on the cover: hometown paper money
TRANSCRIPT
ON THE COVER: HOMETOWN PAPER MONEY
Displayed on the cover of the 2003 Comprehensive Annual Financial Report are examples of paper money
issued by 11 New Castle County national banks between 1863 and 1935. The idea of paper money backed by
bonds became popular during the state banking era of the mid-1800’s. By the mid-1930s, the Federal Reserve
grew dominant as America’s central bank, and the note-issuing role of national banks became unnecessary.
Today, original notes are collectable artifacts of our national and local history.
NEW CASTLE COUNTY, DELAWARE COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2003
Prepared by the Office of Finance Ronald A. Morris, Chief Financial Officer
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New Castle County, Delaware Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2003
Table of Contents
I. INTRODUCTORY SECTION Page
Letter of Transmittal………………………………………………….….………………….IV-IX
Certificate of Achievement for Excellence in Financing Reporting.………………………..X
Organizational Chart……………………………….…………………………………………..XI
List of Principal Officials…………………………….…………………………………………XII
II. FINANCIAL SECTION
Exhibit Independent Auditor’s Report……….……………………………..………………………...3-4 Management’s Discussion and Analysis…………………………..………………………7-20 Basic Financial Statements: Government-wide Financial Statements:
1 Statement of Net Assets……….……………………………..………….……………………22 2 Statement of Activities………….……………………………..……………….………………23
Fund Financial Statements:
3 Balance Sheet – Governmental Funds………………………..……………….…………….24 3 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets………………………….………………………..……………….……………25 4 Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds ………………………………………..……………….……………...26 4 Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities……………......27 5 Statement of Revenues, Expenditures, and Changes In Fund Balance -
Budget and Actual - General Fund……………………………………..……………..…...28 6 Statement of Net Assets - Proprietary Funds………………………………………..……...29 7 Statement of Revenues, Expenses, and Changes in Fund Net Assets -
Proprietary Funds…………………………………………………………………………....30 8 Statement of Cash Flows - Proprietary Funds………………………………………..……..31 9 Statement of Fiduciary Net Assets - Fiduciary Fund…….…………………………………32 10 Statement of Changes in Fiduciary Net Assets - Fiduciary Fund…….…………….……..33
Notes to the Financial Statements………………………………………………………..34-60
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New Castle County, Delaware Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2003
Table of Contents
Exhibit Page Supplementary Information: Combining and Individual/Fund Statements and Schedules:
11 Combining Balance Sheet - Nonmajor Governmental Funds…………………………….…...64 12 Combining Statement of Revenues, Expenditures and Changes In
Fund Balances - Nonmajor Governmental Funds…..………………………………………..65 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual:
13 Light Tax Fund……………………….……………………………………….……………..……...66 14 Grants Fund………………………………………………………………………….……………..67 15 Capital Projects Funds..…………………………………………………………………….……..68
III. Statistical Section
Table Fund Information:
1 General Governmental Expenditures and Other Uses by Function...………………….….....69 2 General Governmental Revenues by Source………………………………………….………..70 3 Property Tax Levies and Collections……………………………………………….………...….71 4 Property Tax Rates - Direct and all Overlapping Governments…..……………….…............72 5 Principal Taxpayers………………………………………………….………………………….....73 6 Assessed and Estimated Actual Value of Taxable Property…………………………………..74 7 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita...75 8 Computation of Legal Debt Margin…………………………………………………………........76 9 Computation of Direct and Overlapping Debt……………………………………………..........7710 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures…………………………..……………………….78 11 Special Assessment Collections…………………………………………………….…………....79 12 Demographic Statistics…………………………………………………………………….……....80 13 Property Value, Construction, and Bank Deposits……………………………………………...81 14 Miscellaneous Statistics………………………………………………………………………..82-83
IV. Single Audit Schedule of Expenditures of Federal Awards and Notes…………………………………..85-87 Auditors’ Reports on Compliance and Internal Controls……………………………………89-92 Schedule of Findings and Questioned Costs……………………………………………......93-94
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THOMAS P. GORDONCOUNTY EXECUTIVE
87 READS WAY, NEW CASTLE, DE 19720 PHONE: 302-395-5102 FAX: 302-395-5268
October 27, 2003
To the Honorable Members of the County Council and the Citizens of New Castle County: New Castle County Code requires New Castle County to provide information pertaining to the financial affairs of the County. With this requirement, the County publishes a Comprehensive Annual Financial Report (CAFR). The annual report is submitted herewith, and includes, as required by Code, financial statements which have been examined by an independent firm of certified public accountants. The complete set of financial statements is presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report of New Castle County, Delaware (County), for the fiscal year ended June 30, 2003. This report consists of management’s representations concerning the finances of the County. Consequently, management assumes full responsibility for the completeness and reliability of all information presented in this report. To provide a reasonable basis for making these representations, County management has established a comprehensive internal control framework that is designed both to protect the County’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the County’s comprehensive framework of internal controls has been designed to provide 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. The County’s financial statements have been audited by Ernst & Young LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended June 30, 2003, are free of material misstatement. The independent audit involved 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. Ernst & Young concluded, based upon the audit, that there was reasonable basis for rendering an unqualified opinion that the County’s financial statements for the fiscal year ended June 30, 2003, 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. The independent audit of the financial statements of the County was 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 independent auditor to report not only on the fair presentation of the financial statements, but also on the County’s audited internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. Information related to this Single Audit, including the schedule of federal financial assistance, and auditor's reports on the internal control structure and compliance with applicable laws and regulations, are included in the Single Audit section of this report.
Executive Office
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GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. New Castle County’s MD&A can be found immediately following the report from the independent auditors. Profile of New Castle County New Castle County is located in the northern portion of the State of Delaware. New Castle County is the largest populated county in Delaware and encompasses 437 square miles with a population density of 1,185 citizens per square mile. The County is bordered on the east for 40 miles by the Delaware River, on the north by Pennsylvania, on the west by Maryland and on the south by Kent County, Delaware. The City of Wilmington, the County seat, is the largest incorporated city in the state. The County Government was established on January 3, 1967, replacing the Levy Court Commission with a Council-Executive form of government. The powers and duties of the County Government are set forth in Chapter 11, Title 9, of the Delaware Code. The County Government is composed of a legislative body (“the Council”) and an administrative body headed by the County Executive (“the Administration”), which now includes five operating departments as a product of the 1998 County-wide reorganization, and five judiciary (row) offices. The Council, which has all legislative powers, is composed of a President who is elected at-large, and six members representing each of the County’s respective districts. The County Executive, who is elected at-large and is limited to not more than two consecutive four-year terms, is responsible for the entire range of executive, administrative, and fiscal duties performed by all County departments, agencies, and offices. As a result of the County-wide reorganization, the County Executive selects the managers (non-appointed) to provide leadership within the departments of the County. The County Executive appoints a Chief Administrative Officer who assists the County Executive in the supervision of the executive and administrative agencies of the County and is responsible by Code for the annual Operating Budget, the six-year Capital Program and the annual Capital Budget of the County. New Castle County provides many governmental services. Statute or Code mandates the majority of these services; however, there are some services that are discretionary in nature and highly desirable by the citizens of the County. Major public services/facilities include police protection, emergency medical services, land use, parks, recreation programs, senior centers, libraries, sewer services, and code enforcement. A basis for preparing the County's Comprehensive Annual Financial Report was the identification of the reporting entity. Various potential component units were evaluated to determine whether they should be reported in the County's financial report. A component unit was considered to be part of the County's reporting entity when it was concluded that the County was financially accountable for the entity, or the nature and significance of the relationship between the County and the entity was such that exclusion would cause the County's financial statements to be misleading or incomplete. Based on the above analysis, no component units qualify to be included in this report. The annual budget serves as the foundation for New Castle County’s financial planning and control. The annual budget cycle starts in September, when the Executive Budget Committee meets with the County Executive and staff to review the County’s service level performance and to update the fiscal plan for the next three years. As a result of these performance evaluations, service level and budgetary strategies are developed for presentation to County Council for their input. The development of the recommended budget formally commences in November. The budget preparation manual and guidelines are distributed to the various County departments and offices for preparation of departmental requests and revenue estimates. During the first two weeks of January, the County departments and offices submit their completed service level requests and revenue estimates to the budget office. In January and February, the Chief
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Administrative Officer, Chief Financial Officer, and the Budget staff review each request and revenue estimate with the managers and members of each department and office. The County Executive’s recommended budget is prepared during March and submitted to County Council by April 1. During April and May, County Council holds a series of public hearings on each department/office budget, and citizens are invited to comment on the budgets. In late May, but no later than June 1, County Council formally adopts the annual Operating Budget. When the budget is formally approved, budget documents are distributed to the departments for budget implementation in July. Factors Affecting Financial Condition Local economy. New Castle County is the state's primary economic center, representing a major portion of the state's taxable base and population, and serves as its leading business, service, and industrial center. The County has a strong industrial base, and is one of the chief chemical manufacturing centers of the world. The headquarters and major laboratories of E.I. duPont de Nemours and Company, Inc. and AstraZeneca, Inc. are located in the County. Other significant industries in the County include an automobile assembly plant near Wilmington (General Motors), an automobile assembly plant in Newark (Daimler-Chrysler), a large oil refinery in Delaware City (Motiva Enterprises, L.L.C.), a cosmetics industry in Newark (Avon), and a steel plant in Claymont (CitiSteel USA, Inc.). Augmenting this economic base is a service economy that consists of both traditional services, as well as a significant financial services sector that has developed in response to direct State initiatives in this area. Leading financial service companies in this field are Bank One Card Services and MBNA Corporation, major credit card issuers with offices within New Castle County. September unemployment rates in the County and State are 4.7 percent and 4.4 percent, respectively, compared to the 6.1 percent experienced nationally. Anticipated growth in the County's population through the year 2020 has been estimated at approximately 13.9 percent. Financial planning. New Castle County is continually working to strengthen its financial condition. Over the past six and one-half years, we have achieved a new fiscal equilibrium by employing many of the strategies contained in the 1997 Phoenix Management Services, Inc. “State of the County” report. New Castle County has positioned itself well to weather economic downturns, create a positive atmosphere for economic development, and provide greater flexibility on budgetary issues. One measure of our financial strength is the level of cash reserves. During fiscal year 2001, a Budget Reserve Account or “rainy day” fund was legislated in the General and Sewer funds. The General fund reserve of $25,479,763 was created to give added protection against a turbulent economy or any unfunded legislated mandates. The Sewer fund reserve of $9,818,239 will be utilized to fund unanticipated deficits or revenue reductions. Additional dedicated financial reserve amounts of $92,634,400 in the General fund have been designated for specific purposes. The Property Tax Rate Preservation ($61,300,000) will be dedicated to maintain the stability of the property tax rate. The Pay-As-You-Go Capital ($25,829,000) will fund certain capital project costs for fiscal years 2004 to 2009 that have been adopted in the FY 2004 capital program. The New Facilities Maintenance ($3,505,400) will be utilized to fund the operating and maintenance costs of new County facilities and their expansion. The Fleet reserve ($2,000,000) will be maintained for fleet purchases. Other General fund reserves have been established for reserve for encumbrances ($2,373,218) and prepaid costs ($770,721). Other designations of fund balance are allocated for compensated absences for future sick and vacation leave ($9,200,000), uninsured damages/costs ($5,672,913), community service grants ($1,125,000), and other ($74,282). The Sewer Facilities fund has established a sewer capital rehabilitation reserve ($58,675,189), which will be utilized for replacement and/or rehabilitation of the sewer infrastructure.
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Another indicator of financial strength is the level of the undesignated fund balance. The General fund undesignated fund balance is $13.5 million as of June 30, 2003, which represents 9.8 percent of fiscal year 2003 total General fund revenue. Of this amount, $9.4 million is available for spending in subsequent years. In addition, the unrestricted net asset balance for the Sewer fund is $21.9 million, which will be used to stabilize user-charge rates. Our plan for reinventing County government has worked. The quality of life in New Castle County has improved through programs, services, and a commitment to excellence. Some of our major accomplishments include: expanding and improving programs and services with no property tax or sewer service rate increases to the residents, advancing technology to improve efficiency and responsiveness, increasing the accessibility of County services to our residents through e-Government initiatives, and creating public and private sector partnerships. This is evidenced in the Police Athletic League, New Castle County Economic Development Council, Volunteer Fire Companies, and Brandywine Hundred Library funding. Subsequent budget cycles will be approached with the same fervent commitment to excellence that has been demonstrated for the past seven years. The County will remain vigilant over its revenues, expenditures, and economic conditions. With our strong financial condition, we are well positioned to deal with the challenges and uncertainties the future may hold. Cash management policies and practices. The County utilizes outside managers for the investment of its available funds and pension assets. Pension investments are primarily in stocks, bonds, and other corporate investments. The non-pension investments which the County may purchase are broadly limited and may be changed by the County Executive. The County currently limits its investments to: (1) obligations of the U.S. government, U.S. government agencies and instrumentalities, or U.S. government agency mortgage-backed securities; (2) certificates of deposit or time deposits of U.S. banks whose long-term unsecured indebtedness is rated A or higher by Standard & Poor’s or Moody’s; (3) investment-grade obligations of state and local governments and public authorities; (4) repurchase agreements whose underlying purchased securities consist of the foregoing; (5) money market mutual funds regulated by the Securities and Exchange Commission; (6) local government investment pools; (7) investment-grade corporate bonds with an average weighted quality of A+ or higher by either Standard & Poor’s or Moody’s; and (8) commercial paper rated A1/P1 or higher by either Standard & Poor’s or Moody’s. New Castle County’s policy is to diversify its investment portfolios. Assets shall be diversified to reduce the risk of loss resulting from over-concentration of assets in a specific maturity, a specific issuer or a specific class of securities. All certificates of deposit or repurchase agreements in the portfolio must be collateralized 102 percent by short-term U.S. Government obligations. The average yield on investments held during the year was 2.25 percent on the County’s working capital funds. An annualized return of 9 percent was earned on the County’s strategic reserve funds for the three-year period ending June 30, 2003. The amount of interest earned during the year was $10,295,296. In addition, $41,564 was earned by the County judiciary offices. Comparable earnings for fiscal year 2002 were $13,614,420 and $136,963, respectively, based upon an average yield of 3.25 percent on the County’s working capital funds and an annualized return of 7.64 percent on the County’s strategic reserve funds for the three-year period ending June 30, 2002. Additional information on cash and investments can be found by referring to Note 2 of the Notes to the Financial Statements.
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Risk management. The County’s risk management program provides for property, general, automobile, and workers’ compensation insurance. The following schedule indicates the types of insurance acquired, the deductible or retention level maintained by the program, and the limit of the insurance coverage acquired.
Retention Level Limits of
Description (Deductible) Coverage Workers’ Compensation $500,000 $ 5,000,000 Property 100,000 91,116,876 Auto Liability 250,000 1,000,000 Public Liability 250,000 2,000,000 Excess Liability - 15,000,000 Law Enforcement Liability 250,000 2,000,000 Public Officials & Employees Legal Liability 250,000 5,000,000 Workers’ compensation is subject to an annual aggregate of $2,250,000 and property has an annual aggregate of $500,000. In addition, the liabilities for auto, public, excess, and law enforcement are subject to one annual aggregate of $1,000,000. The office of Risk Management was established with the goal of creating a safer work environment and to provide for the health and welfare of employees. New Castle County employees now have a professional, comprehensive healthcare facility, where workers can obtain fast and complete medical attention. Through the use of the Omega Medical Center, diagnosis and treatment of injuries have been dramatically improved, assisting the worker and manager alike. New Castle County is in the process of returning its employees to good health and to their jobs. In so doing, savings in excess of $9.0 million have been realized since 1997. This demonstrates our commitment to our employees by moving to provide a healthy work environment. Please refer to Note 14 of the Notes to the Financial Statements for additional information. Pension and other postemployment benefits. New Castle County maintains a single-employer defined benefit pension plan that covers substantially all full-time County employees (except for police employees who are covered by the Delaware Municipal Police/Firefighter Pension Plan), as well as part-time school crossing guards. The Program provides retirement, disability, and death benefits to Program members and beneficiaries. Each year, an independent actuary determines the annual required contribution using the entry age actuarial cost method. The County’s funding of this annual required contribution has resulted in the recording of a net pension asset. This net pension asset of $3,292,798 is reported in the statement of net assets as an asset in the governmental activities of $2,903,919 and in the business-type activities of $388,879. Refer to Note 25 of the Notes to the Financial Statements for additional pension information. The County also contributes to a governmental cost-sharing, multiple-employer defined benefit pension plan administered by the Delaware Public Employees’ Retirement System. The plan, which is the Delaware Municipal Police/Firefighter Pension Plan, covers County police employees hired on or after February 1, 1993. The plan provides retirement, disability, and death benefits to plan members and beneficiaries. The County’s contribution to the plan for the year ending June 30, 2003, was $1,074,265 and is equal to the required contribution for the year. The Delaware Public Employees’ Retirement System issues a publicly available financial report that includes financial statements for the plan. That report may be obtained by writing to the System at P.O. Box 1401, Dover, Delaware 19903-1401.
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In addition to providing pension benefits as described above, the County provides certain postretirement healthcare and life insurance benefits for all retired employees. Eligibility to participate in these postretirement benefits is the same as outlined in the provisions for pension benefits. Currently, 910 retirees meet those eligibility requirements and receive postretirement healthcare and life insurance benefits. For additional information on postemployment benefits, please refer to Note 20 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 New Castle County for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2002. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the County published an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. This report satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. New Castle County has received a Certificate of Achievement for the last twenty-two consecutive years (fiscal years ended 1981-2002). We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the County also received the GFOAs Award for Distinguished Budget Presentation for its 2003 budget document. In order to qualify for the Distinguished Budget Presentation Award, the County's budget document was judged to be proficient in certain program criteria as an operations guide, as a financial plan and as a communications medium. This is the thirteenth consecutive year the County has received this award for its budget documents. The preparation of the Comprehensive Annual Financial Report on a timely basis was made possible by the dedicated service of our Office of Finance staff. Each member who shared in the preparation of this report has our sincere appreciation. Appreciation is also expressed to all additional individuals who assisted in this effort. In closing, we would also like to express our gratitude to the County Council for their continual support and interest in the financial affairs of our County.
Respectfully submitted, Thomas P. Gordon Ronald A. Morris County Executive Chief Financial Officer
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NEW CASTLE COUNTY, DELAWARE LIST OF PRINCIPAL OFFICIALS
JUNE 30, 2003
EXECUTIVE
County Executive Thomas P. Gordon
COUNTY COUNCIL
Council President Christopher A. Coons First District J. Robert Woods Second District Robert S. Weiner Third District William J. Tansey Fourth District Penrose Hollins Fifth District Karen G. Venezky Sixth District Patty W. Powell
ADMINISTRATIVE
Chief Administrative Officer Sherry L. Freebery Chief Financial Officer Ronald A. Morris Chief Human Resources Officer Patricia Lutz DiIenno Chief of Police John L. Cunningham Chief Procurement Officer Vacant Community Services General Manager Diane J. Baker County Attorney Timothy P. Mullaney, Sr. Land Use General Manager Charles L. Baker Special Services General Manager Joseph J. Freebery
ROW OFFICES
Clerk of the Peace Kenneth W. Boulden Jr. Recorder of Deeds Michael E. Kozikowski Register in Chancery Dianne M. Kempski Register of Wills Diane Clarke Streett Sheriff Michael P. Walsh
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IndependentAuditors' Report
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!@# ■ Ernst & Young LLP ■ Phone: (717) 651-7300
Central Pennsylvania Practice Fax: (717) 651-7444 Commerce Court, Suite 200 www.ey.com 2601 Market Place Harrisburg, Pennsylvania 17110-9359
Report of Independent Auditors
The Honorable Members of the County Council New Castle County, Delaware
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of New Castle County, Delaware (the County), as of and for the year ended June 30, 2003, 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 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 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 provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of New Castle County, Delaware as of June 30, 2003, and the respective changes in financial position and cash flows, where applicable, thereof, and the respective budgetary comparison for the general fund for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated October 24, 2003 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 grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
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Management’s discussion and analysis is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. 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 introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
The introductory and statistical sections 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.
The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
October 24, 2003
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Management'sDiscussion and
Analysis
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Management’s Discussion and Analysis
The following discussion and analysis of New Castle County’s financial statements provides an overview of the financial activities of New Castle County for the fiscal year ended June 30, 2003. Please read it in conjunction with the transmittal letter, located at the front of this report, the basic financial statements and the accompanying notes to those statements which follow this section. Financial Highlights for Fiscal Year 2003
• The net assets (assets minus liabilities) of the County for fiscal year 2003 were $392,501,261. Of this amount, $193,510,509 represents governmental net assets and $198,990,752 represents business-type net assets.
• The current year change in net assets for governmental activities was an increase of
$12,096,644 and for the business-type activities an increase of $1,094,194.
• The General fund reported an ending fund balance of $150,815,650, which represents an increase of $11,277,493 from fiscal year 2002. The Sewer Facilities fund net assets reported an ending balance of $195,677,411, an increase of $472,865 over total net assets from fiscal year 2002.
• The County’s total outstanding bonds payable for June 30, 2003, were $132,020,000.
Overview of the Comprehensive Annual Financial Report The County’s financial statements are composed of this Management’s Discussion and Analysis (MD&A) and the basic financial statements. This discussion and analysis serves as an introduction to the basic financial statements. The MD&A provides analysis and overview of the County’s financial activities. The basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also includes other supplementary information as listed in the table of contents, along with the statistical tables and the County’s single audit. Government-wide Financial Statements The government-wide financial statements are presented in a manner similar to private-sector business financial statements. The statements are prepared using the economic resources measurement focus and the accrual basis of accounting. The government-wide financial statements include two statements: Statement of Net Assets and Statement of Activities. Fiduciary activities, whose resources are not available to finance County programs, are excluded from these statements. The Statement of Net Assets presents the County’s total assets and liabilities, with the difference reported as net assets. Over time, increases or decreases in the net assets may serve as a gauge as to whether the financial position of the County is improving or deteriorating. The Statement of Activities presents information showing the change in the County’s net assets during the current fiscal year. All revenues and expenses are reported in this statement regardless of the timing of cash flows. The focus of this statement is on the net cost of providing various activities to the citizens of the County.
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Both of the above financial statements have separate sections for the two different types of activities. These two types of activities are: Governmental activities – The activities reflected in this section are general government, police, special services, community services, land use, and judiciary offices. These activities are mostly supported by taxes, charges for services, and operating grants and contributions. Business-type activities – These activities include a sewer facilities system and an airport. These activities are intended to recover their cost of operation, including depreciation, primarily through user charges. The government-wide financial statements can be found immediately following this discussion and analysis. Fund Financial Statements A fund is an accounting entity with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The County divides its funds into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds – Most of the basic services provided by the County are financed and accounted for through governmental funds. Governmental fund financial statements focus on current inflows and outflows of spendable resources as well as the available balances of these resources at the end of the fiscal year. This information is useful in determining the County’s financing requirements for the subsequent fiscal period. Governmental funds use the flow of current financial resources measurement focus and the modified accrual basis of accounting. Because the focus of governmental funds is for the current period, it is useful to compare this information to the data presented in the government-wide financial statements. Readers may better understand the long-term impact of the County’s current financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County has eight individual governmental funds: General, Grants, Light Tax, Garstin Trust, and four Capital Projects funds. Of these, the General, Grants and Park Development funds are reported as major funds, and are presented in separate columns on the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance. The Light Tax, Garstin Trust, Facilities and Equipment, Police and Miscellaneous Capital Improvements funds are combined into a single, aggregated column on these statements. Individual fund data for these five nonmajor funds can be found on the combining statements. Proprietary funds – These funds are used to show activities that operate in a manner similar to private business enterprises. Because these funds charge fees for services provided, they are known as enterprise funds. Proprietary fund financial statements use the economic resources measurement focus and the accrual basis of accounting, like the government-wide financial statements. Proprietary fund statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Sewer Facilities fund and the New Castle County Airport fund. Of these two funds, only the Sewer Facilities fund is considered a major fund for the County.
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Fiduciary funds – These funds are used to account for resources held for the benefit of parties outside of New Castle County. The fiduciary funds are not reflected in the government-wide financial statements because the assets of these funds are not available to support the activities of the County. The economic resources measurement focus and accrual basis of accounting are used for fiduciary funds, the same that is used for the proprietary funds. The County has only one fiduciary fund, the Pension Trust fund. This fund is used to account for the activities of the defined benefit pension plan for County employees. The fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. The fund financial statements can be found immediately following the government-wide financial statements. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found following the fund financial statements. Other Information Additional statements and schedules can be found immediately following the notes to the financial statements. These include the combining statements for the nonmajor funds, schedules of budget to actual comparisons, the statistical tables, and the single audit schedules.
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Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the County, assets exceeded liabilities by $392,501,261 for fiscal year 2003, an increase of $13,190,838 over fiscal year 2002. The following table reflects the condensed comparative Statement of Net Assets:
New Castle County’s Net Assets (amounts expressed in thousands)
Governmental
Activities Business-type
Activities
Total 2003 2002 2003 2002 2003 2002
Assets: Current and other assets $184,815 $196,799 $114,255 $119,868 $299,070 $316,667Capital assets 161,473 132,433 153,463 147,968 314,936 280,401 Total assets 346,288 329,232 267,718 267,836 614,006 597,068 Liabilities: Long-term liabilities outstanding
95,964
100,416
42,980
46,370
138,944
146,786
Other liabilities 56,814 47,402 25,747 23,569 82,561 70,971
Total liabilities 152,778 147,818 68,727 69,939 221,505 217,757 Net assets: Invested in capital assets, net of related debt
71,360
38,295
108,493
98,011
179,853
136,306
Restricted 32,105 42,139 68,494 69,024 100,599 111,163Unrestricted 90,045 100,980 22,004 30,862 112,049 131,842 Total net assets $193,510 $181,414 $198,991 $197,897 $392,501 $379,311
The largest portion of the County’s net assets ($179,853,623) or 45.8 percent, reflects its investment in capital assets (e.g., land, buildings and equipment), less any related outstanding debt used to acquire those assets. The County uses these capital assets to provide services to citizens; consequently, these assets 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 this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. This portion of net assets increased by $43,548,339 from the prior year due to the addition of capital assets with no increase in related bond debt to acquire these assets. Restricted net assets ($100,598,910) or 25.6 percent, represent resources that are subject to external restrictions on how they may be used. For governmental activities, $32,105,482 is restricted for the following purposes: Budget reserve account of $25,479,763 was legislated to set aside resources to cover unanticipated deficits or revenue reductions and other externally imposed regulations; $5,529,361 is restricted for the Light Tax, Garstin Trust, and Grant funds; and $1,096,358 is restricted for the Capital Projects funds. The restricted net asset decrease of $10,033,252 from the prior year is attributed to spending in the Capital Projects funds, primarily for regional parkland. For business-type activities, $68,493,428 is restricted for the following two purposes: Capital reserve account of $58,675,189 is legally restricted to fund future replacement and rehabilitation of the sewer facilities’ infrastructure, and the budget reserve account of $9,818,239 was legislated to fund unanticipated deficits or revenue reductions.
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The remaining portion of net assets, unrestricted net assets ($112,048,728), or 28.6 percent, represents an additional component of total net assets. This balance displays the financial strength of the County. For governmental activities, a share of these net assets has been designated for specific purposes. These designations will be used for Property Tax Rate Preservation ($61,300,000), Pay-As-You-Go Capital ($25,829,000), New Facilities Maintenance ($3,505,400), Fleet reserve ($2,000,000), compensated absences ($9,200,000), uninsured damages/costs ($5,672,913), community service grants ($1,125,000), and other ($74,282). For business-type activities, $21,948,051 will be used to stabilize sewer user-charge rates. The decrease of $10,935,823 in unrestricted net assets in governmental activities and $8,857,758 in business-type activities is attributed to the purchase of capital assets with operating cash. In all three categories of net assets, the County is able to report positive balances for both the government as a whole, as well as for its separate governmental and business-type activities.
New Castle County Changes in Net Assets
(amounts expressed in thousands)
Governmental Activities
Business-type Activities
Total
2003 2002 2003 2002 2003 2002 Revenues: Program revenues: Charges for services $30,862 $31,710 $44,365 $44,121 $75,227 $75,831 Operating grants and contributions
25,114
27,271
1,877
1,941
26,991
29,212
Capital grants and contributions
4,978
7,705
1,071
2,466
6,049
10,171
General revenues: Taxes 100,241 93,005 - - 100,241 93,005 Investment earnings- unrestricted
4,537
5,424
5,516
8,177
10,053
13,601
Loss on sale of assets (3) (82) - - (3) (82) Total revenues 165,729 165,033 52,829 56,705 218,558 221,738 Expenses: General government 16,267 15,496 - - 16,267 15,496 Police 65,523 56,577 - - 65,523 56,577 Special services 16,169 9,812 - - 16,169 9,812 Community services 32,976 29,648 - - 32,976 29,648 Land use 12,227 9,593 - - 12,227 9,593 Judiciary offices 5,660 5,300 - - 5,660 5,300 Interest on long-term debt
4,810
6,101
-
-
4,810
6,101
Sewer - - 51,620 47,495 51,620 47,495 Airport - - 115 153 115 153 Total expenses 153,632 132,527 51,735 47,648 205,367 180,175Increase in net assets before transfers
12,097
32,506
1,094
9,057
13,191
41,563
Transfers - (120) - 120 - - Increase in net assets 12,097 32,386 1,094 9,177 13,191 41,563Net assets - 6/30/2002 181,413 149,028 197,897 188,720 379,310 337,748Net assets - 6/30/2003 $193,510 $181,414 $198,991 $197,897 $392,501 $379,311
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Governmental activities. Governmental activities increased the County’s net assets by $12,096,644, which accounts for 91.7 percent of the total growth in net assets. Governmental activities are represented by the following funds: General, Grants, Light Tax, Garstin Trust, and Capital Projects.
Revenues by Source - Governmental Activities
Charges forServices
Operating Grantsand Contributions
Capital Grants andContributions
Taxes
Investment Earnings
For the fiscal year ended June 30, 2003, revenues from governmental activities totaled $165.7 million. Tax revenues ($100.2 million), comprised of property tax and real estate transfer taxes, represent the largest revenue source (60.5 percent). Collection of the current tax levy remains very strong at 99.1 percent, with a 10-year average of 98.5 percent. Real estate transfer taxes yielded $29.2 million, an increase of $6.4 million over fiscal year 2002. This was due to increased market value on housing sales and significant increases in commercial transactions. Charges for services, which account for $30.9 million or 18.6 percent of the governmental activities revenue, declined $848,606 from fiscal year 2002. This revenue decrease is attributed to the jurisdictional transfer of the Chancery Office to the State of Delaware. This program revenue is derived from judiciary fees ($16.1 million), primarily for real estate recording fees and land use permits and fees, and ($5.0 million), primarily from building permits. Additional sources of charges for services are from general government revenues ($3.0 million) and police-related services ($3.0 million). Operating grants and contributions ($25.1 million) were derived mainly from the U.S. Department of Housing and Urban Development ($15.2 million). These grants are used to aid low-income families in obtaining decent, safe, sanitary, and affordable rental housing while also developing and expanding the supply of affordable housing for low-income families. Revenues in the amount of $7.1 million were received from the State of Delaware for the paramedic reimbursement program and the State pension contribution allocation on behalf of County police. These revenues show a decrease from fiscal year 2002 as a result of a one-time receipt that was willed to the County in the prior fiscal year. Capital grants and contributions, which account for $5.0 million, were received from private sources and the State of Delaware. Private sources provided $3.7 million for County libraries. These revenues decreased $2.7 million as a result of final State funding received for the Bear Library in fiscal year 2002. Investment income of $4.5 million was earned by the governmental activities. This amount was $0.9 million lower than fiscal year 2002. This was due to lower interest rates and a decrease in investable cash during the fiscal year.
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For the fiscal year ended June 30, 2003, expenses for governmental activities totaled $153,632,493. Major functions represented by governmental activities include general government, police, special services, community services, land use, judiciary, and interest on debt. Police accounted for $65,522,644, or 42.7 percent of these expenses, which were used to support police services, emergency medical services, emergency communications, crossing guards, and grants to volunteer fire companies. Police expenses increased $8,945,275 over fiscal year 2002 primarily in salaries and wages and employee benefits. This increase is attributed to a new negotiated labor contract which provided pay raises and an expense accrual for the future payment of unused sick leave upon retirement or termination for all employees. This increase is also due to the full annual impact in fiscal year 2003 of salaries and benefits for 15 police officers and 12 paramedics hired in the last quarter of fiscal year 2002. New police vehicle fleet purchases also increased costs for cross-charges in the current fiscal year. Community Services, $32,975,888 or 21.4 percent of these charges, covers costs for libraries and recreation programs. This area also covers grant programs aimed at helping low-income families obtain affordable rental housing. Costs for Community Services increased $3,327,786 from 2002. This increase can be attributed to increases in salaries and wages and employee benefits due to new negotiated labor contract raises and new positions for libraries, Rockwood Museum, and the sports division. Increased funding for contractual libraries and additional Section 8 housing assistance payments due to a higher number of vouchers being utilized also contributed to this increase in costs. General Government ($16,267,495), Special Services ($16,169,325), and Land Use ($12,227,189) represent 29.1 percent of the charges and are used to support services for the general administrative operations of the County, parks and related facilities, street lights, and land use issues. These costs had a cumulative increase of $9,763,448 over the prior fiscal year. The largest increase, in salaries and wages and employee benefits, resulted from a new negotiated labor contract which provided pay raises and an expense accrual for the future payment of unused sick leave upon retirement or termination for all employees. This increase was also due to a depreciation increase on capital assets and a prior year decrease of $3.0 million in landfill postclosure care costs. Judiciary offices, $5,660,245 or 3.7 percent, are composed of the following “row offices.” Register in Chancery provides support services for the State of Delaware Court of Chancery; Register of Wills performs responsibilities relating to wills; Recorder of Deeds serves as depository for real estate transaction records; Sheriff provides services to the State of Delaware Superior Court, Supreme Court, Court of Common Pleas, and Family Court; and the Clerk of the Peace issues marriage licenses. These costs show a slight increase of $360,961 due to a new negotiated labor contract for pay raises. Debt service costs, $4,809,707 or 3.1 percent, are used to pay interest on the outstanding general obligation bonds related to governmental activities. These costs reflect a decrease of $1,291,723 based on the structure of the payment schedule for outstanding general obligation bonds.
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Expenses and Program Revenues - Governmental
Activities
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000G
en
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Go
vern
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Po
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Sp
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Se
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es
Co
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un
ity
Serv
ices
La
nd
Use
Ju
dic
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Off
ices
Lo
ng
-term
Deb
t In
tere
st
Expenses Program Revenues
Business-type activities. Business-type activities increased the County’s net assets by $1,094,194, accounting for 8.3 percent of the total growth in net assets. Key elements of the growth are as follows.
• Charges for services ($44,364,750) is revenue that is primarily earned through sewer service charges to our customers. Residential customers generate approximately 44 percent of this revenue, with the balance being received from industrial, commercial, and other non-residential user classes. Charges for services increased $244,309 or 0.6 percent from the previous fiscal year. This marginal increase in charges for services occurred despite continued declines in sewer service charges of $1.5 million.
• Investment income ($5,515,818) for business-type activities decreased by $2,660,964 or
32.5 percent. This decrease is due to significantly lower yields on short-term investments as a result of a slowdown in the market and a decrease in investable cash.
• Operating grants and contributions ($1,877,006) are primarily from the reimbursement
program for the Wilmington Treatment Plant and from the Delaware River and Bay Authority for reimbursement for existing debt service under the terms of a lease.
• Capital grants and contributions ($1,071,190), which represent a decrease of $1,395,371,
were received mainly from sewer connection fees.
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• Expenses, which total $51,734,570, increased $4.1 million from the previous year. Salaries/wages and employee benefits increased $1.9 million due to a new negotiated labor contract which provided pay raises and an expense accrual for the future payment of unused sick leave upon retirement or termination for all employees. Administrative and fixed charges increased $1.3 million for support services provided by the General fund. Communication and utilities increased $0.5 million mainly due to increased sewer treatment fees paid to the City of Wilmington. Depreciation expense increased by $0.9 million. These costs are offset by a decrease in interest expense, $0.2 million, due to the structure of the payment schedule for outstanding bonds and various miscellaneous decreases of $0.3 million.
Governmental Funds Financial Analysis Governmental funds. The governmental funds are comprised of the General fund, Grants fund, Parks Development fund, Light Tax fund, Garstin Trust fund, and three Capital Projects funds. For the fiscal year ended June 30, 2003, New Castle County governmental funds reported a combined ending fund balance of $138,836,726, a decrease of $15,198,197 from fiscal year 2002. The General fund is the primary operating fund of New Castle County. At the end of the current fiscal year, the General Fund fund balance was $150,815,650. The fund balance of the County’s General fund increased $11,277,493 during the current fiscal year. This increase in fund balance can be attributed to revenues exceeding expenditures by $14.4 million. Increases in transfer taxes of $6.4 million and recording fees of $2.1 million are the main factors which contributed to the fund balance increase. The favorable economic housing market and several large commercial transactions are the reasons for growth in this area. A modest increase in expenditures over the prior year also attributed to the fund balance growth. The County was able to offer the same level of service to its residents while controlling expenditures in the General fund to under a 6.6 percent increase for fiscal year 2003.
Revenues by Source
Business-type Activities
Charges for
Services
Operating Grants
and Contributions
Capital Grants
and Contributions
Unrestricted
Investment
Earnings
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One measure of the County’s financial strength is the level of cash reserves. During fiscal year 2001, a Budget Reserve Account or “rainy day” fund was legislated in the General fund. These reserves were created to give added protection against a turbulent economy or any unfunded legislated mandates. A five-sevenths vote from County Council is needed to appropriate these funds for the established conditions or to change the percentage allocated to this reserve. Fund balance amounts totaling $137,330,297 have been dedicated in the General fund. These amounts are reported as reserved/designated for specific purposes. Reserves have been established as follows: budget reserve ($25,479,763), reserve for encumbrances ($2,373,218), and prepaid costs ($770,721). Designations of fund balance have been established to set aside financial reserves ($92,634,400) as follows: Property Tax Rate Preservation ($61,300,000), Pay-As-You-Go Capital ($25,829,000), New Facilities Maintenance ($3,505,400), and Fleet reserve ($2,000,000). Additional designations are: compensated absences ($9,200,000), uninsured damages/costs ($5,672,913), community service grants ($1,125,000), and other ($74,282). See Note 19 for additional information on these reserves and designations. The unreserved and undesignated fund balance of $13,485,353 may serve as a useful measure of the County’s net resources. Of this amount, $9,420,513 is available for spending in subsequent fiscal years. The Grants fund is used to account for certain operating activities of the County. General government, police, community services, special services, and land use are financed through this fund with revenue from federal, state, local, and private sources. The largest activity of the Grants fund is to provide aid to low-income families in order to obtain decent, safe, sanitary, and affordable rental housing. The Grants fund ending fund balance is $752,779 for fiscal year 2003. The Parks Development fund is used to account for the acquisition and development of County parkland. The ending fund balance deficit of ($12,981,366) represents a decrease of $18,827,017. This large decrease is due mainly to the purchase of a large parcel of land for a new regional park. Nonmajor Governmental funds consist of the Light Tax fund, Garstin Trust fund, and three Capital Projects funds. These funds are established to provide different services to the residents of New Castle County. The Light Tax fund is set up to provide street lighting to residents, while the Garstin Trust fund is established to provide care and maintenance of parks. The Capital Projects funds’ purpose is to provide funding for projects, such as fleet acquisitions and general facilities improvement, primarily through funding from general obligation bond issues. For the fiscal year ending June 30, 2003, the combined fund balance of these funds totaled $249,663. This represents a decrease of $7,720,541 for fiscal year 2003. The nonmajor Governmental fund balance consists of the Light Tax fund balance of $566,928, Garstin Trust fund balance of $4,209,654, Facilities and Equipment deficit fund balance of ($776,112), Police Capital Projects fund balance of $1,096,358, and Miscellaneous Capital Improvements deficit fund balance of ($4,847,165). Proprietary funds. The County’s proprietary funds provide the same type of information found in the government-wide financial statements. Please refer to the business-type activities section listed previously for discussion on the activity in the proprietary funds. Restrictions of net assets have been legally established in the Sewer Facilities fund. These reserves are to fund future replacement and/or rehabilitation of the sewer facilities' infrastructure ($58,675,189) and to maintain a budget reserve account to fund unanticipated deficits or revenue reductions ($9,818,239). The unrestricted portion of net assets will be used to stabilize user charge rates.
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General Fund Budgetary Variances Revenue budget. Revenue budget differences were minimal between the original budget and final amended budget, showing an increase of $14,500. This increase was for an appropriation of investment income from the Seized Money Asset account to the Police contingency to enhance drug and criminal investigations. Appropriation budget. Budgetary expenditure variances between the original and prior year appropriations to the final budget for fiscal year 2003 reflect an increase of $9,720. Funding for this supplement was made possible through unappropriated revenues from fiscal year 2003. This change was mainly attributed to increases in Police ($0.3 million), Special Services ($0.8 million), and Community Services ($0.1 million), offset by a decrease in General Government ($1.2 million). Police appropriations increased due to funding for severance pay and retroactive pay plan changes. Special Services’ increases were for unanticipated events such as winter storms, one of historical proportion, and rush renovations performed in order to move the Sheriff’s office due to insufficient accommodations at the new State Court House. Community Services’ increase was to cover retroactive pay plan changes. General Government appropriations were decreased to accommodate the above mentioned increases. Budget to actual – revenue. Variances between actual revenue and budgeted revenue for fiscal year 2003 reflect a net positive variance of $16,651,949 or 13.7 percent. Property taxes exceeded budget by $.5 million, due to a continued aggressive collection policy to collect current property taxes. Additionally, real estate transfer taxes reflect an increase of $8.7 million, due to a strong housing market in the current economic environment and significant increases in commercial transactions. Charges for Services exceeded its estimated budget by $4.7 million, primarily from increased collection of recording fees due to favorable refinancing conditions and commissions received from Sheriff sales of real estate. Intergovernmental revenues exceeded its estimated budget by $1.2 million, due to an increase in the State allocation of pension contributions on behalf of County police. Miscellaneous income reflects a $1.0 million increase mainly due to the proceeds of the sale of stock for life insurance policies and from unclaimed proceeds of housing bonds. Investment earnings reported a positive variance of $0.8 million as a result of higher than projected investment earnings for fiscal year 2003. Budget to actual – expenditure. Due to sound fiscal management, fiscal year 2003 reflected a positive variance between expenditures and final appropriations by $9,710,231 or 7.3 percent. This savings was realized in all departments by managing expenditures while ensuring that service goals were met. Positive variances were mainly reported in the following expenditure object levels: salaries, wages, and fringe benefits ($2,808,188), contractual services ($1,076,937), fixed charges/pass-thru-grants ($746,701), communications and utilities ($387,299), equipment ($345,028), and debt service ($1,687,526). Salaries and wages recorded savings due to position control management. Two main factors contributed to the savings realized in contractual services; favorable bid openings which lowered the costs for services provided to the County, and less than anticipated usage of service contracts, printing, outside legal counsel, and professional services. Fixed charges/pass-thru-grants reflect savings due to lower workers’ compensation claims from proactive administration, and lower automobile settlement payments. Communications and utilities savings are mainly due to lower-than-anticipated postage, telephone and electricity costs. Equipment charges were lower than budget estimates due to encumbered funds for the purchase of critical incident response equipment being deferred until the subsequent fiscal year, and other purchases not materializing as planned. Debt service realized savings from a planned bond issue that is being deferred until fiscal year 2004.
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Capital Assets and Long-term Debt Activity Capital assets. The County’s investment in capital assets for its governmental and business-type activities as of June 30, 2003, amounts to $314,936,311 (net of accumulated depreciation). This investment in capital assets includes land, buildings, building improvements, improvements other than buildings, equipment, infrastructure, and construction in progress.
New Castle County Capital Assets
(Net of Depreciation) (amounts expressed in thousands)
Governmental
Activities Business-type
Activities
Total 2003 2002 2003 2002 2003 2002
Land $70,986 $55,633 $21,383 $21,383 $92,369 $77,016
Buildings 42,422 39,311 7,369 7,536 49,791 46,847
Building improvements 7,576 4,030 16 16 7,592 4,046
Improvements other than buildings
14,838
13,216
344
264
15,182
13,480
Equipment 23,060 18,489 6,069 4,847 29,129 23,336
Infrastructure - - 113,090 111,165 113,090 111,165
Construction in progress
2,592
1,754
5,191
2,757
7,783
4,511
Total $161,474 $132,433 $153,462 $147,968 $314,936 $280,401
The following highlights the amounts expended during the current fiscal year on major capital assets:
• Various building and information systems costs totaled $14.1 million. The majority of the expenditures included $3.7 million for the completion of the new Brandywine Hundred Branch Library, $2.8 million for the expansion of the Newark Library, $1.9 million for advancements in information systems, $2.3 million for the purchase of heavy equipment, off-road equipment and vehicles, and $3.4 million for various building projects.
• Park development costs incurred during the year amounted to $19.5 million. The majority
of the expenditures includes $15.0 million for the acquisition of the Glasgow Regional Park, $2.4 million for restorations to the Carriage House at Rockwood Park, and $2.1 million for various other park improvements and developments.
• Police capital projects totaled $0.9 million, of which $0.6 million was used to upgrade the
Mobile Data Terminals, and $0.3 million was used for various other Police projects. • In the Sewer Facilities fund, project costs amounted to $9.9 million. The majority of the
costs incurred was for the southern sewer area ($2.5 million) and the Brandywine Hundred North Rehabilitation ($2.4 million). Costs for various sewer relief construction projects amounted to $1.1 million. Rehabilitation projects incurred costs of $2.3 million. Pump station, septic elimination and stormwater project costs accounted for $1.6 million.
Additional information on the County’s capital assets can be found in Note 5 of the Notes to the Financial Statements.
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Long-term debt. At the end of the current fiscal year, the County had total bonded debt outstanding of $132,020,000. The County’s total debt decreased by $12,075,474 due to the retirement of bonded debt. On November 1, 2002, the County issued $26,555,000 of General Obligation Bonds, Series 2002A, to refund its 1991, 1996, and 1997 outstanding general obligation bonds. This refunding reduced the interest rates resulting in gross savings of $1.3 million to the taxpayers of New Castle County.
New Castle County Outstanding Debt General Obligation Bonds
(amounts expressed in thousands) Governmental
Activities Business-type
Activities
Total 2003 2002 2003 2002 2003 2002 General Obligation Bonds $87,051 $94,138 $44,969 $49,957 $132,020 $144,095
Through sound financial management and manageable debt levels, the County has been able to maintain and improve its “high-grade” ratings for its general obligation bonds. On October 2, 2002, Fitch Ratings of New York upgraded New Castle County from “AA” to the prestigious “AAA,” the best rating attainable under Fitch’s rating system. On October 8, 2002, Moody’s Investor Service also announced that New Castle County had earned the “AAA” bond rating. This is also the best rating attainable under Moody’s rating system. Previously, on February 2, 2001, Standard & Poor’s Rating Service upgraded New Castle County from “AA” to the prestigious “AAA.” These rating upgrades acknowledge the strong financial management and manageable debt levels and also reflect the County’s increasingly diverse and regionally important economy. These high-grade ratings will reduce the cost of raising capital for County projects, resulting in substantial savings for taxpayers. Delaware Code limits the amount of outstanding bonds the County can issue to 3 percent of the total assessed valuation of the taxable real estate. The County’s outstanding debt is well below the legal debt margin of $400,735,301. Additional information on the County’s long-term debt can be found in Note 10 of the Notes to the Financial Statements. Economic Factors and Fiscal Year 2004 Budgets The County’s unemployment rate as of September 2003 is 4.7 percent, which is higher than the State of Delaware’s rate of 4.4 percent, but continues to be lower than the national average of 6.1 percent. As of 2002, per capita personal income of Delaware residents increased 1.9 percent to $32,779, with Delaware’s per capita personal income being the twelfth highest in the nation. Our fiscal year 2004 operating budget reflects an increase of 3.3 percent over the initial authorized fiscal year 2003 operating budget. This is the eighth consecutive year without a property tax rate increase and the tenth consecutive year without a residential sewer rate increase.
Highlights of the County’s operating budget include:
• Allocation for County-wide paging system for Fire and EMS services to enhance ability to jointly respond to local emergencies.
• Increased funding for our partnership with the 21 local volunteer fire companies, which provide our residents with fire, ambulance, and rescue services.
• Funding increases for our 15 libraries, including increased funding for book purchases and technological enhancements.
• Two new librarian positions, which will provide one additional position at the Brandywine Hundred Branch Library and one position to start up the new Woodlawn Library in the City of Wilmington.
• Cost of living allowances and merit increases for County employees. • Funding increase in Community Services for new and additional programming, plus two
new library cafes. • Healthcare cost increases due to the rising cost of hospital care and prescription drugs. • Funding for National Pollutant Discharge Elimination System (NPDES) Program for field
inspections and related testing. • Funding for Miss Utility Program participation to respond to calls for sewer line markings
in order to prevent environmental accidents. • Funding for a new County-wide emergency planning initiative.
Highlights of the County’s capital budget include:
• Development and acquisition of parks for our ever-growing population. • Land acquisition for open space and farmland preservation. • Expansions to two existing libraries and construction of the new Woodlawn Library. • Implementation of additional technical business solutions throughout the County. • Construction of new sewer relief lines, pump station upgrades, and the construction of a
Southern Sewer System. • Construction of a new Public Safety facility.
Contacting New Castle County’s Financial Management This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of New Castle County’s finances and to demonstrate the County’s accountability for the money it receives. Questions concerning this report or requests for additional financial information should be directed to Ronald A. Morris, Chief Financial Officer, New Castle County Government Center, 87 Read’s Way, New Castle, Delaware 19720, telephone (302) 395-5160, or visit the County’s web site at www.co.new-castle.de.us.
20
21
BasicFinancial Statements
22
Exhibit 1
NEW CASTLE COUNTY, DELAWARE
STATEMENT OF NET ASSETS
JUNE 30, 2003
Primary Government
Governmental Business-type
Activities Activities Total
ASSETS
Cash and cash equivalents (Note 2) 112,453,256$ 20,260,445$ 132,713,701$
Investments (Note 2) 39,328,380 90,018,284 129,346,664
Receivables (net of allowances):
Taxes, including interest and penalties (Note 3) 1,577,079 - 1,577,079
Accounts 5,804,335 - 5,804,335
Special assessments, including interest and penalties 43,595 - 43,595
Service charges (Note 4) - 1,826,809 1,826,809
Housing loans (Note 4) 15,831,736 - 15,831,736
Other 611,029 1,983,634 2,594,663
Internal balances (Note 7) 764,242 (764,242) -
Due from other governments 2,424,320 - 2,424,320
Due from other agencies 1,496,445 - 1,496,445
Prepaid costs 1,540,115 - 1,540,115
Net pension asset (Note 25) 2,903,919 388,879 3,292,798
Restricted assets:
Temporarily restricted:
Cash and cash equivalents 36,552 - 36,552
Deferred charges - 541,545 541,545
Capital assets (net, where applicable, of
accumulated depreciation) (Note 5)
Land 70,985,838 21,382,858 92,368,696
Buildings 42,421,602 7,368,965 49,790,567
Building improvements 7,576,008 15,812 7,591,820
Improvements other than buildings 14,837,879 344,034 15,181,913
Equipment 23,060,088 6,069,766 29,129,854
Infrastructure - 113,089,797 113,089,797
Construction in progress 2,592,362 5,191,302 7,783,664
Total Assets 346,288,780 267,717,888 614,006,668
LIABILITIES
Vouchers payable and other current liabilities 13,822,409 2,195,985 16,018,394
Retainage payable 490,857 148,249 639,106
Accrued interest payable 925,676 537,033 1,462,709
Claims and judgements payable (Notes 10 and 14) 1,016,855 - 1,016,855
Deferred revenue (Note 9) 20,135,078 - 20,135,078
Capital lease payable (Notes 10 and 23) 1,376,209 - 1,376,209
Accrued sick and vacation leave (Notes 8 and 10) 6,156,417 824,036 6,980,453
Escrowed amounts 5,553,175 18,619,389 24,172,564
General obligation bonds payable (Note 10) 7,337,835 3,422,165 10,760,000
Noncurrent liabilities:
Due in more than one year:
General obligation bonds payable (Note 10) 79,712,846 41,547,154 121,260,000
Claims and judgements payable (Notes 10 and 14) 1,963,545 - 1,963,545
Capital lease payable (Notes 10 and 23) 1,686,479 - 1,686,479
Accrued sick and vacation leave (Notes 8 and 10) 10,116,890 1,433,125 11,550,015
Estimated liability for landfill postclosure care (Notes 10 and 13) 2,484,000 - 2,484,000
Total Liabilities 152,778,271 68,727,136 221,505,407
NET ASSETS
Invested in capital assets, net of related debt 71,360,408 108,493,215 179,853,623
Restricted 32,105,482 68,493,428 100,598,910
Unrestricted 90,044,619 22,004,109 112,048,728
Total Net Assets 193,510,509$ 198,990,752$ 392,501,261$
The notes to the financial statements are an integral part of this statement.
23
Exh
ibit
2
Op
era
tin
gC
ap
ital
Ch
arg
es f
or
Gra
nts
an
d
Gra
nts
an
d
Go
vern
men
tal
Bu
sin
ess-t
yp
e
Fu
ncti
on
s/P
rog
ram
sE
xp
en
ses
Serv
ices
Co
ntr
ibu
tio
ns
Co
ntr
ibu
tio
ns
Acti
vit
ies
Acti
vit
ies
To
tal
Pri
mary
go
vern
men
t:
G
overn
men
tal acti
vit
ies:
G
enera
l govern
ment
16,2
67,4
95
$
2,9
74,2
51
$
-$
191,3
32
$
(13,1
01,9
12)
$
(13,1
01,9
12)
$
P
olic
e65,5
22,6
44
2,9
87,2
97
8,1
01,7
79
24,6
44
(54,4
08,9
24)
(54,4
08,9
24)
S
pecia
l serv
ices
16,1
69,3
25
1,1
33,5
37
281,0
46
717,9
19
(14,0
36,8
23)
(14,0
36,8
23)
C
om
munity s
erv
ices
32,9
75,8
88
2,5
94,4
58
16,6
51,8
67
4,0
43,9
26
(9,6
85,6
37)
(9,6
85,6
37)
L
and u
se
12,2
27,1
89
5,0
28,0
09
79,7
50
-
(7,1
19,4
30)
(7,1
19,4
30)
J
udic
iary
offic
es
5,6
60,2
45
16,1
44,2
75
-
-
10,4
84,0
30
10,4
84,0
30
Inte
rest on long-t
erm
debt
4,8
09,7
07
-
-
-
(4,8
09,7
07)
(4,8
09,7
07)
T
ota
l g
overn
men
tal acti
vit
ies (
See n
ote
1)
153,6
32,4
93
30,8
61,8
27
25,1
14,4
42
4,9
77,8
21
(92,6
78,4
03)
-
(92,6
78,4
03)
B
usin
ess-t
yp
e a
cti
vit
ies:
S
ew
er
facili
ties
51,6
20,1
41
44,3
64,7
50
1,1
41,2
48
1,0
71,1
90
(5,0
42,9
53)
$
(5,0
42,9
53)
N
ew
Castle C
ounty
airport
114,4
29
-
735,7
58
-
621,3
29
621,3
29
T
ota
l b
usin
ess-t
yp
e a
cti
vit
ies
51,7
34,5
70
44,3
64,7
50
1,8
77,0
06
1,0
71,1
90
-
(4,4
21,6
24)
(4,4
21,6
24)
To
tal p
rim
ary
go
vern
men
t205,3
67,0
63
$
75,2
26,5
77
$
26,9
91,4
48
$
6,0
49,0
11
$
(92,6
78,4
03)
(4,4
21,6
24)
(97,1
00,0
27)
Gen
era
l re
ven
ues:
T
axes
100,2
41,3
80
-
100,2
41,3
80
U
nre
str
icte
d investm
ent earn
ings
4,5
36,7
40
5,5
15,8
18
10,0
52,5
58
L
oss o
n s
ale
of assets
(3,0
73)
-
(3,0
73)
T
ota
l g
en
era
l re
ven
ues
104,7
75,0
47
5,5
15,8
18
110,2
90,8
65
C
han
ge in
net
assets
12,0
96,6
44
1,0
94,1
94
13,1
90,8
38
Net
assets
:
B
egin
nin
g o
f year
181,4
13,8
65
197,8
96,5
58
379,3
10,4
23
E
nd o
f year
193,5
10,5
09
$
198,9
90,7
52
$
392,5
01,2
61
$
The n
ote
s to the fin
ancia
l sta
tem
ents
are
an inte
gra
l part
of th
is s
tate
ment.NE
W C
AS
TL
E C
OU
NT
Y, D
EL
AW
AR
E
ST
AT
EM
EN
T O
F A
CT
IVIT
IES
FO
R T
HE
YE
AR
EN
DE
D J
UN
E 3
0, 2003
Pri
mary
Go
vern
men
t
Pro
gra
m R
even
ues
Net
(Exp
en
se)
Reven
ue a
nd
Ch
an
ges in
Net
Assets
24
Exhibit 3
(continued)
Other Total
Park Governmental Governmental
General Grants Development Funds Funds
ASSETS
Cash and cash equivalents (Note 2) 109,918,696$ 2,439,833$ -$ 131,279$ 112,489,808$
Investments (Note 2) 35,268,899 - - 4,059,481 39,328,380
Receivables (net of allowances):
Taxes, including interest and penalties (Note 3) 1,530,739 - - 46,340 1,577,079
Accounts 5,804,335 - - - 5,804,335
Special assessments, including interest and penalties 43,595 - - - 43,595
Housing loans (Note 4) - 15,831,736 - - 15,831,736
Other 589,494 2,641 - 18,894 611,029
Due from other funds (Note 7) 19,473,054 - - 1,568,776 21,041,830
Due from other governments - 948,847 31,752 1,443,721 2,424,320
Due from other agencies - - - 1,496,445 1,496,445
Prepaid costs 770,721 769,394 - - 1,540,115
Total assets 173,399,533$ 19,992,451$ 31,752$ 8,764,936$ 202,188,672$
LIABILITIES AND FUND BALANCES
Liabilities:
Vouchers payable and accrued expenditures 7,181,664$ 359,821$ 398,410$ 1,114,591$ 9,054,486$
Claims and judgements payable (Notes 10 and 14) 1,781,097 - - - 1,781,097
Retainage payable - - 91,189 399,668 490,857
Due to other funds (Note 7) 753,055 - 12,523,519 7,001,014 20,277,588
Other liabilities 4,767,923 - - - 4,767,923
Escrowed amounts 5,516,623 36,552 - - 5,553,175
Deferred revenues (Note 9) 2,583,521 18,843,299 - - 21,426,820
Total liabilities 22,583,883 19,239,672 13,013,118 8,515,273 63,351,946
Fund balances:
Reserved for: (Note 19)
Budget reserve 25,479,763 - - - 25,479,763
Encumbrances 2,373,218 1,509,942 1,875,797 7,328,031 13,086,988
Prepaid costs 770,721 769,394 - - 1,540,115
Garstin Trust - - - 4,209,654 4,209,654
Capital commitments - - - 762,646 762,646
Unreserved:
Designated for: (Note 19)
Financial reserves 92,634,400 - - - 92,634,400
Compensated absences 9,200,000 - - - 9,200,000
Uninsured damages/costs 5,672,913 - - - 5,672,913
Other 1,199,282 - - - 1,199,282
Undesignated, reported in:
General fund 13,485,353 - - - 13,485,353
Special revenue funds - (1,526,557) - 566,928 (959,629)
Capital projects funds (Note 17) - - (14,857,163) (12,617,596) (27,474,759)
Total fund balances 150,815,650 752,779 (12,981,366) 249,663 138,836,726
Total liabilities and fund balances 173,399,533$ 19,992,451$ 31,752$ 8,764,936$ 202,188,672$
The notes to the financial statements are an integral part of this statement.
NEW CASTLE COUNTY, DELAWARE
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2003
Exhibit 3
(continued)
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets
Total fund balances for governmental funds (Exhibit 3) 138,836,726$
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds. These assets consist of:
Land and construction in progress 73,578,200
Other capital assets net of $105,856,253 accumulated depreciation 87,895,577
Total capital assets, net 161,473,777
Other long-term assets (net pension asset) are not available to pay for current-period
expenditures and, therefore, are deferred in the funds. 2,903,919
Long-term liabilities, including deferred revenue and bonds payable, are not due and
payable in the current period and therefore are not reported in the funds. The
balances of these liabilities are as follows:
Claims and judgements payable (1,199,303)
Accrued interest payable (925,676)
Accrued sick and vacation leave (16,273,307)
Estimated liability for landfill postclosure care (2,484,000)
Deferred revenue 1,291,742
Capital lease payable (3,062,688)
General obligation bonds payable (87,050,681)
(109,703,913)
Total net assets of governmental activities 193,510,509$
The notes to the financial statements are an integral part of this statement.
NEW CASTLE COUNTY, DELAWARE
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2003
25
26
Exhibit 4
(continued)
Other Total
Park Governmental Governmental
General Grants Development Funds Funds
Revenues:
Taxes 97,380,344$ -$ -$ 3,091,242$ 100,471,586$
Charges for services 21,188,046 2,017,870 - - 23,205,916
Licenses and permits 4,160,677 - - - 4,160,677
Intergovernmental 8,642,386 17,486,660 30,562 2,026,904 28,186,512
Investment income 4,536,740 25,398 - 258,904 4,821,042
Rentals 891,239 - - - 891,239
Contributions from private sources - - 617,463 2,392,063 3,009,526
Miscellaneous 1,170,558 - - - 1,170,558
Total revenues 137,969,990 19,529,928 648,025 7,769,113 165,917,056
Expenditures:
Current:
General government 12,162,029 - - 3,047,579 15,209,608
Police 58,352,868 946,649 - - 59,299,517
Special services 10,719,120 22,142 - - 10,741,262
Community services 13,325,159 18,567,114 - - 31,892,273
Land use 11,529,042 99,076 - - 11,628,118
Judiciary offices 5,428,901 - - - 5,428,901
Capital outlays - - 19,475,042 19,664,310 39,139,352
Debt service 12,015,219 - - - 12,015,219
Total expenditures 123,532,338 19,634,981 19,475,042 22,711,889 185,354,250
Excess (deficiency) of revenues
over (under) expenditures 14,437,652 (105,053) (18,827,017) (14,942,776) (19,437,194)
Other financing sources (uses):
Transfers in 9,943 186,864 - 3,028,598 3,225,405
Transfers out (3,215,462) (9,943) - - (3,225,405)
Proceeds of refunding bonds 27,892,859 - - - 27,892,859
Payment to refunded bond escrow agent (27,892,859) - - - (27,892,859)
Capital leases - - - 4,193,637 4,193,637
Sale of capital assets 45,360 - - - 45,360
Total other financing sources and uses (3,160,159) 176,921 - 7,222,235 4,238,997
Net change in fund balances 11,277,493 71,868 (18,827,017) (7,720,541) (15,198,197)
Fund Balances:
Beginning of year 139,538,157 680,911 5,845,651 7,970,204 154,034,923
End of year 150,815,650$ 752,779$ (12,981,366)$ 249,663$ 138,836,726$
The notes to the financial statements are an integral part of this statement.
NEW CASTLE COUNTY, DELAWARE
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2003
27
Exhibit 4
(continued)
Amounts reported for governmental activities in the statement of activities (Exhibit 2) are
different because:
Net change in fund balances-total governmental funds (Exhibit 4) (15,198,197)$
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
capital outlays ($37,436,724) exceeded depreciation ($8,809,880) in the
current period. 28,626,844
The net effect of various miscellaneous transactions involving capital assets
(i.e., sales, trade-ins, and donations) is to increase (decrease) net assets. 413,956
Revenues from property taxes in the statement of activities that do not provide
current financial resources are not reported as revenues in the funds. (230,206)
The issuance of long-term debt (capital lease proceeds) provides current financial
resources to governmental funds, while the repayment of the principal of long-term
debt consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. (4,193,637)
Governmental funds report debt service and capital lease principal payments as
expenditures. However, these amounts are not recorded in the statement of activities,
because bond principal payments ($7,087,608) and capital lease payments
($1,130,949) are a reduction of their related liability. 8,218,557
The change in expenses reported in the statement of activities do not require the
use of current financial resources and, therefore, are not reported as expenditures
in governmental funds. The net change in these expenses are as follows:
Accrued sick and vacation leave (7,042,974)
Claims and judgements payable 439,735
Net pension asset 644,662
Accrued interest payable 117,904
Estimated liability for landfill
postclosure care 300,000
(5,540,673)
Change in net assets of governmental activities (Exhibit 2) 12,096,644$
The notes to the financial statements are an integral part of this statement.
FOR THE YEAR ENDED JUNE 30, 2003
NEW CASTLE COUNTY, DELAWARE
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
28
Exhibit 5
Variance with
Final Budget -
Prior Year Positive
Original Appropriations Final Actual (Negative)
Revenues:
Taxes 88,193,551$ -$ 88,193,551$ 97,380,344$ 9,186,793$
Charges for services 16,460,079 - 16,460,079 21,188,046 4,727,967
Licenses and permits 4,229,000 - 4,229,000 4,160,677 (68,323)
Intergovernmental 7,482,561 - 7,482,561 8,642,386 1,159,825
Investment income 3,780,550 - 3,780,550 4,536,740 756,190
Rentals 957,800 - 957,800 891,239 (66,561)
Miscellaneous 200,000 - 214,500 1,170,558 956,058
Total revenues 121,303,541 - 121,318,041 137,969,990 16,651,949
Expenditures:
Current:
General government 14,476,247 976,318 14,248,308 12,162,029 2,086,279
Police 58,402,011 1,287,921 59,961,224 58,352,868 1,608,356
Special services 11,212,732 303,186 12,296,246 10,719,120 1,577,126
Community services 14,116,063 178,682 14,439,559 13,325,159 1,114,400
Land use 12,748,969 49,659 12,798,628 11,529,042 1,269,586
Judiciary offices 5,723,660 54,656 5,795,859 5,428,901 366,958
Debt service 13,702,745 - 13,702,745 12,015,219 1,687,526
Total expenditures 130,382,427 2,850,422 133,242,569 123,532,338 9,710,231
Excess of Revenues Over Expenditures (9,078,886) (2,850,422) (11,924,528) 14,437,652 26,362,180
Other Financing Sources (Uses):
Transfers in - - - 9,943 9,943
Transfers out - - (186,864) (3,215,462) (3,028,598)
Proceeds of refunding bonds - - - 27,892,859 27,892,859
Payment to refunded bond escrow agent - - - (27,892,859) (27,892,859)
Sale of capital assets 55,040 - 55,040 45,360 (9,680)
Total other financing sources (uses) 55,040 - (131,824) (3,160,159) (3,028,335)
Net Change in Fund Balance (9,023,846) (2,850,422) (12,056,352) 11,277,493 23,333,845
Fund Balance:
Beginning of year 139,538,157 - 139,538,157 139,538,157 -
End of year 130,514,311$ (2,850,422)$ 127,481,805$ 150,815,650$ 23,333,845$
The notes to the financial statements are an integral part of this statement.
FOR THE YEAR ENDED JUNE 30, 2003
Budgeted Amounts
NEW CASTLE COUNTY, DELAWARE
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCE - BUDGET AND ACTUAL
29
Exhibit 6
NEW CASTLE COUNTY, DELAWARE
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
June 30, 2003
Business-type Activities - Enterprise Funds
Nonmajor Fund
Sewer New Castle Total
Facilities County Airport 2003
ASSETS
Current Assets:
Cash and cash equivalents (Note 2) 20,204,387$ 56,058$ 20,260,445$
Investments (Note 2) 90,018,284 - 90,018,284
Receivables (net of allowances):
Service charges (Note 4) 1,826,809 - 1,826,809
Other 1,983,634 - 1,983,634
Total current assets 114,033,114 56,058 114,089,172
Noncurrent assets:
Net pension asset (Note 25) 388,879 - 388,879
Deferred charge 541,545 - 541,545
Capital Assets: (Note 5)
Land 19,223,946 2,158,912 21,382,858
Buildings 9,813,627 4,820,100 14,633,727
Building improvements 16,141 - 16,141
Equipment 13,715,893 1,000 13,716,893
Improvements other than buildings 771,576 43,682,500 44,454,076
Infrastructure 185,679,901 - 185,679,901
Construction in progress 5,191,302 - 5,191,302
Less accumulated depreciation (84,207,135) (47,405,229) (131,612,364)
Total capital assets, net 150,205,251 3,257,283 153,462,534
Total noncurrent assets 151,135,675 3,257,283 154,392,958
Total Assets 265,168,789 3,313,341 268,482,130
LIABILITIES
Current Liabilities:
Vouchers payable and accrued expenses 2,195,985 - 2,195,985
Due to other funds (Note 7) 764,242 - 764,242
Accrued interest payable 537,033 - 537,033
Retainage payable 148,249 - 148,249
General obligation bonds - current (Note 10) 3,422,165 - 3,422,165
Total current liabilities 7,067,674 - 7,067,674
Noncurrent Liabilities:
Accrued sick and vacation leave (Notes 8 and 10) 2,257,161 - 2,257,161
Escrowed amounts 18,619,389 - 18,619,389
General obligation bonds payable
(net of current portion) (Note 10) 41,547,154 - 41,547,154
Total noncurrent liabilities 62,423,704 - 62,423,704
Total Liabilities 69,491,378 - 69,491,378
NET ASSETS
Invested in capital assets, net of related debt 105,235,932 3,257,283 108,493,215
Restricted: (Note 18)
Capital rehabilitation 58,675,189 - 58,675,189
Budget reserve 9,818,239 - 9,818,239
Unrestricted 21,948,051 56,058 22,004,109
Total Net Assets 195,677,411$ 3,313,341$ 198,990,752$
The notes to the financial statements are an integral part of this statement.
30
Exhibit 7
NEW CASTLE COUNTY, DELAWARE
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2003
Business - type Activities
Enterprise Funds
Nonmajor Fund
Sewer New Castle Total
Facilities County Airport 2003
Operating Revenues:
Charges for services 44,364,750$ -$ 44,364,750$
Total operating revenues 44,364,750 - 44,364,750
Operating Expenses:
Salaries and wages 9,733,045 - 9,733,045
Employee benefits 3,520,183 - 3,520,183
Training and civic affairs 1,464 - 1,464
Communications and utilities 15,731,211 - 15,731,211
Materials and supplies 738,728 - 738,728
Contractual services 5,019,934 - 5,019,934
Equipment 84,789 - 84,789
Depreciation 6,049,395 101,322 6,150,717
Unfunded pension costs (90,680) - (90,680)
Administrative and fixed charges 8,387,395 - 8,387,395
Land and structure 102,147 - 102,147
Total operating expenses 49,277,611 101,322 49,378,933
Operating loss (4,912,861) (101,322) (5,014,183)
Non-operating Revenues (Expenses):
Investment income 5,515,818 - 5,515,818
Interest expense (2,342,530) (13,107) (2,355,637)
Other revenues 1,141,248 735,758 1,877,006
Total non-operating revenues (expenses) 4,314,536 722,651 5,037,187
Income (loss) before contributions and transfers (598,325) 621,329 23,004
Capital contributions 1,071,190 - 1,071,190
Change in net assets 472,865 621,329 1,094,194
Net Assets:
Beginning of year 195,204,546 2,692,012 197,896,558
End of year 195,677,411$ 3,313,341$ 198,990,752$
The notes to the financial statements are an integral part of this statement.
31
Exhibit 8
NEW CASTLE COUNTY, DELAWARE
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED JUNE 30, 2003
Business - type Activities - Enterprise Funds
Nonmajor Fund
Sewer New Castle Totals
Facilities County Airport 2003
Cash Flows From Operating Activities:
Cash received from customers 44,083,022$ -$ 44,083,022$
Cash payments to employees for services (12,559,435) - (12,559,435)
Cash payments to suppliers for goods and services (29,963,154) - (29,963,154)
Customer deposits received 2,979,464 - 2,979,464
Customer deposits returned (1,078,903) - (1,078,903)
Other operating revenues 1,141,248 - 1,141,248
Net cash provided by operating activities 4,602,242 - 4,602,242
Cash Flows From Noncapital Financing Activities:
Other revenues - 735,759 735,759
Net cash provided by noncapital financing
activities - 735,759 735,759
Cash Flows From Capital and Related Financing Activities:
Principal paid on bond debt (4,335,373) (713,290) (5,048,663)
Interest paid on bond debt (2,331,643) (22,469) (2,354,112)
Payments to acquire, construct, or improve capital assets (10,703,826) - (10,703,826)
Receipts related to capital grants 1,127,856 - 1,127,856
Net cash used for capital and related
financing activities (16,242,986) (735,759) (16,978,745)
Cash Flows From Investing Activities:
Income received on investments 5,627,007 - 5,627,007
Proceeds from sales of investments 176,771,004 - 176,771,004
Purchases of investments (182,218,757) - (182,218,757)
Net cash provided by investing activities 179,254 - 179,254
Net decrease in cash and cash equivalents (11,461,490) - (11,461,490)
Cash and cash equivalents at beginning of year 31,665,877 56,058 31,721,935
Cash and cash equivalents at end of year 20,204,387$ 56,058$ 20,260,445$
Reconciliation of Operating Loss to Net Cash
Provided by Operating Activities:
Operating loss (4,912,861)$ (101,322)$ (5,014,183)$
Adjustments to reconcile operating income to net
cash provided by (used for) operating activities:
Depreciation expense 6,049,395 101,322 6,150,717
Unfunded pension costs (90,680) - (90,680)
Other revenues 1,141,248 - 1,141,248
Change in assets and liabilities:
Increase in receivables (281,728) - (281,728)
Increase in vouchers payable and accrued expenses 997,373 - 997,373
Decrease in due to other funds (201,066) - (201,066)
Increase in escrowed amounts 1,900,561 - 1,900,561
Total reconciling adjustments 9,515,103 101,322 9,616,425
Net cash provided by operating activities 4,602,242$ -$ 4,602,242$
Noncash Investing, Capital, and Financing Activities:
Increase in fair value of investments 396,933 - 396,933
The notes to the financial statements are an integral part of this statement.
32
Exhibit 9
NEW CASTLE COUNTY, DELAWARE
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUND
June 30, 2003
Pension
Trust Fund
ASSETS
Cash and cash equivalents (Note 2) 24,231,216$
Investments: (Note 2)
Common and preferred stock 91,562,789
Municipal obligations 5,583,091
Obligations of U.S. governments and agencies 48,631,332
Corporate obligations 48,816,041
Mutual funds 67,527,284
Real estate partnerships 21,407
Receivables (net of allowances):
Other 3,171,093
Total Assets 289,544,253
LIABILITIES
Vouchers payable and accrued expenses 386,828
Total Liabilities 386,828
NET ASSETS
Net assets held in trust for pension benefits 289,157,425$
The notes to the financial statements are an integral part of this statement.
33
Exhibit 10
NEW CASTLE COUNTY, DELAWARE
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUND
FOR THE YEAR ENDED JUNE 30, 2003
Pension
Trust Fund
Additions:
Contributions:
Plan members 2,807,002$
New Castle County 3,491,351
State of Delaware 2,086,605
For ad-hoc postretirement increase:
Plan members 118,765
New Castle County 446,644
Total contributions 8,950,367
Investment income:
Net appreciation in fair value of investments 18,379,646
Interest, dividends, and other income,
including realized gains/losses (12,625,695)
Total investment income 5,753,951
Less investment expense 1,369,330
Net investment income 4,384,621
Total additions 13,334,988
Deductions:
Benefit payments 14,489,989
Refunds of contributions 127,564
Administrative expenses 546,506
Other expenses, net 28,808
Total deductions 15,192,867
Change in net assets (1,857,879)
Net assets held in trust for pension benefits:
Beginning of year 291,015,304
End of year 289,157,425$
The notes to the financial statements are an integral part of this statement.
34
Notes to theFinancial Statements
35
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(1) Summary of Significant Accounting Policies (2) Deposits and Investments (3) Property Taxes (4) Receivables (5) Capital Assets (6) Construction Commitments (7) Interfund Receivables, Payables and Transfers (8) Compensated Absences (9) Deferred Revenue (10) Long-term Debt (11) Debt Margin and Bonds Authorized but Unissued (12) Defeasance of Debt (13) Landfill Postclosure Care Costs (14) Risk Management (15) Contingencies (16) Conduit Debt (17) Fund Balance Deficit (18) Restricted Net Assets (19) Fund Balance (20) Other Postemployment Benefits (21) On-Behalf Payments (22) Operating Lease (23) Capital Leases (24) Deferred Compensation Plan (25) Pensions
36
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(1) Summary of Significant Accounting Policies: A. Financial Reporting Entity:
New Castle County Government was established on January 3, 1967, replacing the Levy Court Commission with a Council-Executive form of government. The powers and duties of the County Government are set forth in Chapter 11, Title 9 of the Delaware Code. The County Government is composed of (i) a legislative body (the "Council"), and (ii) an administrative body headed by the County Executive, (the "Administration"), which includes five operating departments and five judiciary (row) offices.
New Castle County provides many governmental services. The majority of these services are mandated by statute or code; however, there are some services that are discretionary in nature and highly desired by the citizens of the County. Major public services/facilities include police protection, paramedic services, parks, recreation programs, senior centers, libraries, sewer services and code enforcement.
The County’s financial reporting entity is required to consist of all organizations for which the County is financially accountable or for which there is a significant relationship. The County has no component units in its financial reporting entity. B. Government-wide and Fund Financial Statements: The accounting policies of New Castle County conform to generally accepted accounting principles applicable to governments. The presented financial statements for fiscal year ended June 30, 2003 are GASB Statement No. 34 compliant. Due to required changes with GASB 34, the basic financial statements are presented using the government-wide financial statements and the fund financial statements. Both of these are explained below. The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the County. For the most part interfund activities have been removed from these statements. Governmental activities, 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. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include: charges to customers who purchase, use, or directly benefit from goods, services or privileges provided by a given function and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among the program revenues are reported as general revenues. The County does not allocate general government (indirect) expenses to other functions. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, however, the fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
37
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(1) Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting and Financial Statement Presentation: The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary 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 revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they 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. For this purpose, the County considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, charges for services, permits, licenses, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the County. The County reports the following major funds: General Fund – This fund is the County’s primary operating fund. It accounts for the general operating activities of the County, except for those required to be accounted for in another fund. General government, police, special services, community services, land use, judiciary offices, and general governmental debt service are financed through this fund with receipts from general property taxes, licenses and permits, investment income, rentals, charges for current services, intergovernmental and other revenue. Grants Fund – This fund accounts for certain operating activities of the County. It accounts for the proceeds of specific revenue sources that are legally or administratively restricted to expenditures for specified purposes. Police, special services, community services and land use are financed through this fund with revenue from federal, state, local and private sources. Park Development – This fund is used to account for the acquisition and development of County parkland. The County reports the following major proprietary fund which is used when it is intended to recover their cost of operation, including depreciation, primarily through user charges: Sewer Facilities Fund – This fund is used to account for the operation and construction of sewage and stormwater collection systems. Additionally, the County reports the following governmental, proprietary, and fiduciary fund types: Light Tax Fund – This fund is used to account for lighting costs financed with revenues from users within the light districts.
38
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(1) Summary of Significant Accounting Policies (Continued): C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued): Garstin Trust Fund – This fund is used to account for the costs of providing for the care, maintenance, and upkeep of county parks and related facilities financed with proceeds from an endowment. Capital Projects Funds – These funds are used to account for financial resources provided by bond proceeds, intergovernmental grants and private contributions used for the acquisition or construction of capital facilities (other than those financed by proprietary funds). The Capital Projects Funds consist of the following:
• Facilities and Equipment - Used to account for design, construction and improvements of County buildings.
• Police - Used to account for improvements at the police building and facilities. • Miscellaneous Capital Improvements -Used to account for all other construction improvements.
New Castle County Airport Fund – This proprietary fund is used to account for the County’s ownership of an airport facility and related industrial park. Pension Trust Fund – This fiduciary fund is used to account for the assets of the pension fund which are held in a trustee capacity for the employees of New Castle County. The Pension Program, which is part of the County’s legal entity, is a single employer defined benefit pension plan that provides benefits to eligible county employees. D. Applicability of Optional Private-sector Guidance: The County applies to both the government-wide and proprietary fund financial statements those applicable Governmental Accounting Standards Board (GASB) pronouncements and only those Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions and Accounting Research Bulletins (ARB) issued on or before November 30, 1989, unless they conflict with or contradict GASB pronouncements. E. Interfund Eliminations: As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are balances between the governmental activities and the business-type activities. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. F. Program Revenues: Amounts reported as program revenues include: charges to customers for goods, services or privileges provided, operating grants and contributions, and capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. General revenues include all taxes.
39
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(1) Summary of Significant Accounting Policies (Continued):
G. Flow Assumption for Restricted Resources:
Net assets are restricted when constraints placed on them are either externally imposed or are imposed by constitutional provisions or enabling legislation. Internally imposed designations of resources are not presented as restricted net assets. When both restricted and unrestricted resources are available for use, it is the County’s policy to use restricted resources first, then unrestricted resources as they are needed. H. Operating and Nonoperating Revenues: Proprietary funds distinguish operating revenues and expenses from nonoperating items. The sewer facilities fund, which is our major enterprise fund, accounts for the majority of our operating revenues and expenses. The principal operating revenues of the sewer fund are charges to customers for providing sewer services. The principal operating revenues of the airport fund is operating contributions which covers the debt service due. Operating expenses for the enterprise funds include the cost of services, administrative expenses, and depreciation on capital assets. All other revenues and expenses not meeting the above criteria are reported as nonoperating revenues and expenses. I. Deposits and Investments: Cash resources of the individual funds, excluding the Pension Trust fund, are combined to form a pool of cash and investments to maximize investment earnings. In the County, the Light Tax fund, Capital Projects funds and the Airport fund do not report investments; therefore, there is not any investment income to report in the financial statements. The County’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with maturities of three months or less from the date of acquisition. New Castle County as a depositor and an investor generally requires full and continuous collateralization based upon market value in the form of: • Obligations of or guaranteed by the United States of America, or
• Obligations of the Federal National Mortgage Association, the Federal Home Mortgage Corporation,
Public Housing Authority, or an agency or instrumentality of the United States of America, or • General or revenue obligations of the State of Delaware or its municipalities, subdivisions, public
housing authorities, or any agency or instrumentality of the State of Delaware. As an investor, New Castle County may invest in any of the above cited instruments and/or: • Certificates of deposit or repurchase agreements fully collateralized by one or more of the above cited
instruments.
• Mutual funds; corporate bonds and debentures; obligations guaranteed by the government of Canada or by a province of Canada; any common and preferred stocks; real estate partnerships; and financial and commodities futures.
The investments of New Castle County and The Pension Trust fund are reported at fair value, which is generally based on quoted market prices.
40
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(1) Summary of Significant Accounting Policies (Continued): J. Inventories: Inventories are not significant and are recorded as expenses/expenditures when acquired. K. Advance Deposits and Prepaid Costs: Metered postage, Section 8 housing assistance payments and health care costs are recorded as prepaid items in both government-wide and fund financial statements. These items are recorded as expenses/expenditures when consumed. L. Restricted Assets: Restricted cash & cash equivalents in the governmental activities are Section 8 escrow funds required by the Department of Housing & Urban Development to be deposited into a separate depository account for the Family Self-Sufficiency program. Upon the participants’ successful completion of the program, the funds are paid to the FSS family. M. Capital Assets: Capital assets, which include land, buildings, building improvements, equipment, improvements other than buildings, and infrastructure assets, are recorded in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the County as assets with a value of $5,000 or more. This capitalization threshold is applied to individual capital assets rather than to groups/sets of capital assets (e.g. chairs, desks, etc.). Such assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair market value on the date donated. Maintenance, repairs, and minor equipment are charged to operations when incurred. Expenses that materially change capacities or extend useful lives are capitalized. Upon sale or retirement of land, buildings, and equipment, the cost and related accumulated depreciation, if applicable, are eliminated from the respective accounts and any resulting gain or loss is included in the results of operations. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense incurred by the County during the current fiscal year was immaterial. Building, building improvements, equipment, improvements other than buildings, and infrastructure are depreciated by using the straight-line method over the estimated useful lives as follows: Assets Years
Buildings 45 Building Improvements 45 Equipment 5 - 20 Improvements other than buildings 20 Sewer System 45
41
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(1) Summary of Significant Accounting Policies (Continued): N. 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 statement of net assets. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. O. Budgetary Information: The County follows these procedures in developing its budget: 1. Prior to April 1, the County Executive submits to County Council a proposed operating budget for the
fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them.
2. Public hearings are conducted to review the proposed budget and obtain taxpayer comments. 3. Prior to June 1, the annual appropriated budget is enacted through legislation. Appropriations are
legislated at the departmental level by object of expenditure. Appropriation control is maintained through the accounting system. Accordingly, no expenditures over appropriations are incurred.
The Budget Office is authorized to make certain budgetary transfers within a department, as allowed by the County Code. All other changes must be approved by County Council. Formal budgetary integration and project controls are employed as a management control device for governmental funds. The County legally adopts an annual budget for the General Fund and Light Tax Fund. Where grant budgets are adopted, these are on a grant basis and generally overlap fiscal years. The Capital Projects Funds budgets are for more than one fiscal year and, in many cases, encompass a five-year period. Comparisons of budget to actual for a fiscal year do not present a meaningful comparison for these funds and are therefore not presented. As an alternative, inception to date budget and actual schedules are presented for the grants and capital projects funds. Budgets for the governmental funds are adopted on a basis materially consistent with generally accepted accounting principles (GAAP). The final budgeted amounts are as amended through June 30, 2003. Supplemental appropriations to the original budget were necessary and legislated during the year. Unexpended appropriations in the operating budget lapse at year-end, while encumbered amounts are reappropriated in the subsequent year.
42
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(1) Summary of Significant Accounting Policies (Continued): P. Encumbrances: Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration and project control in all governmental funds. Encumbrances outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent fiscal year. Q. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. (2) Deposits and Investments: Deposits: The carrying amount of the cash deposits and cash on hand is $156,981,469 in the various funds. The bank balances were $162,233,946. Of the bank balances, $141,341 was covered by Federal Depository Insurance, and $162,092,605 was secured by collateral consisting of uninsured and unregistered investments held by the pledging financial institution in the County’s name. Investments: The County's investments and the Pension Trust fund investments, which are stated at fair value, are categorized below to give an indication of the level of risk assumed at year-end. Category 1 includes investments that are insured or registered or for which the securities are held by the County or its agent in the County's name. Category 2 includes uninsured and unregistered investments with securities held by the counterparty's trust department or agent in the County's name. Category 3 includes uninsured or unregistered investments with securities held by the counterparty's trust department or agent not in the County's name. Certain investments are not categorized because they are not represented by securities.
43
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(2) Deposits and Investments (Continued):
Investments (Continued):
The following is a schedule which details the County's investments categorized by risk:
Category Fair 1 2 3 Value
Common and Preferred Stock and Convertibles $ 91,562,789 $ - $2,097,084 $ 93,659,873Municipal Obligations 5,583,091 - - 5,583,091Obligations of U.S. Government/Agencies 48,631,332 - 80,286,370 128,917,702Corporate Obligations 48,816,041 - 46,254,835 95,070,876
$194,593,253 $ - $128,638,289 $323,231,542Uncategorized: Mutual Funds 68,235,659Real Estate Partnerships 21,407
$391,488,608
The Pension Trust fund has approximately $33,316,572 invested in various tranches of collateralized obligations issued by private-sector financial services companies. The Pension Trust fund purchases those instruments to increase the total rate of return for the portfolio. All collateralized obligations are rated AAA by national credit rating agencies. The market risk relating to those instruments is minimal and similar to that of a nonderivative product.
(3) Property Taxes:
Property taxes attach as an enforceable lien on property when levied. Uncollected property taxes will be subject to sheriff’s sale as the final instrument to satisfy past due balances. Taxes are levied on July 1 and are payable on or before September 30. Taxes paid after the payable date are assessed a six percent penalty for nonpayment and one percent interest per month thereafter. The County bills and collects its own property taxes. County property tax revenues are recognized in the fiscal year levied. Tax receivables, as reported in the fund financial statements, consist of property tax receivable ($1,415,110), crossing guard tax receivable ($69,967), and penalties and interest receivable ($769,150) and are reduced by an allowance for uncollectible accounts of $723,488 for 2003 which is determined by a review of account status and location.
Assessed values are established by the County at 100 percent of 1983 market value based upon the county-wide reassessment completed in 1985. Real property in the County for the 2003 initial levy was assessed at $16.3 billion.
44
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(4) Receivables:
Receivables as of June 30, 2003 for the County’s individual major funds, nonmajor funds, and fiduciary funds in the aggregate, net of applicable allowances for uncollectible accounts are as follows:
Included in the Nonmajor/Fiduciary column are receivables for Light Tax fund, Garstin Trust fund, Capital Projects funds and the Pension Trust fund. Sewer service charges are levied on January 1st and are payable on or before the last day of the month following the month in which it became due. Sewer service charges paid after the payable date are assessed a six percent penalty for nonpayment and a one percent penalty per month thereafter. The County bills and collects its own sewer service charges. Sewer service revenues are recognized in the fiscal year levied. These receivables consist of sewer service receivable ($3,195,375) and penalties and interest receivable ($2,042,749) and are reduced by an allowance for uncollectible accounts of $3,411,315 for 2003 which is determined by a review of account status. Sewer service charges are established by the County based on water usage data provided by the county water suppliers. Four quarterly readings are compared, usually those from the fourth quarter of calendar year 2001 and the first three quarters of calendar year 2002. The County uses the two quarters of lowest consumption, adds them together and doubles this sum to create an annual billing consumption. This annual billing consumption is multiplied by the rate set by County Ordinance. Housing loans ($15,831,736) are made to individuals and businesses. These loans are used to provide funding for rehabilitation to elderly residents, emergency repair to low income homeowners, to allow low to moderate income families the ability to purchase homes through the Down Payment Settlement Assistance Program, and to revitalize aging neighborhoods and storefronts throughout the County. Several funding sources are used to make these loans available to individuals and businesses. Funding is received from the Federal Department of Housing and Urban Development ($14,011,854), New Castle County ($1,679,031), and private contributions ($140,851).
Park Nonmajor/
Receivables: General Grants Develop. Sewer Fiduciary Total
Taxes $1,530,739 $ - $ - $ - $46,340 $1,577,079Service charges - - - 1,826,809 - 1,826,809Accounts 5,804,335 - - - - 5,804,335Special assessments (includes interest and penalties)
43,595
-
-
-
-
43,595Housing loans - 15,831,736 - - - 15,831,736Other 589,494 2,641 - 1,983,634 3,189,987 5,765,756Due from other governments
-
948,847
31,752
-
1,443,721
2,424,320
Due from other agencies
-
-
-
-
1,496,445
1,496,445
Net Total Receivables
$7,968,163 $16,783,224
$31,752
$3,810,443
$6,176,493 $34,770,075
45
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(5) Capital Assets:
Capital asset activity for the year ended June 30, 2003 was as follows:
Beginning Ending Balance Increases Decreases Balance
Governmental activities:Capital assets, not being depreciated: Land $55,632,587 $15,356,651 $ (3,400) $70,985,838Construction in progress 1,754,325 2,468,349 (1,630,312) 2,592,362Total capital assets, not being depreciated 57,386,912 17,825,000 (1,633,712) 73,578,200
Capital assets, being depreciated: Buildings 56,885,326 4,471,967 - 61,357,293Building improvements 6,253,817 3,750,424 - 10,004,241Other improvements 41,114,635 2,727,113 - 43,841,748Equipment 68,252,616 10,733,901 (437,969) 78,548,548Total capital assets, being depreciated 172,506,394 21,683,405 (437,969) 193,751,830
Less accumulated depreciation for: Buildings (17,574,867) (1,360,824) - (18,935,691)Building improvements (2,223,534) (204,699) - (2,428,233)Other improvements (27,898,600) (1,105,269) - (29,003,869)Equipment (49,763,328) (6,139,088) 413,956 (55,488,460)Total accumulated depreciation (97,460,329) (8,809,880) 413,956 (105,856,253)
Total capital assets, being depreciated, net 75,046,065 12,873,525 (24,013) 87,895,577
Governmental activities capital assets, net $132,432,977 $30,698,525 $(1,657,725) $161,473,777
46
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(5) Capital Assets (Continued): Beginning Ending Balance Increases Decreases Balance Business-type activities: Capital assets, not being depreciated:
Land $21,382,858 $ - $ - $21,382,858Construction in progress 2,756,759 3,586,851 (1,152,308) 5,191,302Total capital assets, not being depreciated
24,139,617 3,586,851
(1,152,308)
26,574,160
Capital assets, being depreciated: Buildings 14,484,093 149,634 - 14,633,727Equipment 11,727,423 1,989,470 - 13,716,893Building improvements 16,141 - - 16,141Other improvements 44,343,430 110,646 - 44,454,076Infrastructure 178,718,724 6,961,177 - 185,679,901Total capital assets, being depreciated
249,289,811 9,210,927
-
258,500,738
Less accumulated depreciation for: Buildings (6,948,121) (316,641) - (7,264,762)Equipment (6,880,320) (766,807) - (7,647,127)Building improvements - (329) - (329)Other improvements (44,079,898) (30,144) - (44,110,042)Infrastructure (67,553,308) (5,036,796) - (72,590,104)Total accumulated depreciation (125,461,647) (6,150,717) - (131,612,364) Total capital assets, being depreciated, net
123,828,164 3,060,210
-
126,888,374
Business-type activities capital assets, net $147,967,781 $ 6,647,061
$(1,152,308) $153,462,534
47
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(5) Capital Assets (Continued): Depreciation expense was charged to functions/programs of the County as follows: Governmental activities: General Government $ 904,751 Special Services 3,484,146 Police 3,637,845 Community Services 660,140 Land Use 122,998 Total depreciation expense – governmental activities
$8,809,880
Business-type activities: Sewer Facilities $6,049,395 New Castle County Airport 101,322 Total depreciation expense – business-type activities
$6,150,717
(6) Construction Commitments: New Castle County has active construction projects as of June 30, 2003. The projects include building and facility renovations, park development, police building renovations and sewer construction. At year end the County's commitments with contractors are as follows: Expended Through Remaining
Project June 30, 2003 Commitment Facilities and Equipment $1,904,868 $6,364,935 Park Development 685,831 904,012 Police 1,665 - Subtotal 2,592,364 7,268,947 Sewer Construction 5,191,305 9,234,225 Total $ 7,783,669 $16,503,172 The building and facilities portion of the commitment is being financed in majority by general obligation bonds, along with state and private funding. The park development portion of the commitment is being financed by general obligation bonds. The police portion of the commitment is being financed by general obligation bonds and state funding. The sewer construction portion of the commitment is being financed by general obligation bonds, sewer capital reserve resources and sewer connection fees.
48
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(7) Interfund Receivables, Payables and Transfers: The compositions of interfund balances as of June 30, 2003, are as follows:
Receivable Fund Payable Fund Amount General Fund Sewer Facilities $ 764,242 Facilities and Equipment 2,210,837 Park Development 12,523,519 Misc. Capital Improvements 3,974,456 19,473,054 Special Revenue Funds: Light Tax Fund General Fund 753,055 Capital Projects Funds: Police Misc. Capital Improvements 815,721
Total $21,041,830 During the course of normal operations, the County has numerous short term transactions between funds. The receivable and payable between the General and Sewer funds represent the amounts that the Sewer fund is liable to the General fund for its share of claims and judgements. Amounts due the General fund from the Capital Projects funds are for short term loans to be repaid from a planned bond sale. The amount due to the Light Tax fund from the General fund represents the cash that is swept daily and invested with the General fund proceeds. The compositions of interfund transfers during the fiscal year ended June 30, 2003, are as follows:
Transfers In Fund Transfers Out Fund Amount General Fund Grants Fund $ 9,943 Grants Fund General Fund 186,864 Capital Projects Fund Facilities and Equipment General Fund 2,198,678 Police General Fund 185,000 Misc. Capital Improvements General Fund 644,920 3,028,598
Total $3,225,405
During the fiscal year, several interfund transactions occurred between funds. The General fund contributed proceeds to the Grants fund for its share of the match for the law enforcement block grant and emergency preparedness grant. The Capital Projects funds received proceeds from the General fund to fund capital costs for projects pertaining to information services, fleet purchases, facilities costs and emergency medical services equipment.
49
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(8) Compensated Absences: The County accrues a liability for vacation leave and sick leave as the leave is earned by the employees to the extent it is probable that the County will compensate the employees for the leave through paid time off or some other means, such as cash payments at termination or retirement. County employees earn vacation leave depending on their length of service. Vacation leave, depending on years of service, accumulates on a monthly basis and is fully vested when earned. Accumulated vacation leave cannot exceed 30 days at the end of any calendar year. All unused vacation leave is paid upon leaving County service. County employees earn one day of sick leave for each completed month of service. Accumulation of sick leave is unlimited. All employees have vested rights for payment of accumulated unused sick leave. This severance payment is for a maximum of 20 days for voluntary termination and a maximum of 100 days for retirement, layoffs and death. For employees hired on or before June 30, 1977, payment is based on one day paid for each day accrued. For employees hired on or after July 1, 1977, payment is based on one day paid for each two days accrued. All vacation leave and sick leave pay is accrued in the government-wide and proprietary fund financial statements. At June 30, 2003, noncurrent accumulated vacation leave for governmental fund types was $6,571,209 (including accrued FICA and Medicare) and noncurrent vested sick leave was $9,702,098 (including accrued FICA and Medicare). These amounts total to $16,273,307 and are reported in the government-wide financial statements. At June 30, 2003, accumulated vacation and sick leave for Proprietary Funds in the amount of $2,257,161 has been included in accrued expenses. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. (9) Deferred 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 not yet earned. As of June 30, 2003, the various components of deferred revenue reported in the governmental funds were as follows: General Fund:
Property tax-provision for assessment appeals $1,291,782 Property tax receivables-gross 1,530,739 Less: estimated 60 collection 7/03-8/03 (239,000) 1,291,739 Total General Fund 2,583,521
Grants Fund: Housing loans 15,831,736 Unearned grant revenue 3,011,563
Total Grants Fund 18,843,299
Total $21,426,820
Governmental activities report deferred revenue of $20,135,078 which is less than the governmental funds amount as a result of the full accrual reporting of property tax receivable to revenue.
50
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(10) Long-term Debt: The County issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. All bonds outstanding at June 30, 2003, are general obligation debt supported by the full faith and credit of the County and are summarized as follows:
Purpose Maturities Interest Rates Amount Governmental Activities 2020 3.0 – 5.6% $ 87,050,681 Business-type Activities: Sewer Facilities 2020 3.0 – 5.6% 44,969,319 TOTAL $132,020,000
Annual debt service requirements to maturity for general obligation bonds are as follows:
Governmental Activities Business-type Activities Fiscal Year Principal Interest Principal Interest
2004 $7,337,835 $3,860,248 $3,422,165 $2,022,8002005 6,154,850 3,586,396 3,205,150 1,879,1392006 6,597,251 3,309,364 3,422,749 1,733,2532007 5,432,035 3,024,506 3,062,965 1,583,0222008 5,679,325 2,777,481 3,205,675 1,437,298
2009-2013 26,371,285 10,542,813 15,883,715 5,013,2122014-2018 24,163,100 4,163,798 9,096,900 1,944,1502019-2020 5,315,000 183,338 3,670,000 176,462
$87,050,681 $31,447,944 $44,969,319 $15,789,336 Advance Refunding: On November 1, 2002, the County issued $26,555,000 of general obligation bonds series 2002A with a true interest cost of 3.557401%. The details of this issue are as follows: $26,555,000 was used to advance refund $26,206,544 of bonded indebtedness with interest rates ranging between 3.00 and 5.25 percent. This resulted in an increase in principal of $348,446. These proceeds were used to purchase U.S. Government Securities which were deposited in an irrevocable trust with an escrow agent to provide for all future debt service of the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the appropriate funds. The refunding resulted in $859,343 in present value savings and $1,304,444 in gross savings.
51
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(10) Long-term Debt (Continued): Changes in long-term Liabilities: Long-term liability activity for the year ended June 30, 2003, was as follows:
Balance Balance Due Within Liability July 1, 2002 Additions Reductions June 30, 2003 One Year
Governmental activities: Bonds $ 94,138,288 $ 287,650 $7,375,257 $ 87,050,681 $7,337,835 Sick and vacation 9,230,333 12,850,915 5,807,941 16,273,307 6,156,417 Estimated liability for landfill postclosure care costs 2,784,000 - 300,000 2,484,000 - Capital lease payable - 4,193,637 1,130,949 3,062,688 1,376,209 Claims and judgement costs 3,545,676 935,328 1,500,604 2,980,400 1,016,855 Governmental activity Long-term liabilities $109,698,297 $18,267,530 $16,114,751 $111,851,076 $15,887,316 Business-type activities: Bonds $49,957,186 $ 60,796 $5,048,663 $44,969,319 $3,422,165 Sick and vacation 1,461,299 1,573,255 777,393 2,257,161 824,036 Business-type activity Long-term liabilities $51,418,485 $1,634,051 $5,826,056 $47,226,480 $4,246,201 For the governmental activities, sick and vacation, estimated liability for landfill postclosure care costs, and claims and judgements are liquidated by the General Fund. (11) Debt Margin and Bonds Authorized but Unissued: Bonds authorized but unissued at June 30, 2003 totaled $299,603,065. The County’s legal debt margin for general obligation debt at year-end is $400,735,302. (12) Defeasance of Debt: In prior years, the County defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, assets in the trust account and the liability for the defeased bonds are not included in the County’s financial statements. On June 30, 2003, $37.7 million of bonds outstanding are considered defeased.
52
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(13) Landfill Postclosure Care Costs: State and federal laws and regulations require that New Castle County perform certain maintenance and monitoring functions at its two landfill sites. The landfills have not collected waste at these sites since 1968. The County is currently performing these maintenance and monitoring functions. The estimated cost to comply with postclosure regulations is $2.5 million. However, the actual cost may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The annual operating costs for maintenance and monitoring the landfill sites will continue to be funded by the County and recorded as a long-term liability in the governmental activities in the Statement of Net Assets. (14) Risk Management: The County is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the County is self insured and also carries commercial insurance. The County currently reports all of its risk management activities in its General Fund. The County recognizes expenditures/expenses in the General Fund and the Sewer Fund. Claims expenditures/expenses and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported and claims and adjustment expenses. Claim liabilities are based upon actuarial calculations which consider the effects of inflation, recent claim settlement trends including frequency and amount of pay-outs, other economic and social factors, specific incremental claim adjustment expenses, and salvage and subrogation. There were changes in insurance coverage from the prior fiscal year that enhances the County’s protection. There were no settlements exceeding insurance coverage for the past three fiscal years. Changes in the liability during the past two years are as follows:
2002 2003 Unpaid claims, beginning balance $3,708,346 $3,545,676 Incurred claims 1,047,040 935,328 Claim payments (1,209,710) (1,500,604) Unpaid claims, ending balance $3,545,676 $2,980,400
(15) Contingencies: The Federal and State governments participate in funding certain County capital projects and operating grants, and the County has recorded receivables in the Sewer Facilities, Capital Projects, and Operating Grants Funds for the portion of the costs incurred on projects and grants to be funded from these sources. The costs charged to the funding agency are subject to audit and approval by the agency and, in the event of disallowance, must be funded by the County. Management does not believe that any material amounts of such costs will be disallowed by the funding agency. New Castle County has been notified by the Secretary of the Department of Natural Resources and Environmental Control of the State of Delaware (DNREC) that the County could be a “Potentially Responsible Party” under the Delaware Hazardous Substance Cleanup Act (HSCA) and may be liable, together with others, for the costs incurred and for estimated costs for the remediation of the contamination at Fox Point Park. The County disputes that it is liable for any HSCA response costs. Under the State of Delaware’s proposed allocation of liability for the site, the County’s exposure is estimated to be $0.1 to $1.5 million of these costs.
53
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(15) Contingencies (Continued): The County is a defendant in various other litigation, wherein the plaintiffs have claimed substantial damages. Some of the matters are currently in the discovery stage; others are in various forms of summary judgement disposition. Of these matters, the issue of damages has not been passed upon. The possible liability, if any, on the part of the County in these remaining actions is not currently determinable. The County is involved in a number of other actions related to tax billings, assessment valuations, property damages and other matters. In the opinion of the County Attorney, the ultimate resolution of these actions will not have any material effect on the County's financial position. (16) Conduit Debt: The County has issued mortgage revenue bonds to provide funds to acquire mortgages on single-family residences in New Castle County and authorized the issuance of revenue bonds to provide funds for various commercial, industrial and agricultural development projects. In the opinion of bond counsel, the bonds are not subject to the debt limit imposed by the Delaware Code, but are payable solely from proceeds of the bonds, mortgage loan repayments and certain other special funds created under the indenture pursuant to which the bonds were issued. The County does not have an obligation to pay the bonds other than from such sources; therefore, such amounts have not been included in the financial statements. (17) Fund Balance Deficit: Capital Projects Funds There are fund balance deficits in the Capital Projects funds as follows: $12,981,366 in the Park Development fund, $4,847,165 in the Miscellaneous Capital Improvements fund, and $776,112 in the Facilities and Equipment fund. These fund balance deficits will be eliminated when authorized bonds are issued. (18) Restricted Net Assets: Sewer Facilities Fund Restricted net assets have been legally established in the Sewer Facilities Fund. These restrictions are to fund future replacement and/or rehabilitation of the sewer facilities' infrastructure ($58,675,189) and to maintain a Budget Reserve Account to fund unanticipated deficits or revenue reductions ($9,818,239). The unreserved portion of net assets will be used to stabilize user charge rates.
54
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(19) Fund Balance:
Reserved and Unreserved - Designated - General Fund
Fund balance amounts have been reserved and designated in the General Fund for specific purposes. Reserves have been established as follows: - Budget reserve ($25,479,763): The budget reserve was legislated to set aside resources of twenty
percent of the General Fund’s Fiscal Year 2004 revenue budget to cover unanticipated deficits or revenue reductions caused by a turbulent economy and/or unfunded legislated mandates. A five-sevenths vote from County Council is needed to appropriate these funds for the established conditions or to change the percentage allocated to this fund.
- Reserve for Encumbrances ($2,373,218): These funds are set aside to cover orders placed for goods and services that were committed prior to June 30, 2003.
- Prepaid costs ($770,721): Prepaid costs are reserved to cover charges that will be incurred within the next ninety days.
Designations of fund balance have been established to set aside funding as follows: - Financial Reserves ($92,634,400): This designation has been established for these specific
purposes, Property Tax Rate Preservation, ($61,300,000), which will be used to maintain the stability of the property tax rate. Pay-As-You-Go Capital, ($25,829,000), will fund certain capital project costs for Fiscal Years 2004 to 2009 that have been adopted in the FY 2004 capital program. New Facilities Maintenance, ($3,505,400), will be used to fund the operating and maintenance costs of new County facilities and expansion. Fleet Reserve ($2,000,000) will be maintained for fleet purchases.
- Compensated Absences ($9,200,000): These set aside funds will be used to cover future sick leave payments for employees. Eligible employees have vested rights to receive severance payments for voluntary termination, retirement, layoffs and death. Vacation leave is fully vested when earned and will be paid upon termination. Other allowable future benefit costs may be funded from this designation.
- Uninsured Damages/Costs ($5,672,913): These funds will be used for uninsured damages and costs occurring in the areas of workers compensation, general liability, automobile and healthcare.
- Community Service Grants ($1,125,000): These are earmarked funds approved by County Council to cover challenge grants to match revenue from other municipalities.
- Other ($74,282): These designated amounts are for special assessments ($61,466) and miscellaneous accounts ($12,816).
(20) Other Postemployment Benefits: The County provides postretirement health and life insurance benefits for retired employees. Eligibility to participate in these postretirement benefits is the same as outlined in the provisions for pension benefits and is opened to all retired county employees. Currently, 910 retirees meet those eligibility requirements. The cost of retiree health care and life insurance benefits is recognized as an expenditure as claims and premiums are paid. For the year ended June 30, 2003, those costs were $128,373 for health care benefits and $3,607 for life insurance premiums.
55
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(21) On-Behalf Payments: The County receives a pension contribution from the State of Delaware for New Castle County Police to the Employees’ Retirement System. This on-behalf payment is recorded in the General Fund as intergovernmental revenue and expenditure paid to the Pension Trust Fund. This amount for FY 2003 was $2,086,605. (22) Operating Lease: On July 1, 1995, the Delaware River and Bay Authority (DRBA) assumed responsibility for the New Castle County Airport under the terms of a 30 year lease. The DRBA will reimburse the County for existing debt service payments and for equipment acquisitions. This arrangement is structured to reduce operating losses at the airport while advancing overall economic development and job creation within the County. (23) Capital Leases: The County has entered into three lease agreements for the financing of new police cars. Payments are due in monthly installments with interest rates of 5.86%, 5.95%, and 5.20% per annum. These capital leases have been recorded at the present value of their future minimum lease payments as of the inception date. The capital assets acquired through capital leases are as follows:
Governmental Activities Equipment $4,891,950 Less: Accumulated depreciation 843,459 $4,048,491
The Governmental Activities minimum lease payment amounted to $1,283,853 in fiscal year 2003. The future lease payments under the capital leases at June 30, 2003 are as follows:
Governmental Fiscal Year Activities 2004 $1,517,600 2005 701,241 2006 536,023 2007 453,412 2008 151,177 Total minimum lease payments 3,359,453 Less: amount representing interest 296,765 Present value of minimum lease payments $3,062,688
56
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(24) Deferred Compensation Plan: The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code (IRC) Section 457. The plan, available to all County employees, permits them to defer a portion of their salary until future years. The IRC Section 457 was amended by adding subsection (g) which required the County to amend its Deferred Compensation Plan (DCP) Trust Agreement. In July 1998, the County amended its DCP and amended its existing DCP Trust Agreement to comply with changes in the IRC. The amended DCP provides that all assets and income of the DCP are held in the DCP Trust for the exclusive benefit of participants and their beneficiaries. Therefore, these assets are not the property of the County and will not be subject to the claims of the County’s general creditors. All costs and expenses of administering the plan are borne by the participants.
57
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(25) Pensions: Plan Description and Provisions: New Castle County maintains a single-employer, defined benefit pension plan that covers substantially all full-time County employees (except for police employees who are covered by the Delaware Municipal Police/Firefighter Pension Plan as discussed later) as well as part-time school crossing guards. Benefits are administered under the County's Pension Program (Program) by a quasi-independent agency, which issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained from the Human Resources division of the Department of Administration. The Program consists of four separate pension plans with members’ benefits varying according to the plan in which they participate. Membership in a particular plan generally is based upon the date of employment. The Program’s four pension plans are: the County Employees' Pension Plan (Plan); the Employees' Retirement System (the System); the Alternate Pension Plan (the Closed Plan); and, the School Crossing Guards' Pension Plan (Crossing Guards' Plan). Upon organization of the Program, all of the assets of the County’s previously separate pension plans were pooled and made available to satisfy the obligations to members under any of the plans. Consequently, the plans are not considered to be separate for actuarial, funding, or financial reporting purposes. The Program provides retirement, disability, and death benefits to Program members and beneficiaries. Retirement benefits for members of the System include automatic post-retirement benefit increases. Those benefits are established under the provisions of the County Code and may be amended by action of the Program’s Board of Trustees and the County Council. Summary of Significant Accounting Policies, Basis of Accounting, and Valuation of Investments: The financial statements of the Program are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. The County’s contributions are recognized when due and a formal commitment to provide the contributions has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Program. All Program investments are reported at fair value. Securities traded on a national exchange are valued at the last reported sales price on the County’s balance sheet date. Securities without an established market are reported at estimated fair value. Funding Policy: The requirements for County and employee contributions are established under County Code and may be amended by action of the Board of Trustees of the Program and the County Council. The requirements for State contributions are established under State Statute.
58
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(25) Pensions (Continued): Funding Policy (Continued): The required contribution rates of active Program members are as follows:
Plan
3% of total compensation exceeding $115 a week and 5% of total compensation that exceeds the social security wage base
System
7.5% (police members) and 5% (non-police members) of base salary or wages
Closed Plan
No contribution required
Crossing Guards’ Plan
$10 per bi-weekly pay period
State contributions to the Program are for police members of the System and are based on a ratable share of the State’s tax on insurance premiums. The share provided to the County is based on the relative number of police employees covered by the County Program compared to the total number of state, county, and municipal police employees in the State covered by pension plans that are eligible to participate in the distribution of the tax. The County is required by County Code to contribute to the Program based on an actuarial valuation. The current rate is 5.89% of annual covered payroll. Annual Pension Cost and Net Pension Obligation: The County’s annual pension cost and net pension obligation to the Program for the year ended June 30, 2003, were as follows:
Annual required contribution
$3,071,192
Interest on net pension obligation
(204,596)
Adjustment to annual required contribution
352,903
Annual pension cost
3,219,499
Contributions made
3,954,841
Increase in net pension asset
(735,342)
Net pension asset beginning of year
(2,557,456)
Net pension asset end of year ($3,292,798)
59
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(25) Pensions (Continued): Annual Pension Cost and Net Pension Obligation (Continued): As of June 30, 2003, $388,879 of the net pension asset is reported as an asset in the business-type activities in the government-wide statement of net assets and in the proprietary fund type in the fund financial statement of net assets. The remaining $2,903,919 of the net pension asset is reported as an asset related to the governmental funds and is only recorded in the governmental activities in the government-wide statement of net assets. The annual required contribution for the year was determined as part of the January 1, 2002, actuarial method using the entry age actuarial cost method. The actuarial assumptions included (a) 8% investment rate of return and (b) projected salary increases of 5.5%. Both (a) and (b) included an inflation component of 3%. The assumptions include post-retirement benefit increases for members of the System. The actuarial value of assets was determined using techniques that smooth the effects of changes in the market values of investments over a five-year period. The unfunded actuarial accrued liability was being amortized as a level dollar amount, except for the Plan, for which the liability was being amortized as a level percent of projected payroll. The remaining amortization period at January 1, 2002 was 5 to 14 years closed, varying by plan, depending on plan demographics and provisions. Three-year Trend Information:
Annual pension Net pension Fiscal year ending cost (APC) % of APC contributed asset
6/30/2003 $3,219,499 122.8% $3,292,798
6/30/2002 2,486,721 112.5% 2,557,456
6/30/2001 2,383,395 110.8% 2,246,464
Unfunded
Actuarial
Actuarial Accrued UAAL
Actuarial Actuarial Accrued Liability Ratio of as a % of
Valuation Value of Liability (Asset) Assets to Covered Covered
Date Assets (AAL) (UAAL) AAL Payroll Payroll
1/1/2003 $319,879,507 $298,025,052 ($21,854,455) 107.3% $58,283,840 (37.5%)
1/1/2002 316,269,832 270,513,035 (45,756,797) 116.9% 53,374,163 (85.7%)
1/1/2001 299,951,682 252,063,306 (47,888,376) 119.0% 52,177,122 (91.8%)
The actuarial valuations are used to determine the contributions to be made by the County in the fiscal year starting six months after the valuation date. For example, the January 1, 2002, valuation is used to establish the contribution level for the year ended June 30, 2003.
NEW CASTLE COUNTY, DELAWARE
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2003
(Continued)
(25) Pensions (Continued): Delaware Municipal Police/Firefighter Pension Plan Plan Description: The County contributes to a governmental cost-sharing multiple-employer defined benefit pension plan administered by the Delaware Public Employees’ Retirement System. The plan, which is the Delaware Municipal Police/Firefighter Pension Plan, covers County police employees hired on or after February 1, 1993. Benefit provisions of the plan are established under the provisions of State law and may be amended by an act of the State legislature. The plan provides retirement, disability, and death benefits to plan members and beneficiaries. The Delaware Public Employees’ Retirement System issues a publicly available financial report that includes financial statements for the plan. That report may be obtained by writing to the System at P.O. Box 1401, Dover, Delaware, 19903-1401. Funding Policy: The contribution policy is set by State law and requires contributions by active members and by participating employers. Plan members are required to contribute 5% of base compensation. The contributions required of participating employers are based on an actuarial valuation and is expressed as a percentage of annual covered payroll during the period for which the amount is determined. The County was required to contribute at the following rates for the fiscal years ending June 30, 2003, 2002, and 2001, 12.05%, 13.40%, and 14.25%. The County’s contributions to the plan for the same fiscal years were $1,074,265, $1,023,787, and $964,916, respectively. Those amounts are equal to the required contribution for each year.
60
61
Combining and IndividualFund Financial Statements
and Schedules
62
63
New Castle County
Nonmajor Governmental Funds
Special Revenue Funds Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes.
• Light Tax Fund – Used to account for lighting costs financed with revenues from users within the light districts.
• Garstin Trust Fund – Used to account for the costs of providing for the care, maintenance,
and upkeep of county parks and related facilities financed with proceeds from an endowment.
Capital Projects Funds Capital Projects Funds are used to account for financial resources provided by bond proceeds, intergovernmental grants, and private contributions used for the acquisition or construction of capital facilities other than those financed by proprietary funds.
• Facilities and Equipment – Used to account for design, construction, and improvements of County buildings and for equipment purchases.
• Police – Used to account for improvements at the public safety building and facilities.
• Miscellaneous Capital Improvements – Used to account for all other construction
improvements.
64
Ex
hib
it 1
1
NE
W C
AS
TL
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OU
NT
Y,
DE
LA
WA
RE
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MB
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G B
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-$
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$
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Re
ce
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ble
s (
ne
t o
f a
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ce
s):
Ta
xe
s,
inclu
din
g in
tere
st
an
d
pe
na
ltie
s4
6,3
40
-
46
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0
-
-
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4
6,3
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Oth
er
-
1
8,8
94
1
8,8
94
-
-
-
-
18
,89
4
Du
e f
rom
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er
fun
ds
75
3,0
55
-
7
53
,05
5
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8
15
,72
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81
5,7
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l A
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7
99
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4
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9$
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9$
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$
-$
3,7
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7$
8
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4,9
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$
LIA
BIL
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Lia
bil
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Vo
uch
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pa
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exp
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23
2,4
67
$
-$
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-
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23
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3,4
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Fu
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s-
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9,6
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-
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Un
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rve
d:
Un
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na
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56
6,9
28
-
5
66
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8
(6,8
96
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)
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)
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49
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tal
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bil
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s a
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9$
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58
$
-$
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$
Ca
pit
al
Pro
jec
ts
65
Exh
ibit
12
NE
W C
AS
TL
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OU
NT
Y, D
EL
AW
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E
CO
MB
ININ
G S
TA
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NT
OF
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, E
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AN
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IN
FU
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BA
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ES
NO
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AJO
R G
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ER
NM
EN
TA
L F
UN
DS
FO
R T
HE
YE
AR
EN
DE
D J
UN
E 3
0, 2003
Sp
ecia
l R
even
ue
To
tal
To
tal
Facilit
ies
Mis
cellan
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us
To
tal
No
nm
ajo
r
Sp
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l R
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d
Cap
ital
Cap
ital P
roje
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Go
vern
men
tal
Lig
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Tax
Gars
tin
Tru
st
Fu
nd
sE
qu
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tsF
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ds
Fu
nd
s
Reven
ues:
Taxes
3,0
91,2
42
$
-$
3,0
91,2
42
$
-$
-$
-$
-$
3,0
91,2
42
$
Inte
rgovern
menta
l-
-
-
1,8
45,9
28
(10,3
56)
191,3
32
2,0
26,9
04
2,0
26,9
04
Investm
ent in
com
e-
258,9
04
258,9
04
-
-
-
-
258,9
04
Contr
ibutions fro
m p
rivate
sourc
es
-
-
-
2,3
57,0
63
35,0
00
-
2,3
92,0
63
2,3
92,0
63
T
ota
l re
ven
ues
3,0
91,2
42
258,9
04
3,3
50,1
46
4,2
02,9
91
24,6
44
191,3
32
4,4
18,9
67
7,7
69,1
13
Exp
en
dit
ure
s:
Curr
ent:
G
enera
l govern
ment
3,0
47,5
79
-
3,0
47,5
79
-
-
-
-
3,0
47,5
79
Capital outlay:
C
apital pro
jects
-
-
-
16,3
85,2
12
965,9
33
2,3
13,1
65
19,6
64,3
10
19,6
64,3
10
T
ota
l exp
en
dit
ure
s3,0
47,5
79
-
3,0
47,5
79
16,3
85,2
12
965,9
33
2,3
13,1
65
19,6
64,3
10
22,7
11,8
89
Excess (
Defi
cie
ncy)
of
Reven
ues
O
ver
Exp
en
dit
ure
s43,6
63
258,9
04
302,5
67
(12,1
82,2
21)
(941,2
89)
(2,1
21,8
33)
(15,2
45,3
43)
(14,9
42,7
76)
Oth
er
Fin
an
cin
g S
ou
rces (
Uses):
Tra
nsfe
rs in
-
-
-
2,1
98,6
78
185,0
00
644,9
20
3,0
28,5
98
3,0
28,5
98
Capital le
ases
-
-
-
4,1
93,6
37
-
-
4,1
93,6
37
4,1
93,6
37
T
ota
l o
ther
fin
an
cin
g s
ou
rces (
uses)
-
-
-
6,3
92,3
15
185,0
00
644,9
20
7,2
22,2
35
7,2
22,2
35
N
et
Ch
an
ge in
Fu
nd
Bala
nces
43,6
63
258,9
04
302,5
67
(5,7
89,9
06)
(756,2
89)
(1,4
76,9
13)
(8,0
23,1
08)
(7,7
20,5
41)
Fu
nd
Bala
nces (
Defi
cit
):
B
egin
nin
g o
f year
523,2
65
3,9
50,7
50
4,4
74,0
15
5,0
13,7
94
1,8
52,6
47
(3,3
70,2
52)
3,4
96,1
89
7,9
70,2
04
E
nd o
f Y
ear
566,9
28
$
4,2
09,6
54
$
4,7
76,5
82
$
(776,1
12)
$
1,0
96,3
58
$
(4,8
47,1
65)
$
(4,5
26,9
19)
$
249,6
63
$
Cap
ital P
roje
cts
66
Exhibit 13
Variance with
Final Budget
Positive
Original Final Actual (Negative)
Revenues:
Taxes 3,064,000$ 3,064,000$ 3,091,242$ 27,242$
Expenditures:
General government 3,113,000 3,113,000 3,047,579 65,421
Excess (Deficiency) of Revenues
Over Expenditures (49,000) (49,000) 43,663 92,663
Fund Balance:
Beginning of year 523,265 523,265 523,265 -
End of year 474,265$ 474,265$ 566,928$ 92,663$
Budgeted Amounts
NEW CASTLE COUNTY, DELAWARE
LIGHT TAX FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2003
67
Exhibit 14
Prior Current Total to Grant
Years Year Date Budget
Revenues:
Intergovernmental 79,619,822$ 17,486,660$ 97,106,482$ 102,844,682$
Charges for services 8,883,303 2,017,870 10,901,173 9,937,999
Investment Income 658,094 25,398 683,492 658,636
Total revenues 89,161,219 19,529,928 108,691,147 113,441,317
Expenditures:
General government 36,329 - 36,329 36,329
Police 9,255,576 946,649 10,202,225 10,850,177
Special services 228,471 22,142 250,613 250,613
Community services 77,822,368 18,567,114 96,389,482 104,232,623
Land use 598,211 99,076 697,287 868,668
Total expenditures 87,940,955 19,634,981 107,575,936 116,238,410
Excess (Deficiency) of
Revenues Over Expenditures 1,220,264 (105,053) 1,115,211 (2,797,093)
Other Financing Sources:
Net transfers in 1,523,363 176,921 1,700,284 2,797,093
Net Change in Fund Balance 2,743,627$ 71,868 2,815,495$ -$
Fund Balance:
Beginning of Year 680,911
End of Year 752,779$
(1) Encompassing current grant file information.
Actual
NEW CASTLE COUNTY, DELAWARE
GRANTS FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FROM INCEPTION AND FOR THE YEAR ENDED JUNE 30, 2003 (1)
FUND BALANCE - BUDGET AND ACTUAL
68
Exhibit 15
Prior Current Total to Project
Years Year Date Authorization
Revenues:
Intergovernmental 11,466,324$ 2,057,466$ 13,523,790$ 14,858,000$
Other 89,704 3,009,526 3,099,230 24,800,000
Total revenues 11,556,028 5,066,992 16,623,020 39,658,000
Expenditures:
General government 7,324,147 2,313,165 9,637,312 12,328,148
Police 12,184,084 965,933 13,150,017 14,075,741
Special services 21,786,953 29,362,628 51,149,581 114,724,588
Community services 13,078,654 6,497,626 19,576,280 23,920,539
Total expenditures 54,373,838 39,139,352 93,513,190 165,049,016
Deficiency of Revenues
Over Expenditures (42,817,810) (34,072,360) (76,890,170) (125,391,016)
Other Financing Sources:
Bond proceeds 49,863,560 - 49,863,560 114,061,218
Capital lease proceeds - 4,193,637 -
Loan proceeds 5,150,000 - 5,150,000 5,150,000
Transfers in 3,151,200 3,028,598 6,179,798 6,179,798
Total other financing sources 58,164,760 7,222,235 61,193,358 125,391,016
Net Change in Fund Balances 15,346,950$ (26,850,125) (15,696,812)$ -$
Fund Balances:
Beginning of Year 9,341,840
End of Year (17,508,285)$
(1) Encompassing current project file information.
FROM INCEPTION AND FOR THE YEAR ENDED JUNE 30, 2003 (1)
Actual
NEW CASTLE COUNTY, DELAWARE
CAPITAL PROJECTS FUNDS
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES - BUDGET AND ACTUAL
69
Table 1
NEW CASTLE COUNTY, DELAWARE
GENERAL GOVERNMENTAL EXPENDITURES AND OTHER USES BY FUNCTION (1,2)
LAST TEN FISCAL YEARS
Culture Community
Fiscal General Public Public and Development Debt Net
Year Government Safety Works Judiciary Recreation and Housing Service Transfers Total
1994 19,729,455$ 33,300,916$ 7,796,959$ 4,565,213$ 14,500,058$ 13,631,827$ 10,452,997$ 170,292$ 104,147,717$
1995 19,932,160 36,248,851 7,844,383 4,701,611 15,592,192 14,540,152 10,416,230 - 109,275,579
1996 20,895,019 38,161,996 7,953,085 4,932,035 16,198,700 13,660,519 9,492,624 30,000 111,323,978
1997 20,490,937 37,884,857 8,036,500 4,787,654 16,617,583 14,536,015 11,967,320 - 114,320,866
Fiscal General Special Community Land Judiciary Debt Net
Year Government Police Services Services Use Offices Service Transfers Total
1998 14,578,371 41,263,791 10,836,449 24,506,293 6,448,289 4,565,354 14,253,838 (1,539,445) 114,912,940
1999 16,434,921 43,105,435 12,153,006 23,343,835 6,231,793 4,719,367 12,425,623 88,399 118,502,379
2000 16,432,621 46,908,470 13,136,959 26,747,265 8,883,656 5,056,267 12,986,060 - 130,151,298
2001 15,346,653 50,890,064 10,796,632 26,314,805 8,583,258 5,303,564 13,446,385 - 130,681,361
2002 15,478,192 53,749,687 10,588,619 29,285,044 9,494,554 5,323,809 13,869,142 2,619,659 140,408,706
2003 15,209,608 59,299,517 10,741,262 31,892,273 11,628,118 5,428,901 12,015,219 3,028,598 149,243,496
Note: (1) Includes General and Special Revenue Funds. (2) In FY 1998, New Castle County departments were reorganized.
($2,000,000)
$20,000,000
$42,000,000
$64,000,000
$86,000,000
$108,000,000
$130,000,000
$152,000,000
DO
LL
AR
S
1998 1999 2000 2001 2002 2003
FISCAL YEAR
GENERAL GOVERNMENTAL EXPENDITURESNet Transfers
Debt Service
Judiciary Offices
Land Use
Community Services
Special Services
Police
General Government
70
Table 2
NEW CASTLE COUNTY, DELAWARE
GENERAL GOVERNMENTAL REVENUES BY SOURCE (1)
LAST TEN FISCAL YEARS
Licenses Charges General and
Fiscal and Inter- for Administrative
Year Taxes Permits Governmental Services Miscellaneous Charges Total
1994 64,925,053$ 3,221,798$ 19,859,342$ 12,858,127$ 3,332,363$ 3,260,854$ 107,457,537$
1995 68,395,220 3,430,513 21,474,352 12,214,086 5,513,355 3,327,293 114,354,819
1996 72,785,614 3,660,708 20,866,012 13,685,292 6,723,399 3,231,099 120,952,124
1997 74,332,430 3,953,352 21,597,548 14,239,879 7,426,592 3,270,797 124,820,598
1998 77,316,976 4,235,408 24,260,790 15,644,342 7,196,947 4,262,817 132,917,280
1999 87,889,329 4,537,062 20,711,005 17,010,081 9,123,626 4,714,967 143,986,070
2000 87,737,692 4,465,700 22,333,213 19,595,408 11,492,510 5,088,186 150,712,709
2001 88,026,521 4,269,657 21,735,252 19,172,917 13,502,671 - 146,707,018
2002 93,368,137 4,332,795 24,277,670 23,606,434 12,136,240 - 157,721,276
2,003 100,471,586 4,160,677 26,129,046 23,205,916 6,928,199 - 160,895,424
Note: (1) Includes General and Special Revenue Funds.
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
DO
LL
AR
S
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
FISCAL YEAR
GENERAL GOVERNMENTAL REVENUES
General and AdministrativeCharges
Miscellaneous
Charges for Services
Intergovernmental
Licenses and Permits
Taxes
71
Table 3
NEW CASTLE COUNTY, DELAWARE
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Percent of Percent of
Percent Delinquent Total Tax Outstanding Delinquent
Fiscal Total Current Tax of Levy Tax Total Taxes Collections Delinquent Taxes to
Year Tax Levy (1) Collections Collected Collections Collected (2) to Tax Levy Taxes (2) Tax Levy
1994 49,922,426$ 48,951,727$ 98.1% 748,641$ 49,700,368$ 99.6% 2,328,902$ 4.7%
1995 53,242,781 52,340,471 98.3 760,042 53,100,513 99.7 2,198,418 4.1
1996 56,911,504 55,897,105 98.2 756,076 56,653,181 99.6 2,394,232 4.2
1997 58,346,345 57,310,457 98.2 877,111 58,187,568 99.7 2,450,696 4.2
1998 59,663,134 58,719,111 98.4 985,334 59,704,445 100.1 2,242,640 3.8
1999 60,844,880 59,883,440 98.4 854,597 60,738,037 99.8 2,262,835 3.7
2000 62,068,526 61,161,139 98.5 863,512 62,024,651 99.9 2,243,695 3.6
2001 62,211,884 61,429,761 98.7 941,156 62,370,917 100.3 1,966,481 3.2
2002 63,096,632 62,541,968 99.1 914,603 63,456,571 100.6 1,606,543 2.5
2003 64,303,189 63,722,801 99.1 745,351 64,468,152 100.3 1,415,110 2.2
Notes: (1) Represents initial annual levy plus quarterly additions.
(2) Represents property tax collections in the General Fund only; excludes the crossing guard tax and tax penalties/interest.
72
Table 4
NEW CASTLE COUNTY, DELAWARE
PROPERTY TAX RATES - DIRECT AND ALL OVERLAPPING GOVERNMENTS
(PER $100 OF ASSESSED VALUE)
LAST TEN FISCAL YEARS
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
New Castle County (1) $0.4145 $0.4335 $0.4550 $0.4550 $0.4550 $0.4550 $0.4550 $0.4550 $0.4550 $0.4550
School Districts: County School Districts (2) 0.7780 0.8557 0.9030 0.9403 0.9523 0.9765 0.8903 0.9348 1.0291 1.1725 New Castle County Vo-Tech 0.0800 0.0850 0.0850 0.0850 0.0850 0.1000 0.1000 0.1000 0.1010 0.1010 Appoquinimink District 0.7695 0.7695 0.7695 0.7795 0.7975 0.8925 0.8710 0.9430 1.0180 1.0020 Smyrna District (4) 0.4734 0.5170 0.5870 0.5980 0.5910 0.6110 0.9790 1.1080 1.0260 1.0920
Municipalities (3): Wilmington 0.9111 1.0018 1.0018 1.0819 1.0819 1.0819 1.0819 1.0819 1.3067 1.3067 Newark 0.4100 0.4100 0.4100 0.3900 0.3900 0.3900 0.3900 0.4200 0.4200 0.4200
Elsmere (5) 0.9750 0.8750 0.8750 0.8750 0.8750 0.8750 0.8750 0.8750 0.8750 0.0875
Newport 0.8100 0.8100 0.8100 0.8100 0.8100 0.8100 0.8100 0.8100 0.8100 0.8100
New Castle 0.8700 0.8700 0.8700 0.8700 0.8700 0.8700 0.8700 0.8700 0.8700 0.8700
Delaware City 0.8700 0.8700 0.8700 0.8700 0.9900 0.9900 0.9900 0.9900 0.9900 0.9900
Middletown 0.5000 0.5000 0.5000 0.5000 0.5000 0.5000 0.3000 0.3000 0.3000 0.3000
Other 0.2330 0.2330 0.2330 0.2330 0.2300 0.2300 0.2300 0.2300 0.2300 0.2300
Notes: (1) Represents basic County tax rate applicable to all unincorporated areas. (2) County School District's rate represents an average of the four districts - Brandywine, Christina, Colonial, and Red Clay. (3) Exclusive of basic County tax rate. (4) Includes Vo-Tech. (5) In addition, Elsmere includes a flat rate of $75 per house for residential and $1.20 per $100 of assessed value for commercial.
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Table 5
NEW CASTLE COUNTY, DELAWARE
PRINCIPAL TAXPAYERS
JUNE 30, 2003
2003 Percentage
Assessed of Total
Valuation (1) Assessed
Taxpayer Type of Business (000 Omitted) Valuation
DuPont de Nemours & Co. LLC Chemicals and Synthetics $307,672 1.89%Delmarva Power Public Utility 305,390 1.88Bracebridge Corporation Office Building 216,273 1.33Diamond State Telephone Co. Telephone Utility 213,029 1.31Astrazeneca Pharmaceuticals LP Chemicals and Synthetics 155,295 0.96E. I. duPont de Nemours & Co. Chemicals and Synthetics 121,183 0.75Hercules, Inc. Chemicals and Synthetics 84,813 0.52AWCI Water Utility 72,552 0.45Chrysler Corp. Automobile Assembly 63,300 0.39Wilmington Suburban Water Co. Water Utility 54,688 0.34Woodlawn Trustees, Inc. Shopping Center 53,544 0.331201 North Market Street LLC Office Building 51,775 0.32Motiva Enterprises LLC Oil Refinery 51,154 0.31J. P. Morgan Services, Inc. Banking Center 47,103 0.29General Motors Corporation Automobile Assembly 39,213 0.24Conectiv Delmarva Generation Inc Electric Utility 38,842 0.24HUB Properties Trust Office Building 36,072 0.22Brandywine Operating Partnership Office Building 35,997 0.22ATAPCO Christiana Inc. Office Building 33,820 0.21Christiana Mall LLC Shopping Center 33,751 0.21Concord Mall LLC Shopping Center 33,690 0.21Parkway Gravel Inc. Diversified Holdings 32,196 0.20
$2,081,352 12.80%
Note: (1) Valuations are based on only those property parcels in excess of $500,000.
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Table 6
NEW CASTLE COUNTY, DELAWARE
ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Ratio of Total
Assessed Estimated Assessed to
Fiscal Value (1) Actual Total Estimated
Year (000 Omitted) Value Actual Value
1994 14,002,160$ * *
1995 14,295,066 * *
1996 14,570,892 * *
1997 14,790,815 * *
1998 15,104,789 * *
1999 15,491,430 * *
2000 15,732,008 * *
2001 15,996,661 * *
2002 15,990,935 * *
2003 16,259,533 * *
Note: (1) The County has conducted a County-wide reassessment of all real property.
On July 1,1985, real property was assessed at 100% of the 1983 market value.
* Not available.
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Table 7
NEW CASTLE COUNTY, DELAWARE
RATIO OF NET GENERAL BONDED DEBT
TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA
LAST TEN FISCAL YEARS
Percentage
Total of Net
Taxable General Long-Term Net
Assessed Obligation Enterprise Fund Net Debt to Long-Term
Fiscal Value Bonded Debt Bonded Debt Bonded Debt Assessed Debt
Year Population (1) (000 Omitted) (000 Omitted) (000 Omitted) (000 Omitted) Value Per Capita
1994 457,500 14,002,160$ 136,190$ 51,387$ 84,803$ 0.6% $185.36
1995 466,752 14,295,066 126,555 47,453 79,102 0.6 169.47
1996 470,705 14,570,892 137,585 45,608 91,977 0.6 195.40
1997 474,250 14,790,815 137,440 41,643 95,797 0.6 202.00
1998 478,068 15,104,789 123,755 47,082 76,673 0.5 160.38
1999 482,164 15,491,430 164,763 67,438 97,325 0.6 201.85
2000 501,933 15,732,008 152,908 62,315 90,593 0.6 180.49
2001 507,034 15,996,661 159,004 56,055 102,949 0.6 203.04
2002 512,358 15,990,935 144,095 49,957 94,138 0.6 183.73
2003 517,626 16,259,533 132,020 44,969 87,051 0.5 168.17
Source: (1) New Castle County Department of Land Use.
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Table 8
NEW CASTLE COUNTY, DELAWARE
COMPUTATION OF LEGAL DEBT MARGIN
JUNE 30, 2003
Total assessed taxable value at July 1, 2002 16,259,532,730$
Debt limit - 3% of total assessed value 487,785,982$
Amount of debt applicable to debt limit: Total bonded debt 132,020,000$
Less: Deductions allowed by Delaware Code (1): Sewer facilities 44,969,319$ Airport facilities -
Total deductions 44,969,319
Total amount of debt applicable to debt limit 87,050,681
Legal debt margin 400,735,301$
Note: (1) In accordance with Title 9, Delaware Code Sec. 1163(a)(7), the aggregate principal of all outstanding bonds of New Castle County may not be in excess of 3% of the total assessed valuation of the taxable real estate. The "outstanding bonds" are not to include any bonds, notes, etc. issued for the purpose of financing certain Special Assessment and Enterprise Fund projects and facilities, or issued in anticipation of tax or other revenues, or which are secured by a pledge of obligations of or guaranteed by the U. S. Government or any agency or instrumentality thereof or which do not pledge the full faith and credit of the County. Debt secured by pledged funds ($37,670,000) is not included in the above schedule because it is considered defeased in-substance.
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Table 9
NEW CASTLE COUNTY, DELAWARE
COMPUTATION OF DIRECT AND OVERLAPPING DEBT
JUNE 30, 2003
Percentage Amount
Net Debt Applicable to Applicable to
Jurisdiction Outstanding New Castle County New Castle County
New Castle County 132,020,000$ 100.0% 132,020,000$
School Districts: Appoquinimink 19,336,699 100.0 19,336,699 Brandywine 28,397,602 100.0 28,397,602 Christina 30,947,221 100.0 30,947,221 Colonial 25,357,977 100.0 25,357,977 Red Clay 17,680,855 100.0 17,680,855 New Castle VoTech 1,958,268 100.0 1,958,268 Smyrna (1) 8,605,585 29.0 2,495,620
Total Districts 132,284,207 126,174,242
Municipalities: Middletown 26,505,000 100.0 26,505,000 Newark 23,505,000 100.0 23,505,000 Wilmington 193,100,409 100.0 193,100,409
Total Municipalities 243,110,409 243,110,409
Total Direct and
Overlapping Debt 507,414,616$ 501,304,651$
Note: (1) Approximately 71% of the Smyrna School District's total property assessment lies outside
the boundaries of New Castle County.
Sources: New Castle County Office of Finance, Statewide School Districts' Debt Service Accounts,
and Municipalities Departments' of Finance. No other municipalities have debt outstanding.
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Table 10
NEW CASTLE COUNTY, DELAWARE
RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR
GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES
LAST TEN FISCAL YEARS
Ratio of
Debt Service
Total to Total
Total General General
Fiscal Debt Governmental Governmental
Year Principal (1) Interest (1) Service Expenditures (2) Expenditures
1994 5,769,306$ 4,683,691$ 10,452,997$ 104,147,717$ 10.0%
1995 5,700,644 4,715,586 10,416,230 109,275,579 9.5
1996 5,125,117 4,367,507 9,492,624 111,323,978 8.5
1997 6,180,154 (3) 4,873,916 (3) 11,054,070 114,320,866 9.7
1998 8,471,594 (3) 4,516,402 (3) 12,987,996 114,912,940 11.3
1999 6,899,496 (3) 4,260,285 (3) 11,159,781 118,502,379 9.4
2000 6,731,805 (3) 4,994,036 (3) 11,725,841 130,151,298 9.0
2001 7,643,384 (3) 4,537,160 (3) 12,180,544 130,681,361 9.3
2002 8,811,292 5,057,850 13,869,142 140,408,706 9.9
2003 7,375,257 4,639,962 12,015,219 149,243,496 8.1
Notes: (1) Excludes debt service of Enterprise Funds. (2) Includes General and Special Revenue Funds. (3) Excludes Sewer note payments.
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Table 11
NEW CASTLE COUNTY, DELAWARE
SPECIAL ASSESSMENT COLLECTIONS
LAST TEN FISCAL YEARS
Special Assessments are not material and, accordingly, are not presented.
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Table 12
NEW CASTLE COUNTY, DELAWARE
DEMOGRAPHIC STATISTICS
LAST TEN FISCAL YEARS
Education
Level in
Per Years of School Unemploy-
Fiscal Population Capita Income Median Formal Enrollment ment Rate
Year (1) (2) Age Schooling (3) (2)
1994 457,500 $27,608 * * 62,414 4.7%
1995 466,752 29,743 * * 63,440 4.2
1996 470,705 29,597 * * 64,609 5.4
1997 474,250 30,152 * * 65,607 3.9
1998 478,068 32,536 * * 66,199 3.7
1999 482,164 33,327 * * 66,235 3.2
2000 501,933 35,587 * * 65,701 4.2
2001 507,034 37,087 * * 65,652 3.3
2002 512,358 * * * 65,383 4.7
2003 517,626 * * * * 4.1
Sources: (1) New Castle County Department of Land Use. (2) Delaware Department of Labor. (3) Delaware Department of Education.
* Figures not available.
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Table 13
NEW CASTLE COUNTY, DELAWARE
PROPERTY VALUE, CONSTRUCTION, AND BANK DEPOSITS
LAST TEN FISCAL YEARS
Assessed Property Value
(000 Omitted) Construction Bank
Fiscal Number of Value of Deposits (2)
Year Commercial Residential Nontaxable Permits (1) Permits (000 Omitted)
1994 $5,495,356 $8,586,076 $3,967,404 4,616 $309,670,250 *
1995 5,574,467 8,800,285 4,033,244 4,519 276,645,090 *
1996 5,624,627 9,011,149 4,044,333 4,794 309,095,929 *
1997 5,661,011 9,175,632 4,112,274 4,549 371,752,470 *
1998 5,725,447 9,410,118 4,133,684 4,881 343,500,874 *
1999 5,868,726 9,648,728 4,171,325 5,006 416,152,407 *
2000 5,963,009 9,796,387 4,135,757 5,075 428,378,009 *
2001 6,023,873 9,994,839 4,121,202 4,598 412,060,277 *
2002 6,051,480 9,962,405 4,140,615 4,935 330,184,414 *
2003 6,081,582 10,196,338 4,138,891 4,693 346,354,609 *
Notes: (1) Includes all permits for new dwellings, buildings, alterations and additions. (2) Source: Delaware Banking Commission.
* Not available.
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Table 14(continued)
NEW CASTLE COUNTY, DELAWARE
MISCELLANEOUS STATISTICS
Date of reorganization January 3, 1967
Form of government Council-Executive
County seat Wilmington
Area 437 square miles
Density 1,185 per square mile
The following selected statistics present New Castle County governmental services and facilities. Similar services andfacilities provided by the state and incorporated municipalities are not included in the following statistics.
Police Services:
Number of stations/substations 12 Number of officers 346
Fire Protection:
Volunteer companies 21
Emergency Medical Services:
Number of stations/substations 8 Paramedic staff 95
School Crossing Guards:
School districts served 6 Number of guards 290
Libraries:
Number directly administered 8 Number under contract 7 Circulation 3.4 million
Parks:
Regional park acreage 3,137 Local district park acreage 2,497 Number of parks 214
Recreation Facilities:
Golf courses 2 Softball/Baseball fields 97 Soccer Fields 40 Senior/nutrition centers 14 Basketball courts 117 Tennis courts 63 Museums 1 Riding stables 1 Big Toy Play Equipment Units 185
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Table 14(continued)
NEW CASTLE COUNTY, DELAWARE
MISCELLANEOUS STATISTICS
(CONTINUED)
Airports 1
Sewer Facilities System:
Residential accounts 108,612 Major industrial accounts 23 Commercial accounts 2,611 Apartment complex accounts 232 Contractual user accounts 5 Miles of sanitary sewer 1,600 Pump stations 152 Treatment plants 3
Full-Time Positions 1,619
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Federal Agency: Federal Pass-Through Total
Pass-through Entity: Catalog Entity Identifying Federal Program or Cluster Title Number Number Expenditures
U.S. Department of Agriculture:
Department of Health and Social Services (1)
Food Donation (2) 10.550 35-1400-2001-22 55,540$
Total U.S. Department of Agriculture 55,540$
U.S. Department of Housing & Urban Dev:
Community Development Block Grants/Entitlement Grants 14.218 4,437,698$ Emergency Shelter Grants Program 14.231 98,983
HOME Investment Partnerships Program 14.239 1,704,075
Lower Income Housing Asst Program-Section 8 Moderate Rehab 14.856 217,033
Section 8 Housing Choice Vouchers 14.871 10,190,708
Total U.S. Department of Housing & Urban Development 16,648,497$
U.S. Department of Interior:
National Park Service
Department of State (1) Historic Preservation Fund Grants-In-Aid 15.904 Various 21,259$
Total U.S. Department of Interior 21,259$
U.S. Department of Justice:
Direct Programs From:
Office of Justice Programs
Bureau of Justice Assistance
Local Law Enforcement Block Grants Program 16.592 183,645$
Office of Community Oriented Policing Services
Public Safety Partnership and Community Policing Grants 16.710 122,516
Criminal Division
Asset Forfeiture Program 16.000 18,301
Subtotal - Direct Programs 324,462
Pass-through Programs From:
Office of Justice Programs
Bureau of Justice Assistance
Delaware Department of Public Safety (1)
Byrne Formula Grant Program 16.579 DB-01-02 23,559
Edward Byrne Memorial State and Local Law Enforcement-
Assistance Discretionary Grants Program 16.580 DB-99-10 12,736
Office of Juvenile Justice & Delinquency Prevention
Department of Transportation-Office of Highway Safety (1)
Enforcing Underage Drinking Laws Program 16.727 Various 24,678
Subtotal - Pass-through Programs 60,973
Total U.S. Department of Justice 385,435$
U.S. Department of Transportation:
National Highway Traffic Safety Administration
Department of Transportation (1)
State and Community Highway Safety 20.600 Various 30,523$
Total U.S. Department of Transportation 30,523$
New Castle County
Schedule of Expenditures of Federal Awards
Fiscal Year Ended June 30, 2003
The notes to the schedule of expenditures of federal awards are an integral part of the schedule.
85
Federal Agency: Federal Pass-Through Total
Pass-through Entity: Catalog Entity Identifying Federal Program or Cluster Title Number Number Expenditures
New Castle County
Schedule of Expenditures of Federal Awards
Fiscal Year Ended June 30, 2003
National Foundation on the Arts and the Humanities:
Institute of Museum and Library Services,
Office of Library Servies,
Department of State (1)
State Library Program 45.310 Various 45,854$
Total National Foundation on the Arts and the Humanities 45,854$
Environmental Protection Agency:
Office of Water,
Wetland Program Development Grants 66.461 24,045$
Total Environmental Protection Agency 24,045$
Federal Emergency Management Agency:
Office of National Preparedness
Department of Public Safety-DEMA (1)
Emergency Management Performance Grants 83.552 Various 140,375$
State and Local All Hazards Emergency Operations Planning 83.562 207
Total Federal Emergency Management Agency 140,582$
Department of Education:
Office of Elementary and Secondary Education
Department of Services for Children, Youth and their Families (1)
Safe and Drug-Free Schools and Communities_State Grants 84.186 DFS(NCC-SAP)FY02-54 4,393$
Total Department of Education 4,393$
Department of Health and Human Services:
Administration on Aging
Department of Health and Social Services (1)
Special Programs for the Aging_Title III, Part B_Grants for Supportive Services and Senior Centers 93.044 Various 23,699$ Special Programs for the Aging_Title III, Part C_Nutrition Services 93.045 Various 462,775
Total Aging Cluster 486,474
Total Department of Health and Human Services 486,474$
TOTAL FEDERAL EXPENDITURES 17,842,602$
(1) Pass-Through the State of Delaware
(2) Includes USDA Food Commodities of $13,068
The notes to the schedule of expenditures of federal awards are an integral part of the schedule.
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New Castle County, Delaware
Notes to Schedule of Expenditures of Federal Awards
Year ended June 30, 2003
1. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of New Castle County, Delaware, and is presented on the modified accrual
basis of accounting. The information on this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-
Profit Organizations. Therefore, some amounts presented in this schedule may differ
from amounts presented in, or used in the preparation of, the basic financial statements.
2. Loans Outstanding
New Castle County, Delaware administers low-income housing loan programs under the
Community Development Block Grant and Home Investment Partnership Program. The County had the following loan balances outstanding at June 30, 2003:
Program Title
Federal CFDA
Number
Amount
Outstanding
Community Development Block Grants/
Entitlement Grants
14.218
$9,644,276 HOME Investment Partnerships Program 14.239 $4,362,328
3. Subrecipients
Of the federal expenditures presented in the schedule, New Castle County, Delaware provided federal awards to subrecipients as follows:
Program Title
Federal
CFDA Number
Amount
Provided to Subrecipients
Community Development Block Grants/ Entitlement Grants
14.218
$ 602,940
Emergency Shelter Grants Program 14.231 96,247 HOME Investment Partnerships Program 14.239 $ 482,627
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!@#@# ■ Ernst & Young LLP ■ Phone: (717) 651-7300
Central Pennsylvania Practice Fax: (717) 651-7444 Commerce Court, Suite 200 www.ey.com 2601 Market Place Harrisburg, Pennsylvania 17110-9359
Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
The Honorable Members of the County Council New Castle County, Delaware
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of New Castle County, Delaware as of and for the year ended June 30, 2003, which collectively comprise the County’s basic financial statements, and have issued our report thereon dated October 24, 2003. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether New Castle County, Delaware’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, 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 that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the County’s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control
90
over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management of New Castle County, Delaware in a separate letter dated October 24, 2003.
This report is intended solely for the information and use of the County Council, management, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
October 24, 2003
91
!@# ■ Ernst & Young LLP ■ Phone: (717) 651-7300
Central Pennsylvania Practice Fax: (717) 651-7444 Commerce Court, Suite 200 www.ey.com 2601 Market Place Harrisburg, Pennsylvania 17110-9359
Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance
in Accordance with OMB Circular A-133
The Honorable Members of the County Council New Castle County, Delaware
Compliance
We have audited the compliance of New Castle County, Delaware with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to its major federal program for the year ended June 30, 2003. New Castle County, Delaware’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal program is the responsibility of New Castle County, Delaware’s management. Our responsibility is to express an opinion on New Castle County, Delaware’s compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Those standards and OMB Circular A-133 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 New Castle County, Delaware’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. Our audit does not provide a legal determination on New Castle County, Delaware’s compliance with those requirements.
In our opinion, New Castle County, Delaware complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the year ended June 30, 2003.
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Internal Control Over Compliance
The management of New Castle County, Delaware is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered New Castle County, Delaware’s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of the County Council, management, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
October 24, 2003
New Castle County, Delaware
Schedule of Findings and Questioned Costs
Year ended June 30, 2003
PART I—Summary of Auditors’ Results
Financial Statement Section Type of auditors’ report issued: Unqualified Yes No
Internal control over financial reporting: Material weaknesses identified? X Reportable conditions identified not considered to be material weaknesses? None noted Noncompliance material to financial statements noted? X Federal Awards Section Yes No
Internal control over major programs: Material weaknesses identified? X Reportable conditions identified not considered to be material weaknesses? None noted Type of auditors’ report on compliance for major programs: Unqualified Yes No
Any audit findings disclosed that are required to be reported in accordance with Circular A-133 X (Section .510(a))?
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New Castle County, Delaware
Schedule of Findings and Questioned Costs (Continued)
Year ended June 30, 2003
PART I—Summary of Auditors’ Results (continued)
Identification of major program:
CFDA Number Name of Federal Program
14.871 Section 8 Housing Choice Vouchers
Dollar threshold used to determine Type A programs: $535,278 Yes No
Auditee qualified as low-risk auditee? X
PART II—Financial Statement Findings Section
No findings were noted.
PART III— Federal Award — Findings Section
No findings were noted.
No summary schedule of prior audit findings is required to be prepared in accordance with OMB Circular A-133.
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