financial statements and federal single audit report ......financial statements, which collectively...

Financial Statements and Federal Single Audit

Report

Pacific County

For the period January 1, 2018 through December 31, 2018

Published September 9, 2019

Report No. 1024511

Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (360) 902-0370 [email protected]

Office of the Washington State Auditor

Pat McCarthy

September 9, 2019

Board of Commissioners

Pacific County

South Bend, Washington

Report on Financial Statements and Federal Single Audit

Please find attached our report on Pacific County’s financial statements and compliance with

federal laws and regulations.

We are issuing this report in order to provide information on the County’s financial condition.

Sincerely,

Pat McCarthy

State Auditor

Olympia, WA


TABLE OF CONTENTS

Schedule of Findings and Questioned Costs ................................................................................... 4

Summary Schedule of Prior Audit Findings .................................................................................... 6

Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance

and Other Matters Based on an Audit of Financial Statements Performed in Accordance with

Government Auditing Standards..................................................................................................... 9

Independent Auditor's Report on Compliance for Each Major Federal Program and Report on

Internal Control Over Compliance in Accordance With the Uniform Guidance ......................... 12

Independent Auditor's Report on Financial Statements ................................................................ 15

Financial Section ........................................................................................................................... 19

About the State Auditor's Office ................................................................................................... 53


SCHEDULE OF FINDINGS AND QUESTIONED COSTS

Pacific County

January 1, 2018 through December 31, 2018

SECTION I – SUMMARY OF AUDITOR’S RESULTS

The results of our audit of Pacific County are summarized below in accordance with Title 2 U.S.

Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost

Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Financial Statements

We issued an unmodified opinion on the fair presentation of the County’s financial statements in

accordance with its regulatory basis of accounting. Separately, we issued an adverse opinion on

the fair presentation with regard to accounting principles generally accepted in the United States

of America (GAAP) because the financial statements are prepared using a basis of accounting

other than GAAP.

Internal Control over Financial Reporting:

Significant Deficiencies: We reported no deficiencies in the design or operation of internal

control over financial reporting that we consider to be significant deficiencies.

Material Weaknesses: We identified no deficiencies that we consider to be material

weaknesses.

We noted no instances of noncompliance that were material to the financial statements of the

County.

Federal Awards

Internal Control over Major Programs:

Significant Deficiencies: We reported no deficiencies in the design or operation of internal

control over major federal programs that we consider to be significant deficiencies.

Material Weaknesses: We identified no deficiencies that we consider to be material

weaknesses.


We issued an unmodified opinion on the County’s compliance with requirements applicable to

each of its major federal programs.

We reported no findings that are required to be disclosed in accordance with 2 CFR 200.516(a).

Identification of Major Federal Programs

The following programs were selected as major programs in our audit of compliance in accordance

with the Uniform Guidance.

CFDA No. Program or Cluster Title

14.267 Continuum of Care Program

20.205

20.224

Highway Planning and Construction Cluster – Highway Planning and

Construction

Highway Planning and Construction Cluster – Federal Lands Access

Program

The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by

the Uniform Guidance, was $750,000.

The County did not qualify as a low-risk auditee under the Uniform Guidance.

SECTION II – FINANCIAL STATEMENT FINDINGS

None reported.

SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED

COSTS

None reported.


PACIFIC COUNTY AUDITOR

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

Pacific County


This schedule presents the status of federal findings reported in prior audit periods.

Audit Period:

January 1, 2017 – December 31, 2017

Report Ref. No.:

1022142

Finding Ref.

No.: 2017-001

CFDA Number:

14.267

Federal Program Name and Granting Agency:

Continuum of Care Program, Office of Community

Planning and Development, Department of Housing and

Urban Development (HUD)

Pass-Through Agency Name:

N/A

Finding Caption:

The County did not have adequate internal controls to ensure compliance with subrecipient

monitoring requirements for its Continuum of Care Program.

Background:

During fiscal year 2017, the County spent $209,629 in Continuum of Care Program funds. The

County provided more than 90 percent of its total Program funding to a non-profit subrecipient that

performed the primary activities of this Program. As the pass-through agency, the County was

responsible to ensure its subrecipient complied with Program Requirements.

Our audit identified the County did not have adequate controls in place to ensure it monitored the

subrecipient in a timely manner. While County staff responsible for administering the Program

made effort to monitor its subrecipient, staff were not knowledgeable of the Program’s

requirements sufficient to effectively monitor its subrecipient for compliance in a timely manner.

We consider this weakness in internal controls to be a significant deficiency.

Willapa Harbor Area – (360) 875-9313

Peninsula Area – (360) 642-9313

Naselle – (360) 484-7313

North Cove Area – (360) 267-8313

FAX – (360) 875-9333

TDD – (360) 875-9400

County Auditor &

Recorder

P.O. Box 97

South Bend, WA. 98586-0097

PACIFIC COUNTY COURTHOUSE

National Historic Site


Status of Corrective Action: (check one)

☒ Fully

Corrected

☐ Partially

Corrected ☐ Not Corrected

☐ Finding is considered no

longer valid

Corrective Action Taken:

1. In February 2018, the county hosted David Foster of HUD who provided an overview of the

HUD program and provided technical assistance regarding sub recipient monitoring related

to the HUD program. This meeting resulted in a thorough review of the CFR and development

of new sub recipient program invoice and sub recipient monitoring tool.

2. This process triggered the initial findings (by the county) of the issues identified in the audit

and the start of the corrective action.

3. Between March-June 2018, the county conducted an audit of the 2016-2017 and 2017-18 fiscal

years sub recipient billings. This resulted in the sub recipient paying the county back for the

amounts overbilled. Per guidance from HUD, the county wired the 2016-17 amounts directly

back to HUD. For the 2017-18 repayment, HUD requested that we short bill our next

reimbursement request to reconcile for the overbill.

4. The county has established a written sub recipient monitoring schedule. Although the CFR

only requires annual monitoring, the county will be conducting a formal on-site review of the

sub recipient at least two times per year moving forward. This is in addition to monthly

monitoring of invoices and HMIS performance data. Since the audit, the county has conducted

full on-site reviews of the sub recipient on September 25, 2018, and May 2, 2019. Sub recipient

monitoring is scheduled in September and April of each year moving forward.

5. In Fall 2018, the Health Department underwent management restructuring in an effort to

increase capacity and oversight of the HUD (and other) programs. As part of this restructuring,

the department created a new contracts manager position. This position was filled by Jamie

Haslam in February 2019. Jamie provides program oversight, sub recipient monitoring, and

provides technical assistance to the sub recipient related to the HUD program. The additional

management capacity has significantly increased COC/HUD program oversight.

6. The newly created invoice workbook provides additional controls to ensure HUD program

requirements are met. The invoice workbook requires the sub recipient to document proof of

disability, proof of chronic homelessness, household composition, client income, and lease

start/end dates for each client. The workbook includes a tab that calculates comparable rents

for like units in the area. The workbook limits the amount of rent charged to the grant to be

the lesser of the reasonable rent limit or actual rent. The workbook automatically calculates

the client share of rent and deducts that amount from the rent charged to the grant. This

ensures that the grant is only charged for rents that are reasonable and that the grant is not

paying the client share of rent.

7. The invoice workbook provides a checklist that lists all steps that the sub recipient must take

prior to submitting the invoice and the final invoice is signed/certified to be true under penalty

of perjury. The invoice workbook was used to re-submit all invoices for the 2017-18 fiscal year


(Oct 2017-Jan 2018), as well as all invoices submitted from when the issues were identified

moving forward (February 2018-Current).

8. Initially, the county was under the impression that Fair Market Rent (FMR) was the standard

to use to ensure rents were reasonable. FMR was incorporated into the initial sub recipient

invoice and the county did ensure that FMR was not exceeded by the sub recipient for units

billed to HUD. It was not until the state audit, that the county learned that FMR should be

used for units that are leased (owned) by the sub recipient, and that a separate rent

reasonableness standard should be applied to rental assistance payments. In response (and

with guidance from HUD), the county developed a rent reasonableness policy and

incorporated rent reasonableness calculations into the monthly invoice workbook (for each

client/unit). The rent reasonableness requires documenting at least three comparable units

(size, location, utilities, etc.) and their rents. The maximum allowed reasonable rent is the

average of the 3 comparable units plus 15%. The new invoice automatically calculates this

amount for each unit and formulas within the workbook limit the amount charged to be the

lesser of actual rent or the reasonable max (minus client share). For 2016-17 and 2017-18,

the sub recipient calculated reasonable rent for each unit using the new invoice. Since FMR

was used initially to limit rent amounts, and since FMR was actually lower than the reasonable

rent for each unit, there were not instances where rent charged to the grant exceeded the rent

reasonableness standard.

9. In the Fall of 2018, the County amended the sub recipient contract to include all items required

by the COC program and that were found during the audit.

10. No Supplant Language has always been included in the sub recipient contract and supplanting

related to the COC/HUD grant has never occurred, as the program and funding were all new

to the county in 2016. To ensure supplanting with HUD/COC funding does not occur in the

future, we have created a supplanting policy that applies to all federal funds and other funds

that explicitly disallow supplanting.


INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS

Pacific County



Pacific County


We have audited, in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States, the financial statements of

Pacific County, as of and for the year ended December 31, 2018, and the related notes to the

financial statements, which collectively comprise the County’s financial statements, and have

issued our report thereon dated August 27, 2019.

We issued an unmodified opinion on the fair presentation of the County’s financial statements in

accordance with its regulatory basis of accounting. We issued an adverse opinion on the fair

presentation with regard to accounting principles generally accepted in the United States of

America (GAAP) because the financial statements are prepared by the County using accounting

practices prescribed by Washington State statutes and the State Auditor’s Budgeting, Accounting

and Reporting System (BARS) manual described in Note 1, which is a basis of accounting other

than GAAP. The effects on the financial statements of the variances between the basis of

accounting described in Note 1 and accounting principles generally accepted in the United States

of America, although not reasonably determinable, are presumed to be material.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In planning and performing our audit of the financial statements, we considered the County’s

internal control over financial reporting (internal control) to determine the audit procedures that

are appropriate in the circumstances for the purpose of expressing our opinions on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s


internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s

internal control.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent,

or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a

combination of deficiencies, in internal control such that there is a reasonable possibility that a

material misstatement of the County's financial statements will not be prevented, or detected and

corrected on a timely basis. A significant deficiency is a deficiency, or a combination of

deficiencies, in internal control that is less severe than a material weakness, yet important enough

to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph

of this section and was not designed to identify all deficiencies in internal control that might be

material weaknesses or significant deficiencies. Given these limitations, during our audit we did

not identify any deficiencies in internal control that we consider to be material weaknesses.

However, material weaknesses may exist that have not been identified.

COMPLIANCE AND OTHER MATTERS

As part of obtaining reasonable assurance about whether the County’s financial statements are free

from material misstatement, we performed tests of the County’s compliance with certain

provisions of laws, regulations, contracts and grant agreements, noncompliance with which could

have a direct and material effect on the determination of financial statement amounts. However,

providing an opinion on compliance with those provisions was not an objective of our audit, and

accordingly, we do not express such an opinion.

The results of our tests disclosed no instances of noncompliance or other matters that are required

to be reported under Government Auditing Standards.

PURPOSE OF THIS REPORT

The purpose of this report is solely to describe the scope of our testing of internal control and

compliance and the results of that testing, and not to provide an opinion on the effectiveness of the

County’s internal control or on compliance. This report is an integral part of an audit performed

in accordance with Government Auditing Standards in considering the County’s internal control

and compliance. Accordingly, this communication is not suitable for any other purpose. However,


this report is a matter of public record and its distribution is not limited. It also serves to

disseminate information to the public as a reporting tool to help citizens assess government

operations.

Pat McCarthy

State Auditor

Olympia, WA

August 27, 2019


INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR

EACH MAJOR FEDERAL PROGRAM AND REPORT ON

INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE

WITH THE UNIFORM GUIDANCE

Pacific County



Pacific County


REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL

PROGRAM

We have audited the compliance of Pacific County, with the types of compliance requirements

described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could

have a direct and material effect on each of the County’s major federal programs for the year ended

December 31, 2018. The County’s major federal programs are identified in the accompanying

Schedule of Findings and Questioned Costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and

conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the County’s major federal

programs based on our audit of the types of compliance requirements referred to above. We

conducted our audit of compliance in accordance with auditing standards generally accepted in the

United States of America; the standards applicable to financial audits contained in Government

Auditing Standards, issued by the Comptroller General of the United States; and the audit

requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative

Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Those standards and the Uniform Guidance require that we plan and perform the audit to obtain

reasonable assurance about whether noncompliance with the types of compliance requirements


referred to above that could have a direct and material effect on a major federal program occurred.

An audit includes examining, on a test basis, evidence about the County’s compliance with those

requirements and performing such other procedures as we considered necessary in the

circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major

federal program. Our audit does not provide a legal determination on the County’s compliance.

Opinion on Each Major Federal Program

In our opinion, the County complied, in all material respects, with the types of compliance

requirements referred to above that could have a direct and material effect on each of its major

federal programs for the year ended December 31, 2018.

REPORT ON INTERNAL CONTROL OVER COMPLIANCE

Management of the County is responsible for establishing and maintaining effective internal

control over compliance with the types of compliance requirements referred to above. In planning

and performing our audit of compliance, we considered the County’s internal control over

compliance with the types of requirements that could have a direct and material effect on each

major federal program in order to determine the auditing procedures that are appropriate in the

circumstances for the purpose of expressing an opinion on compliance for each major federal

program and to test and report on internal control over compliance in accordance with the Uniform

Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control

over compliance. Accordingly, we do not express an opinion on the effectiveness of the County’s

internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control

over compliance does not allow management or employees, in the normal course of performing

their assigned functions, to prevent, or detect and correct, noncompliance with a type of

compliance requirement of a federal program on a timely basis. A material weakness in internal

control over compliance is a deficiency, or combination of deficiencies, in internal control over

compliance, such that there is a reasonable possibility that material noncompliance with a type of

compliance requirement of a federal program will not be prevented, or detected and corrected, on

a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a

combination of deficiencies, in internal control over compliance with a type of compliance

requirement of a federal program that is less severe than a material weakness in internal control

over compliance, yet important enough to merit attention by those charged with governance.


Our consideration of internal control over compliance was for the limited purpose described in the

first paragraph of this section and was not designed to identify all deficiencies in internal control

that might be material weaknesses or significant deficiencies. We did not identify any deficiencies

in internal control over compliance that we consider to be material weaknesses. However, material

weaknesses may exist that have not been identified.

Purpose of this Report

The purpose of this report on internal control over compliance is solely to describe the scope of

our testing of internal control over compliance and the results of that testing based on the

requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other

purpose. However, this report is a matter of public record and its distribution is not limited. It

also serves to disseminate information to the public as a reporting tool to help citizens assess

government operations.

Pat McCarthy

State Auditor

Olympia, WA

August 27, 2019


INDEPENDENT AUDITOR’S REPORT ON

FINANCIAL STATEMENTS

Pacific County



Pacific County


REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Pacific County, for the year ended

December 31, 2018, and the related notes to the financial statements, which collectively comprise

the County’s financial statements, as listed on page 19.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements

in accordance with the financial reporting provisions of Washington State statutes and the

Budgeting, Accounting and Reporting System (BARS) manual prescribed by the State Auditor

described in Note 1. This includes determining that the basis of accounting is acceptable for the

presentation of the financial statements in the circumstances. Management is also responsible for

the design, implementation and maintenance of internal control relevant to the preparation and fair

presentation of financial statements that are free from material misstatement, whether due to fraud

or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We

conducted our audit in accordance with auditing standards generally accepted in the United States

of America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States. Those standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,

including the assessment of the risks of material misstatement of the financial statements, whether


due to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the County’s preparation and fair presentation of the financial statements in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we

express no such opinion. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of significant accounting estimates made by management, as

well as evaluating the overall presentation of the financial statements.

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

for our audit opinions.

Unmodified Opinion on Regulatory Basis of Accounting (BARS Manual)

As described in Note 1, Pacific County has prepared these financial statements to meet the financial

reporting requirements of Washington State statutes using accounting practices prescribed by the

State Auditor’s Budgeting, Accounting and Reporting System (BARS) manual. Those accounting

practices differ from accounting principles generally accepted in the United States of America

(GAAP). The differences in these accounting practices are also described in Note 1.

In our opinion, the financial statements referred to above present fairly, in all material respects,

the cash and investments of Pacific County, and its changes in cash and investments, for the year

ended December 31, 2018, on the basis of accounting described in Note 1.

Basis for Adverse Opinion on U.S. GAAP

Auditing standards issued by the American Institute of Certified Public Accountants (AICPA)

require auditors to formally acknowledge when governments do not prepare their financial

statements, intended for general use, in accordance with GAAP. The effects on the financial

statements of the variances between GAAP and the accounting practices the County used, as

described in Note 1, although not reasonably determinable, are presumed to be material. As a

result, we are required to issue an adverse opinion on whether the financial statements are

presented fairly, in all material respects, in accordance with GAAP.


Adverse Opinion on U.S. GAAP

The financial statements referred to above were not intended to, and in our opinion they do not,

present fairly, in accordance with accounting principles generally accepted in the United States of

America, the financial position of Pacific County, as of December 31, 2018, or the changes in

financial position or cash flows for the year then ended, due to the significance of the matter

discussed in the above “Basis for Adverse Opinion on U.S. GAAP” paragraph.

Other Matters

Supplementary and Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements taken

as a whole. The Schedule of Expenditures of Federal Awards is presented for purposes of

additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200,

Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal

Awards (Uniform Guidance). The Schedule of Liabilities is presented for purposes of additional

analysis, as required by the prescribed BARS manual. These schedules are not a required part of

the financial statements. Such information is the responsibility of management and was derived

from and relates directly to the underlying accounting and other records used to prepare the

financial statements. The information has been subjected to the auditing procedures applied in the

audit of the financial statements and certain additional procedures, including comparing and

reconciling such information directly to the underlying accounting and other records used to

prepare the financial statements or to the financial statements themselves, and other additional

procedures in accordance with auditing standards generally accepted in the United States of

America. In our opinion, the information is fairly stated, in all material respects, in relation to the

financial statements taken as a whole.

OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING

STANDARDS

In accordance with Government Auditing Standards, we have also issued our report dated

August 27, 2019 on our consideration of the County’s internal control over financial reporting and

on our tests of its compliance with certain provisions of laws, regulations, contracts and grant

agreements and other matters. The purpose of that report is to describe the scope of our testing of

internal control over financial reporting and compliance and the results of that testing, and not to

provide an opinion on internal control over financial reporting or on compliance. That report is an


integral part of an audit performed in accordance with Government Auditing Standards in

considering the County’s internal control over financial reporting and compliance.

Pat McCarthy

State Auditor

Olympia, WA

August 27, 2019


FINANCIAL SECTION

Pacific County


FINANCIAL STATEMENTS

Fund Resources and Uses Arising from Cash Transactions – 2018

Fiduciary Fund Resources and Uses Arising from Cash Transactions – 2018

Notes to the Financial Statements – 2018

SUPPLEMENTARY AND OTHER INFORMATION

Schedule of Liabilities – 2018

Schedule of Expenditures of Federal Awards – 2018

Notes to the Schedule of Expenditures of Federal Awards – 2018

Beginning Cash and Investments30810 Reserved30880 Unreserved388 / 588 Prior Period Adjustments, Net

Revenues310 Taxes320 Licenses and Permits330 Intergovernmental Revenues340 Charges for Goods and Services350 Fines and Penalties360 Miscellaneous RevenuesTotal Revenues:

Expenditures510 General Government520 Public Safety530 Utilities540 Transportation550 Natural and Economic

Environment560 Social Services570 Culture and RecreationTotal Expenditures: Excess (Deficiency) Revenues over Expenditures:

Other Increases in Fund Resources391-393, 596 Debt Proceeds397 Transfers-In385 Special or Extraordinary Items386 / 389 Custodial Activities381, 395, 398 Other ResourcesTotal Other Increases in Fund Resources:

Other Decreases in Fund Resources594-595 Capital Expenditures591-593, 599 Debt Service597 Transfers-Out585 Special or Extraordinary Items586 / 589 Custodial Activities581 Other UsesTotal Other Decreases in Fund Resources:

Increase (Decrease) in Cash and Investments:Ending Cash and Investments

5081000 Reserved5088000 UnreservedTotal Ending Cash and Investments

Total for All Funds

(Memo Only)001 GENERAL

FUND

102 PC EMERGENCY

MANAGEMENT 103 LAW LIBRARY

15,810,517 819,756 67,665 5,5082,854,901 1,607,108 - -

- - - -

12,814,899 6,649,917 - -430,462 15,879 - -

7,540,215 1,985,458 30,884 -6,150,467 1,041,043 37,412 7,5551,131,266 1,088,048 - -

795,318 540,530 338 -28,862,627 11,320,873 68,634 7,555

8,075,911 5,423,650 - -6,338,301 3,984,954 155,522 -

297,183 7,073 - -4,929,176 - - -1,633,551 26,681 - -

2,859,147 34,267 - -217,613 215,031 - 2,582

24,350,883 9,691,657 155,522 2,5824,511,744 1,629,219 (86,888) 4,973

- - - -3,657,508 415,973 100,849 4,800

- - - -1,529,227 1,185 - -

581,223 305,515 - -5,767,959 722,673 100,849 4,800

3,423,589 35,290 - -365,989 117 - -

3,657,508 1,270,529 - -- - - -

775,328 - - -- - - -

8,222,414 1,305,936 - -

2,057,288 1,045,956 13,961 9,773

17,399,027 987,937 81,627 15,2803,323,679 2,484,880 - -

20,722,706 3,472,817 81,627 15,280

The accompanying notes are an integral part of this statement.

Pacific CountyFund Resources and Uses Arising from Cash Transactions

For the Year Ended December 31, 2018









104 ROAD FUND

105 VETERANS FUND

106 TOURISM DEVELOPMENT

108 FLOOD CONTROL

3,086,211 42,686 753,314 538,16550 - - -

- - - -

3,612,146 360 437,851 -- - - -

3,053,724 - - -36,838 - - 347,692

- - - -133,749 210 4,613 2,720

6,836,457 570 442,464 350,413

- - - -338,646 - - -

- - - 265,6933,809,639 - - 14,960

- - 406,846 1,830

- 8,768 - -- - - -

4,148,285 8,768 406,846 282,4832,688,172 (8,198) 35,618 67,929

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

271,620 - - -271,620 - - -

2,460,921 - - -- - - 33,016- - - -- - - -- - - -- - - -

2,460,921 - - 33,016

498,871 (8,198) 35,618 34,913

3,585,081 34,488 788,932 573,07950 - - -

3,585,131 34,488 788,932 573,079











109 VEGETATION

MANAGEMENT

110 TREASURER'S

O&M111 AUDITOR'S

O&M

112 TREASURER

REET

55,039 63,558 141,684 85,059- - - -- - - -

- - - -- - - -

98,798 - 46,449 14,762163,962 96,324 22,191 -

- - - -- - - -

262,760 96,324 68,640 14,762

- 65,632 51,093 18,042- - - -- - - -- - - -

282,512 - - -

- - - -- - - -

282,512 65,632 51,093 18,042(19,752) 30,692 17,547 (3,280)

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

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

(19,752) 30,692 17,547 (3,280)

35,287 94,249 159,231 81,779- - - -

35,287 94,249 159,231 81,779











117 ELECTION RESERVE

118 HEALTH & HUMAN

SERVICES119 MENTAL

HEALTH

128 PC SHELLFISH

O/SS

129,388 259,157 546,131 100,000- - - -- - - -

- 63,849 325,082 -- - - -

7,728 1,782,203 - -102,472 444,324 - -

- - - -- 43,149 - -

110,201 2,333,524 325,082 -

172,595 - - -- - - -- - - -- - - -- 454,670 - -

- 1,897,522 125,260 -- - - -

172,595 2,352,192 125,260 -(62,395) (18,667) 199,822 -

- - - -85,500 90,000 7,000 -

- - - -- - - -- 4,089 - -

85,500 94,089 7,000 -

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

23,105 75,422 206,822 -

152,494 334,428 752,953 100,000- 150 - -

152,494 334,578 752,953 100,000











131 CRIMINAL JUSTICE SPECIAL

132 SPECIAL INVESTIGATIVE

138 COURT SPECIAL

ACCOUNTS 141 Building

- 52,835 52,588 -- - - 204,705- - - -

194,796 - - -- - - 209,645- - - -- - 17,312 138,438- - - 12,799- 6,529 - 3

194,796 6,529 17,312 360,885

- - 1,276 -- - 31,817 191,784- - - -- - - -- - - 97,196

- - - -- - - -- - 33,093 288,980

194,796 6,529 (15,781) 71,905

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

- - - -- - - -

135,973 - - -- - - -- - - -- - - -

135,973 - - -

58,823 6,529 (15,781) 71,905

58,823 59,364 36,808 -- - - 276,609

58,823 59,364 36,808 276,609











142 ENVIROMENTA

L HEALTH 143 Planning 144 Abatement 160 PACCOM

327,939 - - 1,135,067178,928 141,170 - -

- - - -

- - - 578,76287,090 117,848 - -

160,780 187,751 - -332,668 125,422 - 208,915

5,635 24,784 - -- 6 - 5,573

586,173 455,809 - 793,250

- - - -- 236,030 - 1,341,390- - - -- - - -

1,355 245,660 - -

548,545 - - -- - - -

549,900 481,690 - 1,341,39036,273 (25,879) - (548,140)

- - - -135,000 90,000 10,000 207,380

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

135,000 90,000 10,000 207,380

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

171,273 64,121 10,000 (340,760)

393,892 - 10,000 794,307284,249 205,289 - -678,140 205,289 10,000 794,307











161 PACCOM Special Account

178 Affordable Housing

179 Homeless Housing

191 BECCA RESERVE

341,704 22,280 230,482 13,058- - - -- - - -

324,704 - - -- - - -- - - 20,610- 36,857 212,002 -- - - -

1,932 - - -326,637 36,857 212,002 20,610

- - - -- - - -- - - -- - - -- 36,753 - -

- 13,247 231,538 -- - - -- 50,000 231,538 -

326,636 (13,143) (19,536) 20,610

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

- - - -- - - -

239,895 - - 30,000- - - -- - - -- - - -

239,895 - - 30,000

86,741 (13,143) (19,536) (9,390)

428,446 9,136 210,945 3,668- - - -

428,446 9,136 210,945 3,668











198 Benefits Reserve Fund

199 LEOFF Reserve Fund

208 2008 LIMITED TAX GO BONDS

301 CAPITAL IMPROVEMENT

S

- - 101,014 1,109,162- - - -- - - -

- - - 332,533- - - -- - - 148,970- 100,000 - -- - - -

913 - - 1913 100,000 - 481,505

913,800 122 - 28,793- 29,254 - 3,903- - - -- - - -- - - 29,699

- - - -- - - -

913,800 29,376 - 62,395(912,887) 70,624 - 419,109

- - - -1,565,424 100,000 315,687 439,895

- - - -1,528,022 - - -

- - - -3,093,446 100,000 315,687 439,895

- - - 643,619- - 315,688 -- - - 315,687- - - -

757,828 - - -- - - -

757,828 - 315,688 959,306

1,422,731 170,624 (1) (100,302)

1,422,731 170,624 101,014 1,008,860- - - -

1,422,731 170,624 101,014 1,008,860











302 LOCAL OPTION TAX

SPEC 403 EKLUND

PARK

502 EQUIPMENT RENTAL &

522 PAYROLL INTERNAL

SERVICE FUND

435,353 21,511 3,844,940 1,281,263- - 50 534,161- - - -

294,900 - - -- - - -- - 2,100 -- 22,016 1,945,107 150,040- - - -- 135 46,437 2,609

294,900 22,151 1,993,645 152,649

- - 569,369 109,71725,000 - - -24,000 417 - -74,706 - 1,029,871 -50,349 - - -

- - - -- - - -

174,055 417 1,599,240 109,717120,845 21,734 394,404 42,932

- - - -- - 40,000 -- - - -- - - 20- - - -- - 40,000 20

- - 271,507 -- 17,168 - -- - - 1,665,424- - - -

17,500 - - -- - - -

17,500 17,168 271,507 1,665,424

103,345 4,566 162,897 (1,622,472)

538,698 26,077 4,007,837 192,952- - 50 -

538,698 26,077 4,007,887 192,952











531 CUMULATIVE

RESERVE/INSU

148,000188,729

-

---

561,878-

5,870567,747

721,823----

--

721,823(154,075)

-50,000

---

50,000

12,252-----

12,252

(116,327)

148,00072,402

220,402



308 Beginning Cash and Investments388 & 588 Prior Period Adjustment, Net310-390 Additions510-590 Deductions

Net Increase (Decrease) in Cash and Investments:

508 Ending Cash and Investments

Total for All Funds

(Memo Only)

Agency

38,840,265 38,840,2657,092 7,092

147,894,470 147,894,470139,021,778 139,021,778

8,872,692 8,872,690

47,720,049 47,720,049

Pacific CountyFiduciary Fund Resources and Uses Arising from Cash Transactions


The accompanying notes are an integral part of this statement.

Pacific County Notes to the Financial Statements

For the year ended December 31, 2018 Note 1 ‐ Summary of Significant Accounting Policies The County of Pacific was incorporated in 1851 and operates under the laws of the state of Washington applicable to a county. The county is a general purpose local government and provides public safety, road and street maintenance, planning and zoning, parks and recreation, judicial administration, health and social services, and general administrative services. In addition, Pacific County owns and operates a communications system. The county reports financial activity in accordance with the Cash Basis Budgeting, Accounting and Reporting System (BARS) Manual prescribed by the State Auditor’s Office under the authority of Washington State law, Chapter 43.09 RCW. This manual prescribes a financial reporting framework that differs from generally accepted accounting principles (GAAP) in the following manner:

Financial transactions are recognized on a cash basis of accounting as described below.

Component units are required to be disclosed, but are not included in the financial statements.

Government‐wide statements, as defined in GAAP, are not presented.

All funds are presented, rather than a focus on major funds.

The Schedule of Liabilities is required to be presented with the financial statements as supplementary information.

Supplementary information required by GAAP is not presented.

Ending balances are not presented using the classifications defined in GAAP.

A. Fund Accounting

Financial transactions of the government are reported in individual funds. Each fund uses a separate set of self‐balancing accounts that comprises its cash and investments, revenues and expenditures. The government’s resources are allocated to and accounted for in individual funds depending on their intended purpose. Each fund is reported as a separate column in the financial statements, except for fiduciary funds, which are presented by fund types. The total column is presented as “memo only” because any interfund activities are not eliminated. The following fund types are used: GOVERNMENTAL FUND TYPES: General Fund

This fund is the primary operating fund of the government. It accounts for all financial resources except those required or elected to be accounted for in another fund.

Special Revenue Funds

These funds account for specific revenue sources that are restricted or committed to expenditures for specified purposes of the government.

Debt Service Funds

These funds account for the financial resources that are restricted, committed, or assigned to expenditures for principal, interest and related costs on general long‐term debt.

Capital Projects Funds

These funds account for financial resources which are restricted, committed, or assigned for the acquisition or construction of capital facilities or other capital assets.

Permanent Funds

These funds account for financial resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support programs for the benefit of the government or its citizenry.

PROPRIETARY FUND TYPES:

Enterprise Funds These funds account for operations that provide goods or services to the general public and are supported primarily through user charges.

Internal Service Funds

These funds account for operations that provide goods or services to other departments or funds of the government on a cost reimbursement basis.

FIDUCIARY FUND TYPES:

Fiduciary funds account for assets held by the government in a trustee capacity or as an agent on behalf of others. Pension (and Other Employee Benefit) Trust Funds These funds are used to report fiduciary activities for pension and OPEB plans administered through trust.

Investment Trust Funds These funds are used to report fiduciary activities from the external portion of investment pools and individual investment accounts that are held in trust. Private‐Purpose Trust Funds These funds report all trust arrangements under which principal and income benefit individuals, private organizations or other governments. Custodial Funds These funds are used to account assets that the government holds on behalf of others in a custodial capacity.

B. Basis of Accounting and Measurement Focus

Financial statements are prepared using the cash basis of accounting and measurement focus. Revenues are recognized when cash is received and expenditures are recognized when paid.

C. Cash and Investments

See Note 2, Deposits and Investments.

D. Capital Assets

Capital assets are assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of 5 years. Capital assets and inventory are recorded as capital expenditures when purchased.

E. Compensated Absences

Vacation leave may be accumulated up to 50 days and is payable upon separation or retirement. Sick leave may be accumulated up to 960 hours. Upon separation or retirement employees do receive payment for a portion of unused sick leave. Payments are recognized as expenditures when paid.

F. Long‐Term Debt

See Note 4, Debt Service Requirements.

G. Reserved Portion of Ending Cash and Investments

Beginning and Ending Cash and Investments is reported as reserved when it is subject to restrictions on use imposed by external parties or due to internal commitments established

by the board of county commissioners. When expenditures that meet restrictions are incurred, the county intends to use reserved resources first before using unreserved amounts. Reservations of Ending Cash and Investments consist of:

Fund

Amount

Reserved

Reason

Reserved

001 987,937$ Cumulative Reserve

102 81,627$ Emergency Management functions as defined in RCW 38.52.010

103 15,280$ Law Library as defined in RCW 27.24.070

104 3,585,081$ Roads Maintenance as defined in RCW 36.82.010

105 34,488$ Veteran Relief as defined in RCW 73.08.080

106 788,932$ Tourism Development as defined in RCW 67.28.181

108 573,079$ Maintenance and operations of the Flood Control District

109 35,287$ Vegetation Management as defined in RCW 17.10.240

110 94,249$ Treasurer's Operation and Maintenance as defined in RCW 84.56.020

111 159,858$ Auditor's Operation and Maintenance as defined in RCW 36.22.170

112 81,779$ Treasurer's REET as defined in RCW 82.45.180

117 152,494$ Election as defined in RCW 36.33.200

118 334,428$ Health as defined in RCW 81.14.460

119 752,953$ Tax Revenue reserved for chemical dependency or mental health

128 100,000$ On Site Septic Program

131 58,823$ Tax Revenue reserved for Criminal Justice

132 59,364$ Drug Seizure

138 36,808$ Low Income Assistance as defined by RCW 43.185.060.

142 393,892$ per grant requirement of septic systems

144 10,000$ Abatement

160 795,924$ E911 as defined by RCW 38.52.510

161 428,446$ Tax revenue reserved for E911

178 9,136$ Homeless Housing as defined by RCW 36.22.178

179 210,945$ Affordable Housing as defined by RCW 36.22.179

191 3,668$ BECCA court cost as restricted per grant revenue requirements

198 1,422,731$ Compensated Absences

199 170,624$ LEOFF 1 Liability

208 101,014$ Debt Service

301 1,008,860$ Capital Improvements as defined by RCW 82.46.010 and 82.46.035

302 538,698$ Capital Improvements in the community as defined by RCW 82.14.370

403 26,077$ Reserved for the use of Eklund Park Loan Payment

502 4,007,837$ Equipment Rental and Revolving

522 192,952$ Payroll Processing Fund

531 148,000$ Judgements and Claims

A. Budgets

The county adopts annual appropriated budgets for funds. These budgets are appropriated at the fund level (except the general (current expense) fund, where budget is adopted at the department level). The budget constitutes the legal authority for expenditures at that level. Annual appropriations for these funds lapse at the fiscal year end.

Annual appropriated budgets are adopted on the same basis of accounting as used for financial reporting.

The appropriated and actual expenditures for the legally adopted budgets were as follow:

Fund Operation/Program Title Budget Actual Variance

001.0xx Other Non‐Departmental 740,920 723,506 17,414

001.100 County Assessor 629,154 628,998 156

001.200 County Auditor 451,693 409,878 41,815

001.301 County Commissioners 379,420 375,248 4,172

001.302 Cooperative Extension Service 41,495 40,967 528

001.303 Civil Service Commission 18,300 17,150 1,150

001.305 Interfund Support 1,420,529 1,420,529 ‐

001.311 DPW: General Facilities 408,319 408,280 39

001.312 DPW: Parks and Recreation 64,835 63,520 1,315

001.313 DPW: Telecomm/Computer 182,610 133,811 48,800

001.314 Fair 99,061 98,480 581

001.34X General Administration 193,265 186,893 6,372

001.400 County Clerk 320,737 320,729 8

001.510 North District Court 250,017 246,371 3,646

001.560 South District Court 310,729 310,680 49

001.600 Superior Court 545,060 485,153 59,907

001.610 Juvenile 450,864 425,652 25,212

001.700 Prosecuting Attorney 756,451 756,287 164

001.801 Law 1,885,369 1,867,001 18,368

001.802 Correction 1,605,990 1,593,344 12,646

001.900 County Treasurer 365,138 364,739 399

197 Cumulative Reserve Fund 810,000 120,377 689,623

102 PC Emergency Management 176,903 155,522 21,381

103 Law Library 11,000 2,582 8,418

104.310 Road Fund 8,014,734 6,270,561 1,744,173

104.800 Road Fund: Traffic Law Enforcement 338,646 338,646 ‐

105 Veterans' Relief Fund 20,029 8,768 11,261

106 Tourism Development Fund 412,029 406,846 5,183

108 Flood Control Zone District No. 1 Fund 649,365 315,498 333,867

109 Vegetation Management Fund 354,939 282,512 72,427

110 Treasurer's O&M Fund 82,023 65,632 16,391

111 Auditor's O&M Fund 52,707 51,093 1,614

112 Treasurer's REET Fund 18,043 18,042 1

117 Election Reserve Fund 217,777 172,595 45,182

118 Public Health & Human Services Fund 2,682,964 2,353,197 329,767

119 Mental Health Fund 257,630 125,260 132,370

301 Capital Improvements Fund 2,658,394 1,021,701 1,636,693

302 Public Facilities Improvements Fund 229,298 191,555 37,743

128 Shellfish On‐Site Sewage Fund 100,000 100,000

131 Criminal Justice 135,973 135,973 ‐

132 Special Investigative ‐

138 Courts Special Account Fund 33,544 33,093 451

141 Building 341,180 288,980 52,200

142 Environmental Health 642,956 549,900 93,056

143 Planning 613,676 481,690 131,986

144 Abatement ‐

160 PACCOM 1,388,317 1,341,390 46,927

161 PACCOM Special Account Fund 408,000 239,895 168,105

178 Affordable Housing 50,000 50,000 ‐

179 Homeless Housing 249,238 231,538 17,700

191 BECCA Reserve 36,000 30,000 6,000

198 Benefits Reserve Fund 1,671,628 1,671,628 0

199 LEOFF Reserve Fund 106,144 29,376 76,768

208 2008 Limited Tax GO Bonds 316,187 315,688 500

403 Eklund Park 24,479 17,585 6,894

502 Equipment Rental 2,655,840 1,870,747 785,093

522 Payroll Internal Services Fund 1,777,882 1,775,141 2,741

531 Cumulative Reserve/Insurance 834,725 734,074 100,651

Budgeted amounts are authorized to be transferred between (departments within any fund/object classes within departments); however, any revisions that alter the total expenditures of a fund, or that affect the number of authorized employee positions, salary ranges, hours, or other conditions of employment must be approved by the Board of County Commissioner’s.

Note 2 – Deposits and Investments

It is the counties policy to invest all temporary cash surpluses. The interest on these investments

is prorated to the various funds or allocated back to the county general fund. All deposits and certificates of deposit are covered by the Federal Deposit Insurance Corporation and/or the Washington Public Deposit Protection Commission. All investments are insured, registered or held by the county or its agent in the government’s name. The County uses the original cost method to report all investments. Investments by type at December 31,

2018 are as follows:

Type of Investment County's Investments

Investments held by the

county as an agenct for

other local governments,

individuals or private

organizations Total

Security State 5,000.00 5,000.00$

463,326.00 1,928,081.00 2,391,407.00$

LGIP 18,837,163.89 42,691,908.44 61,529,072.33$

Bank of Pacific 846,962.81 3,616,463.74 4,463,426.55$

US Bank 998,981.54 998,981.54$

742,893.00 742,893.00$

898,248.82 898,248.82$

Petty Cash 47,470.00 47,470.00$

Cash on Hand 2,000.00 2,000.00$

Courts 313,619.88 313,619.88$

Total 21,943,797.24$ 49,448,321.88$ 71,392,119.12$

Note 3 ‐ Property Tax The county treasurer acts as an agent to collect property tax levied in the county for all taxing authorities. Collections are distributed at the end of each month. Property tax revenues are recognized when cash is received by county. Delinquent taxes are considered fully collectible because a lien affixes to the property after tax is levied. The counties regular levy for Current Expense in the year 2018 was $1.620479 per $1,000 on an assessed valuation of $ 2,534,971,293 for a total regular levy of $4,107,870, which includes a levy shift from Pacific County Road of $200,000. The County is also authorized to levy $2.25 per $1,000 of assessed valuation in unincorporated areas for

road construction and maintenance. This levy is subject to the same limitations as the levy for general

government services. The County’s road levy for 2018 was $1.581695 per $1,000 on an assessed

valuation of $1,899,005,731 for a total road levy of $3,003,648.

Note 4 – Debt Service Requirements Debt Service The accompanying Schedule of Liabilities (09) provides more details of the outstanding debt and liabilities of the county and summarizes the county’s debt transactions for year ended December 31, 2018. The debt service requirements for general obligation bonds and revenue bonds are as follows:

Principal Interest Total

2019 270,170$ 96,039$ 366,209$

2020 275,435$ 91,012$ 366,448$

2021 280,892$ 83,343$ 364,236$

2022 258,912$ 75,593$ 334,505$

2023 264,318$ 67,688$ 332,006$

2024‐2028 1,458,349$ 198,653$ 1,657,002$

2029‐2033 66,643$ 19,197$ 85,840$

2034‐2038 47,443$ 3,790$ 51,233$

2039‐2041 ‐$ ‐$

Total 2,922,163$ 635,316$ 3,557,479$ Note 5 – OPEB Plans A. OPEB Plan: WASHINGTON COUNITES INSURANCE FUND, WCIF, this is a defined benefit plan. B. Description of Benefit Terms: Retirees are offered two plans the WCIF 750 and WCIF 3000

please visit the web site at https://wcif.net/retirees/2019‐retiree‐plan‐information/ for additional information.

C. Number of Participants in plan (active and retired): 51 D. Employer Contribution During 2018: $509,600

A. OPEB Plan: PEBB, HCA, this is a defined benefit plan. B. Description of Benefit Terms: Retirees are offered numerous different plans with PEBB

depending upon your location please visit the web site at https://www.hca.wa.gov/assets/pebb/51‐205‐2019.pdf for additional information.

C. Number of Participants in plan (active and retired): 56 D. Employer Contribution During 2018: $483,235

The County of Pacific has commitment to pay for post‐employment benefits for employees that belong to the LEOFF 1. These benefits include medical, vision, nursing care, etc. Three retirees received benefits during the year and $29,376.43 was paid out for those benefits during the year. The County of Pacific is a pay as you go for this liability we have reserved $679,164 for this future expense and continue to budget $100,000 per year.

Note 6 – Pension Plans

A. State Sponsored Pension Plans Substantially all county full‐time and qualifying part‐time employees participate in the following statewide retirement systems administered by the Washington State Department of Retirement Systems (DRS), under cost‐sharing, multiple‐employer public employee defined benefit and defined contribution retirement plans PERS 1, 2, 3, PSERS and LEOFF 2. The State Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. The Department of Retirement Systems, a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380 Olympia, WA 98540‐8380 Also, the DRS CAFR may be downloaded from the DRS website at www.drs.wa.gov. At June 30, 2018 the counties proportionate share of the collective net pension liabilities, as reported on the Schedule 09, was as follows:

Allocation %

Liability (Asset)

PERS 1 0.062315% 2,783,009

PERS 2 and 3 0.071445% 1,219,860

Public Safety ERS 2 0.130160% 1,613

LEOFF 1 0.006301% (114,395)

LEOFF 2 0.035313% (716,933)

LEOFF Plan 1 The county also participates in LEOFF Plan 1. The LEOFF Plan 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. Starting on July 1, 2000, employers and employees contribute zero percent. LEOFF Plan 2 The county also participates in the LEOFF Plan 2. The Legislature, by means of a special funding arrangement, appropriates money from the state general fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. Note 8 – Risk Management Pacific County is a participating member of the Washington Counties Risk Pool (WCRP). Chapter 48.62 RCW authorizes the governing body of one or more governmental entities to join together for the joint purchasing of insurance, and/or joint self‐insuring, and/or joint hiring or contracting for risk management services to the same extent that they may individually purchase insurance, self‐insure, or hire or contract for risk management services. An agreement to form a pooling arrangement was made pursuant to the provisions of Chapter 39.34 RCW, the Interlocal Cooperation Act. The Pool was formed in August of 1988 when 15 counties in the state of Washington joined together by signing an Interlocal Governmental Agreement to pool their self‐insured losses and jointly purchase insurance and administrative services. As of December 31, 2018, 26 counties participate in the WCRP. The Pool allows members to jointly establish a plan of self‐insurance, and provides related services, such as risk management and claims administration. Members enjoy occurrence‐based, jointly purchased and/or jointly self‐insured liability coverage for bodily injury, personal injury, property damage, errors and omissions, and advertising injury caused by a covered occurrence during an eligible period and occurring anywhere in the world. Total coverage limits are $25 million per occurrence and each member selects its occurrence deductible amount for the ensuing coverage year from these options: $10,000, $25,000, $50,000, $100,000, $250,000 or $500,000. For losses occurring in 2018, Pacific County selects a per‐occurrence deductible of $25,000. Members make an annual contribution to fund the Pool. The Pool acquires reinsurance for further protection from larger losses, direct protection for the Pool and indirect for the member counties due to the contingent liabilities they would otherwise incur from risk‐sharing those losses. The reinsurance agreements are written with self‐insured retentions (“SIRs”) equal to the greater of the deductible for the member with the claim or $100,000. More recent years’ reinsurance programs have included “corridor deductibles” with aggregated stop losses which have the effect of increasing the Pool’s SIR. For 2017‐18, the “corridor” increased the SIR to $2 million, with an aggregated stop loss of $4.35 million. Other reinsurance agreements respond up to the applicable policy limits. Those reinsurance agreements contain aggregate limits for the maximum annual

reimbursements to the Pool of $40 million (lowest reinsured layer), $20 million, (second layer), $30 million (third layer) and $50 million (final reinsured layer). Since the Pool is a cooperative program, there is a joint liability among the participating members. New members may be asked to pay modest fees to cover the costs to analyze their loss data and risk profiles, and for their proportional shares of the entry year’s assessments. New members contract under the Interlocal Agreement to remain in the Pool for at least five years. Following its initial 60‐month term, any member may terminate its membership at the conclusion of any Pool fiscal year, provided the county timely files the required advance written notice. Otherwise, the Interlocal Agreement and membership automatically renews for another year. Even after termination, former members remain responsible for reassessments by the Pool for the members’ proportional shares of any unresolved, unreported, and in‐process claims for the periods that the former members were signatories to the Interlocal Agreement. The Pool is fully funded by its member participants. Claims are filed directly with the Pool by members and adjusted by one of the six staff members responsible for evaluating each claim for coverage, establishing reserves, and investigating for any risk‐shared liability. The Pool does not contract with any third party administrators for claims adjustment or loss prevention services. During 2017‐18, Pacific County was also one of twenty‐six (26) counties which participated in the Washington Counties Property Program (WCPP). Property losses are covered under the WCPP to the participating counties’ buildings and contents, vehicles, mobile/contractor equipment, EDP and communication equipment, etc. that have been scheduled. The WCPP includes ‘All Other Perils (“AOP”)’ coverage limits of $500 million per occurrence as well as Flood and Earthquake (catastrophe) coverages with separate occurrence limits, each being $200 million. There are no AOP annual aggregate limits, but the flood and earthquake coverages include annual aggregate limits of $200 million each. Each participating county is solely responsible for paying their selected deductible, ranging between $5,000 and $50,000. Higher deductibles apply to losses resulting from catastrophe‐type losses. Pacific County also participates in the jointly purchased cyber risk and security coverage from a highly‐rated commercial insurer. The Pool is governed by a board of directors which is comprised of one designated representative from each participating member. The Board of Directors generally meets three‐times each year with the Annual Meeting of the Pool being held in summer. The Board approves the extent of risk‐sharing, approves the Pool’s self‐insuring coverage documents, approves the selection of reinsurance and excess agreements, and approves the Pool’s annual operating budget. An 11‐member executive committee is elected by and from the WCRP Board for staggered, 3‐year terms. Authority has been delegated to the Committee by the Board of Directors to, a) approve all disbursements and reviews the Pool’s financial health, b) approve case settlements exceeding the applicable member’s deductible by at least $50,000, c) review all claims with incurred loss estimates exceeding $100,000, and d) evaluate the Pool’s operations, program deliverables, and the Executive Director’s performance. Committee members are expected to participate in the

Board’s standing committees (finance, personnel, risk management, and underwriting) which develop or review/revise proposals for and/or recommendations to the association’s policies and its coverages for the Board to consider and act upon. During 2017‐18, the WCRP’s assets increased slightly to $51.5 million while its liabilities increased slightly to $31.5 million. The Pool’s net position increased slightly from $18.1 million to $19.8 million. The Pool more than satisfies the State Risk Manager’s solvency requirements (WAC 200.100.03001). The Pool is a cooperative program with joint liability amongst its participating members. Deficits of the Pool resulting from any fiscal year are financed by reassessments of the deficient year’s membership in proportion with the initially levied and collected deposit assessments. The Pool’s reassessments receivable balance as of December 31, 2018 was zero ($0). As such, there were no known contingent liabilities at that time for disclosure by the member counties. Note 8 – Interfund Loans The following table displays interfund loan activity during 2018

Borrowing Fund

Lending Fund Balance 01/01/2018

New Loans Payments Balance 12/31/2018

117 502 $95,000 $95,000

Resolution 2018‐037 Note 9 ‐ Other Disclosures NOTES RECEIVABLE 2014 Loan from Pacific County to PACCOM Board members not to exceed $153,108 per resolution 2014‐065 for the purpose of purchase/upgrade radio equipment to assure interoperability and compliance with state and federal regulations. This loan will be a term of three years at 3% interest rate this loan has been completely paid off. REFUND January, 2015, the Board of County Commissioners adopted Ordinance No. 102D imposing an additional ¼ of one percent excise tax on each sale of real property located within unincorporated Pacific County to be deposited in the County Capital Improvements Fund No. 125 (301). In December, 2016, it was discovered that the additional excise tax imposed by the Board of County Commissioners was done so without proper approval by the voters, and therefore the Ordinance was rescinded by ordinance No 182. To assure transparency, and adequate controls were in place to provide for a full accounting of these funds, Resolution 2017‐2 was adopted in January, 2017 which detailed the background, timeline of events, and refund process. In 2015 the excise tax was over reported by $199,139.45 due to the over collection. After the

error was discovered the money was moved into to an agency fund to process the refunding. Currently there is $74,977.44 being held for people who have returned the application for the refund. Please see resolution 2017‐002 for additional information. RISK MANAGEMENT As of January 1, 2019, we had four open cases with the risk pool. We are anticipating we will have no liability for two of those four claims. The County settled one of the two remaining open claims during the first quarter of 2019. For the final remaining open claim, our maximum exposure is the amount of our deductible ($25,000). Through the first quarter of 2019, we have paid $16,495 of that deductible. In addition to the four claims open with the risk pool, we had two pending lawsuits related to the PRA. One lawsuit was settled in conjunction with the claimant’s employment claim during the first quarter of 2019. As part of that settlement agreement an additional payment will be made in 2020. We anticipate no liability for the other PRA claim since we provided all records requested. There has been no activity related to that lawsuit in nearly 3 years.

ID. No. DescriptionBeginning Balance Additions Reductions Ending BalanceDue Date

General Obligation Debt/Liabilities

251.11 GO Bond 2,840,000 - 225,000 2,615,00012/1/2028

263.81 PWFT FCDZ #1 129,474 - 32,368 97,1069/17/2022

2,969,474 - 257,368 2,712,106Total General Obligation Debt/Liabilities:

Revenue and Other (non G.O.) Debt/Liabilities

252.11 Eklund Park 213,618 - 7,693 205,9259/1/2036

259.12 Compensated Absences 840,937 39,547 - 880,484

264.40 OPEB Liabilites 476,839 202,325 - 679,164

264.30 Pension Liabilities 6,244,877 - 2,240,395 4,004,482

7,776,271 241,872 2,248,088 5,770,055Total Revenue and Other (non G.O.) Debt/Liabilities:

8,482,1612,505,456241,87210,745,745Total Liabilities:

Pacific CountySchedule of Liabilities


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Pacific County

Notes to the Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2018

Note 1 – Basis of Accounting

This Schedule is prepared on the same basis of accounting as the counties financial statements. The County uses Cash Basis of Accounting.

Note 2 – Program Costs

The amounts shown as current year expenditures represent only the federal grant portion of the program costs. Entire program costs, including the counties portion, are more than shown. Such expenditures are recognized following, as applicable, either the cost principles in the OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

Note 3 – Noncash Award

The amount of vaccine in lieu reported on the Schedule is the value of vaccine received by the county during current year and priced as prescribed by department of health.

Note 4 – Indirect Cost Rate

The County has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The amount expended includes $42,100.57 claimed as an indirect cost recovery using an approved indirect cost rate of 12.52 %.


The amount expended includes $229.96 claimed as an indirect cost recovery using an approved indirect cost rate of 7 %.


The amount expended includes $576.11 claimed as an indirect cost recovery using an approved indirect cost rate of 10 %.


ABOUT THE STATE AUDITOR’S OFFICE

The State Auditor's Office is established in the state's Constitution and is part of the executive

branch of state government. The State Auditor is elected by the citizens of Washington and serves

four-year terms.

We work with our audit clients and citizens to achieve our vision of government that works for

citizens, by helping governments work better, cost less, deliver higher value, and earn greater

public trust.

In fulfilling our mission to hold state and local governments accountable for the use of public

resources, we also hold ourselves accountable by continually improving our audit quality and

operational efficiency and developing highly engaged and committed employees.

As an elected agency, the State Auditor's Office has the independence necessary to objectively

perform audits and investigations. Our audits are designed to comply with professional standards

as well as to satisfy the requirements of federal, state, and local laws.

Our audits look at financial information and compliance with state, federal and local laws on the

part of all local governments, including schools, and all state agencies, including institutions of

higher education. In addition, we conduct performance audits of state agencies and local

governments as well as fraud, state whistleblower and citizen hotline investigations.

The results of our work are widely distributed through a variety of reports, which are available on

our website and through our free, electronic subscription service.

We take our role as partners in accountability seriously, and provide training and technical

assistance to governments, and have an extensive quality assurance program.

Contact information for the State Auditor’s Office

Public Records requests [email protected]

Main telephone (360) 902-0370

Toll-free Citizen Hotline (866) 902-3900

Website www.sao.wa.gov

http://www.sao.wa.gov/investigations/Pages/FraudProgram.aspx

http://www.sao.wa.gov/investigations/Pages/Whistleblower.aspx

http://www.sao.wa.gov/investigations/Pages/CitizenHotline.aspx

http://www.sao.wa.gov/Pages/default.aspx

https://portal.sao.wa.gov/saoportal/Login.aspx

mailto:[email protected]

financial statements and federal single audit report ......financial statements, which collectively...

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