 156,598 Intergovernmental - - - - - - - - Chargesfor Current Services 60,000 60,000 77,383 17,383 - - - - Fines and Forfeitures - - - - - - - - Investment Income 5,000 5,000 7,314 2,314 5,000 5,000 88,660 83,660 Donations - - - - - - - - Miscellaneous 40,000 40,000 42,278 2 ,278 - - - - Total Revenues 105,000 105,000 126,975 21,975 160,000 160,000 400,258 240,258 EXPENDITURES Current Operating Expenditures 100,125 100,125 96,355 3,770 666,667 1,400,000 1,117,525 282,475 Capital Outlay 27,000 27,000 5,115 21,885 - - - - Debt Service Principal - - - - - - - - Total Expenditures 127,125 127,125 101,470 25,655 666,667 1,400,000 1,117,525 282,475 Excess of Revenues Over (Under) Expenditures (22,125) (22,125) 25,505 47,630 (506,667) (1,240,000) (717,267) 522,733 OTHER FINANCING SOURCES (USES) Issuance of Debt - - - - - - - - Proceeds of Capital Asset Disposals - - - - - - - - Transfers In - - - - 167,000 167,000 302,000 135,000 Transfers (Out) - - - - - - - - Total Other Financing Sources (Uses) - - - - 167,000 167,000 302,000 135,000 Net Increase (Decrease) in Fund Balances $ (22,125) $ (22,125) 25,505 $ 47,630 $ (339,667) $ (1,073,000) (415,267) $ 657,733 Fund Balances,July1 186,263 2,997,438 Fund Balances,June 30 $211,768 $ 2,582,171 - 120 - QUEEN ANNE'S COUNTY, MARYLAND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS NON-MAJOR GOVERNMENTAL FUNDS FORTHE YEAR ENDED JUNE 30, 2008 (CONTINUED) CAPITAL PROJECTS - FIRE COMPANY IMPACT FEES VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) $ - $ - $ - $ - - - - - - - - - - - - - 200,000 200,000 329,422 129,422 - - - - 5,900 5,900 25,592 19,692 - - - - - - - - 205,900 205,900 355,014 149,114 600,000 600,000 256,010 343,990 - - - - - - - - 600,000 600,000 256,010 343,990 (394,100) (394,100) 99,004 493,104 - - - - - - - - - 156,192 156,191 (1) - - - - - 156,192 156,191 (1) $ (394,100) $ (237,908) 255,195 $ 493,103 541,096 $ 796,291 - 121 - Queen Anne’s County is still home to many beautiful examples of early architecture. CAPITAL PROJECTS FUNDS Capital Projects Funds are usedforthe acquisition or constructionofmajor capitalfacilities, as well as other largemulti-year projects thatrelate to capital assets, that arefinancedfrom general governmental resources. - 123 - QUEENANNE'S COUNTY MARYLAND CAPITALPROJECTSFUNDS SCHEDULE OFAPPROPRIATIONSANDEXPENDITURES FOR THEYEARENDEDJUNE30,2008 EXPENDITURES INCLUDED IN CAPITALIZED TOTAL PRIOR CURRENT UNEXPENDED CONSTRUCTION CURRENT PROJ # GENERALCAPITALPROJECTS: APPROPRIATION YEARS YEAR TOTAL APPROPRIATIONS INPROGRESS YEAR GENERAL GOVERNMENT 400003 CountyFacilitiesProgram $ 629,548 $ 371,091 $ 132,327 $ 503,418 $ 126,130 $ 503,418 $ 132,327 400007 GASB-34 Implementation 43,000 13,990 - 13,990 29,010 - - 400009 FinanceSystem(SeeTransfers) 753,476 639,867 33,844 673,711 79,765 673,711 33,844 400011 CourthouseRenovation 700,500 596,717 - 596,717 103,783 5 96,717 - 400015 CountyWideMapping 585,000 367,520 38,977 406,497 1 78,503 - - 400019 LandAcquisitionFund 1,339,787 1,295,131 28,620 1,323,751 16,036 - - 400027 StrategicPlanning 709,602 303,629 38,750 342,379 3 67,223 - - 400029 Comp&CommunityPlans 675,000 250,771 19,457 270,228 4 04,772 - - 400031 Mgt InfoSystemsNetwork 636,000 490,864 98,984 589,848 46,152 - 39,023 400041 IT Infrastructure/Phones 325,000 152,596 79,900 232,496 92,504 232,496 79,900 400047 TaxDitch-Longmarsh Oxdale 50,000 3,317 58,229 61,546 (11,546) - - 400051 HistoricSitesSurvey 117,000 67,765 26,303 94,068 22,932 - - 400053 AlternativeSepticStudy 75,000 16,716 - 16,716 58,284 - - 400223 CircuitCourthousePlanning 1,300,000 28,780 18,835 47,615 1 ,252,385 - - 400233 RecMgmtSys-NonFin 125,000 78,178 31,429 109,607 15,393 - 24,591 400269 TaxDitches-Beaverdam 34,500 2,865 31,631 34,496 4 - - 400271 TaxDitches-Longmarsh 51,500 36,540 - 36,540 14,960 - - 400309 CLS-HospiceCenter-Contribution 175,000 100,000 75,000 175,000 - - - 400327 FY07 GeneralFundTransfer In 5,150,000 - - - 5,150,000 - - 400345 CLS-Land-FrielProperty 3,511,771 3,511,771 53,793 3,565,564 (53,793) - 53,793 400353 GrasonvilleCommunityCenter 75,000 - 75,000 75,000 - - - 400355 DryHydrantProgram 25,000 - - - 25,000 - - 400359 PublicDrainage 150,000 - - - 1 50,000 - - 400361 EastShoreMuseumofLife 2,000 - 2,000 2,000 - - - 400363 ChurchHillPondStabilization 200,000 - 337 337 1 99,663 - - 400365 GrasonvillePoleRelocation 200,000 - - - 2 00,000 - - 400367 ChesterwyeExpansion 100,000 - 100,000 100,000 - - - 400369 Kent IslandSeniorCenterSiteCouncil 15,000 - - - 15,000 - - 400373 BeautificationCommittee 5,000 - 523 523 4,477 - - 400375 GrantProcurementCommittee 5 ,000 - - - 5,000 - - 400377 BNRSepticRetrofit Grant 5,000 - - - 5,000 - - 400389 Public InformationEquipment 80,000 - 66,007 66,007 13,993 - 62,759 400425 FrielPropertyManagement - - 5,508 5,508 (5,508) - - 400427 Land-Nesbit 600,000 - 300,000 300,000 300,000 300,000 300,000 400431 CLS-Land-Courthouse 1,300,000 - 1,296,182 1,296,182 3,818 - 1,290,536 400441 MatapeakeFeasabilityStudy 25,000 - 16,700 16,700 8,300 - - 400447 Budgeted GeneralFundTransfer In 6,000,000 - - - 6,000,000 - - Total General Government 25,773,684 8,328,108 2,628,336 10,956,444 14,817,240 2,306,342 2,016,773 PUBLICSAFETY 400059 DetentionCenterExpansion 341,000 235,676 8,094 243,770 97,230 - - 400061 HazardMitigationPlan 30,800 26,070 - 26,070 4,730 - - 400065 EMS#400CommDrive 166,878 163,169 1,979 165,148 1,730 - 1,979 400217 Transfer toVFDs 1,157,390 676,569 408,120 1,084,689 72,701 - - 400227 RenovateViewingRooms&Roof 136,503 48,168 70,648 118,816 17,687 118,816 70,648 400281 DetentionCenterFurniture&Carpet 10,000 - - - 10,000 - - 400283 DetentionCenterBuildingExpansion 2,468,329 350 44,077 44,427 2,423,902 44,427 44,077 400285 CLS-AnimalControlBuildingRenovation 246,800 121,765 124,694 246,459 341 - 124,694 400313 CountyWideMapping-911 815,530 717,320 38,834 756,154 59,376 - - 400343 DESRecordsManagementSoftware 194,000 91,103 34,055 125,158 68,842 125,158 34,055 400379 CLS-MobileSpeedTrailers 22,150 - 22,150 22,150 - - 22,150 400381 CLS-DetentionCenterACReplacement 60,708 - 60,708 60,708 - - 60,708 400383 ModularUnitEquipment/Storage 25,000 - - - 25,000 - - 400435 DetentionCenterCCTVSystem 39,292 - 39,292 39,292 - 39,292 39,292 TotalPublicSafety 5,714,380 2,080,190 852,651 2,932,841 2,781,539 327,693 397,603 PUBLICWORKS 400077 WetlandsMitigation 216,560 128,787 14,170 142,957 73,603 - - 400079 RoofRepair / Replacement 455,000 425,511 - 425,511 29,489 - - 400081 CentrevilleMCF 602,000 67,813 135,199 203,012 398,988 203,012 135,199 400083 Renovation/Transit Garage(SeeTransfers) 4,765,729 1,341,969 2,531,560 3,873,529 892,200 3,873,529 2,531,560 400087 FuelDepotDemolition/MTBE 200,000 168,783 - 168,783 31,217 1 68,783 - 400091 DPW-Fee InLieu 20,000 - 20,000 20,000 - - - 400235 SolidWasteCapitalEquipment 174,001 55,939 24,465 80,404 93,597 - 24,465 400287 DPWRecordsManagementSystem 75,000 1,217 1,174 2,391 72,609 - - 400331 CLS-KirwanCreekWatershed 55,000 12,664 42,563 55,227 (227) - - 400335 Corsica&Beyond-Stormwater 152,000 37,753 85,479 123,232 28,768 - - 400405 LibraryRain Garden 51,080 3,247 19,773 23,020 28,060 - - TotalPublicWorks 6,766,370 2,243,683 2,874,383 5,118,066 1,648,304 4,245,324 2,691,224 CONTINUED - 124 - QUEENANNE'S COUNTY MARYLAND CAPITALPROJECTSFUNDS SCHEDULE OFAPPROPRIATIONSANDEXPENDITURES FOR THEYEARENDEDJUNE30,2008 (CONTINUED) EXPENDITURES INCLUDED IN CAPITALIZED TOTAL PRIOR CURRENT UNEXPENDED CONSTRUCTION CURRENT PROJ # GENERALCAPITALPROJECTS: APPROPRIATION YEARS YEAR TOTAL APPROPRIATIONS INPROGRESS YEAR SOCIALSERVICES 400093 CLS-CrumptonSeniorCenter $ 105,000 $ 100,898 $ - $ 100,898 $ 4,102 $ - $ - 400097 CLS- GrasonvilleSrCenterRenovation 1,604,735 1,604,688 - 1,604,688 47 - - 400099 KramerCenter Improvement 121,100 29,644 15,052 44,696 76,404 44,696 15,052 400103 Kent IslandSeniorCenter 44,000 1,724 4,226 5,950 38,050 - - 400243 Aging-LargeTransitVehicles 826,145 189,828 30,569 220,397 6 05,748 - 29,519 400357 KramerCenterHVACUnits 50,000 - 13,273 13,273 36,727 13,273 13,273 400403 TransportationDevelopmentPlan 59,625 - - - 59,625 - - 400437 DeptofAgingCapEquipment 71,000 - - - 71,000 - - TotalSocialServices 2,881,605 1,926,782 63,120 1,989,902 891,703 57,969 57,844 EDUCATION 700003 ChesapeakeCollegeAdminBldg 779,971 768,411 - 768,411 11,560 - - 700055 ChesCollCollegeCenter-Renovations 407,167 402,101 - 402,101 5,066 - - 700079 ChesCollTalbotScienceCenterDesign 584,865 356,351 228,514 584,865 - - - 700147 ChesCollTalbotScienceBuildingEquipment 65,000 - 65,000 65,000 - - - SubtotalChesapeakeCollege 1,837,003 1,526,863 293,514 1,820,377 16,626 - - EDUCATION-CONTINUED ALLOCATIONSTOCOMPONENTUNIT - BOARD OFEDUCATION 700005 CLS-MatapeakeElementary 9,294,563 9,227,443 - 9,227,443 67,120 - - 700007 CentrevilleElementaryRenovation 5,448,028 5,938,028 (490,000) 5 ,448,028 - - - 700019 QueenAnne'sCountyHigh 13,196,000 13,082,808 - 13,082,808 1 13,192 - - 700045 CLS-BaysideElementaryRepairs 331,727 331,727 - 331,727 - - - 700047 CLS-BOE Office-StructuralRep 205,404 205,403 - 205,403 1 - - 700059 FY05RoofRepair 10,000 4,695 5,097 9,792 208 - - 700061 MatapeakeMiddle 17,309,456 14,041,882 2,786,879 16,828,761 4 80,695 - - 700063 ChurchHillElemLandAcquisition 855,000 700,838 122,292 823,130 31,870 - - 700067 SecurityCamerasVariousSchools 95,023 69,839 6,510 76,349 18,674 - - 700073 CLS-BOEBuildingRoofRepairs 136,942 136,942 - 136,942 - - - 700075 CLS-KennardElementarySchoolAddition 59,657 59,656 - 59,656 1 - - 700077 BOEDataWarehousing 180,000 115,181 49,240 164,421 15,579 - - 700081 WaterTreatment-ChurchHill/Sudlersville 105,000 9 ,950 - 9,950 95,050 - - 700087 CLS-SudlersvilleMiddleStudy 30,633 30,633 - 30,633 - - - 700089 Kent IslandElementaryRenovation 9,808,000 599,965 8,675,768 9,275,733 5 32,267 - - 700091 CLS-Defibrillators/BandUniforms 40,905 40,905 - 40,905 - - - 700095 BOERelocatables 638,402 271,449 340,060 611,509 26,893 - - 700097 CLS- QACHSSecurityLighting 20,000 - 20,000 20,000 - - - 700099 CLS-SudlersvilleMiddle-LibraryFurniture 29,763 29,434 328 29,762 1 - - 700105 BOEComputerEquipment 357,135 219,954 121,967 341,921 15,214 - - 700107 Schools-Carpet&Tile 270,000 159,013 44,960 203,973 66,027 - - 700111 BOE OfficeBuildingUpgrade 150,595 7 ,100 - 7,100 1 43,495 - - 700113 Schools-Painting 240,000 86,810 79,576 166,386 73,614 - - 700115 Playfields-ChurchHill&Kent IslandElementary 60,000 - 22,165 22,165 37,835 - - 700117 PlaygroundRepairs-Kent IslandElemSchool 50,000 4,929 6,582 11,511 38,489 - - 700121 CLS-TVProductionEquipment 10,332 5,416 4,904 10,320 12 - - 700123 CLS-WirelessSystem-BoardMeetings 14,810 14,810 - 14,810 - - - 700125 KIHSPracticeFields 130,000 40,561 17,047 57,608 72,392 - - 700127 CLS-BOEPlayfields& Grounds 63,030 63,029 - 63,029 1 - - 700129 CLS-CentrevilleMiddleSchoolLockerRestructure 65,179 - 65,178 65,178 1 - - 700131 BOEMicrothermMonitors 80,000 - 73,174 73,174 6,826 - - 700133 CLS-BOESecurityEntr 69,977 - 69,977 69,977 - - - 700135 CLS-SudlersvilleElemParkingLot 26,283 - 26,283 26,283 - - - 700137 StevensvilleMiddlePASystem 20,000 - - - 20,000 - - 700139 CLS- QACHSClassroomFurniture 24,679 - 24,678 24,678 1 - - 700141 AcousticalTiles 20,000 - 13,320 13,320 6,680 - - 700143 CLS-KIHS& QACHSStadiumSod 39,361 - 39,360 39,360 1 - - 700145 CLS-KIHSBaseballField Irrigation 30,000 - 30,000 30,000 - - - 700149 BaysideElementaryRoof 50,000 - 26,600 26,600 23,400 - - SubtotalBoardofEducation 59,565,884 45,498,400 12,181,945 57,680,345 1 ,885,539 - - TotalEducation 61,402,887 47,025,263 12,475,459 59,500,722 1 ,902,165 - - CONTINUED - 125 - QUEENANNE'S COUNTY MARYLAND CAPITALPROJECTSFUNDS SCHEDULE OFAPPROPRIATIONSANDEXPENDITURES FOR THEYEARENDEDJUNE30,2008 (CONTINUED) EXPENDITURES INCLUDED IN CAPITALIZED TOTAL PRIOR CURRENT UNEXPENDED CONSTRUCTION CURRENT PROJ # GENERALCAPITALPROJECTS: APPROPRIATION YEARS YEAR TOTAL APPROPRIATIONS INPROGRESS YEAR PARKSANDRECREATION 400111 Land-Undesignated $ 195,505 $ 67,639 $ 14,878 $ 82,517 $ 1 12,988 $ - $ - 400117 CLS-ChurchHillPark II 412,678 412,678 - 412,678 - - - 400121 GrasonvillePark 165,000 87,575 - 87,575 77,425 87,575 - 400123 MatapeakeParkClubhouse(SeeTransfers) 623,430 318,308 230,637 548,945 74,485 548,945 230,637 400141 EwingPondPark 115,000 89 23,389 23,478 91,522 23,478 23,389 400147 RoundTopParkTrail 60,000 4 ,050 - 4,050 55,950 4,050 - 400153 SpaniardPointEasements 1,870,000 - 13,390 13,390 1,856,610 13,390 13,390 400155 ParkSurvey 46,949 26,756 - 26,756 20,193 - - 400173 ConquestDevelopment 500,000 101,896 - 101,896 398,104 1 01,896 - 400179 PinkneyParkRestrooms 52,905 480 48,073 48,553 4,352 48,553 48,073 400183 MatapeakeSchoolPk Irrigation 111,485 18 111,467 111,485 - 111,485 111,467 400187 SudlersvillePark 235,469 72,820 141,198 214,018 21,451 214,018 141,198 400189 KentNarrows Improvements 60,000 - - - 60,000 - - 400215 PreventiveParkMaintenance 348,680 199,931 137,830 337,761 10,919 - - 400221 CapitalEquipmentFund-P&R 70,000 44,118 25,786 69,904 96 - 22,005 400249 CentrevilleTrail 505,600 400 6,850 7,250 498,350 7,250 6,850 400251 CLS-ChurchHillParkLighting 127,400 127,400 - 127,400 - - - 400253 CLS-BOEPlayfields&Equipment 100,000 100,039 - 100,039 ( 39) - - 400255 OldLovePointParkLights 25,000 - - - 25,000 - - 400257 CrumptonPlaygrounds 30,000 - 15,790 15,790 14,210 15,790 15,790 400259 TinyTotsBuilding 50,000 - 35,121 35,121 14,879 35,121 35,121 400265 CLS-VisitorCenterTrail/Fountain 37,850 37,845 - 37,845 5 - - 400295 CLS- QACRec/CommComplex 500,000 15,200 128,855 144,055 3 55,945 - - 400297 Kent IslandSouthTrailSpur-ChewsManor 60,000 58,547 - 58,547 1,453 58,547 - 400299 ChurchHillParkFitnessTrail 52,597 290 51,970 52,260 337 52,260 51,970 400303 FerryPointTrail 50,000 1 27 - 127 49,873 127 - 400305 WhiteMarshPark 871,677 125,912 528,193 654,105 217,572 654,105 528,193 400307 CLS-Land-Kent Island 1,300,000 - - - 1,300,000 - - 400333 Kent IslandElementaryPlayground 28,945 6,498 58 6,556 22,389 - - 400341 CLS-Land-TalismanFarm 5,024,813 - 5,024,812 5 ,024,812 1 - 5,024,812 400347 CLS-MatapeakeLeadAbatement 208,188 33,993 174,192 208,185 3 - 174,192 400351 KirwanMuseumRepairs 10,247 2,425 6,733 9,158 1,089 - - 400387 MemorialPark(FallenHeroes) 35,000 - 9 9 34,991 9 9 400391 CrossCountyConnecTrailPS1 50,000 - 312 312 49,688 312 312 400393 DavidsonProperty 25,000 - - - 25,000 - - 400395 RoundTopPlaygroundEquipment 30,000 - 15,095 15,095 14,905 15,095 15,095 400397 OldLovePointPark Irrigation 125,000 - - - 1 25,000 - - 400399 FerryPoint/CECBoardwalk 60,000 - 7,800 7,800 52,200 7,800 7,800 400401 CLS-BattsNeckLighting 60,000 - - - 60,000 - - 400407 CLS-KIHS& QACHSStadiumSod 40,000 18,006 21,355 39,361 639 - - 400409 KIHSBaseballField Irrigation 30,000 - 30,000 30,000 - - - 400411 KIHSPracticeField 75,000 - 29,938 29,938 45,062 - - 400413 Land-SportsComplex 355,000 - - - 3 55,000 - - 400415 Land-TrailEasements 25,000 - 1,845 1,845 23,155 1,845 1,845 400439 WellsCoveLanding 120,000 - 6,495 6,495 113,505 6,495 6,495 400467 WhtieMarshParkEquipment 203,323 - 203,322 203,322 1 - 196,322 TotalParks&Recreation 15,082,741 1,863,040 7,035,393 8,898,433 6,184,308 2,008,146 6,654,965 LIBRARY 400195 Kent IslandLibraryExpansionI 140,000 - - - 1 40,000 - - 400385 Kent IslandLibraryExpansion II 297,000 - 26,000 26,000 271,000 26,000 26,000 TotalLibrary 437,000 - 26,000 26,000 411,000 26,000 26,000 CONSERVATION 400293 4-HPark Improvements 456,420 13,231 101,855 115,086 341,334 115,086 101,855 ECONOMIC/COMMUNITYDEVELOPMENT 400201 LandSalesProceeds(SeeTransfers) 10,345 30,345 - 30,345 (20,000) - - ALLOCATIONTOCOMPONENTUNIT - PUBLICHOUSINGAUTHORITY 400105 SudlersvilleSeniorCenter 880,000 - 765,216 765,216 1 14,784 - - 400205 PHAAllocation 1,350,000 900,000 - 900,000 4 50,000 - - 400207 Housing&CommunityServiceTransfer(SeeTransfers) - 100,000 - 100,000 (100,000) - - 400209 FY05PHAAllocation 600,000 450,212 49,930 500,142 99,858 - - 400429 RestrictedAllocation-PHAFoxxtownProj 1,495,378 1,495,378 906,965 2,402,343 (906,965) - - SubtotalPublicHousingAuthority 4,325,378 2,945,590 1,722,111 4,667,701 (342,323) - - TotalEconomic/CommunityDevelopment 4,335,723 2,975,935 1,722,111 4,698,046 (362,323) - - CONTINUED - 126 - QUEENANNE'S COUNTY MARYLAND CAPITALPROJECTSFUNDS SCHEDULE OFAPPROPRIATIONSANDEXPENDITURES FOR THEYEARENDEDJUNE30,2008 (CONTINUED) EXPENDITURES INCLUDED IN CAPITALIZED TOTAL PRIOR CURRENT UNEXPENDED CONSTRUCTION CURRENT PROJ # GENERALCAPITALPROJECTS: APPROPRIATION YEARS YEAR TOTAL APPROPRIATIONS INPROGRESS YEAR DEBTSERVICE 400315 Debt-Bond IssuanceCosts $ 16,250 $ - $ - $ - $ 1 6,250 $ - $ - 400325 FY07Bond Issuance 127,424 307,339 3,972 311,311 (183,887) - - TotalDebtService 143,674 307,339 3,972 311,311 (167,637) - - TRANSFERSTO OTHERFUNDS 400009 FinanceSystem- toSanitaryDistrict - 1 ,719 - 1,719 (1,719) - - 400045 LandPreservationTransfers 570,000 135,000 135,000 270,000 3 00,000 - - 400083 Renovation/Transit Garage- toRoadsCapProj 48,300 48,300 - 48,300 - - - 400123 MatapeakeParkClubhouse 85,191 85,191 - 85,191 - - - 400127 PublicLandingsAllocation 200,000 158,513 41,487 200,000 - - - 400167 EnterpriseTransfer/Alloc- toPropertyMgmt 460,185 148,185 212,000 360,185 1 00,000 - - 400201 LandSaleProceeds 50,000 115,000 - 115,000 (65,000) - - 400207 Housing&CommSvcTransfer- toHousingServices 450,000 350,000 - 350,000 1 00,000 - - 400213 LoanFundTransfers 360,000 260,000 100,000 360,000 - - - TotalTransfers 2,223,676 1,301,908 488,487 1,790,395 4 33,281 - - Total GeneralCapitalProjects $ 125,218,160 $ 68,065,479 $ 28,271,767 $ 96,337,246 $ 28,880,914 $ 9,086,560 $ 11,946,264 PROJ # ROADSBOARDCAPITALPROJECTS: PUBLICWORKS 820005 Asphalt Overlays-Upgrade $ 2,553,091 $ 631,607 $ 354,675 $ 986,282 $ 1,566,809 $ - $ 111,993 820031 CLS-#10SchoolhouseBridge 601,286 601,357 538 601,895 (609) - - 820091 GroffRoadBridge 653,100 596,948 34,403 631,351 21,749 631,351 34,403 820111 ThompsonCreekRoad 452,480 69,680 55,559 125,239 3 27,241 - 55,559 820151 IslandCreekRoadBridge 65,000 16,966 3,904 20,870 44,130 20,870 3,904 820195 SaltStorageSheds 329,423 - 208,757 208,757 120,666 208,757 208,757 820203&221 TaylorMillRoadBridge 197,500 4 50 - 450 197,050 450 - 820235 CLS-EmilyLaneAssessment 13,366 13,366 - 13,366 - - - TotalPublicWorks 4,865,246 1,930,374 657,836 2,588,210 2,277,036 861,428 $ 414,616 TRANSFERSTO OTHERFUNDS 820187 ToRoads Operating 1,063,484 1,019,487 - 1,019,487 43,997 - - 820209 CountyWideMapping II 40,000 40,000 - 40,000 - - - 820215 RoadsPaintTruck 125,000 - - - 1 25,000 - - TotalTransfers to OtherFunds 1,228,484 1,059,487 - 1,059,487 1 68,997 - - TotalRoadsBoardCapitalProjects $ 6,093,730 $ 2,989,861 $ 657,836 $ 3,647,697 $ 2,446,033 $ 861,428 $ 414,616 Total GeneralandRoadsCapitalProjects $ 131,311,890 $ 71,055,340 $ 28,929,603 $ 99,984,943 $ 31,326,947 $ 9,947,988 $ 12,360,880 ForceinKindCapitalProjectsreportedin $ - non-capitalprojectsFundsandadded toCIP 400124 MatapeakeClubhouseFIC $ - $ 4,984 $ 35,396 $ 40,380 $ (40,380) $ 40,380 $ 35,396 400126 CLS-Cross/Kent IslandSouthTrail II FIC - 2 ,190 - 2,190 (2,190) - - 400142 GrasonvilleSchoolPondParkFIC - - 16,250 16,250 (16,250) 16,250 16,250 400188 SudlersvilleParkFIC - - 10,787 10,787 (10,787) 10,787 10,787 400250 CentrevilleTrail-FIC - - 3,049 3,049 (3,049) 3,049 3,049 400304 FerryPointProjectFIC - - 8,760 8,760 (8,760) - - 400306 WhiteMarchParkFIC - - 52,358 52,358 (52,358) 52,358 52,358 400332 CLS-KirwanCreekWatershedFIC - 14,574 28,377 42,951 (42,951) - - 400336 Corsica&BeyondFIC - 21,852 54,163 76,015 (76,015) - - 400392 CrossCountyConn II FIC - - 1,922 1,922 (1,922) - - 400400 ExplorationCenterBridgeFIC - - 689 689 (689) - - $ - $ 43,600 $ 211,751 $ 255,351 $ (255,351) $ 122,824 $ 117,840 TotalConstructioninProgressandCapitalizedCurrent Year $ 10,070,812 $ 12,478,720 - 127 - QUEENANNE'S COUNTY, MARYLAND SCHEDULEOF REVENUES, EXPENDITURES,AND CHANGES IN FUNDBALANCES - BUDGETANDACTUAL SCHOOL IMPACT FEES CAPITALPROJECTS FUND FORTHEYEAR ENDED JUNE 30, 2008 VARIANCE ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES Chargesfor Current Services $ 840,000 $ 840,000 $ 1,011,014 $ 171,014 Investment Income 25,000 25,000 109,753 84,753 Total Revenues 865,000 865,000 1,120,767 255,767 EXPENDITURES Total Expenditures - - - - Excessof Revenues Over Expenditures 865,000 865,000 1,120,767 255,767 OTHER FINANCING SOURCES (USES) Transfers In - - - - Transfers (Out) (1,408,120) (1,408,120) (1,408,120) - Total Other Financing (Uses) (1,408,120) (1,408,120) (1,408,120) - Net Increase (Decrease) in Fund Balances $ (543,120) $ (543,120) (287,353) $ 255,767 Fund Balances,July 1 2,542,813 Fund Balances,June 30 $ 2,255,460 - 128 - NON-MAJOR ENTERPRISE FUNDS Non-Major Enterprisefunds accountfor activitieswhich are commercialin nature and are primarily or partiallyintended to be self-supporting;thatis, eachfundsetsits rates and service charges at a levelsufficient to: (1)meetallofits operating expenses; (2) providefor depreciation from wear and obsolescence; and (3) totheextent thatfunds are not borrowed,finance the cost ofexpansion of physicalfacilities. All non-major enterprisefunds are intended to be only partially self-supporting. - 129 - Fresh Seafood from the Chesapeake Bay is king! NON-MAJOR ENTERPRISE FUNDS Non-major enterprise fundsinclude all of the following funds: Public Marinas– Thisfundaccountsforoperation, maintenance,and major repairs of public marinas. For afee,thegeneralpublic hasaccess to these marinasfor temporary mooring. Parksand Recreation: Blue Heron Golf Course – Thisfundaccountsforoperationand maintenance of an18- holepublicgolf coursethat isownedandoperatedby the County. Recreation Programs– Thisfundaccountsfor self-supporting recreationprograms wherein user charges coverthe majority of operatingexpenditures. Public Landings – Thisfund accountsfor operation, maintenance,and major repairs of public landingsand bulkheads. Forafee, the general publichas accesstothese landings to launch small craft into the many waterways that surround the County. PropertyManagement –Thisfundaccountsfor theoperation, maintenanceand major repairsassociated with the County’s many parks andpublicfacilities. - 131 - QUEENANNE'S COUNTY, MARYLAND COMBINING STATEMENTOF NETASSETS NON-MAJOR ENTERPRISE FUNDS JUNE30,2008 GOLF RECREATION PUBLIC ASSETS COURSE PROGRAMS LANDINGS Current Assets Equity in Pooled Cash $ - $ 374,869 $ 368,055 Accounts Receivable (Net) 660 9,210 - Duefrom Other Funds - 4 0,000 - Duefrom Other Governments 21,536 - 28,090 Inventories 5,256 - - Total Current Assets 27,452 424,079 396,145 Capital Assets Land, Improvedand Unimproved 1,853,631 - 559,862 Buildingsand Improvements to Buildings 182,792 - - Improvements OtherThan Buildings 122,268 - 1,313,171 Automotive Equipment 22,835 - 10,880 Equipment 583,046 - 56,814 Furnitureand Fixtures - 1 6,505 - Construction in Progress 161,474 - 616,007 Capital Assetsbefore Depreciation 2,926,046 16,505 2,556,734 Less Accumulated Depreciation (469,725) (9,078) (170,318) Total Capital Assets, Netof Accumulated Depreciation 2,456,321 7,427 2,386,416 Total Noncurrent Assets 2,456,321 7,427 2,386,416 Total Assets 2,483,773 431,506 2,782,561 LIABILITIES CurrentLiabilities Accounts Payable 27,571 70,221 29,370 Accrued Interest Payable 6,834 - - Escrow Deposits - 4,106 - Due to Other Funds 1,436,065 - - Unearned Revenue 1,732 1,446 129 Current Portionof Compensated Absences 737 382 18,752 Current Portionof Bonds/Notes Payable 56,763 - - Total CurrentLiabilities 1,529,702 76,155 48,251 NoncurrentLiabilities Compensated Absences 318 164 8,080 Bonds/Notes Payable 880,470 - - Total NoncurrentLiabilities 880,788 164 8,080 TotalLiabilities 2,410,490 76,319 56,331 NET ASSETS Invested in Capital Assets, Netof Related Debt 1,519,088 7,427 2,386,416 Restrictedfor: Debt Service/Capital Projects 62 - - Unrestricted (1,445,867) 347,760 339,814 Total Net Assets $ 73,283 $ 355,187 $ 2,726,230 - 132 - QUEENANNE'S COUNTY, MARYLAND COMBINING STATEMENTOF NETASSETS NON-MAJOR ENTERPRISE FUNDS JUNE30,2008 (CONTINUED) TOTAL TOTAL PROPERTY PARKS AND PUBLIC NON-MAJOR MANAGEMENT RECREATION MARINAS ENTERPRISE $ - $ 742,924 $ 271,470 $ 1,014,394 1,350 11,220 - 11,220 - 40,000 - 40,000 69,135 118,761 - 118,761 - 5,256 - 5,256 70,485 918,161 271,470 1,189,631 49,335 2,462,828 209,248 2,672,076 2,013,594 2,196,386 - 2,196,386 - 1,435,439 401,542 1,836,981 49,730 83,445 - 83,445 156,461 796,321 - 796,321 1,748 18,253 - 18,253 442,495 1,219,976 82,263 1,302,239 2,713,363 8,212,648 693,053 8,905,701 (361,067) (1,010,188) (49,952) (1,060,140) 2,352,296 7,202,460 643,101 7,845,561 2,352,296 7,202,460 643,101 7,845,561 2,422,781 8,120,621 914,571 9,035,192 37,574 164,736 24,894 189,630 - 6,834 784 7,618 3,450 7,556 - 7,556 226,524 1,662,589 14,025 1,676,614 - 3,307 - 3,307 - 19,871 - 19,871 - 56,763 8,230 64,993 267,548 1,921,656 47,933 1,969,589 - 8,562 - 8,562 - 880,470 59,086 939,556 - 889,032 59,086 948,118 267,548 2,810,688 107,019 2,917,707 2,352,296 6,265,227 575,785 6,841,012 - 62 - 62 (197,063) (955,356) 231,767 (723,589) $ 2,155,233 $ 5,309,933 $ 807,552 $ 6,117,485 - 133 - QUEENANNE'SCOUNTY,MARYLAND COMBINING STATEMENTOF REVENUES, EXPENSES,AND CHANGESIN FUND NETASSETS NON-MAJOR ENTERPRISE FUNDS FORTHEYEAR ENDED JUNE 30, 2008 GOLF RECREATION PUBLIC COURSE PROGRAMS LANDINGS OPERATING REVENUES Chargesfor Services $ 272,213 $ 475,144 $ 204,970 Intergovernmental 500 4,541 39,089 Material Sales 30,687 - - Miscellaneous Revenues 2,701 9,721 50,495 Total Operating Revenues 306,101 489,406 294,554 OPERATING EXPENSES Costof Salesand Services Parksand Recreation 334,671 573,866 180,600 PublicMarinas - - - Total Costof Salesand Services 334,671 573,866 180,600 Depreciation 48,898 1,651 29,706 Total Operating Expenses 383,569 575,517 210,306 Operating Income (Loss) (77,468) (86,111) 84,248 NON-OPERATING REVENUES (EXPENSES) Interest Expense (47,413) - - Miscellaneous Non-Operating (Expense) - - (167,834) Total Non-Operating Revenues (Expenses) (47,413) - (167,834) Gain (Loss) Before Contributionsand Transfers (124,881) (86,111) (83,586) Capital Contributions, Feesand Grants 21,536 - 27,354 Transfers In 100,000 43,000 75,485 Transfers (Out) - - (579,574) Net Transfers In (Out) 100,000 43,000 (504,089) Change in Net Assets (3,345) (43,111) (560,321) Total Net Assets - Beginningof Year 76,628 398,298 3,286,551 Total Net Assets - End of Year $ 73,283 $ 355,187 $ 2,726,230 - 134 - QUEENANNE'SCOUNTY,MARYLAND COMBINING STATEMENTOF REVENUES, EXPENSES,AND CHANGESIN FUND NETASSETS NON-MAJOR ENTERPRISE FUNDS FORTHEYEAR ENDED JUNE 30, 2008 (CONTINUED) TOTAL TOTAL PROPERTY PARKS AND PUBLIC NON-MAJOR MANAGEMENT RECREATION MARINAS ENTERPRISE $ 507,398 $ 1,459,725 $ 105,900 $ 1,565,625 11,823 55,953 3,710 59,663 2,085 32,772 - 32,772 85,316 148,233 173 148,406 606,622 1,696,683 109,783 1,806,466 722,025 1,811,162 - 1,811,162 - - 19,447 19,447 722,025 1,811,162 19,447 1,830,609 72,493 152,748 5,238 157,986 794,518 1,963,910 24,685 1,988,595 (187,896) (267,227) 85,098 (182,129) - (47,413) (2,659) (50,072) - ( 167,834) - (167,834) - (215,247) (2,659) (217,906) (187,896) (482,474) 82,439 (400,035) 47,000 95,890 - 95,890 137,000 355,485 55,262 410,747 (248,354) (827,928) - (827,928) (111,354) (472,443) 55,262 (417,181) (252,250) (859,027) 137,701 (721,326) 2,407,483 6,168,960 669,851 6,838,811 $ 2,155,233 $ 5,309,933 $ 807,552 $ 6,117,485 - 135 - QUEENANNE'S COUNTY, MARYLAND COMBINING STATEMENTOF CASH FLOWS NON-MAJOR ENTERPRISE FUNDS FORTHEYEAR ENDED JUNE 30, 2008 GOLF RECREATION PUBLIC COURSE PROGRAMS LANDINGS CASH FLOWS FROM OPERATING ACTIVITIES Receiptsfromcustomersand users $ 268,012 $ 461,281 $ 292,013 Receiptsfromotheroperating revenues 12,352 14,262 395,917 Payments tosuppliers (186,756) (369,369) 61,755 Payments toemployeesandon behalfofemployees (150,749) (167,935) (273,952) Net Cash Provided (Used) by Operating Activities (57,141) (61,761) 475,733 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Reclassificationofoperating grant to governmentalfund - - (167,834) Transfersfromotherfunds 100,000 43,000 75,485 Loan proceeds (to)andfrom interfund loans 1,436,065 (40,000) - Transfers tootherfunds - - (579,574) Principal paidon interfund loans (1,239,250) - - Net Cash Provided (Used) by Noncapital Financing Activities 296,815 3,000 (671,923) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Receiptsfromcapital grantsandcontributions 21,536 - 27,354 Principal paidoncapital debt (55,000) - - Receiptsfrom 2006 Bonds - - - Interest paidoncapital debt (44,736) - - Acquisitionand Constructionof Capital Assets (161,474) - (45,882) Net Cash Provided (Used) by Capitaland Related Financing Activities (239,674) - (18,528) CASH FLOWS FROM INVESTING ACTIVITIES Net Cash Provided (Used) by Investing Activities - - - Net increase (decrease) in cashandcashequivalents - (58,761) (214,718) Balances - Beginningofyear - 433,630 582,773 Balances - End ofyear $ - $ 374,869 $ 368,055 Reconciliationofoperating income (loss) to netcash provided byoperatingactivities Operating income (loss) $ (77,468) $ (86,111) $ 84,248 Adjustments to reconcileoperating income (loss) to netcash provided (used) byoperatingactivities: Depreciation 48,898 1,651 29,706 Changes in assetsand liabilities: Accounts receivable, net (660) (8,792) 102,914 Operating grants receivable (21,536) - 306,333 Inventoriesand Prepaid Expenses 4,095 10,344 - Vendoraccounts payable 6,928 26,034 (33,469) Compensatedabsences (13,857) 184 1,872 Escrow deposits payable - (1,077) - Deferred revenuecollected in advance (3,541) (3,994) (15,871) Net Cash Provided (Used) by Operating Activities $ (57,141) $ (61,761) $ 475,733 - 136 - QUEENANNE'S COUNTY, MARYLAND COMBINING STATEMENTOF CASH FLOWS NON-MAJOR ENTERPRISE FUNDS FORTHEYEAR ENDED JUNE 30, 2008 (CONTINUED) TOTAL TOTAL PROPERTY PARKS AND PUBLIC NON-MAJOR MANAGEMENT RECREATION MARINAS ENTERPRISE $ 536,114 $ 1,557,420 $ 110,098 $ 1,667,518 80,089 502,620 3,883 506,503 (368,291) (862,661) 3,977 (858,684) (390,625) (983,261) - (983,261) (142,713) 214,118 117,958 332,076 - (167,834) - (167,834) 137,000 355,485 55,262 410,747 226,524 1,622,589 14,025 1,636,614 (248,354) (827,928) - (827,928) (133,512) (1,372,762) (17,381) (1,390,143) (18,342) (390,450) 51,906 (338,544) 47,000 95,890 - 95,890 - (55,000) (7,885) (62,885) - - 36,934 36,934 - (44,736) (1,957) (46,693) 114,055 (93,301) (73,868) (167,169) 161,055 (97,147) (46,776) (143,923) - - - - - (273,479) 123,088 (150,391) - 1,016,403 148,382 1,164,785 $ - $ 742,924 $ 271,470 $ 1,014,394 $ (187,896) $ (267,227) $ 85,098 $ (182,129) 72,493 152,748 5,238 157,986 25,266 118,728 4,198 122,926 (19,135) 265,662 - 265,662 - 14,439 - 14,439 (36,891) (37,398) 23,424 (13,974) - (11,801) - (11,801) 3,450 2,373 - 2,373 - (23,406) - (23,406) $ (142,713) $ 214,118 $ 117,958 $ 332,076 - 137 - Vintage waterman in foul weather gear - Kent Island, MD. FIDUCIARY FUNDS Fiduciaryfunds accountfor assets heldfor others,in atrustee or agency capacity,which cannot be used to support other government programs. Agency Funds accountfor assets held by the County on behalf ofindividuals, private organizations, or other governments and/orfunds. Private-purpose Trust Funds also benefitindividuals, private organizations or other governments; however,they are used onlyinthe absence of a publicpurpose. The County’s one Private- purpose Trust Fundis reported as part ofthe Basic Financial Statements. - 139 - AGENCY FUNDS Agency funds are as follows: Tax Ditch – This fund accounts for special taxing district revenues that are used to maintain drainage ditches located in parts of the County. Zoning Deposits – This fund accounts for performance deposits required under various sections of the Zoning Ordinance. State and Town Tax Collections – This fund accounts for collections received by the County on behalf of: the State of Maryland and incorporated towns located within the County. These taxes are collected by the County along with County taxes and are then remitted to the proper jurisdiction. Motor Vehicle Administration Deposits – This fund accounts for funds collected by the County for State vehicle registration fees. Mid-shore Regional Recycling Program (MRRP) – This fund accounts for activities of the regional recycling effort that is supported by four counties, including Queen Anne’s County. Escheat – Abandoned Property – This fund accounts for stale-dated County payroll and disbursements checks that are voided by the County after six months and remitted to the State after three years as abandoned property. In accordance with State statutes, these funds are available to be claimed by the original payee or they revert to the State. - 140 - QUEENANNE'S COUNTY,MARYLAND COMBININGSTATEMENTOF FIDUCIARY NETASSETSAND LIABILITIES AGENCY FUNDS JUNE30,2008 STATE MOTOR TAX &TOWN VEHICLE MIDSHORE ESCHEAT- TOTAL DITCH ZONING TAX ADMIN REGIONAL ABANDONED AGENCY FUND DEPOSITS COLLECTIONS DEPOSITS RECYCLING PROPERTY FUNDS ASSETS Cashand CashEquivalents $ 129,983 $ 146,698 $ 74,928 $ 4,197 $ - $ 1,379 $ 357,185 OtherAssets - - - - 2 ,355 - 2,355 Miscellaneous Receivables - - - - 1 11,997 - 111,997 TotalAssets $ 129,983 $ 146,698 $ 74,928 $ 4,197 $ 114,352 $ 1,379 $ 471,537 LIABILITIES Due toOtherGovernments $ - $ - $ 74,928 $ 4,197 $ 114,352 $ 1,339 $ 194,816 DepositsandEscrows 129,983 146,698 - - - 40 276,721 TotalLiabilities $ 129,983 $ 146,698 $ 74,928 $ 4,197 $ 114,352 $ 1,379 $ 471,537 - 141 - QUEENANNE'S COUNTY,MARYLAND STATEMENTOF CHANGES IN FIDUCIARYNETASSETSAND LIABILITIES AGENCY FUNDS FORTHEYEAR ENDED JUNE 30, 2008 OtherAssets and Miscellaneous Total Cash Receivables Assets TAXDITCH FUND Balance 7-1-07 $ 1 22,421 $ - $ 122,421 Additions 2 3,261 - 23,261 Deductions (15,699) - (15,699) Balance 6-30-08 $ 1 29,983 $ - $ 129,983 ZONINGDEPOSITS Balance 7-1-07 $ 1 37,923 $ - $ 137,923 Additions 9 ,169 - 9,169 Deductions (394) - (394) Balance 6-30-08 $ 1 46,698 $ - $ 146,698 STATEANDTOWNTAX COLLECTIONS Balance 7-1-07 $ 1 ,739 $ - $ 1,739 Additions 1 0,355,006 - 10,355,006 Deductions (10,281,817) - (10,281,817) Balance 6-30-08 $ 7 4,928 $ - $ 74,928 MOTOR VEHICLEADMINDEPOSITS Balance 7-1-07 $ 1 1,416 $ - $ 11,416 Additions 3 05,399 - 305,399 Deductions (312,618) - (312,618) Balance 6-30-08 $ 4 ,197 $ - $ 4,197 MIDSHORE REGIONAL RECYCLING Balance 7-1-07 $ - $ 156,617 $ 156,617 Additions 1,152,070 119,622 1,271,692 Deductions (1,152,070) (161,887) (1,313,957) Balance 6-30-08 $ - $ 114,352 $ 114,352 ESCHEAT - ABANDONEDPROPERTY Balance 7-1-07 $ 1 ,195 $ - $ 1,195 Additions 1 1,396 - 11,396 Deductions (11,212) - (11,212) Balance 6-30-08 $ 1 ,379 $ - $ 1,379 TOTALS - ALLAGENCY FUNDS Balance 7-1-07 $ 274,694 $ 156,617 $ 431,311 Additions 11,856,301 119,622 11,975,923 Deductions (11,773,810) (161,887) (11,935,697) Balance 6-30-08 $ 357,185 $ 114,352 $ 471,537 - 142 - QUEENANNE'S COUNTY,MARYLAND STATEMENTOF CHANGES IN FIDUCIARYNETASSETSAND LIABILITIES AGENCY FUNDS FORTHEYEAR ENDED JUNE 30, 2008 (CONTINUED) Due to Other Escrow Total Governments Deposits Liabilities $ - $ 122,421 $ 122,421 - 7,562 7,562 - - - $ - $ 129,983 $ 129,983 $ - $ 137,923 $ 137,923 - 9,169 9,169 - (394) (394) $ - $ 146,698 $ 146,698 $ 1 ,739 $ - $ 1,739 1 0,355,006 - 10,355,006 ( 10,281,817) - (10,281,817) $ 7 4,928 $ - $ 74,928 $ 1 1,416 $ - $ 11,416 3 04,406 - 304,406 ( 311,625) - (311,625) $ 4 ,197 $ - $ 4,197 $ 1 56,617 $ - $ 156,617 3 95,611 - 395,611 ( 437,876) - (437,876) $ 1 14,352 $ - $ 114,352 $ 1 ,193 $ 2 $ 1,195 2,945 8,451 11,396 (2,799) (8,413) (11,212) $ 1,339 $ 40 $ 1,379 $ 170,965 $ 260,346 $ 431,311 11,057,968 25,182 11,083,150 (11,034,117) (8,807) (11,042,924) $ 194,816 $ 276,721 $ 471,537 - 143 - Tour historic churches and landmarks like St. Lukes Episcopal Church, c.1732 - Church Hill, MD. Interfund Receivables and Payables Interfund Transfers Interfund receivables and payables are usually used by the Countyto cover temporarycash deficitsinindividualfunds until grantfunds are received. Occasionally, these receivables and payables are usedinlieuof short-termexternal borrowing,such asfor capitallease agreements. InterfundTransfers represent a transferof resourcesfrom onefund to another,without expectationof repayment, and are usually undertaken to enable the receiving entity to provide services that the government has determined to beinthe bestinterestofthe County. Thefollowing detailedschedulesofinterfund receivables and payables andinterfundtransfers are optionalschedules added in order to clarify the schedulesfoundin Note 7 – Interfund Receivables and Payables, andin Note 8 – InterfundTransfers. The noteschedules are more condensed and show totals byfundtype,whereas the following detailedschedules provide totals byindividualfunds. - 145 - QUEENANNE'S COUNTY,MARYLAND DETAILED SCHEDULE OFINTERFUND RECEIVABLESAND PAYABLES JUNE 30, 2008 DUE FROM FUND MAJOR GOVERNMENTAL NON-MAJORGOVERNMENTAL COMMUNITY CAPITAL HOUSING AND PARTNERSHIPS DREDGING PROJECTS - GENERAL DEPARTMENT COMMUNITY FOR SPECIAL FIRE COMPANY DUETO FUND CAPITAL PROJECTS OF AGING SERVICES CHILDREN ASSESSMENTS IMPACTFEES SUBTOTAL GeneralFund $ - $ 65,040 $ 38,630 $ 29,148 $ 11,720 $ 79,561 $ 224,099 Capital ProjectsFunds General Capital Projects - - - - - - - EnterpriseFunds Sanitary District - Sewer Operating - - - - - - - Parks and Recreation - Recreational Programs - - - - - - - TotalTransfers Out by EnterpriseFunds - - - - - - - Componentunits Queen Anne's County Boardof Education 2,406,194 - - - - - - TOTAL ALL FUNDS $ 2,406,194 $ 65,040 $ 38,630 $ 29,148 $ 11,720 $ 79,561 $ 224,099 - 146 - QUEENANNE'S COUNTY,MARYLAND DETAILED SCHEDULE OFINTERFUND RECEIVABLESAND PAYABLES JUNE 30, 2008 (CONTINUED) COMPONENT MAJORENTERPRISE NON-MAJORENTERPRISE UNITS QUEEN ANNE'S SANITARY DISTRICT COUNTY RESTRICTED DEBT SERVICE BAY BRIDGE GOLF PROPERTY PUBLIC HOUSING FUND FUND SUBTOTAL AIRPORT SUBTOTAL COURSE MANAGEMENT MARINAS SUBTOTAL AUTHORITY TOTAL $ - $ - $ - $ 831,509 $ 831,509 $ 1,396,065 $ 226,524 $ 14,025 $ 1,636,614 $ 43,547 $ 2,735,769 80,000 - 80,000 - 80,000 - - - - - 80,000 - 17,199 17,199 - 17,199 - - - - - 17,199 - - - - - 40,000 - - 40,000 - 40,000 - 17,199 17,199 - 17,199 40,000 - - 40,000 - 57,199 - - - - - - - - - - 2,406,194 $ 80,000 $ 17,199 $ 97,199 $ 831,509 $ 928,708 $ 1,436,065 $ 226,524 $ 14,025 $ 1,676,614 $ 43,547 $ 5,279,162 - 147 - QUEEN ANNE'S COUNTY, MARYLAND DETAILED SCHEDULE OF INTERFUNDTRANSFERS JUNE 30, 2008 TRANSFERS IN FUND MAJORGOVERNMENTAL TRANSFERS OUT GENERAL GENERAL ROADS TRANSFERS OUT FUND TOTAL FUND CAPITAL PROJECTS BOARD SUBTOTAL General Fund $ 1 5,032,528 $ - $ 12,176,028 $ 28,868 $ 12,204,896 Capital Projects Funds General Capital Projects 4 88,487 - - - - Impact Fees - Schools 1,408,120 1,408,120 - - 1,408,120 Total Transfers Outby Capital Projects Funds 1,896,607 1,408,120 - - 1,408,120 Special Revenue Funds Kent Narrows 45,427 45,427 - - 45,427 Community Partnerships 26,976 26,976 - - 26,976 Department of Aging 2 4,350 - 24,350 - 24,350 Total Transfers Outby Special Revenue Funds 96,753 72,403 2 4,350 - 96,753 Major Enterprise Funds Sanitary District - Sewer Operating 6 1,914 - - - - Sanitary District - Water Operating 8 0,550 - - - - Sanitary District - Restricted 2 ,118,937 - - - - Sanitary District - Debt Service 2 ,092,727 - - - - Total Transfers Outby Major Enterprise Funds 4 ,354,128 - - - - Non-Major Enterprise Funds Public Landings 579,574 579,574 - - 579,574 Property Management 2 48,354 - - - - Total Transfers Outby Non-Major Enterprise Funds 827,928 579,574 - - 579,574 Total Transfers Outby All Funds $ 22,207,944 $ 2,060,097 $ 12,200,378 $ 28,868 $ 14,289,343 - 148 - QUEEN ANNE'S COUNTY, MARYLAND DETAILED SCHEDULE OF INTERFUNDTRANSFERS JUNE 30, 2008 (CONTINUED) NON-MAJORGOVERNMENTAL COMMUNITY CAPITAL HOUSING AND PARTNERSHIPS ECONOMIC PROJECTS - DEPARTMENT COMMUNITY FOR DEVELOPMENT LAW AGRICULTURAL FIRE COMPANY OF AGING SERVICES CHILDREN COMMISSION LIBRARY TRANSFER IMPACT FEES SUBTOTAL $ 1,663,342 $ 391,990 $ 103,921 $ 130 $ 7,390 $ 167,000 $ 156,191 $ 2,489,964 - 100,000 - - - 135,000 - 235,000 - - - - - - - - - 100,000 - - - 135,000 - 235,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 1,663,342 $ 491,990 $ 103,921 $ 130 $ 7,390 $ 302,000 $ 156,191 $ 2,724,964 - 149 - QUEEN ANNE'S COUNTY, MARYLAND DETAILED SCHEDULE OF INTERFUNDTRANSFERS JUNE 30, 2008 (CONTINUED) TRANSFERS IN FUND MAJOR ENTERPRISE SANITARY DISTRICT SEWER WATER RESTRICTED DEBT SERVICE BAY BRIDGE TRANSFERS OUT FUND OPERATIONS OPERATIONS FUND FUND SUBTOTAL AIRPORT SUBTOTAL General Fund $ 4,330 $ 153,152 $ - $ - $ 157,482 $ 22,926 $ 180,408 Capital Projects Funds General Capital Projects - - - - - - - Impact Fees - Schools - - - - - - - Total Transfers Outby Capital Projects Funds - - - - - - - Special Revenue Funds Kent Narrows - - - - - - - Community Partnerships - - - - - - - Department of Aging - - - - - - - Total Transfers Outby Special Revenue Funds - - - - - - - Enterprise Funds Sanitary District - Sewer Operating - - 61,914 - 61,914 - 61,914 Sanitary District - Water Operating - - 80,550 - 80,550 - 80,550 Sanitary District - Restricted - - - 2,118,937 2 ,118,937 - 2,118,937 Sanitary District - Debt Service 1,712,040 380,687 - - 2,092,727 - 2,092,727 Total Transfers Outby Enterprise Funds 1,712,040 380,687 142,464 2,118,937 4 ,354,128 - 4,354,128 Enterprise Funds Public Landings - - - - - - - Property Management 177,001 71,353 - - 248,354 - 248,354 Total Transfers Outby Enterprise Funds 177,001 71,353 - - 248,354 - 248,354 Total Transfers Outby All Funds $ 1,893,371 $ 605,192 $ 142,464 $ 2,118,937 $ 4,759,964 $ 22,926 $ 4,782,890 - 150 - QUEEN ANNE'S COUNTY, MARYLAND DETAILED SCHEDULE OF INTERFUNDTRANSFERS JUNE 30, 2008 (CONTINUED) NON-MAJOR ENTERPRISE GOLF RECREATION PUBLIC PROPERTY PUBLIC TRANSFERS IN COURSE PROGRAMS LANDINGS MANAGEMENT MARINAS SUBTOTAL TOTAL $ - $ 43,000 $ 33,998 $ 25,000 $ 55,262 $ 157,260 $ 15,032,528 100,000 - 41,487 112,000 - 253,487 488,487 - - - - - - 1,408,120 100,000 - 41,487 112,000 - 253,487 1,896,607 - - - - - - 45,427 - - - - - - 26,976 - - - - - - 24,350 - - - - - - 96,753 - - - - - - 61,914 - - - - - - 80,550 - - - - - - 2,118,937 - - - - - - 2,092,727 - - - - - - 4,354,128 - - - - - - 579,574 - - - - - - 248,354 - - - - - - 827,928 $ 100,000 $ 43,000 $ 75,485 $ 137,000 $ 55,262 $ 410,747 $ 22,207,944 - 151 - Learn about how life used to be on the Shore at the Museum of Eastern Shore Life. Community Partnerships for Children Community Partnershipsfor Childrenis reported as a Non-Major Special Revenue Fundin the County’s financialstatements. Inlieuof preparingseparate auditedfinancialstatementsforthe Partnership, additionalschedules have been added to the County’s financialstatements tomeet requirementsof thePartnership’s grantor agencies. - 153 - QUEENANNE'S COUNTY COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND COMBININGBALANCE SHEETS BYGRANTOR JUNE 30, 2008 (with Summarized Totals as of June 30, 2007) Federal Fed/State Federal Drug-Free OCYF Family Community State State Admin GOCCP Support Ctr SAMHSA CSAFE OTHER ASSETS Cash and cash equivalents $ 6,187 $ 977,249 $ 4,131 $ - $ - $ 48,011 Accounts receivable 8,970 - - - - - Due from State governmental agencies 55,000 98,450 - - 15,904 - Due from Federal governmental agencies - 49,810 - 32,902 - - Total Assets $ 70,157 $ 1,125,509 $ 4,131 $ 32,902 $ 15,904 $ 48,011 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable and accrued expenditures $ 4,785 $ 675,052 $ - $ 15,737 $ 3,921 $ 14,103 Due to other funds - - - 17,165 11,983 - Due to (from) State governmental agencies (21,973) 405,152 4,131 - - 33,908 Deferred revenue 5,264 42,700 - - - - Total Liabilities (11,924) 1,122,904 4,131 32,902 15,904 48,011 FUND BALANCES Reserved Donor-Specified Purposes 50 1,000 - - - - Total Reserved 50 1,000 - - - - Unreserved 82,031 1,605 - - - - Total Fund Balances 82,081 2,605 - - - - Total Liabilities and Fund Balances $ 70,157 $ 1,125,509 $ 4,131 $ 32,902 $ 15,904 $ 48,011 - 154 - QUEENANNE'S COUNTY COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND COMBININGBALANCE SHEETS BYGRANTOR JUNE 30, 2008 (with Summarized Totals as of June 30, 2007) (CONTINUED) Total Returned 2007 Community Reinvestment 2008 Summarized Partnerships Fund Total Total $ 1,035,578 $ 52,821 $ 1,088,399 $ 1,305,136 8,970 82,763 91,733 69,332 169,354 - 169,354 24,615 82,712 - 82,712 29,001 $ 1,296,614 $ 135,584 $ 1,432,198 $ 1,428,084 $ 713,598 $ - $ 713,598 $ 355,366 29,148 - 29,148 10,412 421,218 - 421,218 864,561 47,964 - 47,964 107,709 1,211,928 - 1,211,928 1,338,048 1,050 - 1,050 1,050 1,050 - 1,050 1,050 83,636 135,584 219,220 88,986 84,686 135,584 220,270 90,036 $ 1,296,614 $ 135,584 $ 1,432,198 $ 1,428,084 - 155 - QUEENANNE'SCOUNTY COMMUNITYPARTNERSHIPSFORCHILDRENSPECIALREVENUEFUND SCHEDULE OFREVENUES,EXPENDITURES,ANDCHANGESINFUNDBALANCES BYCOMMUNITYPARTNERSHIPAGREEMENTS(CPA)andNON-COMMUNITYPARTNERSHIPAGREEMENTS(NON-CPA) FOR THEYEARENDEDJUNE30,2008(withSummarized TotalsfortheYearEndedJune30,2007) Federal/State OCYF / GOCCP Administrative POS OperatingFund POS In-State POS CASA Total Return Diversion Diversion Start REVENUES CPA Intergovernmental OCYF $ 339,970 $ 41,934 $ - $ 50,000 $ 42,036 OCYF-Carryforward 4,516 - 59,618 - - SubtotalCPA 344,486 41,934 59,618 50,000 42,036 Non-CPA Intergovernmental Federal GOCCP YouthStrategies - - - - 93,308 FederalSAMHSADrug-FreeCommunities - - - - - FederalMSDEHealthyFamilies - - - - - OCYF-non-CPA - - - - - Other - - - - - Investment Income 23,985 - - - - Donations - - - - - Miscellaneous 10,774 - - - - SubtotalNon-CPA 34,759 - - - 93,308 TotalRevenues 379,245 41,934 59,618 50,000 135,344 EXPENDITURES CPA ProgramContractedServices - 41,934 59,618 - 42,036 OtherExpenditures Salaries 246,646 - - - - FringeBenefitCosts 96,493 - - - - Auditing - - - - - Consultants 21,829 - - - - Professional Groups 500 - - - - EquipmentRental 4,163 - - - - MonitoringCosts - - - - - OtherContractedServices 3,393 - - - - Postage 2,296 - - - - OfficeSupplies 5,887 - - - - PrintingandPublishing 1,309 - - - - Equipment Operation 376 - - - - BusinessTravel 215 - - - - Meetings&Conferences 4,695 - - - - Training 425 - - - - Board'sExpenditures 6,652 - - - - Advertising - - - - - Marketing/Promotions - - - - - Communications 1,310 - - - - Utilities 1,324 - - - - Rent 19,905 - - - - OtherCharges 1,053 - - - - SubtotalCPAExpenditures 418,471 41,934 59,618 - 42,036 Non-CPA ProgramContractedServices - - - - 93,308 OtherExpenditures Salaries 10,774 - - - - FringeBenefitCosts - - - - - Consultants - - - - - EquipmentRental - - - - - OtherContractedServices - - - - - Postage - - - - - OfficeSupplies - - - - - ProgramSupplies - - - - - PrintingandPublishing - - - - - BusinessTravel - - - - - Meetings&Conferences - - - - - Training - - - - - Marketing/Promotions - - - - - Communications - - - - - Utilities - - - - - Rent - - - - - OtherCharges - - - - - Capital Outlay - - - - - SubtotalNon-CPAExpenditures 10,774 - - - 93,308 TotalExpenditures 429,245 41,934 59,618 - 135,344 ExcessofRevenues Over(Under)Expenditures (50,000) - - 50,000 - OTHERFINANCINGSOURCES(USES) Transfers In(Out) withinPartnerships 50,000 - - - - Transfers(Out) - - - (50,000) - Transfers In(Out) for ProgramContractedServices- In - - - - - ProgramContractedServices-(Out) - - - - - OtherFinancingSources(Uses) 50,000 - - (50,000) - Net Increase(Decrease)inFundBalances $ - $ - $ - $ - $ - FundBalances,July 1 FundBalances,June30 - 156 - QUEENANNE'SCOUNTY COMMUNITYPARTNERSHIPSFORCHILDRENSPECIALREVENUEFUND SCHEDULE OFREVENUES,EXPENDITURES,ANDCHANGESINFUNDBALANCES BYCOMMUNITYPARTNERSHIPAGREEMENTS(CPA)andNON-COMMUNITYPARTNERSHIPAGREEMENTS(NON-CPA) FOR THEYEARENDEDJUNE30,2008(withSummarized TotalsfortheYearEndedJune30,2007) (CONTINUED) Federal/StateOCYF/GOCCP Healthy MD RDEF OCYF/GOCCP Resource Chesapeake Fam/Home Family AfterSchool Character Program OperatingFund Promotion Helps Visiting Navigators Opportunity Counts ForTeens Total $ 69,384 $ 128,725 $ 92,554 $ 163,488 $ 86,450 $ 20,690 $ - $ 695,261 - 15,506 - 27,115 - - - 102,239 69,384 144,231 92,554 190,603 86,450 20,690 - 797,500 - - - - - - - 93,308 - - - - - - - - - - 296,372 - - - - 296,372 - - - - - - 20,779 20,779 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 296,372 - - - 20,779 410,459 69,384 144,231 388,926 190,603 86,450 20,690 20,779 1,207,959 69,384 144,231 92,554 190,603 86,450 - - 726,810 - - - - - 5,378 - 5,378 - - - - - 639 - 639 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4,395 - 4,395 - - - - - 224 - 224 - - - - - - - - - - - - - - - - - - - - - 2,000 - 2,000 - - - - - 299 - 299 - - - - - - - - - - - - - - - - - - - - - 7,755 - 7,755 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 69,384 144,231 92,554 190,603 86,450 20,690 - 747,500 - - 296,372 - 100,000 - 20,779 510,459 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 296,372 - 100,000 - 20,779 510,459 69,384 144,231 388,926 190,603 186,450 20,690 20,779 1,257,959 - - - - (100,000) - - (50,000) - - - - - - - - - - - - - - - (50,000) - - - - 100,000 - - 100,000 - - - - - - - - - - - - 100,000 - - 50,000 $ - $ - $ - $ - $ - $ - $ - $ - CONTINUED - 157 - QUEENANNE'SCOUNTY COMMUNITYPARTNERSHIPSFORCHILDRENSPECIALREVENUEFUND SCHEDULE OFREVENUES,EXPENDITURES,ANDCHANGESINFUNDBALANCES BYCOMMUNITYPARTNERSHIPAGREEMENTS(CPA)andNON-COMMUNITYPARTNERSHIPAGREEMENTS(NON-CPA) FOR THEYEARENDEDJUNE30,2008(withSummarized TotalsfortheYearEndedJune30,2007) (CONTINUED) DrugFree Community CSAFE OperatingFund Community Youth OperatingFund AllPrograms Total Policing Prevention Total Subtotal REVENUES CPA Intergovernmental OCYF $ - $ - $ - $ - $ 1,035,231 OCYF-Carryforward - - - - 106,755 SubtotalCPA - - - - 1,141,986 Non-CPA Intergovernmental Federal GOCCP YouthStrategies - - - - 93,308 FederalSAMHSADrug-FreeCommunities 51,319 - - - 51,319 FederalMSDEHealthyFamilies - - - - 296,372 OCYF-non-CPA - - - - 20,779 Other - 25,926 26,494 52,420 52,420 Investment Income - - - - 23,985 Donations 500 - - - 500 Miscellaneous - - - - 10,774 SubtotalNon-CPA 51,819 25,926 26,494 52,420 549,457 TotalRevenues 51,819 25,926 26,494 52,420 1,691,443 EXPENDITURES CPA ProgramContractedServices - - - - 726,810 OtherExpenditures Salaries - - - - 252,024 FringeBenefitCosts - - - - 97,132 Auditing - - - - - Consultants - - - - 21,829 Professional Groups - - - - 500 EquipmentRental - - - - 4,163 MonitoringCosts - - - - - OtherContractedServices - - - - 3,393 Postage - - - - 2,296 OfficeSupplies - - - - 10,282 PrintingandPublishing - - - - 1,533 Equipment Operation - - - - 376 BusinessTravel - - - - 215 Meetings&Conferences - - - - 6,695 Training - - - - 724 Board'sExpenditures - - - - 6,652 Advertising - - - - - Marketing/Promotions - - - - 7,755 Communications - - - - 1,310 Utilities - - - - 1,324 Rent - - - - 19,905 OtherCharges - - - - 1,053 SubtotalCPAExpenditures - - - - 1,165,971 Non-CPA ProgramContractedServices - - 30,415 30,415 540,874 OtherExpenditures Salaries - - - - 10,774 FringeBenefitCosts - - - - - Consultants 750 - - - 750 EquipmentRental - - - - - OtherContractedServices 27,541 - - - 27,541 Postage 109 - - - 109 OfficeSupplies 435 - - - 435 ProgramSupplies - - - - - PrintingandPublishing 100 - - - 100 BusinessTravel - - - - - Meetings&Conferences 16,215 - - - 16,215 Training 1,575 - - - 1,575 Marketing/Promotions 775 - - - 775 Communications 10 - - - 10 Utilities 1,069 - - - 1,069 Rent 2,190 - - - 2,190 OtherCharges - - - - - Capital Outlay - - - - - SubtotalNon-CPAExpenditures 50,769 - 30,415 30,415 602,417 TotalExpenditures 50,769 - 30,415 30,415 1,768,388 ExcessofRevenues Over(Under)Expenditures 1,050 25,926 (3,921) 22,005 (76,945) OTHERFINANCINGSOURCES(USES) Transfers In(Out) withinPartnerships - - - - 50,000 Transfers(Out) - - - - (50,000) Transfers In(Out) for ProgramContractedServices- In - - 3,921 3,921 103,921 ProgramContractedServices-(Out) (1,050) (25,926) - (25,926) (26,976) OtherFinancingSources(Uses) (1,050) (25,926) 3,921 (22,005) 76,945 Net Increase(Decrease)inFundBalances $ - $ - $ - $ - - FundBalances,July 1 84,686 FundBalances,June30 $ 84,686 CONTINUED - 158 - QUEENANNE'SCOUNTY COMMUNITYPARTNERSHIPSFORCHILDRENSPECIALREVENUEFUND SCHEDULE OFREVENUES,EXPENDITURES,ANDCHANGESINFUNDBALANCES BYCOMMUNITYPARTNERSHIPAGREEMENTS(CPA)andNON-COMMUNITYPARTNERSHIPAGREEMENTS(NON-CPA) FOR THEYEARENDEDJUNE30,2008(withSummarized TotalsfortheYearEndedJune30,2007) (CONTINUED) Federal Total State OCYF GOCCP Federal Community Returned 2007 CPA Non-CPA Youth DrugFree Federal Partnerships Reinvestment 2008 Summarized Subtotal (RDEF) Strategies Community MSDE Other OperatingFunds Fund Total Total $ 1,035,231 $ - $ - $ - $ - $ - $ 1,035,231 $ 130,234 $ 1,165,465 $ 864,493 106,755 - - - - - 106,755 - 106,755 33,556 1,141,986 - - - - - 1,141,986 130,234 1,272,220 898,049 - - 93,308 - - - 93,308 - 93,308 63,594 - - - 51,319 - - 51,319 - 51,319 84,444 - - - - 296,372 - 296,372 - 296,372 296,372 - 20,779 - - - - 20,779 - 20,779 21,239 - - - - - 52,420 52,420 - 52,420 147,269 - - - - - 23,985 23,985 - 23,985 30,017 - - - 500 - - 500 - 500 1,000 - - - - - 10,774 10,774 - 10,774 42,799 - 20,779 93,308 51,819 296,372 87,179 549,457 - 549,457 686,734 1,141,986 20,779 93,308 51,819 296,372 87,179 1,691,443 130,234 1,821,677 1,584,783 726,810 - - - - - 726,810 - 726,810 484,331 252,024 - - - - - 252,024 - 252,024 230,272 97,132 - - - - - 97,132 - 97,132 87,912 - - - - - - - - - 2,230 21,829 - - - - - 21,829 - 21,829 59,285 500 - - - - - 500 - 500 450 4,163 - - - - - 4,163 - 4,163 3,729 - - - - - - - - - 5,500 3,393 - - - - - 3,393 - 3,393 1,129 2,296 - - - - - 2,296 - 2,296 2,493 10,282 - - - - - 10,282 - 10,282 4,290 1,533 - - - - - 1,533 - 1,533 - 376 - - - - - 376 - 376 1,612 215 - - - - - 215 - 215 314 6,695 - - - - - 6,695 - 6,695 3,180 724 - - - - - 724 - 724 1,227 6,652 - - - - - 6,652 - 6,652 9,125 - - - - - - - - - 1,375 7,755 - - - - - 7,755 - 7,755 526 1,310 - - - - - 1,310 - 1,310 1,389 1,324 - - - - - 1,324 - 1,324 672 19,905 - - - - - 19,905 - 19,905 20,562 1,053 - - - - - 1,053 - 1,053 131 1,165,971 - - - - - 1,165,971 - 1,165,971 921,734 - 20,779 93,308 - 296,372 130,415 540,874 - 540,874 590,626 - - - - - 10,774 10,774 - 10,774 17,570 - - - - - - - - - 5,207 - - - 750 - - 750 - 750 26,856 - - - - - - - - - 407 - - - 27,541 - - 27,541 - 27,541 461 - - - 109 - - 109 - 109 359 - - - 435 - - 435 - 435 8,534 - - - - - - - - - 11,228 - - - 100 - - 100 - 100 832 - - - - - - - - - 187 - - - 16,215 - - 16,215 - 16,215 27,656 - - - 1,575 - - 1,575 - 1,575 270 - - - 775 - - 775 - 775 13,467 - - - 10 - - 10 - 10 82 - - - 1,069 - - 1,069 - 1,069 1,494 - - - 2,190 - - 2,190 - 2,190 300 - - - - - - - - - 780 - - - - - - - - - 10,094 - 20,779 93,308 50,769 296,372 141,189 602,417 - 602,417 716,410 1,165,971 20,779 93,308 50,769 296,372 141,189 1,768,388 - 1,768,388 1,638,144 (23,985) - - 1,050 - (54,010) (76,945) 130,234 53,289 (53,361) 50,000 - - - - - 50,000 - 50,000 93,755 (50,000) - - - - - (50,000) - (50,000) (93,755) 103,921 - - - - - 103,921 - 103,921 99,092 - - - (1,050) - (25,926) (26,976) - (26,976) (31,902) 103,921 - - (1,050) - (25,926) 76,945 - 76,945 67,190 79,936 - - - - (79,936) - 130,234 130,234 13,829 129,472 (6,428) - (1,025) - (37,333) 84,686 5,350 90,036 76,207 $ 209,408 $ (6,428) $ - $ (1,025) $ - $ (117,269) $ 84,686 $ 135,584 $ 220,270 $ 90,036 - 159 - QUEENANNE'S COUNTY COMMUNITY PARTNERSHIPSFOR CHILDREN SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES,AND CHANGESINFUND BALANCES - BUDGETARY BASIS FORTHE YEAR ENDED JUNE 30, 2008 COMMUNITY PARTNERSHIPSFOR CHILDREN RETURNED REINVESTMENTFUND Variancewith Variancewith Final Budget Final Budget Original Final Positive Original Final Positive Budget Budget Actual (Negative) Budget Budget Actual (Negative) REVENUES Intergovernmental OCYF - CPA and Non-CPA $ 1,236,112 $ 1,318,256 $ 1,162,765 $ (155,491) $ 147,000 $ 147,000 $ 130,234 $ (16,766) Federal GOCCP Youth Strategies 120,000 103,990 93,308 (10,682) - - - - Federal SAMHSA Drug-Free Communities 100,000 101,748 51,319 (50,429) - - - - Federal MSDE Healthy Families 250,853 296,372 296,372 - - - - - Other 23,935 49,098 52,420 3,322 - - - - Investment Income - - 23,985 23,985 - - - - Donations - 500 500 - - - - - Miscellaneous 47,275 23,152 10,774 (12,378) - - - - Total Revenues 1,778,175 1,893,116 1,691,443 (201,673) 147,000 147,000 130,234 (16,766) EXPENDITURES Program Contracted Services 1,385,773 1,476,713 1,267,684 209,029 25,000 25,000 - 25,000 Other Expenditures Salaries 269,068 274,190 262,798 11,392 - - - - Fringe Benefit Costs 100,141 101,659 97,132 4,527 - - - - Auditing 3,000 2,988 - 2,988 - - - - Consultants 25,100 28,614 22,579 6,035 - - - - Professional Groups 500 728 500 228 - - - - Equipment Rental 3,532 3,189 4,163 (974) - - - - Monitoring Costs 5,500 3,593 - 3,593 - - - - Other Contracted Services - - 30,934 (30,934) 122,000 122,000 - 122,000 Postage 2,532 2,178 2,405 (227) - - - - Office Supplies 5,000 10,146 10,717 (571) - - - - Printing and Publishing 3,900 4,762 1,633 3,129 - - - - Equipment Operation 800 729 376 353 - - - - BusinessTravel 1,000 911 215 696 - - - - Meetings & Conferences 7,428 31,157 22,910 8,247 - - - - Training 750 4,884 2,299 2,585 - - - - Board's Expenditures 6,000 6,967 6,652 315 - - - - Marketing/Promotions 28,136 5,290 8,530 (3,240) - - - - Communications 1,000 1,411 1,320 91 - - - - Utilities 2,048 2,000 2,393 (393) - - - - Rent 21,380 25,250 22,095 3,155 - - - - Other Charges - - 1,053 (1,053) - - - - Capital Outlay CPA 2,000 2,000 - 2,000 - - - - Total Expenditures 1,874,588 1,989,359 1,768,388 220,971 147,000 147,000 - 147,000 Excessof Revenues Over (Under) Expenditures (96,413) (96,243) (76,945) 19,298 - - 130,234 130,234 OTHERFINANCING SOURCES (USES) Transfers In (Out)within Partnerships - 50,000 50,000 - - - - - Transfers (Out) - (50,000) (50,000) - - - - - Transfers In (Out)for: Program Contracted Services - In 120,348 124,269 103,921 (20,348) - - - - Program Contracted Services - (Out) (23,935) (28,026) (26,976) 1,050 - - - - OtherFinancing Sources (Uses) 96,413 96,243 76,945 (19,298) - - - - Net Increase (Decrease) in Fund Balances/Net Assets $ - $ - - $ - $ - $ - 130,234 $ 130,234 Fund Balances, July1 84,686 5,350 Fund Balances, June 30 $ 84,686 $ 135,584 - 160 - QUEENANNE'S COUNTY COMMUNITY PARTNERSHIPSFOR CHILDREN SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES,AND CHANGESINFUND BALANCES - BUDGETARY BASIS FORTHE YEAR ENDED JUNE 30, 2008 (CONTINUED) TOTAL Variancewith Final Budget Original Final Positive Budget Budget Actual (Negative) $ 1,383,112 $ 1,465,256 $ 1,292,999 $ (172,257) 120,000 103,990 93,308 (10,682) 100,000 101,748 51,319 (50,429) 250,853 296,372 296,372 - 23,935 49,098 52,420 3,322 - - 23,985 23,985 - 500 500 - 47,275 23,152 10,774 (12,378) 1,925,175 2,040,116 1,821,677 (218,439) 1,410,773 1,501,713 1,267,684 234,029 269,068 274,190 262,798 11,392 100,141 101,659 97,132 4,527 3,000 2,988 - 2,988 25,100 28,614 22,579 6,035 500 728 500 228 3,532 3,189 4,163 (974) 5,500 3,593 - 3,593 122,000 122,000 30,934 91,066 2,532 2,178 2,405 (227) 5,000 10,146 10,717 (571) 3,900 4,762 1,633 3,129 800 729 376 353 1,000 911 215 696 7,428 31,157 22,910 8,247 750 4,884 2,299 2,585 6,000 6,967 6,652 315 28,136 5,290 8,530 (3,240) 1,000 1,411 1,320 91 2,048 2,000 2,393 (393) 21,380 25,250 22,095 3,155 - - 1,053 (1,053) 2,000 2,000 - 2,000 2,021,588 2,136,359 1,768,388 367,971 (96,413) (96,243) 53,289 149,532 - 50,000 50,000 - - (50,000) (50,000) - 120,348 124,269 103,921 (20,348) (23,935) (28,026) (26,976) 1,050 96,413 96,243 76,945 (19,298) $ - $ - 130,234 $ 130,234 90,036 $ 220,270 - 161 - Bicycling with family on the Cross Island Trail - Kent Island, MD. STATISTICAL SECTION The Statistical Section,whichfullyincorporatesinformationmandated by Governmental AccountingStandards Board (GASB)Statement No. 44,Economic Condition Reporting: The Statistical Section, presents detailedinformationforthe primary governmentinthefollowing areas, as a contextfor understandingwhat the informationin the Financial Sectionsays about the County’s overallfinancial health: FINANCIALTRENDS –Informationto help the readerunderstand how the County’s financial performance and well-being have changed overtime. REVENUE CAPACITY – Information to helpthe reader assess the County’smost significantlocal revenuesources – the property tax and income tax. DEBT CAPACITY – Information to helpthe reader assess the affordabilityofthe County’s current levelsof outstanding debt and the County’s ability toissue additional debtinthefuture. DEMOGRAPHICAND ECONOMIC INFORMATION–Indicators to help the reader understand the environmentwithinwhich the County’sfinancial activities take place. OPERATING INFORMATION – Service andinfrastructure data to help thereader understand how the informationin the County’sfinancial report relates to the services the County provides and the activities it performs. Manyofthese tables covermore thantwo fiscal years and present data from outside the accounting records. Therefore,the Statistical Sectionis unaudited. - 163 - Historic Christ Church, c.1880 - Stevensville, MD QUEEN ANNE'S COUNTY,MARYLAND FINANCIAL TRENDS NET ASSETS BY COMPONENT - GOVERNMENT-WIDE (GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES) LAST SIX FISCALYEARS Table 1 2003 2004 2005 2006 2007 2008 GovernmentalActivities: Invested incapital assets,net of relateddebt $ 111,710,606 $ 82,209,646 $ 85,784,267 $ 95,644,000 $ 103,657,227 $ 117,831,360 Restricted 22,167,033 8,118,231 8,418,254 9,842,795 18,012,695 15,376,330 Unrestricted (deficit) (1) (29,783,476) (14,178,514) (6,161,281) 7,339,567 (3,740,905) (15,075,202) Total GovernmentalActivitiesNetAssets 104,094,163 76,149,363 88,041,240 112,826,362 117,929,017 118,132,488 Business-typeActivities: Invested incapital assets,net of relateddebt 50,984,848 52,094,337 55,612,719 69,672,273 74,463,912 77,237,512 Restricted 6,482,894 7,857,202 7,742,890 11,733,254 19,133,485 18,276,271 Total Business-typeActivitiesNetAssets 57,467,742 59,951,539 63,355,609 81,405,527 93,597,397 95,513,783 Primary Government: Invested incapital assets,net of relateddebt 162,695,454 134,303,983 141,396,986 165,316,273 178,121,139 195,068,872 Restricted 28,649,927 15,975,433 16,161,144 21,576,049 37,146,180 33,652,601 Unrestricted (deficit) (1) (29,783,476) (14,178,514) (6,161,281) 7,339,567 (3,740,905) (15,075,202) Total Primary GovernmentNetAssets $ 161,561,905 $ 136,100,902 $ 151,396,849 $ 194,231,889 $ 211,526,414 $ 213,646,271 NOTES: * Government-widenet asset information is reported on the accrualbasis of accounting. * Accountingstandards require thatnet assetsbe reported in threecomponents in the financial statements: invested incapital assets,net of relateddebt; restricted; andunrestricted.Net assets are considered restricted when (1) an externalparty,such as thestate or federal government,places a restriction onhow the resourcesmaybeused, or (2) enabling legislation is enactedby the County. * Informationprior to FY03 isnot available,due to the FY03 implementation of GASB34. * Source: Statement of NetAssets,pages 30-31. (1) In thegovernment-wide financialstatements, the Countyhas reportednegativeunrestrictednet assets for someyears. This isdue to the fact that the County issuesgeneral obligationbondeddebt for purposes of capitalconstruction on behalf of the QueenAnne's County Board of Education.Absent the effect of this relationship, the County would have reportedpositivenet assets for itsgovernmental activities and for government-widepurposes. Government- wideunrestrictednet assets wouldhavebeen: Unrestricted (deficit)net assets reported above $ (29,783,476) $ (14,178,514) $ (6,161,281) $ 7,339,567 $ (3,740,905) $ (15,075,202) Debt issued for capital onbehalf of others 41,941,175 51,839,220 47,345,646 44,460,306 57,496,385 53,758,049 Countynet assets absent effect of this relationship $ 12,157,699 $ 37,660,706 $ 41,184,365 $ 51,799,873 $ 53,755,480 $ 38,682,847 - 165 - QUEENANNE'SCOUNTY,MARYLAND FINANCIAL TRENDS CHANGESINNETASSETS- GOVERNMENT-WIDE(GOVERNMENTALANDBUSINESS-TYPEACTIVITIES) LASTSIXFISCALYEARS Table2-a 2003 2004 2005 2006 2007 2008 Expenses GovernmentalActivities: General Government $ 7,537,390 $ 8,902,751 $ 8,774,831 $ 9,071,760 $ 9,854,468 $ 11,167,743 PublicSafety 10,161,429 13,064,686 14,255,183 17,534,652 19,149,388 20,721,185 PublicWorks 7,594,914 7,512,277 8,303,570 8,898,010 9,913,917 10,420,547 Health 952,194 1,123,795 1,284,216 1,377,717 1,450,866 1,441,143 SocialServices 4,003,914 4,084,308 4,786,130 4,420,205 4,474,784 4,978,883 Education 43,050,433 46,142,006 40,377,624 42,303,087 56,118,585 58,034,317 Parks&Recreation 2,068,102 3,810,546 2,385,014 2,562,890 3,158,455 3,330,087 Library 975,549 1,020,653 1,073,222 1,168,232 1,266,183 1,270,718 ConservationofNaturalResources 892,015 537,207 591,986 478,426 497,926 2,172,443 Economic/CommunityDevelopment 1,775,216 1,634,749 1,546,516 1,575,099 3,258,876 3,527,908 InterestandFiscalCharges 2,649,524 2,981,403 2,288,442 2,508,070 2,864,493 3,033,416 Total GovernmentalActivitiesExpenses 81,660,680 90,814,381 85,666,734 91,898,148 112,007,941 120,098,390 Business-typeActivities: WaterandSewer 6,603,225 6,975,749 6,974,968 7,127,140 7,802,798 9,621,784 Parks&Recreation 1,929,891 2,007,419 2,524,904 2,509,783 3,273,986 2,179,157 PublicMarinas - - - - 57,372 27,344 Airport 492,856 522,863 529,755 713,896 674,337 812,067 TotalBusiness-typeActivitiesExpenses 9,025,972 9,506,031 10,029,627 10,350,819 11,808,493 12,640,352 TotalPrimary GovernmentExpenses 90,686,652 100,320,412 95,696,361 102,248,967 123,816,434 132,738,742 ProgramRevenues GovernmentalActivities: General Government Charges forServices 688,216 1,007,791 1,124,756 1,139,531 1,127,737 1,047,371 Operating GrantsandContributions 146,501 185,597 312,136 454,948 377,412 295,898 Capital GrantsandContributions 62,382 61,448 22,747 60,000 5,000 757,975 TotalRevenue 897,099 1,254,836 1,459,639 1,654,479 1,510,149 2,101,244 PublicSafety Charges forServices 720,580 1,197,844 968,857 1,595,738 1,642,258 3,167,090 Operating GrantsandContributions 1,265,912 887,519 1,443,474 1,743,073 1,255,307 1,254,611 Capital GrantsandContributions - 493,132 271,867 456,993 272,497 1,171 TotalRevenue 1,986,492 2,578,495 2,684,198 3,795,804 3,170,062 4,422,872 PublicWorks Charges forServices 692,471 782,252 1,666,335 1,189,117 871,962 1,014,600 Operating GrantsandContributions 4,259,700 3,624,359 4,130,984 3,710,398 5,572,760 6,304,965 Capital GrantsandContributions 230,243 168,092 461,499 57,000 1,838,101 544,610 TotalRevenue 5,182,414 4,574,703 6,258,818 4,956,515 8,282,823 7,864,175 Health Charges forServices - - - - - - Operating GrantsandContributions 5,241 - - 150,966 - - Capital GrantsandContributions - - - - - - TotalRevenue 5,241 - - 150,966 - - SocialServices Charges forServices 265,809 188,032 162,958 58,467 73,497 64,041 Operating GrantsandContributions 2,881,622 2,769,345 3,035,511 2,550,840 2,589,967 2,911,796 Capital GrantsandContributions 459,411 829,082 24,388 - 172,732 613,804 TotalRevenue 3,606,842 3,786,459 3,222,857 2,609,307 2,836,196 3,589,641 Education Charges forServices 703,191 1,277,905 917,387 1,696,657 963,216 1,011,013 Operating GrantsandContributions - - - 18,000 - - Capital GrantsandContributions - - - - - - TotalRevenue 703,191 1,277,905 917,387 1,714,657 963,216 1,011,013 Parks&Recreation Charges forServices 20,494 14,532 21,724 68,051 158,447 302,195 Operating GrantsandContributions 8,893 4,619 - 42,690 58,485 72,659 Capital GrantsandContributions 585,164 3,103,241 297,537 5,998,982 4,363,393 5,666,226 TotalRevenue 614,551 3,122,392 319,261 6,109,723 4,580,325 6,041,080 ConservationofNaturalResources Charges forServices 89,691 109,527 150,052 119,580 100,488 88,534 Operating GrantsandContributions 250,078 324,573 371,960 680,396 597,613 322,718 Capital GrantsandContributions - 5,211 28,535 - - - TotalRevenue 339,769 439,311 550,547 799,976 698,101 411,252 Economic/CommunityDevelopment Charges forServices 24,261 17,615 23,728 11,086 4,083 5,249 Operating GrantsandContributions 658,808 465,989 247,404 121,497 120,254 163,245 Capital GrantsandContributions 5,000 - - - - - TotalRevenue 688,069 483,604 271,132 132,583 124,337 168,494 Total GovernmentalActivitiesProgramRevenues 14,023,668 17,517,705 15,683,839 21,924,010 22,165,209 25,609,771 CONTINUED - 166 - QUEENANNE'SCOUNTY,MARYLAND FINANCIAL TRENDS CHANGESINNETASSETS- GOVERNMENT-WIDE(GOVERNMENTALANDBUSINESS-TYPEACTIVITIES)-CONTINUED LASTSIXFISCALYEARS Table2-a 2003 2004 2005 2006 2007 2008 Business-typeActivities: WaterandSewer Charges forServices 6,738,431 7,206,833 6,704,817 8,057,402 12,169,440 8,014,366 Operating GrantsandContributions - - 541,052 - - - Capital GrantsandContributions 2,506,457 868,581 994,303 12,576,490 5,015,603 2,584,371 TotalRevenue 9,244,888 8,075,414 8,240,172 20,633,892 17,185,043 10,598,737 Parks&Recreation Charges forServices 883,297 1,051,908 1,099,161 1,576,001 1,581,030 1,459,725 Operating GrantsandContributions - - 330,204 387,270 1,279,648 55,953 Capital GrantsandContributions 658,120 145,975 4,000 469,624 144,844 95,890 TotalRevenue 1,541,417 1,197,883 1,433,365 2,432,895 3,005,522 1,611,568 PublicMarinas Charges forServices - - - - 108,100 105,900 Operating GrantsandContributions - - - - 92,348 3,710 Capital GrantsandContributions - - - - - - TotalRevenue - - - - 200,448 109,610 Airport Charges forServices 179,029 149,601 182,092 23,661 32,683 46,960 Operating GrantsandContributions - - - 4,448 1 ,112 - Capital GrantsandContributions 41,190 23,636 69,595 6,368,327 667,166 382,945 TotalRevenue 220,219 173,237 251,687 6,396,436 700,961 429,905 TotalBusiness-typeActivitiesProgramRevenues 11,006,524 9,446,534 9,925,224 29,463,223 21,091,974 12,749,820 TotalPrimary GovernmentProgramRevenues 25,030,192 26,964,239 25,609,063 51,387,233 43,257,183 38,359,591 Net(Expense)Revenue(1) Governmentalactivities (67,637,012) (73,296,676) (69,982,895) (69,974,138) (89,842,732) (94,488,619) Business-typeactivities 1,980,552 (59,497) (104,403) 19,112,404 9,283,481 109,468 TotalPrimary GovernmentNetExpense (65,656,460) (73,356,173) (70,087,298) (50,861,734) (80,559,251) (94,379,151) GeneralRevenuesand OtherChangesinNetAssets GovernmentalActivities: Taxes(2) $66,274,065 $75,137,137 $80,932,258 $87,157,631 $ 90,910,849 $ 91,853,216 GrantsandContributionsNotRestricted toSpecificPrograms - - 88,750 - - - Investmentincome 274,585 285,279 682,682 1,738,114 3,162,830 2,128,509 Gain(Loss)onSaleofCapitalAssets 58,529 (452,997) - 2,983,087 1 3,605 - Miscellaneous 608,688 724,069 1,063,336 997,032 1,928,398 721,946 Transfers In(Out) (554,940) (154,916) (3,055,362) 2,396,851 (1,070,297) (11,581) Special Items- Gain 832,718 2 15,000 - - - - ExtraordinaryLoss (24,430) - - (477,707) - - Total GovernmentalActivities 67,469,215 75,753,572 79,711,664 94,795,008 94,945,385 94,692,090 Business-typeActivities: Investmentincome 756,118 635,674 634,413 771,883 956,687 875,509 Gain(Loss)onSaleofCapitalAssets (39,866) - - - 4 ,691 - Miscellaneous 333,402 915,879 772,083 562,482 876,714 919,828 Transfers In(Out) 554,940 154,916 3,055,362 (2,396,851) 1,070,297 11,581 Specialitems-(Loss) - - (953,385) - - - Extraordinary Gain - 9 51,460 - - - - TotalBusiness-typeActivities 1,604,594 2,657,929 3,508,473 (1,062,486) 2,908,389 1,806,918 TotalPrimary Government 69,073,809 78,411,501 83,220,137 93,732,522 97,853,774 96,499,008 ChangeinNetAssets Governmentalactivities (167,797) 2,456,896 9,728,769 24,820,870 5,102,653 203,471 Business-typeactivities 3,585,146 2,598,432 3,404,070 18,049,918 12,191,870 1,916,386 TotalPrimary Government $ 3,417,349 $ 5,055,328 $13,132,839 $42,870,788 $ 17,294,523 $ 2,119,857 NOTES: * Government-widenetassetinformationisreportedon theaccrualbasisofaccounting. * Informationprior toFY03isnotavailable,due to theFY03implementationof GASB34. *Source:StatementofActivities,pages32-33. (1)Net(expense)/revenueis thedifferencebetween theexpensesandprogramrevenuesofa functionorprogram. It indicates thedegree to whicha functionorprogramissupported withitsown feesandprogram-specificgrantsversusitsreliance upon funding from taxesandgeneralrevenues.Numbersinparenthesesindicate thatexpenses weregreater thanprogram revenuesand thereforegeneralrevenues wereneeded to finance that functionorprogram.Numbers withoutparentheses mean thatprogramrevenues weremore thansufficient tocoverexpenses. (2)SeeTable2-b fordetailof GeneralTaxRevenues. - 167 - QUEEN ANNE'S COUNTY,MARYLAND FINANCIAL TRENDS GENERAL TAX REVENUES - GOVERNMENTAL ACTIVITIES LAST SIX FISCAL YEARS Table 2-b 2003 2004 2005 2006 2007 2008 Local PropertyTaxes $ 36,257,473 $ 39,784,933 $ 42,121,614 $ 44,688,709 $ 46,185,050 $ 50,021,587 LocalIncomeTax 23,471,091 27,738,830 29,957,555 31,959,096 35,346,494 35,700,111 Other LocalTaxes 6,545,501 7,613,374 8,853,089 10,509,826 9,379,305 6,131,518 TotalTaxes - GovernmentalActivities $ 66,274,065 $ 75,137,137 $ 80,932,258 $ 87,157,631 $ 90,910,849 $ 91,853,216 NOTES: * Government-widegeneral tax revenue information is reported on the accrualbasis of accounting. *Informationprior to FY03 is not available,due to the FY03 implementation of GASB34. * Source: Statement of Activities,pages 32-33. - 168 - QUEENANNE'S COUNTY, MARYLAND FINANCIAL TRENDS FUNDBALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Table 3 1999 2000 2001 2002 2003 General Fund: Reserved $ 5,111,422 $ 6,333,566 $ 326,382 $ 93,099 $ 5,578,543 Unreserved 1,922,121 733,374 6,486,698 7,426,819 3,269,461 Total General Fund 7,033,543 7,066,940 6,813,080 7,519,918 8,848,004 All Other Governmental Funds: Reserved 13,278,721 14,885,770 16,870,563 9,032,415 9,570,304 Unreserved (deficit), reported in: Capital Projects Fund 1,044,612 (7,305,034) 10,340,077 12,097,123 6,465,484 Special Revenue Funds 1,444,283 1,938,263 3,046,815 3,127,711 2,972,713 TotalAll Other Governmental Funds 15,767,616 9,518,999 30,257,455 24,257,249 19,008,501 TotalAll Governmental Funds $ 22,801,159 $ 16,585,939 $ 37,070,535 $ 31,777,167 $ 27,856,505 2004 2005 2006 2007 2008 General Fund: Reserved $ 5,766,939 $ 5,705,316 $ 6,169,255 $ 7,140,303 $ 8,948,231 Unreserved 5,669,161 4,104,926 14,944,399 15,302,827 3,972,847 Total General Fund 11,436,100 9,810,242 21,113,654 22,443,130 12,921,078 All Other Governmental Funds: Reserved 12,329,623 15,075,521 13,751,478 20,060,988 16,706,954 Unreserved (deficit), reported in: Capital Projects Fund 11,835,783 11,706,521 13,579,649 17,618,012 14,409,216 Special Revenue Funds 2,698,617 3,156,479 2,810,027 3,019,522 2,185,304 TotalAll Other Governmental Funds 26,864,023 29,938,521 30,141,154 40,698,522 33,301,474 TotalAll Governmental Funds $ 38,300,123 $ 39,748,763 $ 51,254,808 $ 63,141,652 $ 46,222,552 NOTES: * Fund balance information for governmental funds is reportedon the modifiedaccrual basisofaccounting. * Source: Balance Sheet, pages 34-35. - 169 - QUEEN ANNE'S COUNTY, MARYLAND FINANCIALTRENDS CHANGESIN FUND BALANCES - GOVERNMENTAL FUNDS LASTTEN FISCAL YEARS Table 4 1999 2000 2001 2002 2003 Revenues Taxes Local Property Taxes $ 25,578,118 $ 26,879,315 $ 31,470,442 $ 33,760,455 $ 36,238,606 Local Income Taxes 18,647,323 19,373,084 21,498,495 23,217,162 23,517,175 Other Local Taxes 2,681,028 3,000,709 2,961,474 3,987,371 6,545,501 State Shared Taxes 1,066,372 1,503,702 1,890,539 1,941,971 4,424,763 Licenses and Permits 1,426,294 1,451,200 1,657,245 2,152,720 1,410,491 Intergovernmental 12,200,017 7,805,350 8,588,986 10,471,381 6,351,125 Chargesfor Current Services 927,252 1,121,836 1,279,623 1,460,330 1,248,229 Fines and Forfeitures 20,699 20,285 17,299 15,861 29,443 Special Assessments 118,574 60,441 51,174 46,419 43,067 Investment Income 1,187,777 1,248,707 2,169,485 1,042,194 465,164 Donations - - - - 81,350 Miscellaneous (1) 1,190,881 770,705 823,059 1,020,802 853,309 Total Revenues 65,044,335 63,235,334 72,407,821 79,116,666 81,208,223 Expenditures Current General Government (2) 4,516,687 4,777,730 5,493,808 6,139,990 7,729,416 Public Safety 6,329,930 7,169,209 8,190,088 8,726,365 9,829,451 PublicWorks 5,082,489 5,577,264 5,793,807 6,126,407 6,790,032 Health 874,961 879,277 931,775 1,208,954 807,489 Social Services 1,435,677 1,873,674 2,399,938 3,105,830 4,303,930 Education (3) 34,118,744 32,358,138 37,222,432 39,713,371 43,050,433 Parks and Recreation 1,357,168 1,448,363 1,605,717 1,727,072 2,616,946 Library (4) 818,697 852,183 904,151 935,439 951,939 Conservation of Natural Resources 285,593 275,513 459,420 880,299 880,058 Economic/Community Development 1,018,837 1,183,240 1,246,768 1,267,138 1,848,707 Miscellaneous - - - - - Capital Outlay 9,640,136 9,854,345 9,629,250 8,001,582 1,488,726 Debt Service Principal 2,497,882 1,498,016 6,666,033 2,920,206 2,690,928 Debt Issuance Costs - - - - - Interest and Fiscal Charges 1,836,315 1,786,854 2,313,472 2,698,380 2,695,664 Total Expenditures 69,813,116 69,533,806 82,856,659 83,451,033 85,683,719 Excess (Deficiency) of Revenues over (under) Expenditures (4,768,781) (6,298,472) (10,448,838) (4,334,367) (4,475,496) Other Financing Sources (Uses) Issuance of Debt 3,633,488 400,000 31,175,000 6 ,310,000 - Re-allocation of 2006 Bonds - - - - - Bond Premiums - - - - - Bond Issuance Costs - - - - - Proceeds of Capital Asset Disposals - - - - 98,000 Insurance Proceeds - - - - - Capital Contributions - Developer - - - - - Transfers In (5) 5,788,161 4,867,940 5,616,405 6,137,635 3,806,476 Transfers (Out) (6) (6,097,960) (5,184,688) (6,067,751) (7,115,841) (4,361,416) Defeasance ofdebt - - - (6,290,795) - Total Other Financing Sources (Uses) 3,323,689 83,252 30,723,654 (959,001) (456,940) Special and Extraordinary Items Special Items - - - - 885,140 Extraordinary Gains (Losses) - - - - (24,430) Total Special Items and Extraordinary Gains (Losses) - - - - 860,710 Net Increase (Decrease) in Fund Balances $ (1,445,092) $ (6,215,220) $ 20,274,816 $ (5,293,368) $ (4,071,726) Debtservice as a percentage ofnon-capital expenditures (7, 8) 7.17% 5.40% 12.03% 7.59% 6.67% NOTES: * Governmentalfund information is reported on themodified accrualbasis of accounting. * Source: Statement of Revenues, Expenditures and Changes in Fund Balances,pages 38-39, and the Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities,pages 40-41. (1) For FY02 andprior, "Miscellaneous Revenue" includes amountspreviouslyclassified as "Operating Transfers in"from Component Units. (2) For allfiscalyears, "General Government" includes amountspreviouslyclassified as "Miscellaneous," "Intergovernmental" and/or "Contingency." (3) For FY02 andprior, "Education Expenditures" includes amountspreviouslyclassified as "Operating Transfers out" to Component Unit (Board of Education). (4) For FY02 andprior, "Library Expenditures" includes amountspreviouslyclassified as "Operating Transfers out" to Component Unit (Library). (5) For FY02 andprior, "Transfers In" exclude amountspreviouslyclassified as "Operating Transfers in"from Component Units. (6) For FY02 andprior, "Transfers Out" exclude amountspreviouslyclassified as "Operating Transfers out" to Component Units (Board of Education and Library). (7) Debtservice representsdebtserviceprincipal and interest expenditures and excludes amortization ofdebt issuancecosts aspresented above. (8) Noncapital expenditures represents Total Expenditures above,less expenditures of the General and Roads Capital Project Funds andgovernmental capital outlay that resulted incapital assets - seespecificline items aspart of the reconciliation onpage 40. - 170 - 2004 2005 2006 2007 2008 $ 39,771,711 $ 42,191,297 $ 44,657,603 $ 46,208,342 $ 50,007,054 26,765,483 28,237,534 31,633,987 34,980,663 34,767,725 7,613,374 8,853,089 10,509,826 9,379,305 6,131,518 3,660,145 4,528,046 4,233,139 5,125,419 5,306,763 647,633 829,784 824,917 895,931 890,821 9,261,854 6,049,496 11,476,325 10,661,130 12,199,511 3,464,771 3,394,626 4,864,374 3,806,563 4,049,902 38,798 48,654 77,008 239,194 1,759,370 ( 7,528) - - - - 410,845 907,275 1,738,139 3,162,830 2,128,509 93,178 104,093 98,610 74,694 247,002 954,621 1,567,883 1,346,669 1,853,706 719,067 92,674,885 96,711,777 111,460,597 116,387,777 118,207,242 8,851,440 8,933,985 9,516,299 8,772,229 10,128,699 11,970,575 13,199,057 16,356,949 17,918,740 19,292,661 7,872,914 9,055,472 9,168,186 9,167,362 9,182,618 1,101,713 1,261,488 1,355,057 1,428,395 1,430,670 4,922,755 4,367,736 4,294,781 4,260,927 4,747,491 46,689,001 40,421,109 42,346,958 56,163,966 58,086,283 6,266,051 2,481,296 9,096,593 2,809,748 3,083,038 997,043 1,049,612 1,144,622 1,242,573 1,247,108 565,218 578,426 508,606 483,810 2,177,820 1,809,329 1,552,689 1,558,978 3,188,316 3,513,153 - - - 915,542 731,771 1,173,687 1,280,650 1,049,361 14,291,416 13,676,569 4,029,332 5,928,559 3,677,307 3,795,769 4,888,405 - - - 236,899 3,972 2,780,312 2,555,411 2,569,650 2,257,928 3,147,529 99,029,370 92,665,490 102,643,347 126,933,620 135,337,787 (6,354,485) 4,046,287 8,817,250 (10,545,843) (17,130,545) 16,602,500 30,026,336 - 23,219,790 510,617 - - - - (345,955) - 1,069,864 - 236,899 3,972 - (159,647) - - - 135,520 154,787 1,176,860 88,535 45,494 - - - - 8,898 - 88,750 - - - 9,647,582 10,661,440 8,578,135 13,131,736 17,014,307 (9,802,498) (13,716,802) (6,181,284) (14,202,033) (17,025,888) - (30,722,375) - - - 16,583,104 (2,597,647) 3,573,711 22,474,927 211,445 2 15,000 - - - - - - (477,707) (42,242) - 2 15,000 - (477,707) (42,242) - $ 10,443,619 $ 1,448,640 $ 11,913,254 $ 11,886,842 $ (16,919,100) 7.40% 9.49% 6.88% 5.26% 6.61% - 171 - The Great Blue Heron - a local native. QUEEN ANNE'S COUNTY,MARYLAND ASSESSED VALUE OF TAXABLE AND EXEMPT PROPERTY LAST TEN FISCAL YEARS Table 5 Real Property (1) (3) Personal Property Total Total Total Public Utility Taxable Taxable and Fiscal Commercial Residential (2) Total Direct Assessed Assessed Exempt Exempt Year Assessed Value Assessed Value Assessed Value Tax Rate (4) Value (3) (5) Value Property Property 1999 $ 602,287,045 $ 2,134,034,975 $ 2,736,322,020 $ 0.876 $ 67,849,561 $ 2,804,171,581 $ 248,800,945 $ 3,052,972,526 2000 634,731,500 2,269,951,675 2,904,683,175 0.876 67,954,700 2,972,637,875 266,713,700 3,239,351,575 2001 662,743,925 2,401,723,715 3,064,467,640 0.976 69,582,528 3,134,050,168 277,039,075 3,411,089,243 2002 692,030,001 2,607,616,738 3,299,646,739 0.976 70,150,240 3,369,796,979 274,858,885 3,644,655,864 2003 728,512,663 2,858,309,623 3,586,822,286 0.976 64,201,229 3,651,023,515 276,953,744 3,927,977,259 2004 771,054,050 3,208,049,692 3,979,103,742 0.976 59,945,270 4,039,049,012 297,843,389 4,336,892,401 2005 849,272,884 3,690,010,496 4,539,283,380 0.926 57,382,490 4,596,665,870 330,840,259 4,927,506,129 2006 950,694,704 4,051,000,772 5,001,695,476 0.870 59,360,390 5,061,055,866 369,542,935 5,430,598,801 2007 1,104,093,458 4,526,502,291 5,630,595,749 0.800 63,168,480 5,693,764,229 419,303,486 6,113,067,715 2008 1,291,356,759 5,045,464,776 6,336,821,535 0.770 61,729,010 6,398,550,545 474,798,401 6,873,348,946 NOTES: *Tax exemptproperty is included for purposes of calculating total assessedvalue, which is used onTable 12. (1)The State of Maryland,under Chapter 80 of theActs of 2000, required that assessedvalues of realpropertybebased on full cash value assessments as of October 1, 2000. Prior to that time, assessedvalues of realproperty were based on 40% of full cash value. Fiscal years 1999 to 2001 havebeen restated to full cashvalue for comparisonpurposes. (2) Residential realproperty includes single-familyhomes, townhouses, condominiums, and apartmentdwellings.The assessedvalue shown abovehasbeen reduced for the Homestead Credit assessment. (3) Realproperty andpersonalproperty assessments are done every three years and every year, respectively,by the State Department of Assessments andTaxation at 100% of estimated fair value. (4) See Table 6-a for realpropertydirect tax rates. Tax Rates are appliedper $100 of assessedvalue. (5)Thepersonalproperty tax rate for QueenAnne's County is zero. Source: State of Maryland, Department of Assessments andTaxation. - 173 - QUEENANNE'S COUNTY, MARYLAND REAL PROPERTY TAX RATES - COUNTY DIRECT RATE LAST TEN FISCAL YEARS Table6-a County Fiscal Direct Year Rate (1,2) 1999 $ 0.876 2000 0.876 2001 0.976 2002 0.976 2003 0.976 2004 0.976 2005 0.926 2006 0.870 2007 0.800 2008 0.770 NOTES: * Nodiscountsareallowed. * TaxesareleviedasofJuly1,aredueby September30,andbecomedelinquent October1. * Owneroccupiedproperties mayelect topayonanannualbasis.Ifnoelectionis made, taxesarepaidonasemi-annualbasis withpaymentdueby September30and December31. * Non-owneroccupiedproperties mustpayonanannualbasis. *Interestatonepercentper monthisassessedondelinquent taxbills. * Revised taxbillsbaseduponcertifications from the State receivedafter September1 maybepaid within thirtydays withoutinterest. * Delinquent taxeson realpropertyarecollectedbysale. * Costsof taxsale, whichvary,areadded to the redemption. * Taxsaledate: Third Tuesdayin May. * Thepersonalproperty tax rate for Queen Anne's Countyiszero. (1) The Stateof Maryland,under Chapter80of the Actsof2000, required thatassessed valuesof realpropertybebasedon fullcashvalueassessmentsasof October1,2000. Prior to that time,assessedvaluesof realproperty werebasedon40%of fullcashvalue. Tax rates for fiscalyears1999 to2001havebeen restated to fullcashvalue for comparisonpurposes. (2) Tax Ratesareappliedper$100ofassessedvalue. - 174 - QUEENANNE'SCOUNTY,MARYLAND REALPROPERTYTAXRATES-COUNTYSPECIALTAXINGDISTRICTS LASTTENFISCALYEARS Table6-b KentNarrows CommercialManagement Fiscal andWaterfront Year ImprovementDistrict(1) 1999 $ 0.060 2000 0.060 2001 0.060 2002 0.060 2003 0.060 2004 0.060 2005 0.060 2006 0.060 2007 0.060 2008 0.060 NOTES: * Taxratesareper$100ofassessedvalue. * Thepersonalproperty taxratefor QueenAnne'sCounty iszero. (1)TheStateofMaryland,underChapter80of theActsof2000,required thatassessed valuesofrealpropertybebasedonfullcashvalueassessmentsasof October1,2000. Prior to that time,assessedvaluesofrealpropertywerebasedon40%offullcashvalue. Taxratesforfiscalyears1999 to2001havebeenrestated tofullcashvaluefor comparisonpurposes. - 175 - QUEENANNE'S COUNTY,MARYLAND REAL PROPERTYTAX RATES - OVERLAPPING GOVERNMENTS - TOWNS (1) LASTTEN FISCALYEARS Table 6-c Fiscal Town of Town of Town of Town of Town of Year Centreville Barclay Church Hill Millington QueenAnne 1999 $ 0.380 $ 0.100 $ 0.340 $ 0.280 $ 0.200 2000 0.380 0.100 0.340 0.280 0.180 2001 0.380 0.100 0.340 0.280 0.180 2002 0.480 0.100 0.340 0.280 0.210 2003 0.480 0.100 0.340 0.280 0.180 2004 0.480 0.100 0.340 0.280 0.180 2005 0.480 0.100 0.340 0.280 0.180 2006 0.480 0.100 0.340 0.280 0.180 2007 0.470 0.100 0.340 0.280 0.180 2008 0.430 0.100 0.340 0.280 0.180 NOTES: *Tax rates are per $100 of assessed value. *The personal property tax rate for QueenAnne's Countyiszero. *Taxes collected by the County for other fiscalunits,including overlapping governments, are remitted based on actual collections. (1)The State of Maryland,under Chapter 80 of theActs of 2000, required that assessed values of real property be based on full cashvalue assessments as of October 1, 2000. Prior to that time, assessed values of real propertywere based on 40% of full cashvalue.Tax rates for fiscalyears 1999 to 2001 have been restated to full cashvalue for comparison purposes. - 176 - Town of Town of Town of Queenstown Sudlersville Templeville $ 0.200 $ 0.188 $ 0.172 0.200 0.188 0.168 0.200 0.188 0.164 0.200 0.185 0.161 0.200 0.176 0.142 0.200 0.176 0.142 0.200 0.167 0.133 0.200 0.167 0.122 0.200 0.167 0.252 0.200 0.167 0.252 - 177 - QUEENANNE'S COUNTY,MARYLAND TEN HIGHEST COMMERCIAL PROPERTY TAXPAYERS CURRENT FISCALYEARAND NINE YEARSAGO Table 7 For the Fiscal Year Ended June 30, 2008 Ratio: AssessableBase Taxpayer Real Personal Base to Total Total Property Property AssessableBase Second HorizonGroup Limited Partnership $ 41,977,039 $ 41,945,099 $ 31,940 0.66% KRM Development Corporation 28,782,362 28,782,362 - 0.45 White's Heritage Partners 27,376,580 27,376,580 - 0.43 Great American LifeInsurance Company 19,831,866 19,831,866 - 0.31 Waterford Centreville, LLC 14,333,877 14,333,877 - 0.22 Reliable Development Company 12,456,014 12,456,014 - 0.19 K Hovnanian's Four Seasons at Kent Island 10,856,146 10,856,146 - 0.17 Washington Brick and Terra Cotta Company 10,504,933 10,504,933 - 0.16 213 Centreville Associates, LLC 10,290,433 10,290,433 - 0.16 Kent Narrows Properties, LLC 10,105,633 10,105,633 - 0.16 Total $ 186,514,883 $ 186,482,943 $ 31,940 2.91% Total Assessable Base $ 6,398,550,545 100.00 % For the Fiscal Year Ended June 30, 1999 Ratio: AssessableBase Taxpayer Real Personal Base to Total Total Property Property AssessableBase Second HorizonGroup Limited Partnership $ 30,369,500 $ 30,247,125 $ 122,375 1.08% MarioJ. Boiardi 13,580,400 13,580,400 - 0.48 Washington Brick and Terra Cotta Company 8,120,775 7,935,900 184,875 0.29 KentIslandJoint Venture 7,526,750 7,526,750 - 0.27 Bay Bridge Limited 6,156,700 6,156,700 - 0.22 KRM Development 6,095,050 6,095,050 - 0.22 Gateway Partnership 5,831,850 5,831,850 - 0.21 TC Shopping Center 5,620,500 5,620,500 - 0.20 Clyde E. Sisk 5,072,600 5,072,600 - 0.18 Mears Point Association 5,185,175 5,185,175 - 0.18 Total $ 93,559,300 $ 93,252,050 $ 307,250 3.33% Total Assessable Base $ 2,804,171,581 100.00 % NOTES: (1)The State of Maryland, under Chapter 80 of the Acts of 2000, required that assessedvalues of real property be based on fullcash value assessments as of October 1, 2000. Prior to that time, assessedvalues of real property were based on 40% of fullcash value. Fiscalyear 1999 has been restated to fullcashvalue for comparison purposes. Source: State of Maryland Department of Assessments and Taxation - 178 - QUEENANNE'S COUNTY,MARYLAND REVENUE CAPACITY PROPERTYTAX LEVIES AND COLLECTIONS LASTTEN FISCALYEARS Table 8 Collectedwithin the Taxes Levied FiscalYear of the Levy Collections in Total Collections to Date Fiscal for the Percentage of Subsequent Percentage of Year FiscalYear Amount Original Levy Years Amount Original Levy 1999 $ 23,970,181 $ 23,919,895 99.79% $ 13,599 $ 23,933,494 99.85% 2000 25,246,867 25,179,068 99.73% 44,695 25,223,763 99.91% 2001 29,673,499 29,593,289 99.73% 36,705 29,629,994 99.85% 2002 31,834,978 31,759,768 99.76% 115,644 31,875,412 100.13% 2003 34,534,049 34,452,221 99.76% 82,442 34,534,663 100.00% 2004 38,135,222 38,052,633 99.78% 67,033 38,119,666 99.96% 2005 40,608,914 40,542,167 99.84% 210,856 40,753,023 100.35% 2006 43,208,732 43,107,941 99.77% 97,858 43,205,799 99.99% 2007 44,500,414 44,401,745 99.78% 65,331 44,467,076 99.93% 2008 48,575,431 48,505,180 99.86% - 48,505,180 99.86% NOTES: *This table includes dataforall property taxes billedapplicable toallfundsfor Queen Anne's County,Maryland to include Genera Special Revenue,and Enterprise Funds. Property taxes billedfor the StateofMarylandandvariousmunicipalitiesareexcluded - 179 - QUEENANNE'S COUNTY,MARYLAND RATIOSOFOUTSTANDINGDEBTBYTYPE LASTTEN FISCALYEARS Table 9 GovernmentalActivities General Bond Bond Deferred Fiscal Obligation Notes Anticipation Bond Issuance Refunding Year Bonds Payable NotesPayable Premiums Costs Costs 1999 $ 30,805,000 $ 4,581,420 $ - $ - $ - $ - 2000 29,465,000 1,304,927 3,500,000 - - - 2001 57,620,000 1,042,742 - - - - 2002 55,490,000 593,840 - - - - 2003 52,800,000 457,912 - - - - 2004 62,467,858 3,245,500 - - - - 2005 60,689,541 684,000 - 1,069,864 (159,647) (2,342,375) 2006 56,890,501 622,500 - 993,473 (147,978) (2,171,892) 2007 75,938,286 561,000 - 1,153,981 (373,209) (2,001,409) 2008 70,752,345 822,617 - 1,069,518 (353,469) (1,830,926) Business-typeActivities General Bond Bond Deferred Fiscal Obligation Notes Anticipation Bond Issuance Refunding Year Bonds Payable NotesPayable Premiums Costs Costs 1999 $ 8,345,000 $ 8,725,173 $ 1,200,000 $ - $ - $ (197,806) 2000 7,590,000 8,472,616 1,200,000 - - (164,622) 2001 8,515,000 7,410,320 - - - (131,438) 2002 7,825,000 6,912,388 - - - (312,421) 2003 6,865,000 6,402,363 - - - (258,403) 2004 5,825,000 5,879,764 - - - (204,386) 2005 5,383,663 5,343,775 - 59,927 (7,679) (293,209) 2006 4,943,663 14,580,581 - 55,932 (7,167) (258,264) 2007 4,608,851 22,516,916 - 63,281 (17,998) (223,317) 2008 4,094,485 21,058,076 - 50,889 (9,090) (188,369) NOTES: * Amountsfor 1999 - 2002 represent debt relating to total governmentalfunds (from the General Long-Term Obligations Account Group)and totalenterprisefunds,since the reportingof governmentalactivitiesand business-typeactivities in government-widefinancialstatementswas implemented in FY03. (1) SeeTable 14 for personal incomeand population data,whichare used in calculating these ratios. - 180 - Rebatable Total Interest Compensated Capital Governmental Payable Absences Leases Activites $ - $ 662,508 $ 131,575 $ 36,180,503 - 803,556 90,152 35,163,635 - 977,747 46,304 59,686,793 - 1,096,607 - 57,180,447 - 1,176,719 - 54,434,631 - 1,320,756 114,331 67,148,445 - 1,411,276 - 61,352,659 - 1,551,143 - 57,737,747 - 1,707,921 248,460 77,235,030 - 1,969,026 202,978 72,632,089 Ratios Debt to Rebatable Total Total Total Outstanding Interest Compensated Capital Business-type Primary Personal Debt per Payable Absences Leases Activities Government Income (1) Capita (1) $ 2 1,312 $ - $ - $ 18,093,679 $ 54,274,182 4.53% $ 1,357 - - - 17,097,994 52,261,629 4.05% 1,288 - - 2,000 15,795,882 75,482,675 5.47% 1,841 - 181,097 - 14,606,064 71,786,511 4.92% 1,730 - 192,287 - 13,201,247 67,635,878 4.34% 1,610 - 215,735 - 11,716,113 78,864,558 4.98% 1,819 - 216,827 - 10,703,304 72,055,963 4.50% 1,623 - 229,426 - 19,544,171 77,281,918 6.93% 1,700 - 242,678 - 27,190,411 104,425,441 5.61% 2,258 - 243,176 - 25,249,167 97,881,256 4.87% 2,044 - 181 - QUEENANNE'S COUNTY,MARYLAND RATIOS OF GENERAL BONDED DEBT OUTSTANDING LASTTEN FISCALYEARS Table 10 Percentage of Fiscal General TotalTaxable Per Year Bonded Debt (1) Assessable Base (2) Capita (3) 1999 $ 39,150,000 1.40% $ 979 2000 37,055,000 1.25% 914 2001 66,135,000 2.11% 1,613 2002 63,315,000 1.88% 1,526 2003 59,665,000 1.63% 1,421 2004 68,292,858 1.69% 1,575 2005 66,073,204 1.44% 1,488 2006 61,834,164 1.22% 1,360 2007 80,547,137 1.41% 1,742 2008 74,846,830 1.17% 1,563 NOTES: * General Bonded Debt includes all general obligation debt, regardless of purpose or repayment source, and other bonded debt financedwith general government resources. Other debt is excluded becauseitisnotin the form of bonds. (1) General Bonded Debt is comprised of both governmental and business- type activities fromTable 9. (2) See Table 5 for taxable assessable base. (3) See Table 14 for population data. - 182 - QUEENANNE'SCOUNTY,MARYLAND COMPUTATION OFNETDIRECTAND OVERLAPPINGDEBT(1) AS OFJUNE30,2008 Table11 NameofJurisdiction GrossDebt QueenAnne'sCounty: County Government TotalNetDirectDebt(1) $ 96,930,501 Towns:(2) Centreville 11,024,665 Millington 1,317,618 Queenstown 335,681 TotalNet OverlappingDebt 12,677,964 TotalNetDirectand OverlappingDebt $109,608,465 NOTES: (1) Netdirectdebtof theCounty includesgeneralobligationbonds,notespayable,andcapital leases.SeeTable9. Overlappingdebt is thedebtofothergovernmentalentities locatedwithin theCounty that is payable inwholeor inpartby taxpayersof theCounty. (2) Entitiesare locatedwhollywithin QueenAnne'sCounty. Debt informationreportedbymunicipalities. - 183 - QUEENANNE'S COUNTY, MARYLAND COMPUTATION OF LEGAL DEBT MARGIN LAST TEN FISCAL YEARS Table 12 1999 2000 2001 Computationof Legal Debt Margin - for QueenAnne's County Other than Debt related to the Sanitary District: Authorized debt limit underTitle 5 (Sub 2) (Sec 5-202) (1) $ 8,000,000 $ 8,000,000 $ 8,000,000 Authorized bonded debt under specific public laws Enterprise Funds, excluding Sanitary District (5) - - 1,715,000 General Obligation Debt (5) 30,805,000 29,465,000 57,620,000 Subtotal 30,805,000 29,465,000 59,335,000 Totalauthorized debt underTitle 5 and specific public laws 38,805,000 37,465,000 67,335,000 LESS Outstanding bondsand notes payable (6) 53,590,362 51,458,073 74,504,928 Less: Sanitary District debt (5) 18,072,367 17,097,994 14,003,929 Subtotal 35,517,995 34,360,079 60,500,999 Legal Debt Margin - Other than the Sanitary District $ 3,287,005 $ 3,104,921 $ 6,834,001 Debt related to the Sanitary District Proprietary Fund: Total taxableassessed value (3, 4) $2,804,171,581 $2,972,637,875 $3,134,050,168 Plusexempt property (3, 4) 248,800,945 266,713,700 277,039,075 Totalassessed value $3,052,972,526 $3,239,351,575 $3,411,089,243 Debt Limit - 6% of totalassessed value (2, 3) $ 183,178,352 $ 194,361,095 $ 204,665,355 LESS Sanitary District 18,072,367 17,097,994 14,003,929 Less: Restricted CashandInvestments in the Debt Service Fund available for paymentof principal 4,488,071 4,430,101 5,480,724 13,584,296 12,667,893 8,523,205 Legal Debt Margin - Sanitary District $ 169,594,056 $ 181,693,202 $ 196,142,150 NOTES: (1) Title 5, Subtitle 2, Section 5-202 of the Codeof Public Local Lawsof QueenAnne's Countyauthorizes the County to borrow up to $8,000,000 for generaloperatingand capital improvementexpenditures.Thisauthority is in addition toany bonded debtauthorized under specific public local laws. (2) Title 24, Subtitle 1, Section 24-146(A)of the Codeof Public Local Lawsof QueenAnne's Countyauthorizes the County to borrowanamount not to exceed 6% of the total valueof propertyassessed.The proceedsof such borrowings must be used for sewerandwater system construction payments (3) Prior to June 1, 2001, the legal debt limit was 15 percentof theassessable base (realand personal property)of the County. During that time, theassessable base for real propertywas 40 percentof the full assessed value. Effective June 1, 2001, real property in the Stateof Maryland began beingassessedat 100 percentof full assessed value insteadof the previous 40 percentassessment method. Alsoeffective June 1, 2001, the sectionof the Code referred toabovewasamended in conjunctionwith the real propertyassessment change. Under theamendment, the legal debt margin is a totalof 6 percentof theassessable base (presentedat 100 percent)of real propertyof the Countyand 15 percentof the County'sassessable baseof personal propertyandoperating real property. Note that FiscalYears 1999 to 2001 have been restated to full cash valueand the legal debt margin has been calculatedat 6% for forall property andall years for comparison purposes. (4) SeeTable 5. (5) See Note 9, Section B. (6) SeeTable 9. - 184 - 2002 2003 2004 2005 2006 2007 2008 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 1,625,000 1,535,000 1,440,000 1,413,663 1,413,663 1,538,851 1,509,485 55,490,000 52,800,000 62,467,858 60,689,541 56,890,501 75,938,286 70,752,345 57,115,000 54,335,000 63,907,858 62,103,204 58,304,164 77,477,137 72,261,830 65,115,000 62,335,000 71,907,858 70,103,204 66,304,164 85,477,137 80,261,830 70,508,807 66,266,872 77,328,067 72,100,979 77,037,245 103,625,053 96,727,523 12,731,829 11,412,635 10,005,867 9,266,078 18,069,698 25,552,847 23,615,821 57,776,978 54,854,237 67,322,200 62,834,901 58,967,547 78,072,206 73,111,702 $ 7,338,022 $ 7,480,763 $ 4,585,658 $ 7,268,303 $ 7,336,617 $ 7,404,931 $ 7,150,128 $3,369,796,979 $3,651,023,515 $4,039,049,012 $4,596,665,870 $5,061,055,866 $5,693,764,229 $6,398,550,545 274,858,885 276,953,744 297,843,389 330,840,259 369,542,935 419,303,486 474,798,401 $3,644,655,864 $3,927,977,259 $4,336,892,401 $4,927,506,129 $5,430,598,801 $6,113,067,715 $6,873,348,946 $ 218,679,352 $ 235,678,636 $ 260,213,544 $ 295,650,368 $ 325,835,928 $ 366,784,063 $ 412,400,937 12,731,829 11,412,635 10,005,867 9,266,078 18,069,698 25,552,847 23,615,821 5,141,449 4,264,878 4,289,452 4,105,842 3,940,626 4,746,865 4,551,821 7,590,380 7,147,757 5,716,415 5,160,236 14,129,072 20,805,982 19,064,000 $ 211,088,972 $ 228,530,879 $ 254,497,129 $ 290,490,132 $ 311,706,856 345,978,081 393,336,937 - 185 - QUEENANNE'S COUNTY,MARYLAND PRINCIPAL EMPLOYERS CURRENT FISCALYEARAND NINEYEARSAGO Table 13 FiscalYear 2008 FiscalYear 1999 Percentageof Percentageof Total County Total County Employer Employees Rank Employment Employees Rank Employment Queen Anne's County Boardof Education 977 1 9.77% N/A N/A N/A Queen Anne's County Government 532 2 5.32% N/A N/A N/A S.E.W. Friel 275 3 2.75% N/A N/A N/A Paul Reed Smith Guitars 250 4 2.50% N/A N/A N/A Chesapeake College 225 5 2.25% N/A N/A N/A Safeway 185 6 1.85% N/A N/A N/A ReebMillwork 170 7 1.70% N/A N/A N/A Kmart 150 8 1.50% N/A N/A N/A Genesis Healthcare 150 9 1.50% N/A N/A N/A Acme 150 10 1.50% N/A N/A N/A Total 3,064 30.64% NOTES: * N/A - Informationfor 1999 is unavailble. Source: Queen Anne's County Economic Development Office; Tables 15 and 17. - 186 - QUEENANNE'SCOUNTY,MARYLAND DEMOGRAPHICSTATISTICS LASTTENFISCALYEARS Table14 Average Total Registered Fiscal Personal PerCapita Unemployment Numberof Year Population(1) Income(2) Income(3) Rate(3) Pupils(4) 1999 40,000 $ 1,198,080,000 $ 29,952 4.10% 6,674 2000 40,563 1,290,876,912 31,824 3.40% 7,015 2001 41,000 1,379,035,000 33,635 3.60% 7,239 2002 41,500 1,459,638,000 35,172 3.30% 7,266 2003 42,000 1,558,032,000 37,096 3.50% 7,457 2004 43,350 1,582,275,000 36,500 3.10% 7,530 2005 44,392 1,601,707,752 36,081 3.50% 7,649 2006 45,450 1,114,661,250 24,525 3.50% 7,162 2007 46,241 1,861,755,142 40,262 3.50% 7,774 2008 47,886 2,009,392,332 41,962 4.00% 7,790 NOTES: (1) Source: U.S.CensusBureau (2) Personal incomederivedbymultiplyingpopulationbypercapita income. (3) Source: QueenAnne'sCountyEconomicDevelopmentCommission (4) Source: QueenAnne'sCountyBoardofEducation. - 187 - QUEENANNE'S COUNTY,MARYLAND OPERATING INFORMATION COUNTYGOVERNMENTEMPLOYEES- FULL-TIMEEQUIVALENTS LASTTEN FISCALYEARS Table15 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 NumberofExemptEmployees 22 30 31 31 33 33 35 35 36 31 Numberof FullTimeEmployees 332 364 373 394 399 413 420 432 470 481 NumberofPartTimeEmployees(FTE) 50 50 24 24 29 21 21 23 25 20 Total CountyGovernmentEmployees 404 444 428 449 461 467 476 490 531 532 NOTES: Source: QueenAnne's County FinanceOffice. - 188 - QUEENANNE'SCOUNTY,MARYLAND COUNTY GOVERNMENTEMPLOYEES-FULL-TIME ONLYBYFUNCTION LASTTWOFISCALYEARS Table16 2007 2008 GovernmentalActivities: General Government 90 90 PublicSafety: Police 49 53 Fire-EmergencyManagementServices 69 68 Corrections 37 38 AnimalServices 11 11 PublicWorks 87 91 Health 1 1 SocialServices 40 38 Education - - Parks&Recreation 39 40 Library - - ConservationofNaturalResources 3 3 Economic/CommunityDevelopment 12 12 Total GovernmentalActivities 438 445 Business-TypeActivities: SanitaryDistrict 47 46 BayBridgeAirport 3 3 PublicLandings 3 3 PropertyManagement 5 4 TotalBusiness-TypeActivities 58 56 ComponentUnit: PublicHousingAuthority 10 11 TotalFull-TimeCountyEmployees 506 512 NOTES: Only full-timeCountyemployeesarerepresented in thisTable;datarelating to full-timeequivalents forpart-timeemployees isnotavailableat this time. Countyemployees include thePublicHousingAuthoritybutexcludeothercomponentunits. Therefore, noemployeesare listed for theEducationorLibrary functions,whichrelate to theBoardofEducation and the QueenAnne'sCountyFreeLibrarycomponentunits,respectively. Asdatabecomesavailable in futureyears, thisTablewillbeupdated to includedata forup to ten fiscalyears. Source: QueenAnne'sCountyFinance Office. - 189 - QUEENANNE'S COUNTY,MARYLAND OPERATING INFORMATION OPERATING INDICATORS BY FUNCTION LASTTEN FISCALYEARS Table17 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 GovernmentalActivities: GeneralGovernment: Planning& Zoning: Numberof commercialpermitsissued 235 294 124 118 219 295 272 256 235 23 Numberofresidentialpermitsissued: Single FamilyPermits 438 322 374 406 326 271 247 224 160 138 Multi FamilyPermits 60 54 33 16 36 - 1 - - - RenovationsandAdditionsPermits 444 563 519 550 678 745 680 608 541 539 PublicSafety: Fireand Rescue: Numberofvolunteermembers 679 577 450 577 650 649 630 630 600 663 Police: UniformedPoliceOfficers 33 37 42 42 47 50 49 49 49 53 Numberoflawviolations: Physicalarrests 1,222 1,112 1,190 987 1,021 1,112 1,536 1,115 1,413 1,373 Trafficviolations 3,815 3,602 3,227 1,904 2,322 4,363 5,307 4,962 5,310 5,745 Detention Center: Detention CenterOfficers 28 28 28 29 29 32 30 31 33 35 Average yearlyprisonpopulation N/A N/A 86 80 92 92 96 99 113 112 PublicWorks: WastewaterTreated- Daily(mgd) 1.18 1.60 1.50 1.50 1.60 1.50 1.50 1.50 1.50 1.60 Education: NumberofPersonnel Teachers 431 439 446 447 458 459 479 496 501 522 Administrators 44 41 37 41 39 39 39 39 40 40 Support 41 283 265 303 303 302 321 318 327 338 Other 282 44 56 46 46 43 53 59 55 77 NumberofStudents 6,674 7,015 7,239 7,266 7,457 7,530 7,649 7,162 7,774 7,790 NumberofHighSchoolGraduates N/A N/A N/A N/A N/A N/A N/A 514 563 560 NOTES: N/A- Datanotreadilyavailable,ornotavailableinamanner consistentwith thisdisplay. Source:Various Countydepartments. - 190 - QUEENANNE'S COUNTY,MARYLAND OPERATING INFORMATION CAPITALASSETSTATISTICS BY FUNCTION LASTTEN FISCALYEARS Table18 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 GovernmentalActivities: PublicSafety: Fireand Rescue: Numberofvolunteer stations 9 9 9 9 9 9 10 10 10 10 Equipment: Engines 20 19 19 17 13 16 17 17 16 16 Tankers 8 9 9 8 8 7 7 7 9 9 AerialUnits 3 3 3 4 3 4 4 4 4 4 RescueUnits 4 4 4 4 5 5 5 5 5 6 BrushUnits 8 8 8 8 7 7 7 7 8 8 AirUnits(MDStatePolice) 1 1 1 1 8 8 1 1 1 3 Boats 5 5 4 6 5 5 5 5 3 1 Ambulance/MedicUnits 14 15 16 21 15 15 15 18 20 16 Cars/Other 7 7 11 19 15 20 20 20 16 17 Police: NumberofStations 1 1 1 1 1 1 1 1 1 1 NumberofVehicles Patrol 35 36 42 38 48 58 43 34 54 57 Other - 6 8 8 21 6 15 26 15 7 Detention Center Capacity 104 104 104 104 104 104 104 104 104 104 PublicWorks: County Maintained RoadsandStreets Paved(miles) 511 511 508 510 524 522 524 534 536 530 Unpaved(miles) 47 47 27 24 12 13 13 13 12 15 CountyOwnedWaterand Wastewater Facilities Water Milesof Mains 35 35 37 38 38 47 47 49 51 56 WaterTreatmentPlants 10 10 10 10 10 10 10 10 10 11 BoosterStations 2 2 2 3 2 2 2 2 2 2 Wastewater Milesof Mains 91 91 94 96 97 105 105 107 109 114 WastewaterTreatmentPlants 2 1 1 1 1 1 1 1 1 1 Wastewater Collection,Lift, andPumpingStations 26 27 28 28 28 29 29 29 29 31 Education: NumberofSchools HighSchools 2 2 2 2 2 2 2 2 2 2 MiddleSchools 3 3 3 3 3 3 3 3 3 3 ElementarySchools 7 7 7 7 7 7 8 8 8 8 Parksand Recreation: Parks 20 21 25 24 24 24 24 28 29 32 ParkAcreage 1,542 1,842 1,804 1,902 2,022 2,024 2,024 2,579 2,572 2,633 PublicLandings 19 20 21 22 22 22 21 21 21 21 Library: NumberofLibraries 3 3 3 3 3 3 3 3 3 3 NOTES: Source:Various Countydepartments. - 191 - Sailing on the Chesapeake Bay, easily accessible from our many tributaries.