BERKELEY COUNTY, SOUTH CAROLINA PREPARED BY: Kace

BERKELEY COUNTY, SOUTH CAROLINA PREPARED BY: Kace

BERKELEY COUNTY, SOUTH CAROLINA BASIC FINANCIAL STATEMENTS, SUPPLEMENTARY FINANCIAL INFORMATION, AND INDEPENDENT AUDITORS’ REPORT FISCAL YEAR ENDED JU...

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BERKELEY COUNTY, SOUTH CAROLINA BASIC FINANCIAL STATEMENTS, SUPPLEMENTARY FINANCIAL INFORMATION, AND INDEPENDENT AUDITORS’ REPORT FISCAL YEAR ENDED JUNE 30, 2005

PREPARED BY: Kace Smith, CPA, Finance Director Marietta Hicks, Accountant Jennifer Hinson, Accountant

BERKELEY COUNTY, SOUTH CAROLINA TABLE OF CONTENTS YEAR ENDED JUNE 30, 2005

FINANCIAL SECTION Page Number INDEPENDENT AUDITORS' REPORT

1

Management's Discussion and Analysis

3

Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets

12

Statement of Activities

14

Fund Financial Statements: Balance Sheet - Governmental Funds

15

Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Assets

16

Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds

17

Reconciliation of the Statement of Revenues, Expenditures, and Changes In Fund Balances - Governmental Funds to the Statement of Activities

18

Statement of Net Assets - Proprietary Funds

19

Statement of Revenues, Expenditures, and Changes in Fund Net Assets Proprietary Funds

20

Statement of Cash Flows - Proprietary Funds

21

Statement of Fiduciary Net Assets - Fiduciary Funds

23

Notes to the Basic Financial Statements

24

REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance Budgets and Actual - General Fund

50

(Continued)

BERKELEY COUNTY, SOUTH CAROLINA TABLE OF CONTENTS YEAR ENDED JUNE 30, 2005

OTHER SUPPLEMENTARY INFORMATION Page Number Combining and Individual Fund Schedules: Combining Balance Sheet - Nonmajor Governmental Funds

53

Combining Balance Sheet - Special Revenue Funds

54

Combining Schedule of Revenue, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds

61

Combining Schedule of Revenue, Expenditures, and Changes in Fund Balances Special Revenue Funds

62

Combining Statement of Fiduciary Net Assets - All Agency Funds

68

Schedule of Court Assessments and Surcharges, Clerk of Court and Magistrates

70

COMPLIANCE SECTION Schedule of Expenditures of Federal Awards

71

Notes to Schedule of Expenditures of Federal Awards

74

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Performed in Accordance with Government Auditing Standards

75

Independent Auditors' Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133

76

Schedule of Findings and Questioned Costs

77

Summary of Prior Audit Findings

80

INDEPENDENT AUDITORS’ REPORT

The Members of County Council Berkeley County, South Carolina Moncks Corner, South Carolina 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 Berkeley County, South Carolina (the “County”), as of and for the year ended June 30, 2005, which collectively comprise the County’s basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the County’s management. Our responsibility is to express an opinion on these basic 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 basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic 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 Berkeley County, South Carolina, as of June 30, 2005, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 17, 2006, on our consideration of the County’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The accompanying management’s discussion and analysis on pages 3 through 11 and budgetary comparison schedule on pages 50 through 51 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

1

Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the County’s basic financial statements. The other supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the US Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the County. The other supplementary information and schedule of expenditures of federal awards 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.

Greene, Finney & Horton, LLP February 17, 2006

2

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

Our discussion and analysis of Berkeley County’s annual financial report presents a narrative overview of the County’s financial performance during the fiscal year ended June 30, 2005. This information should be read in conjunction with the basic financial statements and the accompanying notes.

FINANCIAL HIGHLIGHTS •

• • • • • •

Berkeley County’s assets exceeded it's liabilities (net assets) at June 30 by $130,844,078 for fiscal year 2005 as compared to $123,944,914 last fiscal year end. Unrestricted net assets may be used to meet the County’s ongoing obligations to citizens and creditors; Berkeley County’s unrestricted net assets at June 30 amounted to $24,530,679. Unrestricted net assets increased $516,096 over the previous fiscal year. The County’s total net assets this fiscal year increased $6,899,165 over the previous year, with $1,000,410 of the increase resulting from governmental activities and $5,898,755 resulting from business-type activities. At June 30, Berkeley County’s governmental funds statements reported combined ending fund balances of $17,179,899, a decrease of $5,661,433 over the previous fiscal year due to the construction of capital projects. Of this amount, $15,011,690 remains in the various fund types of the County as unreserved. The General Fund reported an unreserved fund balance of $5,383,002 compared to last year’s unreserved amount of $5,315,371, an increase of $67,631. The County’s total capital assets increased by $24,057,486 in comparison to the previous year The County’s total long-term obligations decreased by $3,765,819 in comparison to the previous year The debt service coverage for the Solid Waste and the Water/Sewer revenue bonds was 236.7% and 127.9%, respectively. Both exceeded the 120% required by the bond covenants.

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Berkeley County’s basic financial statements. The basic financial statements are comprised of three sections: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. Government-Wide Financial Statements Government-wide financial statements provide a broad overview of the financial position of Berkeley County and are similar to private-sector financial statements. They include a Statement of Net Assets and a Statement of Activities. The Statement of Net Assets shows the County’s assets less its liabilities at June 30, 2005. The difference between these assets and liabilities is reported as net assets. Changes in net assets over time may be helpful in indicating an improving or deteriorating financial condition. The Statement of Activities follows the Statement of Net Assets and presents information showing how the net assets changed during the fiscal year. The statement presents all underlying events, which give rise to the change, regardless of the timing of the related cash flows. Both statements attempt to distinguish functions of Berkeley County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). Governmental activities reported in the statements include general government, public safety, airport, highways and streets, culture and recreation, health and welfare, and community development. The business-type activities are water and sewer, solid waste, parks and recreation, and emergency telephone.

3

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED) Fund Financial Statements Fund financial statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. Like other state and local governments, Berkeley County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of Berkeley County Government can be divided into three categories: governmental, proprietary, and fiduciary funds. Governmental Funds – Governmental funds are used to account for essentially the same functions as reported under the governmental activities column of the government-wide Statement of Net Assets and Statement of Activities. However, this set of financial statements focuses on events that produce near-term inflows and outflows of spendable resources, as well as on the balances of spendable resources available at the end of the fiscal year and is a narrower focus than the governmentwide financial statements. Such information may be useful in evaluating Berkeley County’s near-term financing requirements and available resources. By comparing functions between the two sets of statements for governmental funds and governmental activities, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statements of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Proprietary Funds – Services for which the County charges customers a fee are generally reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. These funds are similar to the government-wide business-type activities, but provide more detail and additional information, such as a cash flow statement. Fiduciary Funds – Berkeley County uses fiduciary funds to account for resources held for the benefit of parties outside county government. Although these funds are presented in the fund set of statements, they do not appear in the governmentwide financial statements because the resources of fiduciary funds are not available to support Berkeley County Government’s own programs. Berkeley County reports its fiduciary funds in a separate Statement of Fiduciary Net Assets. Notes to the Basic Financial Statements – The notes provide required disclosures and other information that are essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes present information about the County’s accounting policies, significant account balances and activities, material risks, obligations, commitments, contingencies and subsequent events. Other Information – In addition to the basic financial statements and the accompanying notes, this report also presents certain required supplementary information that includes this analysis and the General Fund budgetary comparison. Additionally, the combining statements, which include nonmajor governmental funds, are presented. As required by law, the County also presents a Schedule of Court Assessments and Surcharges.

4

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

GOVERNMENT-WIDE FINANCIAL ANALYSIS Comparative data for fiscal years ending June 30, 2005 and 2004 are shown below.

Berkeley County Net Assets (In Thousands) Governmental Activities 2005 2004 * Assets: Current and Other Assets Capital Assets, Net Total Assets

$

Business-Type Activities 2005 2004

Total 2005

2004 *

46,314 35,958 82,272

48,486 28,745 77,231

59,271 186,251 245,522

71,371 169,407 240,778

105,585 222,209 327,794

Liabilities: Current Liabilities Non-Current Liabilities Total Liabilities

33,577 36,510 70,087

29,310 36,736 66,046

11,053 115,810 126,863

8,280 119,738 128,018

44,630 152,320 196,950

37,590 156,474 194,064

Net Assets: Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets

4,884 1780 5,521 12,185

4,185 1,180 5,820 11,185

98,913 736 19,010 118,659

91,880 2,685 18,195 112,760

103,797 2,516 24,531 130,844

96,065 3,865 24,015 123,945

$

$

$

119,857 198,152 318,009

* Amounts have been restated due to a prior period adjustment. See Note III.A. in the Notes to the Basic Financial Statements for additional information. The overall financial position of the County improved in both fiscal years 2005 and 2004. As noted earlier in our discussion, changes in net assets over time can be one of the best and most useful indicators of financial position. Berkeley County’s increase in net assets for the fiscal years ending June 30, 2005 and 2004 amounted to $6,899,165 and $5,950,057, respectively. For both fiscal years, the County reported positive balances in all categories of net assets in both governmental and businesstype activities. The County’s net assets as of June 30, 2005 increased approximately $516,000 for unrestricted net assets and decreased approximately $1,349,000 for restricted assets. Unrestricted net assets are County resources that may be used to meet the County’s ongoing obligations to citizens and creditors while restricted assets are resources subject to external restriction. The largest portion of the County’s net assets (79.4%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), These assets are presented less any outstanding debt related to the acquisition and accumulated depreciation of those assets. The County uses capital assets to provide services to citizens and consequently these assets are not available for future spending. Although the investment in capital assets is reported net of related debt, the capital assets themselves cannot be used to liquidate that liability and other resources will be needed to repay any associated debt.

5

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Comparative data for fiscal years ending June 30, 2005 and 2004 are shown below. Information about changes in net assets can identify sources of County revenue, and how the County uses its funds. Below is a summary of the change in net assets. Berkeley County Statement of Activities (In Thousands) Governmental Activities 2005 2004 Revenues: Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions

$

Business-Type Activities 2005 2004

Total 2005

2004

12,808 2,088 3,089

10,837 1,367 2,430

31,255 4,507 6,382

30,949 319 4,929

44,063 6,595 9,471

20,673 4,543 387 320 7,478 347 3 161 51,897

20,461 4,342 349 299 7,042 154 84 47,365

736 338 43,218

483 27 36,707

20,673 4,543 387 320 7,478 1,083 341 161 95,115

20,461 4,342 349 299 7,042 637 27 84 84,072

Expenses: General Government Public Safety Airport, Highways, and Streets Culture and Recreation Health and Welfare Community Development Interest and Fiscal Charges Water and Sewer Solid Waste Parks and Recreation Emergency Telephone Total Expenses

17,002 20,299 5,995 2,098 1,635 2,009 1,755 50,793

16,033 19,120 5,480 2,038 1,441 3,264 1,895 49,271

23,410 11,528 1,225 557 36,720

19,688 7,413 1,245 505 28,851

17,002 20,299 5,995 2,098 1,635 2,009 1,755 23,410 11,528 1,225 557 87,513

16,033 19,120 5,480 2,038 1,441 3,264 1,895 19,688 7,413 1,245 505 78,122

Increase (Decrease) in Net Assets before Extraordinary Item and Transfers Extraordinary Item Transfers Change in Net Assets

1,104 (104) 1,000

(1,906) (20) (1,926)

6,498 (703) 104 5,899

7,856 20 7,876

7,602 (703) 6,899

5,950 5,950

Net Assets, Beginning of Year Prior Period Adjustment * Net Assets, Beginning of Year, Restated

10,237 948 11,185

12,163 12,163

112,760 112,760

104,884 104,884

122,997 948 123,945

117,047 117,047

12,185

10,237

118,659

112,760

130,844

General Revenues: Property Taxes Fee in Lieu of Taxes Accommodations Taxes Franchise Fees Unrestricted Grants Interest Income Gain on Sale of Assets Miscellaneous Total Revenues

Net Assets, End of Year

$

$

$

Reclassifications of some 2004 amounts have been made to conform to the 2005 presentation. * See Note III.A. in the Notes to the Basic Financial Statements for information on the prior period adjustment.

6

41,786 1,686 7,359

122,997

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED) Governmental Activities. The largest increase in revenues was charges for services. This was substantially attributable to higher building permits and real estate filing fees. The largest increase in expenses was public safety. This was substantially attributable to rising personnel costs necessary to protect and serve the needs of the County’s growing population. The largest decrease in expenses was community development. This was substantially attributable to the decrease in the amount of funds passed through the County for economic development. Business-type Activities. The largest increase in revenues was charges for operating grants and contributions. This was substantially attributable to a Disaster Relief grant as a result of damages incurred from Hurricane Gaston. The largest increase in expenses was solid waste. This was substantially attributable to clean up costs related to Hurricane Gaston. This item is discussed in greater detail in the Notes to the Basic Financial Statements

FINANCIAL ANALYSIS OF BERKELEY COUNTY’S FUNDS As noted earlier, Berkeley County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The following schedule presents a summary of all governmental fund revenues and other financing sources for the fiscal year ended June 30, 2005, and the amount and percentage of increases and decreases in relation to prior year amounts (in thousands):

Amount Revenues Property and Accommodations Taxes Fee in Lieu of Taxes Licenses, Fees and Permits Fines, Forfeitures and Fees Interest Income Local Revenue Intergovernmental - Federal Intergovernmental - State and Local Miscellaneous Other Financing Sources Proceeds from Capital Lease Transfers In Total

Percent of Total

$ 21,467 4,545 1,399 10,887 346 512 2,948 8,108 1,136

38.7% 8.2% 2.5% 19.6% 0.6% 0.9% 5.3% 14.6% 2.0%

1,088 3,085 $ 55,521

2.0% 5.6% 100%

Increase (Decrease) from 2004 $

$

931 212 287 1,762 192 104 778 9 399 55 (29) 4,700

Percent Increase (Decrease) 4.5% 4.9% 25.8% 19.3% 124.7% 25.5% 35.9% 0.1% 54.1% 5.3% -0.9% 9.2%

The largest percentage increase in revenues and other financing sources was interest income. This was a result of an increase in interest rates. There was no substantial decrease in revenues from prior year.

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BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

FINANCIAL ANALYSIS OF BERKELEY COUNTY’S FUNDS (CONTINUED) The following schedule presents a summary of all governmental funds expenditures and other financing uses for the fiscal year ended June 30, 2005, and the percentage of increases and decreases in relation to prior year amounts (in thousands):

Amount Expenses: General Government Public Safety Airport, Highways, and Streets Culture and Recreation Health and Welfare Community Development Capital Outlay Debt Service: Principal Retirement Interest Fiscal Charges Other Financing Uses: Transfer Out Total

Percent of Total

$ 16,052 19,453 5,274 1,990 1,562 1,987 8,558

26.2% 31.8% 8.6% 3.3% 2.6% 3.2% 14.0%

1,624 1,490

2.7% 2.4%

3,189 $ 61,179

5.2% 100.0%

Increase (Decrease) from 2004 $

$

1,126 1,099 445 79 284 (1,277) 4,044

Percent Increase (Decrease) 7.5% 6.0% 9.2% 4.1% 22.2% -39.1% 89.6%

393 153

31.8% 11.4%

55 6,401

1.8% 11.7%

The largest percentage increase in expenditures and other financing uses was in capital outlay. This was attributable to the capital projects including the construction of the new County administration building. The largest decrease in expenditures and other financing uses was in community development and is attributable to the decrease in funds passed through the County for economic development. General Fund Berkeley County’s only major governmental fund is the General Fund. It is the chief operating fund of the County. The fund balance of the General Fund increased 3.2% from the prior fiscal year to $5,663,617. The use of fund balance is attributable to increased expenditures in most county departments. Proprietary Funds Proprietary fund statements provide the same information as in the business-type activities column of the government-wide statements, but in greater detail, and on a fund basis for enterprise funds. The four enterprise funds are Water and Sewer, Solid Waste, Parks and Recreation, and Emergency Telephone. At June 30, 2005, total net assets amounted to $118,658,627 for enterprise funds as compared to $112,759,872 at June 30, 2004. Net asset changes are a result of operations, other nonoperating revenues and expenses, capital contributions and donated assets, and grants.

8

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

FINANCIAL ANALYSIS OF BERKELEY COUNTY’S FUNDS (CONTINUED) Proprietary Funds (Continued) Income from operations is the result of operational revenues less operational expenses. The table below shows net income or losses from operations for all enterprise funds. The Water and Sewer Fund experienced a decrease in operating income; while water and sewer operating revenues increased from the prior year, they were not sufficient to cover the increase in maintenance and repair costs. The Solid Waste Fund experienced an operational gain due to an increase in revenues combined with lower personnel costs. Parks and Recreation still continues to reflect net operational losses as it strives to increase its visitor attendance in a competitive market. Emergency Telephone continued to show an operational loss in fiscal year 2005, which was lower than the loss reported in prior year. While revenues experienced a slight increase, increased operational costs in most areas due to inflation caused them to exceed revenues. Operating Income (Loss) (In Thousands) 2005 4,029 1,964 (669) (44) $ 5,280

Water and Sewer Solid Waste Parks and Recreation Emergency Telephone Total

$

2004 7,062 1,281 (626) (24) $ 7,693

$

General Fund Budgetary Highlights: The County’s General Fund budget is the fiscal plan to provide services to the taxpayers and the resources required to provide those services. Budget to actual statements reporting these services and resources are provided in the financial statements for the General Fund. Budget columns are provided for both the original budget adopted for fiscal year 2005 as well as the final budget. The difference between the original budget and the final budget is substantially related to the supplemental appropriation approved by council in June 2005. The change between the original budgeted revenues and other financing sources, and the final budgeted revenues and other financing sources was an increase of $1,902,010. This amount was offset by the same increase in the change between the original budgeted expenditures and other financing uses, and the final budgeted revenues and other financing sources. A column for actual revenues and a column for differences between final budget and actual revenues follow the budgeted amounts columns. During fiscal year 2005, revenues exceeded budgetary estimates by $532,673. A column for actual expenditures and a column for differences between final budget and actual expenditures follow the budgeted amounts columns. During fiscal year 2005, expenditures were less than budgetary estimates by $1,494,317. Most of this savings is attributable to $652,413 and $634,553 realized in the general government and public safety expenditures, respectively.

9

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. At the end of 2005, the County had approximately $222 million invested in capital assets, net of depreciation. This was an increase of approximately $24 million from the prior year end. The investment in capital assets, both purchased and donated, includes land, buildings and utility systems, improvements, machinery and equipment, parks, roads, bridges and major drainage structures. Notable activity includes additional utility systems and plants for Water and Sewer coming on line during fiscal 2005, the purchase of computer equipment and software, ambulances, airport improvements, and vehicles for the Sheriff’s office. The table below reflects the capital asset balances as of June 30, 2005 and 2004, net of accumulated depreciation (in thousands). Governmental Activities 2005 2004 Land Construction in Progress Buildings and Improvements Furniture and Equipment Vehicles Utility Systems, Plants and Buildings Other Total

$

2,506 9,543 14,839 2,766 3,068 3,236 35,958

$

Business-type Activities 2005 2004

2,192 3,141 15,010 1,962 3,104 3,336 28,745

2,765 7,845 5,480 170,160 186,250

Total 2005

2,765 18,230 5,114 143,298 169,407

2004

5,271 $ 17,388 14,839 8,246 3,068 170,160 3,236 222,208 $

4,957 21,371 15,010 7,076 3,104 143,298 3,336 198,152

The County also has total outstanding construction commitments at June 30, 2005 of approximately $24.7 million. More detailed information about the County’s capital assets is included in Note III. E. of the Notes to the Basic Financial Statements. Long-Term Debt. At June 30, 2005, the County had approximately $154.6 million in bonds, loans and capital leases outstanding versus approximately $158.8 million at June 30, 2004, or a decrease of approximately $4.2 million due primarily to principal payments made during the year. The table below reflects the outstanding balances (in thousands) as of June 30, 2005 and 2004. Governmental Activities 2005 2004 General Obligation Bonds Revenue Bonds Intergovernmental Loan Capital Leases Total

$

$

28,550 5,000 1,735 35,285

Business-type Activities 2005 2004

29,287 5,000 1,515 35,802

116,085 3,256 119,341

120,485 2,527 123,012

Total 2005 28,550 $ 116,085 5,000 4,991 154,626 $

2004 29,287 120,485 5,000 4,042 158,814

Subsequent to year end, the County issued three bonds totaling approximately $143 million. More detailed information about the County’s debt and other long-term liabilities is presented in Note III.J and Note IV. M. of the Notes to the Basic Financial Statements.

10

BERKELEY COUNTY, SOUTH CAROLINA REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2005

CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED) Both the County’s current general obligation rating and revenue bond rating remains at A+ as assigned by Standard and Poor’s. These ratings reflect the strength of Berkeley County and its management staff.

ECONOMIC FACTORS AND THE 2006 BUDGET Factor considered in preparing Berkeley County’s budget for the 2006 fiscal year included: • • •

The unemployment rate in the County increased to approximately 5.3% from approximately 4.7% in 2004, while the state’s unemployment rate decreased to approximately 6.3% from approximately 6.6% in 2004. The population of the County was approximately 149,668 in 2005, and is expected to reach 190,000 by 2010. The building permits in the County increased approximately 11.3% over the prior year.

During the current fiscal year, unreserved fund balance in the general fund increased to $5,383,002. The County has appropriated $1,627,074 of this amount for spending in the 2006 fiscal year budget. It is intended that this use of available fund balance will avoid the need to raise taxes or charges during the 2006 fiscal year.

REQUESTS FOR INFORMATION This financial report is designed to provide a general financial overview of Berkeley County Government’s finances for all those with an interest in our government.. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed by mail to Berkeley County Finance Department at Post Office Box 6122, Moncks Corner, SC 29461-6120.

11

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF NET ASSETS JUNE 30, 2005

PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES

TOTAL

ASSETS CURRENT ASSETS Cash and Cash Equivalents Investments Receivables, Net of Allowances: Property Taxes Accounts Receivable Federal Government State and Local Governments Internal Balances Inventories, at Cost Prepaid Items and Deposits Restricted Cash and Cash Equivalents

$

TOTAL CURRENT ASSETS

8,269,867 7,602,957

13,361,026 -

$

21,630,893 7,602,957

22,778,843 3,799,115 536,133 1,758,424 1,151,233 108,859 45,611 128,100

1,500,270 3,535,146 (1,151,233) 554,645 279,478 33,319,059

22,778,843 5,299,385 536,133 5,293,570 663,504 325,089 33,447,159

46,179,142

51,398,391

97,577,533

12,049,127 23,909,008

10,610,217 175,640,438

22,659,344 199,549,446

35,958,135

186,250,655

222,208,790

131,185

131,185

135,087

6,188,034 1,553,824 -

6,188,034 1,553,824 135,087

135,087

7,873,043

8,008,130

36,093,222

194,123,698

230,216,920

82,272,364

245,522,089

NON-CURRENT ASSETS Capital Assets: Non-Depreciable Depreciable, Net of Accumulated Depreciation TOTAL CAPITAL ASSETS OTHER NON-CURRENT ASSETS Accounts Receivable, Due in More Than One Year Joint Municipal Water System, Net of Accumulated Amortization Bond Issuance Cost, Net of Accumulated Amortization Other Assets

-

TOTAL OTHER NON-CURRENT ASSETS TOTAL NON-CURRENT ASSETS TOTAL ASSETS

$

$

327,794,453

(Continued) The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

12

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF NET ASSETS JUNE 30, 2005

PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES

TOTAL

LIABILITIES CURRENT LIABILITIES Accounts Payable and Accrued Liabilities Accrued Interest Payable Current Portion of Long-Term Obligations: Accrued Compensated Absences Landfill Closure and Postclosure Cost Liability Capital Leases Bonds Payable Deferred Revenue Liabilities Payable from Restricted Assets: Construction Contract and Retainage Payable Accrued Interest Payable Bonds Payable

$

3,272,122 2,033,210

3,522,105 87,704

1,791,521 681,669 800,000 24,998,789

190,469 53,762 964,529 4,298

1,981,990 53,762 1,646,198 800,000 25,003,087

579,979 557,284 5,093,367

579,979 557,284 5,093,367

33,577,311

11,053,497

44,630,808

2,706,003 1,053,651 27,749,948 5,000,000

485,661 2,041,264 2,291,312 110,991,728 -

3,191,664 2,041,264 3,344,963 138,741,676 5,000,000

TOTAL NON-CURRENT LIABILITIES

36,509,602

115,809,965

152,319,567

TOTAL LIABILITIES

70,086,913

126,863,462

196,950,375

4,884,289

98,913,028

103,797,317

1,641,104 139,207 5,520,851

735,771 19,009,828

2,376,875 139,207 24,530,679

12,185,451

118,658,627

-

TOTAL CURRENT LIABILITIES

$

6,794,227 2,120,914

NON-CURRENT LIABILITIES Accrued Compensated Absences Landfill Closure and Postclosure Cost Liability Capital Leases Bonds Payable Intergovernmental Loan

NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted For: Debt Service Other Unrestricted TOTAL NET ASSETS

$

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

13

$

130,844,078

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2005

PRIMARY GOVERNMENT:

EXPENSES

NET (EXPENSE) REVENUE AND PROGRAM REVENUES CHANGES IN NET ASSETS OPERATING CAPITAL PRIMARY GOVERNMENT CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL BUSINESS-TYPE SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL

Governmental Activities: General Government Public Safety Airport, Highways and Streets Culture and Recreation Health and Welfare Community Development Interest and Fiscal Charges Total Governmental Activities

$ 17,001,547 20,299,098 5,995,437 2,097,980 1,634,752 2,009,385 1,754,790

7,746,265 4,612,972 302,275 32,996 16,929 96,621 -

684,073 539,702 185,291 303,603 157,491 217,748 -

1,446,327 97,220 1,367,981 177,520 -

(7,124,882) (15,049,204) (4,139,890) (1,761,381) (1,460,332) (1,517,496) (1,754,790)

50,792,989

12,808,058

2,087,908

3,089,048

(32,807,975)

23,410,431 11,527,719 1,224,921 556,606

21,903,980 8,301,012 555,398 494,738

471,065 4,009,987 25,806 -

6,381,800 -

36,719,677

31,255,128

4,506,858

6,381,800

$ 87,512,666

44,063,186

6,594,766

9,470,848

-

$

(7,124,882) (15,049,204) (4,139,890) (1,761,381) (1,460,332) (1,517,496) (1,754,790) (32,807,975) -

Business-Type Activities: Water and Sewer Solid Waste Parks and Recreation Emergency Telephone Total Business-Type Activities: Total Primary Government

-

5,346,414 783,280 (643,717) (61,868)

-

5,424,109

5,424,109

5,424,109

(27,383,866)

(32,807,975)

General Revenues: Taxes: Property Taxes Fee in Lieu of Taxes Accommodation Franchise Taxes Grants and Contributions not Restricted to Specific Programs Interest Income Gain on Sale of Assets Miscellaneous

20,672,769 4,543,421 386,568 320,543 7,477,599 346,530 3,662 160,941

Extraordinary Item - Loss due to Sulfur Spill Transfers

(103,648)

Total General Revenues, Extraordinary Item and Transfers

735,817 338,208 (703,027) 103,648

5,346,414 783,280 (643,717) (61,868)

20,672,769 4,543,421 386,568 320,543 7,477,599 1,082,347 341,870 160,941 (703,027) -

33,808,385

474,646

34,283,031

1,000,410

5,898,755

6,899,165

NET ASSETS - Beginning of Year, as Previously Stated Prior Period Adjustments

10,237,850 947,191

112,759,872 -

122,997,722 947,191

NET ASSETS - Beginning of Year, Restated

11,185,041

112,759,872

123,944,913

12,185,451

118,658,627

$ 130,844,078

NET CHANGE IN NET ASSETS

NET ASSETS, End of Year

$

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

14

BERKELEY COUNTY, SOUTH CAROLINA BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2005

GENERAL FUND

OTHER GOVERNMENTAL FUNDS

TOTAL GOVERNMENTAL FUNDS

ASSETS Cash and Cash Equivalents Investments Receivables, Net of Allowances: Property Taxes Accounts Receivable Federal Government State and Local Governments Due from Other Funds Inventories, at Cost Prepaid Items and Deposits Restricted Cash and Cash Equivalents

$

3,338,090 -

4,931,777 7,602,957

20,044,211 410,958 22,007 1,659,893 2,849,164 108,859 43,656 128,100

2,734,632 3,388,157 514,126 98,531 1,955 -

22,778,843 3,799,115 536,133 1,758,424 2,849,164 108,859 45,611 128,100

28,604,938

19,272,135

47,877,073

Accounts Payable and Accrued Liabilities Compensated Absences Payable Due to Other Funds Deferred Revenue

2,112,615 10,610 1,193,078 19,625,018

1,159,507 504,853 6,091,493

3,272,122 10,610 1,697,931 25,716,511

TOTAL LIABILITIES

22,941,321

7,755,853

30,697,174

108,859 43,656 128,100 -

1,955 1,746,432 139,207

108,859 45,611 1,746,432 128,100 139,207

TOTAL ASSETS

$

8,269,867 7,602,957

LIABILITIES AND FUND BALANCES LIABILITIES

FUND BALANCES Reserved For: Inventory Prepaid Items and Deposits Debt Service Future Capital Lease Acquisitions Other Unreserved: Designated for Subsequent Years' Appropriations/Operations Undesignated, Reported in: General Fund Special Revenue Funds Capital Projects Funds

1,627,074

TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES

$

-

3,755,928 -

3,636,462 5,992,226

3,755,928 3,636,462 5,992,226

5,663,617

11,516,282

17,179,899

28,604,938

19,272,135

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

15

1,627,074

$

47,877,073

BERKELEY COUNTY, SOUTH CAROLINA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2005

TOTAL FUND BALANCES - GOVERNMENTAL FUNDS

$

17,179,899

Amounts reported for the governmental activities in the Statement of Net Assets are different because of the following: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. The cost of the assets was $56,914,128 and the accumulated depreciation was $20,955,993. Other long-term assets are not available to pay for current period expenditures and therefore are not reported or are deferred in the funds: Property Taxes Emergency Medical Fees Other Assets Long-term liabilities, including bonds payable, are not due or payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consisted of the following: General Obligation Bonds Deferred Refunding Costs Bond Premium Intergovernmental Loan Capital Leases Accrued Compensated Absences Accrued Interest

35,958,135

548,496 169,226 135,087

852,809

(28,510,000) 262,949 (302,897) (5,000,000) (1,735,320) (4,486,914) (2,033,210)

TOTAL NET ASSETS - GOVERNMENTAL ACTIVITIES

(41,805,392) $

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report. 16

12,185,451

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2005

GENERAL

OTHER GOVERNMENTAL FUNDS

TOTAL GOVERNMENTAL FUNDS

REVENUES Taxes: Property Other Fee in Lieu of Taxes Licenses, Fees and Permits Fines, Forfeitures and Fees Interest Income Local Revenue Intergovernmental - Federal Intergovernmental - State and Local Miscellaneous

$

TOTAL REVENUES

18,664,854 3,666,773 1,398,520 7,567,954 149,271 380,691 7,166,530 692,239

2,415,730 386,568 878,786 3,318,915 197,259 511,926 2,566,921 941,764 443,402

$

21,080,584 386,568 4,545,559 1,398,520 10,886,869 346,530 511,926 2,947,612 8,108,294 1,135,641

39,686,832

11,661,271

51,348,103

15,051,503 15,235,150 5,262,489 53,605 1,561,854 389,495 956,165

1,000,658 4,217,512 11,952 1,935,958 1,597,898 7,601,986

16,052,161 19,452,662 5,274,441 1,989,563 1,561,854 1,987,393 8,558,151

861,580 72,768

765,345 1,417,524

1,626,925 1,490,292

39,444,609

18,548,833

57,993,442

242,223

(6,887,562)

(6,645,339)

1,087,554 945,953 (2,099,108)

2,139,108 (1,089,601)

1,087,554 3,085,061 (3,188,709)

(65,601)

1,049,507

983,906

176,622

(5,838,055)

(5,661,433)

EXPENDITURES Current: General Government Public Safety Airport, Highways and Streets Culture and Recreation Health and Welfare Community Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds from Capital Lease Transfers In Transfers Out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCE - Beginning of Year Prior Period Adjustments

5,486,995 -

16,491,267 863,070

21,978,262 863,070

FUND BALANCE - Beginning of Year, Restated

5,486,995

17,354,337

22,841,332

5,663,617

11,516,282

FUND BALANCE - End of Year

$

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

17

$

17,179,899

BERKELEY COUNTY, SOUTH CAROLINA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2005

TOTAL NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS

$

(5,661,433)

Amounts reported for the governmental activities in the Statement of Activities are different because of the following: Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. This amount represents the change in deferred revenues for the year.

(446,116)

Repayment of bond and capital lease principal is an expenditure or other financing use in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets.

1,626,925

Capital lease proceeds provide current financial resources to governmental funds, but entering into capital leases increases long-term liabilities in the Statement of Net Assets. This amount represents the proceeds received in the current year.

(1,087,554)

Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due and thus requires the use of current financial resources. In the Statement of Activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This amount represents the difference in treatment for the year.

(241,188)

Bond premiums are other financing sources in the year they are received in governmental funds; they are amortized over the lives of the bonds in the Statement of Activities. This amount represents the amortization for the year.

13,169

Deferred refunding charges are not recognized by the goverrnmental funds but are amortized over the life of the refunded debt in the Statement of Activities. This amount represents the amortization for the year.

(36,479)

The acquisition of non-current assets is not recognized in the Statement of Activities until disposed. Whereas, in the governmental funds, the purchase is recognized as an expenditure as they require the use of current financial resources.

135,087

Some compensated absences reported in the Statement of Activities do not require the use of current financial resources and are not reported as expenditures in the governmental funds.

(515,391)

In the Statement of Activities, the gain on disposal of assets has been reported, whereas in the governmental funds, proceeds from the disposal of assets increases financial resources. Thus, the change in net assets differs from the change in fund balance by the carrying amount of the assets disposed.

(121,638)

In the Statement of Activities, voter registration equipment contributed by the State of South Carolina is reported as revenues. Since such contributions result in neither the receipt nor the use of current financial resources, they are not reflected in the fund statements.

1,027,694

In the Statement of Activities, vehicles awarded through the courts is reported as revenues. Since such contributions result in neither the receipt nor the use of current financial resources, they are not reflected in the fund statements.

36,140

Governmental funds report capital asset additions as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital asset additions of $8,725,323 exceeded depreciation expense of $2,454,129 during the year. TOTAL CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

18

6,271,194 $

1,000,410

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2005

BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS WATER AND SEWER

SOLID WASTE

PARKS AND RECREATION

EMERGENCY TELEPHONE

TOTALS

ASSETS CURRENT ASSETS: Cash and Cash Equivalents Accounts Receivable, Net of Allowance Due from the State and Local Government Inventories, at Cost Prepaid Items and Deposits Due from Other Funds Restricted Cash and Cash Equivalents

$

TOTAL CURRENT ASSETS

6,592,899 724,708 749,304 491,981 215,798 4,568,664 30,560,566

6,070,550 702,801 2,785,842 5,964 2,746,815

800 62,664 11,678

696,777 72,761 57,716 -

$

13,361,026 1,500,270 3,535,146 554,645 279,478 4,568,664 33,319,059

43,903,920

12,311,972

75,142

827,254

57,118,288

8,172,785 150,342,399

2,352,432 22,952,135

85,000 1,774,347

571,557

10,610,217 175,640,438

158,515,184

25,304,567

1,859,347

571,557

186,250,655

131,185 6,188,034 1,445,952

107,872

-

-

131,185 6,188,034 1,553,824

7,765,171

107,872

-

-

7,873,043

166,280,355

25,412,439

1,859,347

571,557

194,123,698

210,184,275

37,724,411

1,934,489

1,398,811

251,241,986

3,390,911 29,177 172,973 96,482 -

73,539 53,762 58,527 667,181 48,186 3,375,586 -

49,094 8,318 43,347 4,298

8,561 116,057 2,454 -

3,522,105 53,762 87,704 964,529 190,469 3,375,586 4,298

559,979 500,233 4,093,367

20,000 57,051 1,000,000

-

8,843,122

5,353,832

105,057

127,072

14,429,083

284,185 359,889 97,821,728

142,147 2,041,264 1,562,620 13,170,000

59,329 2,344,311 17,132 -

351,671 -

485,661 2,344,311 2,041,264 2,291,312 110,991,728

98,465,802

16,916,031

2,420,772

351,671

118,154,276

107,308,924

22,269,863

2,525,829

478,743

132,583,359

86,058,548 9,266 16,807,537

10,905,076 726,505 3,822,967

1,845,575 (2,436,915)

103,829 816,239

98,913,028 735,771 19,009,828

102,875,351

15,454,548

(591,340)

920,068

NON-CURRENT ASSETS: CAPITAL ASSETS: Non-Depreciable Depreciable, Net of Accumulated Depreciation TOTAL CAPITAL ASSETS OTHER NON-CURRENT ASSETS: Accounts Receivable, Due in More Than One Year Joint Municipal Water System, Net Bond Issuance Costs, Net TOTAL OTHER NON-CURRENT ASSETS TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES: Accounts Payable and Accrued Liabilities Landfill Closure and Postclosure Cost Liability Accrued Interest Payable Capital Leases Accrued Compensated Absences Due to Other Funds Deferred Revenue Liabilities Payable from Restricted Assets: Construction Contract and Retainage Payable Accrued Interest Bonds Payable TOTAL CURRENT LIABILITIES

-

579,979 557,284 5,093,367

NON-CURRENT LIABILITIES: Accrued Compensated Absences Due to Other Funds Landfill Closure and Postclosure Cost Liability Capital Leases Bonds Payable TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for Debt Service Unrestricted Assets (Deficit) TOTAL NET ASSETS (DEFICIT)

$

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

19

$

118,658,627

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2005

BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS WATER AND SEWER

SOLID WASTE

PARKS AND RECREATION

EMERGENCY TELEPHONE

TOTALS

OPERATING REVENUES Sales and Services Impact and Capacity Reservation Fees Other Operating Revenue

$

TOTAL OPERATING REVENUES

17,588,319 3,134,875 1,180,786

8,279,218 21,794

437,551 117,847

494,725 13

$

26,799,813 3,134,875 1,320,440

21,903,980

8,301,012

555,398

494,738

31,255,128

5,652,862 1,293,272 320,267 3,088,870 603,432 1,119,634 5,501,578 294,668

2,328,289 37,179 108,890 1,715,949 207,073 424,169 1,515,436 -

779,207 37,083 68,957 24,218 15,251 11,027 193,162 95,277 -

97,154 1,602 248,573 21,798 52,774 9,000 31,472 76,773 -

8,857,512 38,685 1,647,981 475,173 4,872,844 830,532 1,768,437 7,189,064 294,668

17,874,583

6,336,985

1,224,182

539,146

25,974,896

4,029,397

1,964,027

(668,784)

(44,408)

5,280,232

571,414 471,065 (127,392) (5,408,456)

164,403 4,009,987 (4,557,863) 338,208 (632,871)

25,806 (739)

(17,460)

735,817 4,506,858 (4,557,863) 210,816 (6,059,526)

(4,493,369)

(678,136)

25,067

(17,460)

(5,163,898)

(643,717)

(61,868)

116,334

OPERATING EXPENSES Personal Services Advertising Utilities Office Expenses Maintenance and Repairs Contractual Services Other Services and Charges Depreciation Amortization of Joint Municipal Water System TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NON-OPERATING REVENUES (EXPENSES) Interest Income Grant Revenue Hurricane Gaston Clean Up Costs Gain (Loss) on Disposition of Capital Assets Interest Expense TOTAL NON-OPERATING REVENUES (EXPENSES) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS EXTRAORDINARY ITEMS AND TRANSFERS

(463,972)

1,285,891

CAPITAL CONTRIBUTIONS, EXTRAORDINARY ITEM AND TRANSFERS Capital Contributions Extraordinary Item - Loss Due to Sulfur Spill Transfers In TOTAL CONTRIBUTIONS, EXTRAORDINARY ITEMS AND TRANSFERS CHANGE IN NET ASSETS NET ASSETS (DEFICIT), Beginning of Year NET ASSETS (DEFICIT), End of Year

$

6,381,800 (703,027) -

-

103,648

-

6,381,800 (703,027) 103,648

5,678,773

-

103,648

-

5,782,421 5,898,755

5,214,801

1,285,891

(540,069)

(61,868)

97,660,550

14,168,657

(51,271)

981,936

102,875,351

15,454,548

(591,340)

920,068

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

20

112,759,872 $

118,658,627

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2005

BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS WATER AND SEWER

SOLID WASTE

PARKS AND RECREATION

EMERGENCY TELEPHONE

$ 23,162,659 300,000 (6,458,899) (5,919,677) -

8,365,215 (2,193,093) (2,448,524) (300,000)

556,246 (342,859) (300,945) -

747,735 (188,530) (97,898) -

11,084,083

3,423,598

(87,558)

461,307

471,065 (703,027) (4,936,390)

1,224,145 (4,557,863) 3,743,312

25,806 103,648

-

1,721,016 (4,557,863) (703,027) (1,089,430)

129,454

-

(4,629,304)

TOTALS

CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers and Users Cash Received from Interfund Services Provided Cash Paid to Suppliers Cash Paid to Employees Cash Paid to Interfund Services Provided NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

$ 32,831,855 300,000 (9,183,381) (8,767,044) (300,000) 14,881,430

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Operating Grant Contributions Hurricane Storm Gaston Clean Up Costs Extraordinary Item Transfers and Advances Between Funds NET CASH PROVIDED BY (USED IN) NON-CAPITAL FINANCING ACTIVITIES

(5,168,352)

409,594

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Capital Leases Grant Contributions Proceeds from the Sale of Assets Acquisition and Construction of Capital Assets Principal Paid - Revenue Bonds and Capital Leases Interest Paid - Revenue Bonds and Capital Leases NET CASH USED IN CAPITAL AND RELATED FINANCING ACTIVITIES

8,845,264 (18,918,924) (4,270,830) (5,005,333)

1,510,000 401,183 (2,933,427) (1,379,772) (548,245)

34,350 (54,129) (8,900) (739)

(22,695) (111,613) (17,460)

1,544,350 8,845,264 401,183 (21,929,175) (5,771,115) (5,571,777)

(19,349,823)

(2,950,261)

(29,418)

(151,768)

(22,481,270)

CASH FLOWS FROM INVESTING ACTIVITIES Interest Income on Investments

571,414

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, Beginning of Year CASH AND CASH EQUIVALENTS, End of Year

Reconciliation of Cash and Cash Equivalents to the Statement of Net Assets Cash and Cash Equivalents Restricted Cash and Cash Equivalents

164,403

-

-

735,817

(12,862,678)

1,047,334

12,478

309,539

(11,493,327)

50,016,143

7,770,031

-

387,238

58,173,412

$ 37,153,465

8,817,365

12,478

696,777

$ 46,680,085

6,592,899 30,560,566

6,070,550 2,746,815

800 11,678

696,777 -

13,361,026 33,319,059

$ 37,153,465

8,817,365

12,478

696,777

$ 46,680,085

(Continued)

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

21

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2005

BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS WATER AND SEWER

SOLID WASTE

PARKS AND RECREATION

EMERGENCY TELEPHONE

TOTALS

Reconciliation of Operating Income (Loss) to Net Cash Provided By (Used In) Operating Activities: Operating Income (Loss)

$

Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided By (Used In) from Operating Activities: Depreciation and Amortization (Increase) Decrease in Assets: Accounts Receivable Inventories Prepaid Items and Deposits Increase (Decrease) in Liabilities: Accounts Payable and Accrued Liabilities Landfill Closure and Postclosure Cost Liability Due to Other Funds Deferred Revenue Total Adjustments Net Cash Provided by (Used in) Operating Activities

4,029,397

1,964,027

(668,784)

(44,408)

5,796,246

1,515,436

95,277

76,773

1,258,679 4,027 (189,663)

64,203 -

5,551 3,200

252,997 174,152

272,568 -

(85,081) -

(3,498) 460,681 848

$

5,280,232

7,483,732 1,575,879 9,578 (12,311)

2,537 -

186,526 460,681 848

7,054,686

1,459,571

581,226

505,715

9,601,198

$ 11,084,083

3,423,598

(87,558)

461,307

$ 14,881,430

Schedule of Noncash Investing, Capital and Financing Activities: Acquisition of Capital Assets Through Developer and Other Contributions Acquisition of Capital Assets Not Yet Paid For Interest Capitalized on Assets Amortization of Bond Premium, Deferred Refunding Costs and Issuance Costs Increase in Outstanding Debt Obligations Due to Accretion of Interest

$

$

6,381,800 1,925,776 180,378

-

-

-

352,415

33,911

-

-

246,467

-

-

-

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

22

$

6,381,800 1,925,776 180,378 386,326

$

246,467

BERKELEY COUNTY, SOUTH CAROLINA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2005

AGENCY FUNDS ASSETS Cash and Cash Equivalents Investments Receivables: Accounts State Government

$

13,758,583 18,184,774 9,840 231,478

TOTAL ASSETS

32,184,675

LIABILITIES Due to School District Due to Other Designated Recipients

12,014,156 20,170,519

TOTAL LIABILITIES

$

The notes to the basic financial statements are an integral part of this statement. See accompanying independent auditors' report.

23

32,184,675

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity Berkeley County, South Carolina (the “County”) was established under the provisions of Act 681 of the 1942 South Carolina Legislature. The County is governed by an eight member County Council under the CouncilSupervisor form of government. Members are elected from single member districts. The supervisor, elected at large, serves as the chief administrative officer executing the policies and legislative actions of County Council. The County provides the following services: public safety (sheriff and fire), airport, highways and streets, sanitation, health and social services, cultural and recreational programs, public improvements, planning and zoning, courts and general administrative services. The basic financial statements of the County have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the County’s accounting policies are described below. The basic financial statements present the County and its component units, entities for which the County is considered to be financially accountable or for which exclusion of a component unit would render the financial statements incomplete or misleading. Blended component units, although legally separate entities, are in substance part of the government’s operations, and data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the County. The County has no blended or discretely presented component units. Related Organization The County is a member of the Lake Moultrie Water Agency (“LMWA”), a Municipal Water System. It appoints one representative to the four member board of LMWA. The LMWA is not owned by nor is it fiscally dependent upon the County. B. Government-wide and Fund Financial Statements The basic financial statements consist of the government-wide financial statements and fund financial statements. Both sets of statements distinguish between the governmental and business-type activities of the County. 1.

Government-wide Statements:

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 primary government. 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 or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self-financing or draws from the general revenues of the County.

24

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government-wide and Fund Financial Statements (Continued) 2.

Fund Financial Statements:

The County uses funds to maintain its financial records during the fiscal year. Fund accounting is designed to demonstrate legal compliance and to aid management by segregating transactions related to certain County functions or activities. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. Fund financial statements report detailed information about the County. The focus of governmental and enterprise fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a single column in the fund financial statements. Non-major funds are aggregated and presented in a single column. Fiduciary funds are presented by fund type and are excluded from the government-wide financial statements. 3.

Major Funds:

The County reports the following major governmental fund: The General Fund is the County’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The County reports the following major proprietary funds: The Water and Sewer Fund accounts for the sale and distribution of potable water, and for the operation of sewage treatment plants, pumping stations and systems for the collection and treatment of sewage. The Solid Waste Fund accounts for the operation and maintenance of the County Landfill and collection sites. The Parks and Recreation Fund accounts for the operation and maintenance of the County’s parks, including Cypress Gardens. The Emergency Telephone Fund accounts for the operation of the County’s 911 services. 4.

Nonmajor Funds:

In addition, the County reports the following fund types: The Special Revenue Funds account for revenue sources that are legally restricted to expenditures for specific purposes (not including expendable trusts or major capital projects) such as grants, fire and other special purpose fees, and economic development. The Debt Service Fund accounts for the servicing of general obligation long-term debt not being financed by proprietary or nonexpendable trust funds. The Capital Projects Fund accounts for the acquisition of fixed assets or construction of major capital projects not being financed by proprietary or nonexpendable trust funds. The Fiduciary Funds are used to account for assets held by the government in a trustee capacity or as an agent on behalf of others. The Agency Fund is custodial in nature and does not present results of operations.

25

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus and Basis of Accounting “Measurement focus” is a term used to describe which transactions are recorded within the various financial statements. “Basis of accounting” refers to when transactions are recorded, regardless of the measurement focus applied. 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 funds are reported using the current financial resources focus and the modified accrual basis of accounting in the Fund Financial Statements. Under the modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or soon enough thereafter to pay current liabilities. Expenditures (including capital outlay) are recorded when the related fund liability is incurred. Revenue Recognition In applying the susceptible to accrual concept under the modified accrual basis, the following revenue sources are deemed both measurable and available (i.e., collectible within the current year or within sixty days of year-end and available to pay obligations of the current period). This includes investment earnings, fines and forfeitures, certain charges for services, and state-levied locally shared taxes. Reimbursements due for federally funded projects are accrued as revenue at the time the expenditures are made. When grant funds are received in advance, revenue recognition is deferred until the qualifying expenditures are made. Property taxes and special assessments, though measurable, are not available soon enough in the subsequent year to finance current period obligations. Therefore, property tax and special assessment receivables are recorded and deferred until they become available. Other revenues, including permits, licenses, franchise fees and miscellaneous revenues, are recorded as revenue when received in cash because they are generally not measurable until actually received. Expenditure Recognition The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Most expenditures are measurable and are recorded when the related fund liability is incurred. However, debt service expenditures, as well as expenditures related to compensated absences, are recorded only when payment is due. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989 generally are followed in the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The County has elected not to follow subsequent private-sector guidance.

26

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus and Basis of Accounting (Continued) Expenditure Recognition (Continued) As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the government’s water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services, in connection with a proprietary fund’s principal ongoing operations. The County’s business-type activities accounted for in proprietary funds are chiefly administering water and sanitation, recreation, and emergency telephone. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Assets, Liabilities and Net Assets or Equity 1.

Cash and Cash Equivalents and Deposits The “deposits” classification is used only in the notes, not on the face of the statement of net assets, balance sheet or statement of cash flows. Deposits include only cash on hand, pooled money market funds and certificates of deposit. For purposes of the statement of cash flows for the Enterprise Funds, the County considers all highly liquid investments (including restricted assets) with original maturities of three months or less when purchased to be cash and cash equivalents.

2.

Investments The County’s investment policy is designed to operate within existing statutes (which are identical for all funds, fund types and component units within the State of South Carolina) that authorize the County to invest in the following: (1) Obligations of the United States and agencies thereof; (2) General obligations of the State of South Carolina or any of its political units; (3) Savings and loan association deposits to the extent insured by the Federal Deposit Insurance Corporation: (4) Certificates of deposit and funds in deposit accounts with banking institutions provided that such certificates and funds in deposit accounts are collaterally secured by securities of the type described in (1) and (2) above, held by a third party as escrow agent or custodian of a market value, not less than the amount of the certificates or funds in deposit accounts so secured, including interest; provided, however, such collateral shall not be required to the extent the same are insured by an agency of the federal government; (5) Collateralized repurchase agreements when collateralized by securities as set forth in (a) and (b) above and held by the governmental entity or a third party as escrow agent or custodian; and

27

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities and Net Assets or Equity (Continued) 2.

Investments (Continued) (6) No load open-end or closed-end management type investment companies or investment trusts registered under the Investment Company Act of 1940, as amended, where the investment is made by a bank or trust company or savings and loan association or other financial institution when acting as trustee or agent for a bond or other debt issue of that local government unit, political subdivision, or county treasurer if the particular portfolio of the investment company or investment trust in which the investment is made (i) is limited to obligations described in items (1), (2), and (5), of this subsection, and (ii) has among its objectives the attempt to maintain a constant net asset value of one dollar a share and to that end, value its assets by the amortized cost method. In addition, South Carolina State statutes authorize the County to invest in the South Carolina Local Government Investment Pool. The SCLGIP was created by state legislation which restricts the types of securities the pool can purchase. Specifically, the pool is permitted to purchase obligations of the United States, its agencies and instrumentalities, and any corporation within the United States if such obligations bear any of the three highest ratings of at least two nationally recognized rating services. The SCLGIP is 2a7-like pool, which is not registered with the Securities and Exchange Commission (SEC) as an investment company, but has a policy that it will operate in a manner consistent with the SEC’s rule 2a7 of the Investment Company Act of 1940. The reported value of the County’s position in the pool, if any, is the same as the fair value of the pool shares. In accordance with Governmental Accounting Standards Board (“GASB”) Statement No. 31, “Accounting and Financial Reporting for Certain Investments and for External Investment Pools”, investments are carried at fair value determined annually based upon quoted market prices. The total fair value of the Pool is apportioned to the entities with funds invested on an equal basis for each share owned, which are acquired at a cost of $1.00. The County’s cash investment objectives are preservation of capital, liquidity and yield. The County has a number of financial instruments, none of which is held for trading purposes. Except for nonparticipating investment contracts, investments are reported at fair value, which is based on quoted market prices. Nonparticipating investment contracts such as nonnegotiable certificates of deposit and repurchase agreements are reported at cost. Debt securities are reported at cost or amortized cost. For additional information related to deposits and investments, see Note III.B. The County currently or in the past year has used the following investments: •

Open ended mutual funds which are primarily invested in money market funds which invest in short term obligations of the United States and related agencies.



Repurchase agreements are a type of transaction in which a participant acquires immediately available funds by selling securities and simultaneously agreeing to repurchase the same or similar securities after a specified time at a given price, which typically includes interest at an agreed-upon rate. The County’s repurchase agreements are considered cash and cash equivalents as they may be redeemed on demand.

28

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities and Net Assets or Equity (Continued) 3.

Restricted Assets The County established certain accounts for assets restricted for specific purposes, typically by outside parties or legal agreement. Certain bond indentures require the establishment of (i) maximum annual principal and interest payments, unless a surety bond was provided, and (ii) the next succeeding principal and accrued interest payment. 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.

4.

Receivables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “Due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the governmentwide financial statements as “internal balances.” All trade and property tax receivables are shown net of an allowance for uncollectible amounts. The allowance for trade accounts receivable is computed based upon an estimate of collections within each aging category. The allowance for property taxes receivable is based upon a composite average of all years’ collections applied to the outstanding balance at the beginning of the fiscal year. The County bills and collects property taxes for itself and all other taxing entities within the County. The County recognizes property taxes in the period for which they are levied and available for financing current expenditures. Property taxes receivable represent delinquent real and personal taxes for the past ten years, less an allowance for amounts estimated to be uncollectible, plus taxes levied on the assessed value of real and personal property, excluding vehicles, as of January 1, 2005. All net property taxes receivable at yearend, except those collected within 60 days, are recorded as deferred revenue and thus not recognized as revenue until collected in the governmental funds. Taxes on real property and certain personal property attach as an enforceable lien on the property as of January 1. Taxes are levied and billed the following October on all property other than vehicles and are payable without penalty until January 15 of the following year. Penalties are assessed on unpaid taxes on the following dates: January 16 - three percent, February 2 - an additional seven percent, March 16 - an additional five percent. If not paid by the first Monday of November, the property is subject to sale by the delinquent tax office. Taxes on licensed motor vehicles are levied during the month when the taxpayer’s license registration is due for renewal. The taxpayer must provide proof of payment to the Highway Department before that agency will renew the vehicle license. The County charges a user fee to real property owners and certain commercial and governmental entities representing revenues for a portion of the County’s unfunded solid waste collection and disposal effort (e.g., incineration and landfill). The County also charges fees on real property in the various special tax districts for the specific services provided in such districts. Annual charges to real property owners are billed in the fall for the subsequent calendar year, but are recognized in full in the year of billing. For additional information related to receivables, see Note III.C.

29

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities and Net Assets or Equity (Continued) 5.

Inventories and Prepaid Items Inventories are valued at cost for the General Fund and lower of cost or market for the Proprietary Funds using the first-in, first-out method. Inventory in the General Fund consists of expendable supplies held for consumption using the purchase method. General Fund inventories have been charged as expenditures when purchased. Reported inventories are equally offset by a fund balance reserve which indicates that they do not constitute “available spendable resources” even though they are a component of fund balance. Inventory in the Proprietary Funds consists of replacement parts, supplies for operating systems, and items for resale. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid assets.

6.

Capital Assets Capital assets, which include property, plant, equipment, software and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets other than infrastructure are defined by the government as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of two years. The County’s minimum capitalization threshold for infrastructure assets is $100,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Donated capital assets are recorded at estimated fair market value at the date of donation. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction of capital assets for governmental activities is not capitalized. However, interest incurred during the construction phase of business-type activity capital assets is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Interest capitalized on assets not acquired with tax exempt debt is the product of the average accumulated expenditures during the year for such assets and the weighted average interest rate on debt. Interest is not capitalized on assets acquired or constructed with gifts and grants. Interest costs are not capitalized when immaterial in amount, or for small projects under $200,000, or those for which the construction period is less than six months. All reported capital assets, except land, construction in progress and certain infrastructure assets, are depreciated. Useful lives for infrastructure were estimated based on the County’s historical records of necessary improvements and replacements. Depreciation is provided using the straight-line method over the following estimated useful lives: Buildings and Other Improvements Equipment and Furniture Software Infrastructure Utility Systems, Treatment Plants and Buildings

30

15-40 years 4-15 years 5-15 years 15-40 years 15-40 years

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities and Net Assets or Equity (Continued) 6.

Capital Assets (Continued) GASB Statement No. 34 required the County to report and depreciate new infrastructure assets effective with the fiscal year ended June 30, 2003. Infrastructure assets include roads, bridges, underground pipe (other than related to utilities), traffic signals, etc. These infrastructure assets are likely to be the largest asset class of the County. Neither their historical cost nor related depreciation has historically been reported in the financial statements. The retroactive reporting of infrastructure is subject to an extended implementation period and must be completed by the fiscal year ending in 2006. The County has elected not to implement the retroactive provisions of GASB Statement No. 34 in the current year for infrastructure. The County is still gathering cost information and plans to implement the retroactive provisions for those assets in fiscal year 2006. Had all of the infrastructure networks been capitalized in 2005, net assets would be significantly higher.

7.

Compensated Absences It is the County’s policy to permit employees to accumulate earned but unused vacation, personal and sick pay benefits. There is no liability for unpaid accumulated sick leave since it is the County’s policy to record the cost of sick leave only when it is paid. Accumulated vacation and personal pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability is recorded in the governmental fund financial statements only if they have matured, for example, as a result of employee resignations and retirements.

8.

Long-term Obligations In the government-wide financial statements and proprietary 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, and gains or losses on debt refundings are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Costs related to the issuance of bonds are recognized as deferred charges and are amortized over the life of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

9.

Reservations and Designations of Fund Balances Government-wide Statements Equity is classified as net assets and displayed in three components: A. Invested in capital assets, net of related debt. Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

31

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

I.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities and Net Assets or Equity (Continued) 9.

Reservations and Designations of Fund Balances (Continued) B. Restricted net assets. Consists of net assets with constraints placed on their use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. C. Unrestricted net assets. All other net assets that do not meet the definition of “restricted” or “invested in capital assets, net of related debt.” Fund Statements Governmental fund equity is classified as reserved and unreserved, with unreserved further split between designated and undesignated. Reservations represent portions of fund balances which are not appropriable for expenditure or have been segregated for specific future uses by legal mandate. Designations represent tentative plans by the County for financial resource utilization in a future period as documented in the budgeting process for a succeeding year. Such plans are subject to change from original authorizations and may never result in expenditures.

10. Accounting Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires the County’s management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates.

II.

STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for the General Fund and for all of the Special Revenue Funds except the following: Special Clerk of Court Accounts, Special Sheriff Accounts, Planning Grant, Highway “C” Funds, PARD Grant, Heritage Community Service, and Legal Forfeiture Proceeds. The excluded Special Revenue Funds and Capital Projects Funds are budgeted over the life of the grant or project. Formal budgetary policies are not employed for the Debt Service Fund because effective budgetary control is alternatively achieved through General Obligation Bond indenture provisions. All agencies of the County must submit requests for appropriations to the Supervisor by March along with revenue estimates so that a budget may be prepared. By May the proposed budget is presented to County Council for review. The Council holds public hearings and adopts the final budget by July 1 through passage of an ordinance.

32

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

II.

STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED) A. Budgetary Information (Continued) The level of budgetary control is determined by County Council at the County’s total appropriations level. Expenditures by fund, department, and category (i.e., personnel, operating and capital outlay), are further defined in the budget document. The County Supervisor is authorized to make transfers of up to $2,000 per occurrence between departments and funds as long as total appropriations are not exceeded. The budget ordinance must be amended by Council to effect changes in total appropriations. Budgets, as reported in the financial statements, are as originally passed by ordinance and subsequently amended. During the year ending June 30, 2005, one supplementary appropriation of $1,896,834 was necessary. Encumbrance accounting is employed in the governmental funds. Encumbrances (e.g., purchase orders, contracts) 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 year. At June 30, 2005, there were no encumbrances outstanding. B. Excess of Expenditures Over Appropriations For the year ended June 30, 2005, expenditures exceeded appropriations in the following Special Revenue Funds, all of which were funded through revenues in excess of budget, operating transfers and fund balances. Total expenditures for the County did not exceed total appropriations. Therefore, the County has not violated any laws or regulations. Appropriations Sheriff DSS State Accommodations Tax County Accommodations Tax GIS-Non Consortium Expenses National Forest Funds Pooled Fire Fees Devon Forest Special Tax District Pimlico Special Tax District Airport Improvements

$

$

13,125 60,000 290,000 118,694 670,000 187,090 27,800 24,450 720,000

Expenditures 14,108 90,228 386,568 119,113 683,942 280,308 28,500 25,375 902,303

Excess $

$

983 30,228 96,568 419 13,942 93,218 700 925 182,303

C. Deficit Fund Equity The Parks and Recreation Enterprise Fund had a deficit net asset balance of $591,340 as of June 30, 2005, in addition to an interfund payable of $2,344,311 due to the General Fund. The County intends to designate funding to cover this deficit, to pay the amount due to the General Fund and for other recreational purposes.

33

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS A. Prior Period Adjustment The County accounts for transactions related to Special Tax Districts in Special Revenue funds. During 2005, the County determined that it owned the assets and was responsible for the liabilities of the Special Tax Districts, including Sangaree Special Tax District, which is the only fund with net assets. Accordingly, the beginning fund balance has been restated to reflect the County’s ownership of the net assets of Sangaree Special Tax District Fund, resulting in an increase in net assets of approximately $863,000 as of June 30, 2004. This change impacted the Statement of Revenues, Expenditures and Changes in Fund Balance by approximately $240,000 for the year ended June 30, 2004. This change also impacted the government-wide statements, increasing net assets by approximately $947,000, comprised of cash of approximately $863,000 and capital assets of approximately $84,000, as of June 30, 2004 and increasing revenues by approximately $240,000 for the year ended June 30, 2004. B. Deposits and Investments Deposits Custodial Credit Risk for Deposits: Custodial credit risk for deposits is the risk that, in the event of a bank failure, the County’s deposits might not be recovered. The County does not have a deposit policy for custodial credit risk but follows the investment policy statutes of the State of South Carolina. As of June 30, 2005, $8,590,650 of the County’s bank balances of $62,680,786 (which had a carrying value of $62,212,279) were exposed to custodial credit risk as $8,549,855 was uninsured but collateralized with securities held by the pledging financial institution’s trust department or agent but not in the government’s name and $40,795 was uninsured but collateralized with securities held by the pledging financial institution. Investments As of June 30, 2005, the County had the following investments: Credit Rating ^

Investment Type Money Market Mutual Funds - investing in U.S. Treasury Obligations Repurchase Agreements

AAAm *

Totals

Fair Value $

712,642 31,699,445

$

712,642 31,699,445

$

32,412,087

$

32,412,087

* Investments in Repurchase Agreements are considered to have no credit risk and therefore the credit rating for these investments are not disclosed. ^ If available, credit ratings are for Moody's Investors Service and Standard & Poor's.

34

Less Than 1 Year

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) B. Deposits and Investments (Continued) Interest Rate Risk: The County does not have a formal policy limiting investment maturities that would help manage its exposure to fair value losses from increasing interest rates. Custodial Credit Risk for Investments: Custodial credit risk for investments is the risk that, in the event of a counterparty failure, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County does not have an investment policy for custodial credit risk but follows the investment policy statutes of the State of South Carolina. As of June 30, 2005, $1,658,000 of the County’s investments were held by the counterparty’s trust department but not in the County’s name and $30,041,445 of the County’s investments were held by the counterparty. Concentration of Credit Risk for Investments: The County places no limit on the amount it may invest in any one issuer. Investments issued by or explicitly guaranteed by the U.S. Government and investments in mutual funds, external investment pools, and other pooled investments are exempt from concentration of credit risk disclosures. A repurchase agreement in the amount of $30,041,445 is held by Citigroup Global Markets, Inc. Reconciliation to the Financial Statements A reconciliation of cash and investments as shown in the Statements of Net Assets and the Statement of Fiduciary Net Assets is as follows: Description: Carrying Amount of Deposits Fair Value of Investments Total Statement of Net Assets: Cash and Cash Equivalents Cash and Cash Equivalents - Restricted Investments Statement of Fiduciary Net Assets: Cash and Cash Equivalents Investments

$

Amount 62,212,279 32,412,087

$

94,624,366

$

21,630,893 33,447,159 7,602,957 13,758,583 18,184,774

Total

$

94,624,366

Additional disclosure regarding the County‘s deposits and investments is located at Note I.D.1and D.2.

35

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) C. Receivables Receivables as of year end, including the applicable allowances for uncollectible accounts, are as follows, which includes $131,185 in non-current receivables for the Water and Sewer Fund:

Receivables: Taxes Accounts Federal Government State Government Total Less Allowance for Uncollectibles: Taxes Accounts Total

General $ 21,404,781 4,477,990 22,007 1,659,893

Water and Sewer 1,440,894 749,304

27,564,671

2,190,198

Other Nonmajor Funds 2,922,473 3,572,012 514,126 98,531

3,667,948

72,761

7,107,142

Agency Funds $

9,840 231,478 241,318

(1,360,570) (4,067,032)

(585,001)

(179,305)

-

(187,841) (183,855)

-

(5,427,602)

(585,001)

(179,305)

-

(371,696)

-

$ 22,137,069

Net Receivables

Solid Waste 882,106 2,785,842

Emergency Telephone 72,761 -

1,605,197

3,488,643

72,761

6,735,446

$

241,318

D. Interfund Receivables and Payables The composition of interfund balances at June 30, 2005 is as follows: Receivable Fund General Fund Special Revenue Funds: Emergency Preparedness State Accommodations Tax Sheriff's Grants Miscellaneous Special Revenue Solicitor's Grants County Accommodations Tax PARD Grant Airport Improvements Emergency Funds: Water and Sewer Solid Waste Parks and Recreation

$

Payable Fund

2,849,164

$

-

7,367 3,261 166,280 13,000 13,549 26,558 7,231 267,607

4,568,664 -

Total

$

7,417,828

1,193,078

3,375,586 2,344,311 $

7,417,828

Interfund balances largely result from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.

36

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) E. Capital Assets Capital asset activity in governmental funds for the year ended June 30, 2005, is as follows: Restated Balance 6/30/2004 Capital Assets, Not Being Depreciated: Land Construction in Progress Total Capital Assets, Not Being Depreciated

Disposals

244,669 6,826,641 7,071,310

Capital Assets, Being Depreciated: Buildings Furniture Equipment Software Vehicles Improvements Library Materials Infrastructure Total Capital Assets, Being Depreciated

18,086,783 81,345 7,879,111 323,232 7,133,908 5,483,198 1,441,468 2,291,689 42,720,734

24,812 1,401,862 39,602 858,915 225,484 167,172 2,717,847

(112,743) (751,084) (83,433) (947,260)

9,974 49,979 18,489 295,238 373,680

18,086,783 116,131 9,168,230 412,813 7,260,228 6,003,920 1,525,207 2,291,689 44,865,001

Less: Accumulated Depreciation For: Infrastructure Buildings Furniture Equipment Software Vehicles Improvements Library Materials Total Accumulated Depreciation

85,861 6,078,494 25,680 5,972,491 25,492 4,029,773 2,481,780 609,426 19,308,997

76,390 452,170 9,344 620,646 36,802 776,403 322,371 160,003 2,454,129

(109,537) (632,652) (83,433) (825,622)

18,489 18,489

162,251 6,530,664 35,024 6,483,600 62,294 4,192,013 2,720,718 769,429 20,955,993

Total Capital Assets, Being Depreciated, Net

23,411,737

263,718

(121,638)

355,191

23,909,008

28,744,745

7,335,028

(121,638)

$

-

Balance 6/30/2005

Transfers

2,192,113 3,140,895 5,333,008

Governmental Activities Capital Assets, Net

$

Additions

-

69,379 (424,570) (355,191)

-

$

$

2,506,161 9,542,966 12,049,127

35,958,135

The balances as of June 30, 2004 were increased in total by $84,121 to reflect the County’s ownership of the capital assets in the Sangaree Special Tax District operations. See Note III.A. for additional information related to this prior period adjustment. During the year ended June 30, 2005, the County recorded $1,027,694 in voter registration equipment contributed by the State of South Carolina and $36,140 in vehicles awarded through the courts.

37

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) E. Capital Assets (Continued) Business-Type capital asset activity for the year ended June 30, 2005, is as follows: Balance 6/30/2004 Capital Assets, Not Being Depreciated: Land Construction in Progress Total Capital Assets, Not Being Depreciated

$

Additions

Disposals

Balance 6/30/2005

Transfers

2,764,853 18,229,611 20,994,464

18,334,370 18,334,370

(2,026,193) (2,026,193)

(26,692,424) (26,692,424)

Capital Assets, Being Depreciated: Utility Systems, Treatment Plants and Buildings Equipment and Furniture Total Capital Assets, Being Depreciated

192,647,245 16,623,915 209,271,160

6,060,891 2,078,455 8,139,346

(188,742) (254,201) (442,943)

26,692,424 (18,489) 26,673,935

225,211,818 18,429,680 243,641,498

Less: Accumulated Depreciation For: Utility Systems, Treatment Plants and Buildings Equipment and Furniture Total Accumulated Depreciation

49,348,984 11,510,081 60,859,065

5,702,644 1,486,420 7,189,064

(28,580) (28,580)

(18,489) (18,489)

55,051,628 12,949,432 68,001,060

148,412,095

950,282

(414,363)

169,406,559

19,284,652

(2,440,556)

Total Capital Assets, Being Depreciated, Net Business-Type Activities Capital Assets, Net

$

$

26,692,424 -

2,764,853 7,845,364 10,610,217

175,640,438 $

186,250,655

During the year ended June 30, 2005, the County recorded $6,381,800 in utility systems contributed by developers. Depreciation expense was charged to functions of the primary government as follows: Governmental Activities: General Government Public Safety Airport, Highways, and Streets Culture and Recreation Health and Welfare Community Development Total Governmental Activity Depreciation Business-Type Activities: Water and Sewer Solid Waste Parks and Recreation Emergency Telephone Total Business-Type Activity Depreciation

38

$

$

841,355 555,404 707,285 258,968 69,125 21,992 2,454,129

5,501,578 1,515,436 95,277 76,773 7,189,064

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) E. Capital Assets (Continued) Construction commitments At June 30, 2005, the Water and Sewer Enterprise Fund had commitments under contracts for construction of various projects not completed of $22,771,011. Airport Improvement Special Revenue Fund had commitments under contracts for construction of various projects not completed of $162,141, and the Capital Projects Fund had commitments under contracts for construction of various projects not completed of $1,770,403. Capitalized Interest The Enterprise Funds capitalized interest costs incurred during construction activities. For the year ended June 30, 2005, the Water and Sewer Fund incurred $5,588,834 in interest on its bonds and capitalized $180,378; no interest was capitalized for the other funds. Equipment Purchased under Capital Lease The cost of equipment recorded under various capital leases for the County totaled $5,515,233 at June 30, 2005. Accumulated amortization was $1,774,810 at June 30, 2005. Amortization of assets recorded under capital lease obligations has been included with depreciation expense.

F. Joint Municipal Water System - Lake Moultrie Water Agency In prior years, the Authority’s Water and Sewer Enterprise Fund entered into a contract expiring October 2, 2027, with Lake Moultrie Water Agency (“LMWA”) to purchase 24% of the finished water produced by LMWA. Provisions of the contract require a deposit to reserve the capacity and to pay monthly demand (fixed) and volumetric (variable) charges. The original deposit was recognized as a deferred charge and is being amortized over the life of the contract; the remaining unamortized amount is included in other non-current assets. The Authority paid $8,959,122 to LMWA to reserve the desired capacity. These deferred charges are being amortized over the life of the contract. Accumulated amortization at June 30, 2005, is $2,771,088, and amortization recognized during the year $294,668. The estimated demand charges, excluding amortization of deferred charges for the next five years, are as follows: Year Ending June 30 2006 2007 2008 2009 2010

Amount $ $ $ $ $

39

582,905 622,007 645,545 674,261 708,655

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) G. Interfund Transfers Interfund transfers for the year ended June 30, 2005 consisted of the following: Transfer In Major Governmental Fund: General Fund Nonmajor Governmental Funds: Library National Forest Emergency Preparedness GIS Storm Water Management EMS Equipment State Accommodations Tax Sheriff's Grants Miscellaneous Special Revenue Solicitor's Grants County Accommodations Tax PARD Grants Local Economic Development Airport Improvements Lake Moultrie Enterprise Fund: Parks and Recreation

$

945,953

Transfer Out

$

1,695,970 113,899 233,505 3,309 2,629 6,629 4,333 9,211 29,623 40,000

683,942 28,261 7,498 77,268 3,060 279,924 9,648

103,648

Total

$

3,188,709

2,099,108

$

3,188,709

Transfers are used (1) to move revenues from the fund that a statute or budget requires to collect them to the fund that a statute or budget requires to expend them, and (2) to use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

40

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) H. Deferred Revenues The government-wide financial statements and the governmental funds defer revenue recognition in connection with resources that have been received, but not yet earned. In addition, governmental funds report deferred revenue in the fund financial statement in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At June 30, 2005, the various components of deferred and unearned revenue reported in the financial statements for governmental activities were as follows: Unearned: Real Property Taxes User Fees Vehicle Taxes Other Deferred Revenue - Statement of Net Assets

$

Unavailable: Real Property Taxes Vehicle Taxes EMS Fees Deferred Revenue - Governmental Funds

I.

$

21,777,286 3,091,838 84,223 45,442 24,998,789

526,509 21,987 169,226 25,716,511

Operating Leases The County leases various properties under several operating lease agreements expiring through 2015. Total costs charged to operations were approximately $150,000 for the year ended June 30, 2005, including $42,000 in General Fund expenditures, and $108,000 in Special Revenue Fund expenditures. Future minimum payments for these leases are as follows: Year Ending June 30, 2006 2007 2008 2009 2010 Thereafter

$

Total

$

41

Amount 180,076 160,161 140,649 78,946 50,283 230,464 840,579

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) J.

Long-term Obligations Presented below is a summary of changes in long-term obligations for the year ended June 30, 2005:

Long-Term Obligations Governmental Activities: General Obligation Bonds: Series 1997 Bond Series 2003 Refunding and Improvement Bond Subtotal Premium - Series 2003 Bond Deferred Refunding Costs - Series 2003 Bond Total - General Obligation Bonds

Beginning Balance

$

Intergovernmental Loan Capital Leases Compensated Absences Total Governmental Activities Business-Type Activities: Revenue Bonds: Capital Appreciation Bonds - Water and Sewer Series 2000 Revenue Bonds - Water and Sewer Series 2003 Revenue Bond - Water and Sewer Series 2000 Revenue Bond - Solid Waste Series 2002 Revenue Bond - Solid Waste Series 2003 Revenue Bond - Solid Waste Subtotal Accretion of Interest - Capital Appreciation Bonds Premium - Series 2003 Revenue Bond - Water and Sewer Deferred Refunding Costs - Series 2003 - Water and Sewer Deferred Refunding Costs - Series 2003 - Solid Waste Total Revenue Bonds

Total Business-Type Activities

4,270,000 25,000,000 29,270,000 316,066 (299,428) 29,286,638

$

-

Ending Balance

Reductions

255,000 505,000 760,000 13,169 (36,479) 736,690

4,015,000 24,495,000 28,510,000 302,897 (262,949) 28,549,948

Due Within One Year

$

270,000 530,000 800,000 800,000

5,000,000 1,514,691 3,972,329

1,087,554 2,217,398

866,925 1,692,203

5,000,000 1,735,320 4,497,524

681,669 1,791,521

39,773,658

3,304,952

3,295,818

39,782,792

3,273,190

160,286 3,830,000 225,000 200,000 555,000 4,970,286 166,453 (456,684) (33,911) 4,646,144

2,307,139 3,836,144 91,030,000 2,950,000 2,600,000 8,620,000 111,343,283 2,184,149 4,981,312 (2,423,649) 116,085,095

113,367 3,980,000 225,000 200,000 575,000 5,093,367 5,093,367

2,307,139 3,996,430 94,860,000 3,175,000 2,800,000 9,175,000 116,313,569 1,937,682 5,147,765 (2,880,333) (33,911) 120,484,772

Capital Leases Landfill Closure and Postclosure Care Cost Compensated Absences

Additions

246,467 246,467

2,527,382 2,095,026 779,865

1,544,350 419,354

815,891 523,089

3,255,841 2,095,026 676,130

125,887,045

2,210,171

5,985,124

122,112,092

964,529 53,762 190,469 $

6,302,127

General Obligation Bonds The County issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the County. The primary source of revenue for repayment of bonds reported in the governmental activities is property taxes. General obligation bonds payable at June 30, 2005 are comprised of the following issues:

Title of Issues Series 1997 General Obligation Bond, with interest ranging from 4.80% to 5%, matures 2015 Series 2003 General Obligation Refunding and Improvement Bond, with interest ranging from 2.00% to 5.00%, matures 2028 Total

Principal Amount Outstanding $

24,495,000 $

42

4,015,000

28,510,000

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) J.

Long-term Obligations (Continued) Intergovernmental Loan On January 15, 1998, the County entered into a ten year intergovernmental loan agreement with the South Carolina Public Service Authority (the “Public Service Authority”) whereby the Public Service Authority advanced $5,000,000 to be used in providing infrastructure for a commerce park within the County. Interest accrues on the loan at a rate equal to the rate borne by 10-year U.S. Treasury Bonds, with such rate adjusted annually on January 15. The rate at June 30, 2005 was approximately 5%. Proceeds from the sale of property in the commerce park will be paid first to the property owner at the greater of $25,500 per acre, or 80% of sales proceeds, net of closing costs. Remaining funds will be paid to the County and will be pledged to the reduction of accrued interest and loan principal. Such pledged revenues are to be remitted annually to the Public Service Authority on January 15. In the event that pledged revenues are insufficient to pay all principal and accrued interest by the maturity date of January 15, 2008, the County shall issue a Special Source Revenue Bond to pay the insufficiency. The Special Source Revenue Bond will be paid from fee in lieu of tax revenue. Outstanding accrued interest was $1,588,423 at June 30, 2005; there has been no repayment of principal to date. Revenue Bonds The Enterprise Funds issue revenue bonds to provide funds for the acquisition and construction of major capital facilities. The government pledges income derived from the acquired or constructed assets to pay debt service. The Water and Sewer Revenue Bonds are payable from revenues derived by the County from the operation of its system and monies on deposit established pursuant to the bond ordinance. Similarly, the debt service on the solid waste bonds is payable from revenues derived from the operation of the landfill and monies on deposit established pursuant to the bond ordinance. There are numerous limitations, restrictions, and covenants contained in the various revenue bond indentures and ordinances. At June 30, 2005, the County is in compliance with all significant restrictions and covenants, and no events of default occurred during the past year. Outstanding Principal Capital Appreciation Bonds due June 2012, exclusive of $2,184,149 in cumulative accretion of interest at 5.3% and 5.75%. Two payments of $3,240,000 each, which includes interest, are due in 2011 and 2012.

$ 2,307,139

Water and Sewer System, Series 2000 – Hanahan Project, due December 2025 with an interest rate of 4.855%.

3,836,144

Water and Sewer System Refunding Revenue Bond, Series 2003, due June 2028, with an interest rate of 2.0% - 5.25%. These bonds have an issuance premium of $4,981,312 and deferred refunding costs of $2,423,649, both of which are net of amortization.

91,030,000

Total Water and Sewer Revenue Bonds

97,173,283

Solid Waste System, Series 2000, due December 2014, with an interest rate of 6.5%.

2,950,000

Solid Waste System, Series 2002, due December 2017, with an interest rate of 4.66%.

2,600,000

Solid Waste System Refunding Revenue Bond, Series 2003, due December 2016, with an interest rate of 3.95%.

8,620,000

Total Solid Waste Revenue Bonds

14,170,000

Total Revenue Bonds

$ 111,343,283 43

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) J.

Long-term Obligations (Continued) Capital Leases The County has entered into various lease agreements to finance the acquisition of certain capital assets. These lease agreements qualify as capital leases for accounting purposes and therefore have been recorded at the present value of the future minimum lease payments as of the inception date. The interest rates on these leases range from 2.21% to 4.75% and mature in various dates from 2006 through 2010. The total outstanding principal at June 30, 2005 was $1,735,320 and $3,257,383 for the County’s governmental and business-type activities, respectively. At June 30, 2005, the County had $2,154,762 in unexpended capital lease proceeds, including $128,100 attributable to governmental activities and $2,026,662 attributable to business-type activities. Debt Service Requirements to Maturity Presented below is a summary of debt service requirements to maturity by year for the governmental and business-type activities. Debt Year Ending June 30 Governmental Activities 2006 2007 2008 2009 2010 2011 - 2015 2016 - 2020 2021 - 2025 2026 - 2028

Principal

Interest

Principal

Interest

Total

800,000 840,000 880,000 925,000 970,000 5,690,000 5,620,000 7,220,000 5,565,000

1,376,965 1,336,520 1,294,105 1,249,600 1,202,885 5,176,434 3,732,000 2,134,500 553,375

681,669 605,059 359,140 89,452 -

52,576 34,280 16,739 4,536 -

Total Governmental Activities

28,510,000

18,056,384

1,735,320

108,131

48,409,835

Business-Type Activities 2006 2007 2008 2009 2010 2011 - 2015 2016 - 2020 2021 - 2025 2026 - 2028

5,093,367 5,308,871 5,534,642 5,790,693 6,072,038 31,388,823 21,683,445 18,646,845 11,824,559

5,309,413 5,097,874 4,836,893 4,564,224 4,278,538 17,639,996 10,490,703 5,739,272 1,173,968

964,529 761,983 784,040 429,824 315,465 -

87,674 65,330 43,295 20,620 8,433 -

11,454,983 11,234,058 10,371,535 10,354,917 10,350,576 49,028,819 32,174,148 24,386,117 12,998,527

111,343,283

59,130,881

3,255,841

225,352

Total Business-Type Activities

$

Capital Leases

$

44

$

$

2,911,210 2,815,859 2,549,984 2,268,588 2,172,885 10,866,434 9,352,000 9,354,500 6,118,375

172,353,680

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) J.

Long-term Obligations (Continued) Landfill Closure and Postclosure Care Costs State and federal laws and regulations require the County to place a final cover on its landfill sites when each site stops accepting waste and to perform certain maintenance and monitoring functions at the sites for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfills stop accepting waste, the County reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $2,095,026 reported as an accrual for landfill closure and postclosure care at June 30, 2005, includes the estimated remaining liability of $1,155,330 for postclosure care of the previously closed landfill site plus the estimated total liability less amounts paid to date for the open site, based on the following information: Estimated Total Costs

Landfill Subtitle D DPW-105

Estimated Remaining Landfill Life

Percentage Balance of Capacity Used

22 years None

18.57% 100%

Closure

Postclosure

Total

Remaining To Be Recognized

$

3,521,450 -

1,473,000 1,155,330

4,994,450 1,155,330

$ 4,054,754 -

$

3,521,450

2,628,330

6,149,780

$ 4,054,754

These amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2005. Actual cost may be higher due to inflation, changes in technology or changes in regulations. The Subtitle D landfill site began accepting waste in July 2000. No assets have been restricted for payment of closure and postclosure care costs. Subsequent to June 30, 2005, DHEC notified the County concerning the water quality standards surrounding the closed landfill (DPW-105). At the time of issuance of the financial statements, management had not decided on a course of action to address DHEC’s concerns. The County will incur additional costs related to this matter. However, no amounts have been recorded for these additional costs at June 30, 2005 as they could not be estimated. K. Reserved and Designated Fund Equity Reserved for Inventory. Fund balance has been reserved for inventory to indicate that these amounts do not represent available spendable resources even though they are components of fund balance. Reserved for Prepaid Items and Deposits. Fund balance has been reserved for prepaid items to indicate that these amounts do not represent available spendable resources even though they are components of fund balance. Reserved for Encumbrances. Encumbrances representing commitments to vendors which had not been received or completed at year end have been reserved since they are not legally available for appropriation. At June 30, 2005, there were no encumbrances outstanding. Reserved for Debt Service. Fund balances are subject to the provision of various bond indenture agreements as to restrictions on expenditures. Designated for Subsequent Year’s Appropriations/Operations. The fiscal year 2006 budget ordinance designates $1,627,074 of the ending General Fund fund balance for fiscal year 2006 appropriations. 45

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

III.

DETAILED NOTES ON ALL FUNDS (CONTINUED) K. Reserved and Designated Fund Equity (Continued) Reserved for Future Capital Lease Acquisitions. Fund balance has been reserved to indicate that the County had unexpended capital lease proceeds which are restricted under financing agreements to be expended only on capital asset additions. Reserved for Other. Fund balance has been reserved to indicate that the County has unexpended National Forest Funds for Title III projects as defined by the Secure Rural Schools and Community Self-Determination Act of 2000.

IV.

OTHER INFORMATION A. Risk Management The County is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions and natural disasters. For all of these risks, the County is a member of the State of South Carolina Insurance Reserve Fund, a public entity risk pool currently operating as a common risk management and insurance program for local governments. The County pays an annual premium to the State Insurance Reserve Fund for its general insurance coverage. The State Insurance Reserve Fund is self-sustaining through member premiums and reinsures through commercial companies for certain claims. The County is also subject to risks of loss from providing health, life, accident, dental and other medical benefits to employees, retirees and their dependents. The County enrolled substantially all of its employees in the State’s health insurance plans administered by the South Carolina Budget and Control Board. The County pays a portion of the premiums and collects from employees and retirees the remaining premiums which are remitted to the state. In addition, the County insures the risk of job related injury or illness to its employees through South Carolina Counties Worker’s Compensation Trust, a public entity risk pool operating for the benefit of local governments. The County pays an annual premium to the Worker’s Compensation Trust for its insurance coverage. For all of the above risk management programs, the County has not significantly reduced insurance coverages from the previous year and settled claims in excess of insurance coverage for the past three years were immaterial. For each of the insurance programs and public entity risk pools in which they participate, the County has effectively transferred all risk with no liability for unfunded claims. B. Contingent Liabilities Several years ago the County received notification from the South Carolina Department of Health and Environmental Control (“DHEC”) regarding new Total Maximum Daily Load (TMDL) requirements for its sewer operations. TMDL refers to the allowable pollutants that can be discharged into a body of water without degradation to the quality of the natural environment. It relates to the total suspended solids, dissolved oxygen concentrations, biological oxygen demands, alkalinity, and other factors relating to effluent discharge. The implementation of Phase I of these requirements have cost the Authority approximately $13 million in prior years. The County is vigorously petitioning to have DHEC re-evaluate the remainder of these requirements; the outcome is currently uncertain. If the rest of DHEC’s TMDL requirements are enacted without any modifications, the County estimates that it will cost an additional $22.0 million to comply, which would be expected to be funded through a revenue bond. The County is hopeful that DHEC’s requirements will be moderated, and therefore the impact will be reduced or eliminated.

46

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

IV.

OTHER INFORMATION (CONTINUED) B. Contingent Liabilities (Continued) Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. Management has not been informed of any significant matters of noncompliance with grant provisions or planned grantor audits. The County, its officers and its employees, are defendants in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the County’s attorney that resolution of these matters, either individually or in the aggregate, will not have a material adverse effect on the financial condition of the County. C. Deferred Compensation Plan The County offers its employees a deferred compensation plan, offered through the State of South Carolina, created in accordance with Internal Revenue Code Section 457. The plan, available to all regular full-time employees, permits participants to defer a portion of their salaries until future years. The deferred compensation is not available to the employee or his beneficiaries until termination, retirement, death, disability or an approved hardship. All amounts of compensation deferred under the plan are held in trust for the contributing employee and are not subject to claims of the employer’s general creditors. The plan is administered by the State of South Carolina. D. Other Post-employment Benefits The County provides post-retirement health, life and dental care benefits, as per the requirement of a local ordinance, for certain retirees and their dependents. Substantially all employees who retire under the state retirement plans are eligible to continue their coverage. The County pays up to $140 per month of the retiree’s premium for standard health and dental coverage. The retiree pays the remaining balance, plus any additional coverage for dependents. The government finances the plan on a pay-as-you-go-basis. The cost to the County for the year ended June 30, 2005, was $114,146. As of year-end there were 66 employees who had retired with the County and are continuing their coverage. E. Employee Retirement Systems and Plans Plan Description The County contributes to both the South Carolina Retirement System (SCRS) and to the South Carolina Police Officers’ Retirement System (SCPORS), which are cost-sharing multiple-employer defined benefit pension plans administered by the Retirement Division of the State Budget and Control Board. Both the South Carolina Retirement System and Police Officers Retirement System offer retirement and disability benefits, cost of living adjustments on an ad-hoc-basis, life insurance benefits and survivor benefits. The Plan’s provisions are established under Title 9 of the SC Code of Laws. A Comprehensive Annual Financial Report containing financial statements and required supplementary information for the South Carolina Retirement System and Police Officers Retirement System is issued and publicly available by writing the South Carolina Retirement System, PO Box 11960, Columbia, SC 29211-1960.

47

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

IV.

OTHER INFORMATION (CONTINUED) E. Employee Retirement Systems and Plans (Continued) Funding Policy SCRS Plan members are required to contribute 6% of their annual covered salary and the County is required to contribute at an actuarially determined rate. The current rate is 6.7% of annual covered payroll. The County’s contributions to SCRS for the years ending June 30, 2005, 2004 and 2003 were $1,614,284; $1,517,656; and $1,383,834, respectively, equal to the required contributions for each year. Additionally, participating employers of the SCRS contribute .2% of payroll to provide a group life insurance benefit for their participants. SCPORS Plan members are required to contribute 6.5% of their annual covered salary and the County is required to contribute at an actuarially determined rate. The current rate is 10.3% of annual covered payroll. The County’s contributions to SCPORS for the years ending June 30, 2005, 2004 and 2003 were $603,541; $589,281, and $516,165; respectively, equal to the required contributions for each year. Additionally, participating employers of the SCPORS contribute .2% of payroll to provide a group life insurance benefit for their participants. F. Concentrations of Credit Risk The Water and Sewer and the Solid Waste Enterprise Funds grant credit to customers in Berkeley County, South Carolina. Accounts receivable and financed impact fees are financial instruments that potentially subject the Funds to credit risk. No collateral is required for credit granted to customers. The Enterprise Funds terminate services for accounts unpaid after 90 days. Additionally, the Funds participate in the State of South Carolina debt collection program, whereby delinquent customer balances may be withheld from customers’ state income tax refunds. G. Conduit Debt From time to time, the County issues Special Source Revenue Bonds to provide financial assistance to privatesector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the County, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2005, there were forty-five series of Special Source Revenue Bonds outstanding. The outstanding aggregate principal amount payable for the nineteen series issued after July 1, 1995, was approximately $1.2 billion. The aggregate principal amount payable for the twenty-six series issued prior to July 1, 1995, could not be determined; however, the original issue amounts for these bonds totaled approximately $776 million. H. Reciprocal Interfund Transactions During the year ended June 30, 2005, the Water and Sewer Enterprise Fund paid the General Fund $70,000 for administrative services. The Local Economic Development Special Revenue Fund paid the Parks and Recreation Enterprise Fund $116,150 for landscaping, mowing and other services provided. The Solid Waste Enterprise Fund reimbursed the Water and Sewer Enterprise Fund for administrative services totaling $300,000 in 2005. These amounts are reported as if they were external transactions, as revenues and expenses in the applicable fund.

48

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO THE BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2005

IV.

OTHER INFORMATION (CONTINUED) I.

Property Taxes The County is permitted under South Carolina law to levy property taxes for general governmental services and for the principal and interest on long-term debt. The County tax rate to finance general governmental services payments for the year ended June 30, 2005, was set by County Council in June 2004 at 49.5 mills ($4.95 per $100 assessed valuation) for general uses and purposes of the County. Additional tax rates were set as follows: 48.0 mills for the Sangaree Special Tax District, and 4.5 mills for debt retirement. The assessed valuation of properties within the County’s boundaries as of June 30, 2005 was $376,421,559, exclusive of vehicles valued at $65,509,505, according to the records of the County Auditor and Assessor.

J.

Related Party Transactions The wife of an engineer employed by the County is an employee of an engineering company used by the County for professional services. During the year ended June 30, 2005, the Water and Sewer Fund paid a total of approximately $1,239,000 to this company. The payments were for services rendered on terms equivalent to those that prevail in arm’s-length transactions.

K. Extraordinary Item – Loss Due to Sulfur Spill In the fall of 2004, a sulfur spill occured near the Water and Sanitation Authority’s offices leaving a large contaminated site. A total of $703,027 in costs related to cleaning up the site was incurred; these costs, which were not covered by insurance, were paid from the Water and Sewer Fund. In addition, the company that caused the spill has not assumed any responsibility related to the spill. The County has treated these costs as an extraordinary item in the financial statements for the year ended June 30, 2005. L. Hurricane Gaston During fiscal year 2005, Hurricane Gaston hit the South Carolina coast, causing major damage to certain County assets. The County’s Solid Waste Fund incurred significant clean up and repair costs totaling approximately $4.6 million related to the hurricane. The County received a Disaster Relief grant from the Federal Emergency Management Agency, which passed through the South Carolina Adjutant General’s office. Under the terms of the grant, the County will be reimbursed for a total of 87.5% of eligible costs, which is estimated at approximately $4.0 million. In June 2005, the County received approximately $1.2 million. The remaining balance of $2.8 million is expected to be received in the near future. M. Subsequent Events Subsequent to June 30, 2005, County Council, in the normal course of business, approved the issuance of three bonds for the Water and Sewer Fund. In July 2005, the County issued a Revenue Bond in the amount of $105,750,000 to finance capital improvements to the Water and Sewer Systems. In September 2005, the County issued a Revenue Bond in the amount of $1,300,000 for the purchase of St. Stephens Water and Sewer Facilities. In February 2006, the County issued a Revenue Bond in the amount of $36,120,000 to refund a portion of the Water and Sewer Fund’s outstanding Series 2003 Revenue Bond. Subsequent to June 30, 2005, County Council approved construction contracts totaling $23,218,673. In addition, County Council approved the issuance of a capital lease in the amount of $1,488,622.

49

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGETS AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2005

VARIANCE WITH FINAL BUDGET

BUDGETED AMOUNTS ORIGINAL

FINAL

ACTUAL AMOUNTS

REVENUES 19,112,104 3,957,000 1,505,800 6,174,513 55,000 184,536 6,823,420 539,008

19,112,104 3,957,000 1,505,800 6,781,938 55,000 253,266 6,834,877 654,174

18,664,854 3,666,773 1,398,520 7,567,954 149,271 380,691 7,166,530 692,239

38,351,381

39,154,159

39,686,832

532,673

417,966 4,500,470 127,908 9,997,095 317,991

421,497 4,573,973 127,908 10,262,547 317,991

372,525 4,442,095 124,316 9,830,704 281,863

48,972 131,878 3,592 431,843 36,128

Total General Government

15,361,430

15,703,916

15,051,503

652,413

Public Safety Sheriff Crime Stoppers Corrections Fire Communications Emergency Medical Services Coroner

7,194,032 3,000 2,373,037 326,747 941,163 4,177,727 257,956

7,506,954 3,000 2,536,905 326,747 978,879 4,246,054 271,164

7,290,023 3,000 2,424,299 325,734 906,822 4,010,050 275,222

216,931 112,606 1,013 72,057 236,004 (4,058)

15,273,662

15,869,703

15,235,150

634,553

294,214 3,841,233 514,582 542,888

310,450 4,053,463 539,272 563,466

304,089 3,948,452 479,705 530,243

6,361 105,011 59,567 33,223

5,192,917

5,466,651

5,262,489

204,162

40,000 13,605

40,000 13,605

40,000 13,605

53,605

53,605

53,605

Property Taxes Fee in Lieu of Taxes Licenses, Fees and Permits Fines, Forfeitures and Fees Interest Income Intergovernmental - Federal Intergovernmental - State and Local Miscellaneous

$

TOTAL REVENUES

$

(447,250) (290,227) (107,280) 786,016 94,271 127,425 331,653 38,065

EXPENDITURES Current: General Government Legislative Judicial Executive Finance and Administration Elections

Total Public Safety Airport, Highways and Streets Airport Highways and Streets Fleet Management Engineering Total Airport, Highways and Streets Culture and Recreation Berkeley Museum Spires Landing Operations Total Culture and Recreation

$

$

Note: This schedule has been presented on the modified accrual basis of accounting, which is consistent with accounting principles generally accepted in the United States of America.

50

-

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGETS AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2005

BUDGETED AMOUNTS ORIGINAL

FINAL

VARIANCE WITH FINAL BUDGET

ACTUAL AMOUNTS

EXPENDITURES (CONTINUED) Current (Continued): Health and Welfare Health State Mosquito Abatement Veterans Services Other Programs Assistance

$

101,270 412,334 96,121 890,834

101,270 516,023 118,073 891,046

94,182 494,598 113,854 859,220

1,500,559

1,626,412

1,561,854

5,000 248,977 135,518

5,000 248,977 135,518

5,000 248,977 135,518

-

389,495

389,495

389,495

-

338,517

894,768

956,165

(61,397)

580,881 49,444

861,592 72,784

861,580 72,768

12 16

630,325

934,376

934,348

28

38,740,510

40,938,926

39,444,609

1,494,317

242,223

2,026,990

Total Health and Welfare Community Development Santee Cooper Country Regional Development Alliance BCD Council of Governments Total Community Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges Total Debt Service TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES

(389,129)

(1,784,767)

(600,000) 900,598 (2,419,856)

(270,841) 1,099,232 900,598 (2,452,609)

1,087,554 945,953 (2,099,108)

Total Other Financing Sources (Uses)

(2,119,258)

(723,620)

(65,601)

NET CHANGE IN FUND BALANCES

(2,508,387)

(2,508,387)

5,486,995

5,486,995

5,486,995

2,978,608

2,978,608

5,663,617

$

7,088 21,425 4,219 31,826 64,558

OTHER FINANCING SOURCES (USES) Reserved for Contingency Proceeds from Capital Lease Transfers In Transfers Out

FUND BALANCE - Beginning of Year FUND BALANCE - End of Year

$

270,841 (11,678) 45,355 353,501 658,019

176,622

2,685,009 $

Note: This schedule has been presented on the modified accrual basis of accounting, which is consistent with accounting principles generally accepted in the United States of America.

51

2,685,009

(This page intentionally left blank.)

52

BERKELEY COUNTY, SOUTH CAROLINA COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2005

CAPITAL PROJECTS

DEBT SERVICE

SPECIAL REVENUE

TOTAL NON-MAJOR GOVERNMENTAL FUNDS

ASSETS Cash and Cash Equivalents Investments Receivables, Net of Allowances: PropertyTaxes Accounts Receivable Federal Government State and Local Governments Prepaid Items

$

92,128 6,447,656

4,931,777 7,602,957

4,262,959 -

1,921,990 -

812,642 3,388,157 514,126 98,531 1,955

2,734,632 3,388,157 514,126 98,531 1,955

6,539,784

3,653,981

9,078,370

19,272,135

547,558 -

1,907,549

611,949 504,853 4,183,944

1,159,507 504,853 6,091,493

547,558

1,907,549

5,300,746

7,755,853

1,746,432 -

1,955 139,207

1,955 1,746,432 139,207

3,636,462 -

3,636,462 5,992,226 11,516,282

-

TOTAL ASSETS

$

576,690 1,155,301

LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable and Accrued Liabilities Due to Other Funds Deferred Revenue TOTAL LIABILITIES FUND BALANCES Reserved For: Prepaid Items Debt Service Other Unreserved: Undesignated, Reported in: Special Revenue Funds Capital Projects Funds

-

5,992,226

TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES

$

-

5,992,226

1,746,432

3,777,624

6,539,784

3,653,981

9,078,370

53

$

19,272,135

BERKELEY COUNTY, SOUTH CAROLINA COMBINING BALANCE SHEET - SPECIAL REVENUE FUNDS JUNE 30, 2005

PLANNING GRANT

LIBRARY

NATIONAL FOREST

EMERGENCY PREPAREDNESS

ASSETS Cash and Cash Equivalents Receivables, Net of Allowances: Property Taxes Accounts Receivable Federal Government State and Local Governments Prepaid Items

$

TOTAL ASSETS

-

218,347

139,207

-

2,360 1,955

-

222,662

-

88,751 -

-

8,819 7,367 -

-

88,751

-

16,186

-

1,955 -

-

131,956

-

133,911

139,207

-

-

222,662

139,207

16,186

139,207

16,186 16,186

LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable and Accrued Liabilities Due to Other Funds Deferred Revenue TOTAL LIABILITIES FUND BALANCES Reserved for: Prepaid Items Other Unreserved: Undesignated TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES

$

54

139,207 -

-

STORM WATER MANAGEMENT

GIS

HIGHWAY "C" FUNDS

EMS EQUIPMENT

CLERK OF COURT

ECONOMIC DEVELOPMENT

87,012

-

39,152

-

31,864

$

323,180

-

-

-

-

21,753 -

87,012

-

39,152

-

53,617

18,489 -

-

39,152 -

-

14,276 -

-

18,489

-

39,152

-

14,276

-

-

-

-

-

-

-

68,523

-

-

-

39,341

323,180

68,523

-

-

-

39,341

323,180

87,012

-

39,152

-

53,617

323,180

$

323,180

(Continued)

55

BERKELEY COUNTY, SOUTH CAROLINA COMBINING BALANCE SHEET - SPECIAL REVENUE FUNDS JUNE 30, 2005

STATE ACCOMMODATIONS TAX

SHERIFF'S GRANTS

MISCELLANEOUS SPECIAL REVENUE

VICTIM'S WITNESS

ASSETS Cash and Cash Equivalents Receivables, Net of Allowances: Property Taxes Accounts Receivable Federal Government State and Local Governments Prepaid Items

$

TOTAL ASSETS

19,076

97,504

196,808

399,784

46,152 -

1,783 168,290 -

13,000 -

65,228

267,577

209,808

399,784

61,967 3,261 -

30,350 166,280 15,353

13,000 -

16,140 -

65,228

211,983

13,000

16,140

-

-

-

LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable and Accrued Liabilities Due to Other Funds Deferred Revenue TOTAL LIABILITIES FUND BALANCES Reserved for: Prepaid Items Other Unreserved: Undesignated TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES

$

56

-

-

-

55,594

196,808

383,644

-

55,594

196,808

383,644

65,228

267,577

209,808

399,784

SOLICITOR'S GRANTS

COUNTY ACCOMMODATIONS TAX

LOCAL ECONOMIC DEVELOPMENT

PARD GRANT

AIRPORT IMPROVEMENTS

-

94,068

-

15,750 -

38,720 -

7,231 -

173,337 5,740 -

256,685 32,148 -

35,462 -

15,750

132,788

7,231

1,544,257

288,833

35,462

2,201 13,549 -

106,230 26,558 -

7,231 -

12,592 235,420

21,226 267,607 -

35,462 -

15,750

132,788

7,231

248,012

288,833

35,462

-

-

-

-

-

-

-

-

15,750

132,788

1,365,180

REGIONAL DISASTER PLANNING GRANT

-

-

$

-

-

-

1,296,245

-

-

-

1,296,245

-

-

7,231

1,544,257

288,833

$

35,462

(Continued)

57

BERKELEY COUNTY, SOUTH CAROLINA COMBINING BALANCE SHEET - SPECIAL REVENUE FUNDS JUNE 30, 2005

SANGAREE SPECIAL TAX DISTRICT

PIMLICO SPECIAL TAX DISTRICT

TALL PINES SPECIAL TAX DISTRICT

DEVON FOREST SPECIAL TAX DISTRICT

ASSETS Cash and Cash Equivalents Receivables, Net of Allowances: Property Taxes Accounts Receivable Federal Government State and Local Governments Prepaid Items

$

TOTAL ASSETS

1,063,857

-

-

-

639,305 -

25,265 -

36,719 -

28,501 -

1,703,162

25,265

36,719

28,501

17,762 632,099

100 25,165

147 36,572

125 28,376

649,861

25,265

36,719

28,501

-

-

-

1,053,301

-

-

-

1,053,301

-

-

-

1,703,162

25,265

36,719

28,501

LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable and Accrued Liabilities Due to Other Funds Deferred Revenue TOTAL LIABILITIES FUND BALANCES Reserved for: Prepaid Items Other Unreserved: Undesignated

-

TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES

$

58

SPECIAL COUNTY TAX DISTRICT 94,524

LAKE MOULTRIE PARK

TOTAL SPECIAL REVENUE FUNDS

LEGAL FORFEITURE PROCEEDS

41,419

51,977

$

4,262,959

3,249,069 -

-

-

812,642 3,388,157 514,126 98,531 1,955

3,343,593

41,419

51,977

9,078,370

132,634 3,210,959

5,193 -

333 -

611,949 504,853 4,183,944

3,343,593

5,193

333

5,300,746

-

-

-

-

36,226

51,644

3,636,462

-

36,226

51,644

3,777,624

41,419

51,977

3,343,593

1,955 139,207

$

59

9,078,370

(This page intentionally left blank.)

60

BERKELEY COUNTY, SOUTH CAROLINA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2005

CAPITAL PROJECTS

DEBT SERVICE

SPECIAL REVENUE

TOTAL NON-MAJOR GOVERNMENTAL FUNDS

REVENUES Taxes: Property Other Fee in Lieu of Taxes Fines, Forfeitures and Fees Interest Income Local Revenue Intergovernmental - Federal Intergovernmental - State and Local Miscellaneous

$

TOTAL REVENUES

25,000 -

1,604,690 330,589 195,699 -

811,040 386,568 548,197 3,318,915 1,560 511,926 2,541,921 941,764 443,402

$

2,415,730 386,568 878,786 3,318,915 197,259 511,926 2,566,921 941,764 443,402

25,000

2,130,978

9,505,293

11,661,271

855,689 4,217,254 3,444 1,935,958 1,551,871 1,617,607

1,000,658 4,217,512 11,952 1,935,958 1,597,898 7,601,986

760,000 1,417,255

5,345 269

765,345 1,417,524

2,177,255

10,187,437

18,548,833

EXPENDITURES Current: General Government Public Safety Airport, Highways, and Streets Culture and Recreation Community Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges

144,969 258 8,508 46,027 5,984,379 -

TOTAL EXPENDITURES

6,184,141

DEFICIENCY OF REVENUES UNDER EXPENDITURES

(6,159,141)

-

(46,277)

(682,144)

(6,887,562)

OTHER FINANCING SOURCES (USES) Transfers In Transfers Out

-

-

2,139,108 (1,089,601)

2,139,108 (1,089,601)

TOTAL OTHER FINANCING SOURCES (USES)

-

-

1,049,507

1,049,507

NET CHANGE IN FUND BALANCES

(6,159,141)

FUND BALANCE - Beginning of Year, as Previously Stated Prior Period Adjustments

12,151,367 -

1,792,709 -

2,547,191 863,070

16,491,267 863,070

FUND BALANCE - Beginning of Year, Restated

12,151,367

1,792,709

3,410,261

17,354,337

5,992,226

1,746,432

3,777,624

FUND BALANCE - End of Year

$

61

(46,277)

367,363

(5,838,055)

$

11,516,282

BERKELEY COUNTY, SOUTH CAROLINA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUNDS FOR THE YEAR ENDED JUNE 30, 2005

PLANNING GRANT

NATIONAL FOREST

LIBRARY

EMERGENCY PREPAREDNESS

REVENUES Taxes: Property Other Fee in Lieu of Taxes Fines, Forfeitures and Fees Interest Income Local Revenue Intergovernmental - Federal Intergovernmental - State and Local Miscellaneous

$

43,304 -

40,160 290,197 10,834

687,428 -

43,232 25 -

43,304

341,191

687,428

43,257

43,304 -

1,901,225 -

-

156,178 -

1,895 130

-

1,036 42

43,304

1,903,250

-

157,256

-

(1,562,059)

687,428

(113,999)

Transfers In Transfers Out

-

1,695,970 -

(683,942)

113,899 -

TOTAL OTHER FINANCING SOURCES (USES)

-

1,695,970

(683,942)

113,899

NET CHANGE IN FUND BALANCES

-

133,911

FUND BALANCE - Beginning of Year, as Previously Stated Prior Period Adjustments

-

-

135,721 -

100 -

FUND BALANCE - Beginning of Year, Restated

-

-

135,721

100

139,207

-

TOTAL REVENUES EXPENDITURES Current: General Government Public Safety Airport, Highways, and Streets Culture and Recreation Community Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges

-

TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES)

FUND BALANCE - End of Year

$

-

62

133,911

3,486

(100)

STORM WATER MANAGEMENT

GIS

HIGHWAY "C" FUNDS

EMS EQUIPMENT

CLERK OF COURT

ECONOMIC DEVELOPMENT

22,052 115,450 -

-

30,182 494,719 -

394 31,480 -

290,207 -

137,502

-

524,901

31,874

290,207

304,662

345,386 -

3,309 -

135 524,766

13,129 21,374

348,646 -

1,914 -

2,414 97

-

347,897

3,309

(210,395)

(3,309)

233,505 -

-

-

524,901

$

-

1,914 302,748

-

34,503

348,646

-

(2,629)

(58,439)

3,309 -

-

2,629 -

-

-

233,505

3,309

-

2,629

-

-

23,110

-

-

-

(58,439)

302,748

45,413 -

-

-

-

97,780 -

20,432 -

45,413

-

-

-

97,780

20,432

68,523

-

-

-

39,341

63

1,914

302,748

$

323,180

(Continued)

BERKELEY COUNTY, SOUTH CAROLINA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUNDS FOR THE YEAR ENDED JUNE 30, 2005

STATE ACCOMMODATIONS TAX

SHERIFF'S GRANTS

MISCELLANEOUS SPECIAL REVENUE

VICTIM'S WITNESS

REVENUES Taxes: Property Other Fee in Lieu of Taxes Fines, Forfeitures and Fees Interest Income Local Revenue Intergovernmental - Federal Intergovernmental - State and Local Miscellaneous

$

TOTAL REVENUES

90,228 -

13,440 1,032 366,294 493,306 469 3,302

106,135 528 16,284 122,679

263,177 -

90,228

877,843

245,626

263,177

61,967 -

734,551 146,648

24,369 203,318 -

317,986 22,516

EXPENDITURES Current: General Government Public Safety Airport, Highways, and Streets Culture and Recreation Community Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges

-

TOTAL EXPENDITURES

61,967

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES

881,199

-

-

227,687

340,502

28,261

(3,356)

17,939

(77,325)

Transfers In Transfers Out

(28,261)

6,629 (7,498)

4,333 -

-

TOTAL OTHER FINANCING SOURCES (USES)

(28,261)

(869)

4,333

-

OTHER FINANCING SOURCES (USES)

NET CHANGE IN FUND BALANCES

-

(4,225)

22,272

(77,325)

FUND BALANCE - Beginning of Year, as Previously Stated Prior Period Adjustments

-

59,819 -

174,536 -

460,969 -

FUND BALANCE - Beginning of Year, Restated

-

59,819

174,536

460,969

-

55,594

196,808

383,644

FUND BALANCE - End of Year

$

64

SOLICITOR'S GRANTS

COUNTY ACCOMMODATIONS TAX

LOCAL ECONOMIC DEVELOPMENT

PARD GRANT

REGIONAL DISASTER PLANNING GRANT

AIRPORT IMPROVEMENTS

80,920 -

386,568 -

3,132 -

32,644 548,197 5,740 -

843,080 29,600 -

80,920

386,568

3,132

586,581

872,680

43,766

90,131 -

309,300 -

72 -

495,805 -

902,303

43,766 -

-

-

-

-

$

-

43,766 -

-

90,131

309,300

72

495,805

902,303

43,766

(9,211)

77,268

3,060

90,776

(29,623)

-

9,211 -

(77,268)

(3,060)

(279,924)

29,623 -

-

9,211

(77,268)

(3,060)

(279,924)

29,623

-

-

-

-

(189,148)

-

-

-

-

-

1,485,393 -

-

-

-

-

-

1,485,393

-

-

-

-

-

1,296,245

-

65

$

-

(Continued)

BERKELEY COUNTY, SOUTH CAROLINA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES SPECIAL REVENUE FUNDS FOR THE YEAR ENDED JUNE 30, 2005

SANGAREE SPECIAL TAX DISTRICT

PIMLICO SPECIAL TAX DISTRICT

TALL PINES SPECIAL TAX DISTRICT

DEVON FOREST SPECIAL TAX DISTRICT

778,396 3,839

25,375 -

37,006 -

28,500 -

782,235

25,375

37,006

28,500

592,004 -

25,375 -

37,006 -

28,500 -

-

-

-

592,004

25,375

37,006

28,500

190,231

-

-

-

REVENUES Taxes: Property Other Fee in Lieu of Taxes Fines, Forfeitures and Fees Interest Income Local Revenue Intergovernmental - Federal Intergovernmental - State and Local Miscellaneous

$

TOTAL REVENUES EXPENDITURES Current: General Government Public Safety Airport, Highways, and Streets Culture and Recreation Community Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges

-

TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers In Transfers Out

-

-

-

-

TOTAL OTHER FINANCING SOURCES (USES)

-

-

-

-

NET CHANGE IN FUND BALANCES

190,231

-

-

-

FUND BALANCE - Beginning of Year, as Previously Stated Prior Period Adjustments

863,070

-

-

-

FUND BALANCE - Beginning of Year, Restated

863,070

-

-

-

1,053,301

-

-

-

FUND BALANCE - End of Year

$

66

SPECIAL COUNTY TAX DISTRICT

LAKE MOULTRIE PARK

TOTAL SPECIAL REVENUE FUNDS

LEGAL FORFEITURE PROCEEDS

2,748,326 -

-

29,004 -

2,748,326

-

29,004

9,505,293

2,748,326 -

34,661 -

3,853 -

855,689 4,217,254 3,444 1,935,958 1,551,871 1,617,607

-

-

34,661

3,853

-

(34,661)

25,151

-

40,000 (9,648)

-

2,139,108 (1,089,601)

-

30,352

-

1,049,507

-

(4,309)

25,151

367,363

-

40,535 -

26,493 -

2,547,191 863,070

-

40,535

26,493

3,410,261

-

36,226

51,644

2,748,326

$

811,040 386,568 548,197 3,318,915 1,560 511,926 2,541,921 941,764 443,402

5,345 269 10,187,437

(682,144)

$

67

3,777,624

BERKELEY COUNTY, SOUTH CAROLINA COMBINING SCHEDULE OF FIDUCIARY NET ASSETS ALL AGENCY FUNDS FOR THE YEAR ENDED JUNE 30, 2005

CLERK OF COURT

MASTER IN EQUITY

TAX COLLECTOR

ASSETS Cash and Cash Equivalents Investments Receivables: Accounts State Government

$

1,315,606 494 -

TOTAL ASSETS

420,482 -

1,393,245 -

1,316,100

420,482

1,393,245

1,316,100

420,482

1,393,245

1,316,100

420,482

1,393,245

LIABILITIES Due to School District Due to Other Designated Recipients TOTAL LIABILITIES

$

68

SHERIFF

MAGISTRATES

84,588 -

192,007 -

TREASURER

"C" FUNDS ADMINISTRATION

TOTALS

7,731,276 8,826,679

2,621,379 9,358,095

9,346 -

231,478

9,840 231,478

-

$

13,758,583 18,184,774

84,588

192,007

16,567,301

12,210,952

32,184,675

84,588

192,007

12,014,156 4,553,145

12,210,952

12,014,156 20,170,519

84,588

192,007

16,567,301

12,210,952

69

$

32,184,675

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF COURT ASSESSMENTS AND SURCHARGES CLERK OF COURT AND MAGISTRATES FOR THE YEAR ENDED JUNE 30, 2005

REVENUES Collections: Assessments Surcharges Total Collections

$

Remitted to State Treasurer: Assessments Surcharges Total Remitted to State Treasurer

1,057,971 536,335 1,594,306

933,007 398,122 1,331,129

Revenues Retained by the County for Victim's Assistance Program

263,177

EXPENDITURES Salaries and Wages Fringe Benefits Other Operating Expenses Total Program Expenses

204,893 61,890 73,719 340,502

Deficiency of Revenues Over Expenditures

(77,325)

BALANCES CARRIED FORWARD Beginning of the Year

460,969

End of the Year

$

70

383,644

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2005

FEDERAL GRANTOR/PASS THROUGH GRANTOR/PROGRAM TITLE

FEDERAL CFDA NUMBER

PASS THROUGH GRANTOR'S NUMBER

14.228 14.228 14.228 14.228

4-P-02-009 4-P-03-009 4-L-03-003 4-L-03-026

ALLOWABLE FEDERAL EXPENDITURES

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Passed Through South Carolina Office of the Governor Division of Economic Development/ Community Development Block Grant Regional Disaster Planning - COG Local Planning Assistance Local Planning Assistance Russellville Water Extension Honey Hill Shulerville

$

Total U.S. Department of Housing and Urban Development

80,450 6,620 104,167 23,814 215,051

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed Through South Carolina Department of Social Services (SCDSS) Child Support Enforcement Title IV-D Child Support Enforcement Title IV-D Clerk of Court - Filing Fees Sheriff's Department

93.563 93.563 93.563 93.563

G-05SC5005 G-05SC5005 G-05SC5005 G-05SC5005

279,079 69,567 22,920 14,108

Total of CFDA # 93.563

385,674

Federal Financial Participation, Passed Through SCDSS Administration for Children and Families Family Preservation and Support Services (CWS-Part II) TANF Block Grant Child Support Enforcement Child Welfare Services - State Grants Title IV-E Foster Care Social Services Block Grant

93.556 93.558 93.563 93.645 93.658 93.667

Center for Medicare and Medicare Services Medicaid Programs

USDA Food Nutrition Service State Administration Matching Grant Food Stamp Program

G-01SCOOFP G-01SCTANF G-05SC5005 G-101SC1400 G-01SC1401 Reimbursement from SCDHHS

1,529 46,738 124 1,088 5,896 21,847

93.778

Reimbursement from SCDHHS

20,938

10.561

12-35-4541

39,589

Total of Federal Financial Participation

137,749

Total U.S. Department of Health and Human Services

$

523,423

(Continued)

71

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2005

FEDERAL GRANTOR/PASS THROUGH GRANTOR/PROGRAM TITLE

FEDERAL CFDA NUMBER

PASS THROUGH GRANTOR'S NUMBER

20.106 20.106 20.106

3-45-0041-10 3-45-0041-11 3-45-0041-12

ALLOWABLE FEDERAL EXPENDITURES

U.S. DEPARTMENT OF TRANSPORTATION Passed Through Department of Transportation Federal Aviation Administration Federal Aviation Administration Federal Aviation Administration

$

Total U.S. Department of Transportation

34,383 220,202 581,643 836,228

U.S. DEPARTMENT OF AGRICULTURE Passed Through South Carolina State Treasurer Emergency Water Shed Funding National Forest Fund National Geodetic Survey

10.054 10.665 11.400

69-469-5-5016 n/a n/a

146,550 687,427 25,000

Total U.S. Department of Agriculture

858,977

FEDERAL EMERGENCY MANAGEMENT AGENCY Passed Through Adjutant General's Office Disaster Relief Local Planning Grant for All Hazard Emergency Planning

97.036 97.042

FEMA-1547-DR-SC EMA-2004-GR-5006

3,528,102 43,084

Total Federal Emergency Management Agency

3,571,186

ENVIRONMENTAL PROTECTION AGENCY Direct Special Water Infrastructure Projects

66.606

XP984939-00-0

467,432

Total Environmental Protection Agency

467,432

U.S. DEPARTMENT OF JUSTICE Passed Through South Carolina Public Safety: Local Law Enforcement Block Grant Local Law Enforcement Block Grant Local Law Enforcement Block Grant

16.592 16.592 16.592

2002-LB-BX-0680 2003-LB-BX-0217 2004-LB-BX-0209

3,035 5,985 50,294

Total CFDA # 16.592

59,314

State Criminal Alien Assistance Program

16.606

2004APBX0195

4,263

Passed Through South Carolina Public Safety: Drug Control and System Improvement Program

16.579

1D04064

17,333

Passed Through County of Charleston Community Gun Violence Prosecution Program Solicitor Project Sentry

16.609 16.609

2001-F0645-SC-GP 2003SE-CX0019

36,844 44,076

Total U. S. Department of Justice

$

161,830

(Continued)

72

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2005

FEDERAL GRANTOR/PASS THROUGH GRANTOR/PROGRAM TITLE

FEDERAL CFDA NUMBER

PASS THROUGH GRANTOR'S NUMBER

97.004 97.004

4SHSP41 3LETP13

ALLOWABLE FEDERAL EXPENDITURES

U.S. DEPARTMENT OF HOMELAND SECURITY Passed Through South Carolina Public Safety: Homeland Security Law Enforcement Terrorism Prevention Allocation

$

353,015 63,465

Passed Through Adjutant General's Office Total U.S. Department of Homeland Security

416,480

TOTAL EXPENDITURES OF FEDERAL AWARDS

$

73

7,050,607

BERKELEY COUNTY, SOUTH CAROLINA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2005

Basis of Presentation A. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Berkeley County, South Carolina and is presented on the accrual basis of accounting. The information in 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, basic financial statements.

74

INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

The Members of County Council Berkeley County, South Carolina Moncks Corner, South Carolina We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Berkeley County, South Carolina (the “County”) as of and for the year ended June 30, 2005, which collectively comprise Berkeley County, South Carolina’s basic financial statements and have issued our report thereon dated February 17, 2006. We conducted our audit in accordance with auditing standards generally accepted in the United States America and the standards applicable to financial audits contained in Governmental Auditing Standards, issued by the Comptroller General of the United States. 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 opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect the County’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. The reportable condition is described in the accompanying schedule of findings and questioned costs as Finding 2005-1. A material weakness is a reportable 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 caused by error or fraud 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. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe that the reportable condition described above is not a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the County’s basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements, noncompliance with which could have a direct and material effect on the determination of basic financial statement amounts. However, providing an opinion on compliance with those provisions was not an object of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Governmental Auditing Standards. We noted certain other matters that we reported to management of the County in a separate letter dated February 17, 2006. This report is intended solely for the information and use of the members of County Council, management, others within the organization, and 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.

Greene, Finney & Horton, LLP February 17, 2006

75

INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

The Members of County Council Berkeley County, South Carolina Moncks Corner, South Carolina Compliance We have audited the compliance of Berkeley County, South Carolina (the “County”) with the types of compliance requirements described in the US Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2005. The County’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the County’s management. Our responsibility is to express an opinion on the County’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 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 the County’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the County’s compliance with those requirements. In our opinion, the County complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2005. However, the results of our auditing procedures disclosed an instance of potential noncompliance with those requirements that is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying schedule of findings and questioned costs as 2005-2. Internal Control Over Compliance The management of the County 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 the County’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 caused by error or fraud 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 members of County Council, management, others within the organization, and 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.

Greene, Finney & Horton, LLP February 17, 2006

76

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2005

Section I - Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? Reportable condition(s) identified that are not considered to be material weaknesses?

Yes X

Noncompliance material to financial statements noted?

X

No

Yes

X

No

Yes

X

No

Yes

X

None Reported

Yes

Federal Awards Internal control over major programs: Material weakness(es) identified? Reportable condition(s) identified that are not considered to be material weaknesses? Type of auditors' report issued on compliance for major programs: Unqualified

Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133?

X

Yes

No

Identification of major programs: CFDA Numbers

Name of Federal Program or Cluster

93.563 20.106 97.036

Child Support Enforcement Title IV-D Federal Aviation Administration Public Assistance Grants

Dollar threshold used to distinguish between type A and type B programs: Auditee qualified as low-risk auditee?

$ X

Yes

300,000 No

(Continued)

77

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2005

Section II – Findings – 2005 Financial Statements Audit 2005-1: LACK OF ADEQUATE MANAGEMENT REVIEW OR MONITORING Condition:

The County’s Water and Sanitation Authority needs to improve its internal controls related to the review and monitoring of certain accounting functions. We noted the following specific areas in which controls should be improved: 1. Recording of capital asset activities. 2. Bank reconciliations for accounts restricted for debt service. 3. Accounts receivable detail ledgers, including grant activity. 4. Accounts payable detail ledgers.

Criteria:

In order to ensure that transactions are recorded timely, accurately and in accordance with accounting principles generally accepted in the United States of America, management needs to have an adequate system for reviewing and monitoring transactions and account balances.

Effect:

Transactions may not be recorded properly, timely and in accordance with management's expectations. In addition, errors may occur and may not be detected in a timely manner.

Recommendation:

We recommend that the County implement a system to review and monitor its accounting functions as soon as possible. This system cannot be effectively implemented until additional personnel are hired and trained in finance.

Response:

The County is aware of its lack of adequate management review and monitoring. We are taking steps to alleviate this problem. The first step is opening two new upper level accounting positions. These positions will create a greater division of duties in the Authority’s Finance Department and help provide a greater system of necessary controls that have been lacking in the past. Second, we are hiring a new accounting clerk that will be able to reconcile accounts and complete quarterly reports. Last, we are working on upgrading our computer system to ensure that our internal controls are more adequate and will expand upon a division of duties.

(Continued) 78

BERKELEY COUNTY, SOUTH CAROLINA SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2005

Section III - Findings and Questioned Costs - Major Federal Awards Programs Audit

Questioned Costs

2005-2: ALLOWABLE COSTS Federal Agency: US Department of Health and Human Services Pass-through Agency: South Carolina Department of Social Services CFDA # 93.563, Child Support Enforcement Title IV-D Pass Through Grantor’s Number: G-05SC5005; Award Year: July 1, 2004 through June 30, 2005 Condition:

The Berkeley County Clerk of Court has filed a complaint against Berkeley County. During fiscal 2005, the Clerk of Court paid $50,000 to an attorney for fees incurred related to this complaint and charged it to this program. Legal counsel for Berkeley County asked that the South Carolina Department of Social Services (“SCDSS”) to investigate whether it was proper to charge this expenditure to the IV-D program. Counsel for SCDSS responded as follows: “The agency would conduct a review after the conclusion of the litigation. Legal costs, including attorney fees, are allowable expenditures under OMB Circular A-87. Whether federal financial participation in this $50,000 fee is allowed, in whole or in part, or must be repaid, will depend on whether the Clerk of Court can document that it is an expense necessary for the administration of the IV-D program.”

Criteria:

The County, through the Clerk of Court, is to comply with the allowable cost regulations as required by the Office of Management and Budgets (“OMB”).

Effect:

The County, through the Clerk of Court, may not be in compliance with the above OMB regulations.

Recommendation:

We recommend that the County contact SCDSS as soon as the complaint has been concluded in order to receive a determination as to the allowability of the $50,000 in costs. If SCDSS determines the costs are not allowable under the OMB regulations, the costs will need to be reimbursed as soon as possible..

Response:

The Clerk of Court responded as follows: “In 2004, I inquired of the South Carolina Department of Social Services Director of the Child Support Enforcement Division, if DSS funds could be used to pay for attorney fees related to the subject litigation. I was informed that nothing in federal or state law and regulations was found that would preclude use of the funds for this purpose. The South Carolina Department of Social Services will review the case once it is closed to determine the amount allowable under the program based on fees paid relevant to DSS issues. I am confident that the fees paid will be judged as allowable."

79

$

50,000

BERKELEY COUNTY, SOUTH CAROLINA SUMMARY OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2005

None

80