sullivan county tennessee - tn comptrollersullivan county, tennessee for the year ended june 30,...

ANNUAL FINANCIAL REPORT

SULLIVAN COUNTY, TENNESSEE FOR THE YEAR ENDED JUNE 30, 2018

DIVISION OF LOCAL GOVERNMENT AUDIT

ANNUAL FINANCIAL REPORT

SULLIVAN COUNTY, TENNESSEE

FOR THE YEAR ENDED JUNE 30, 2018

COMPTROLLER OF THE TREASURY JUSTIN P. WILSON

DIVISION OF LOCAL GOVERNMENT AUDIT JAMES R. ARNETTE

Director

MARK TREECE, CPA, CGFM Audit Manager

PRESTON COBB, CPA MARIE TIDWELL, CPA BRANDON HAMMES ROBERT ANDERSON, CPA GREG BRUSH, CISA Senior Auditors State Auditors

This financial report is available at www.comptroller.tn.gov

2

Exhibit Page(s)

Summary of Audit Findings 6

INTRODUCTORY SECTION 7

Sullivan County Officials 8

FINANCIAL SECTION 9

Independent Auditor's Report 10-13BASIC FINANCIAL STATEMENTS: 14

Government-wide Financial Statements:Statement of Net Position A 15-16Statement of Activities B 17-18

Fund Financial Statements:Governmental Funds:

Balance Sheet C-1 19-21Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position C-2 22Statement of Revenues, Expenditures, and Changes in

Fund Balances C-3 23-24Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Fundsto the Statement of Activities C-4 25-26

Statements of Revenues, Expenditures, and Changes in FundBalances – Actual (Budgetary Basis) and Budget:

General Fund C-5 27-30Highway/Public Works Fund C-6 31-32

Proprietary Funds:Statement of Net Position D-1 33Statement of Revenues, Expenses, and Changes in Net Position D-2 34Statement of Cash Flows D-3 35

Fiduciary Funds:Statement of Fiduciary Assets and Liabilities E 36

Index and Notes to the Financial Statements 37-112REQUIRED SUPPLEMENTARY INFORMATION: 113

Schedule of Changes in Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Planof TCRS – Primary Government F-1 114

Schedule of Contributions Based on Participation in the Public EmployeePension Plan of TCRS – Primary Government F-2 115

Schedule of Contributions Based on Participation in the TeacherRetirement Plan of TCRS – Discretely Presented SullivanCounty School Department F-3 116

Schedule of Contributions Based on Participation in the TeacherLegacy Pension Plan of TCRS – Discretely Presented SullivanCounty School Department F-4 117

TABLE OF CONTENTSSULLIVAN COUNTY, TENNESSEE

3

Exhibit Page(s)

Schedule of Proportionate Share of the Net Pension Asset in theTeacher Pension Plan of TCRS – Discretely PresentedSullivan County School Department F-5 118

Schedule of Proportionate Share of the Net Pension Liability (Asset) in theTeacher Legacy Pension Plan of TCRS – Discretely PresentedSullivan County School Department F-6 119

Schedule of Changes in the Total OPEB Liability and Related RatiosLocal Government Plan - Primary Government F-7 120

Schedule of Changes in the Total OPEB Liability and Related RatiosMedicare Supplement Plan - Primary Government F-8 121

Schedule of Changes in the Total OPEB Liability and Related RatiosLocal Education Plan - Discretely Presented Sullivan County School Department F-9 122

Schedule of Changes in the Total OPEB Liability and Related RatiosTennessee Plan - Medicare - Discretely Presented Sullivan County School Department F-10 123

Notes to the Required Supplementary Information 124COMBINING AND INDIVIDUAL FUND FINANCIAL

STATEMENTS AND SCHEDULES: 125Nonmajor Governmental Funds: 126-127

Combining Balance Sheet G-1 128-131Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances G-2 132-135Schedules of Revenues, Expenditures, and Changes in Fund

Balances – Actual (Budgetary Basis) and Budget:Solid Waste/Sanitation Fund G-3 136Ambulance Service Fund G-4 137Drug Control Fund G-5 138Education Debt Service Fund G-6 139General Capital Projects Fund G-7 140

Major Governmental Funds: 141Schedule of Revenues, Expenditures, and Changes in Fund

Balance – Actual and Budget:General Debt Service Fund H 142

Proprietary Funds: 143Combining Statement of Net Position I-1 144Combining Statement of Revenues, Expenses, and Changes in

Net Position I-2 145Combining Statement of Cash Flows I-3 146

Fiduciary Funds: 147Combining Statement of Fiduciary Assets and Liabilities J-1 148-149Combining Statement of Changes in Assets and Liabilities –

All Agency Funds J-2 150-152Component Unit:

Discretely Presented Sullivan County School Department: 153Statement of Activities K-1 154Balance Sheet – Governmental Funds K-2 155-156Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position K-3 157Statement of Revenues, Expenditures, and Changes in Fund

Balances – Governmental Funds K-4 158-159Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Fundsto the Statement of Activities K-5 160

Combining Balance Sheet – Nonmajor Governmental Funds K-6 161Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances – Nonmajor Governmental Funds K-7 162-163

4

Exhibit Page(s)

Schedules of Revenues, Expenditures, and Changes in FundBalances – Actual (Budgetary Basis) and Budget:

General Purpose School Fund K-8 164-165School Federal Projects Fund K-9 166Central Cafeteria Fund K-10 167Other Education Special Revenue Fund K-11 168School Improvement Fund K-12 169

Statement of Fiduciary Net Position K-13 170Statement of Changes in Fiduciary Net Position K-14 171

Miscellaneous Schedules: 172Schedule of Changes in Long-term Notes, Other Loans, Capital

Leases, and Bonds L-1 173-174Schedule of Long-term Debt Requirements by Year L-2 175-176Schedule of Transfers – Primary Government and Discretely

Presented Sullivan County School Department L-3 177Schedule of Salaries and Official Bonds of Principal Officials –

Primary Government and Discretely Presented SullivanCounty School Department L-4 178

Schedule of Detailed Revenues – All Governmental Fund Types L-5 179-192Schedule of Detailed Revenues – All Governmental Fund Types –

Discretely Presented Sullivan County School Department L-6 193-200Schedule of Detailed Expenditures – All Governmental Fund Types L-7 201-235Schedule of Detailed Expenditures – All Governmental Fund Types –

Discretely Presented Sullivan County School Department L-8 236-248Schedule of Detailed Receipts, Disbursements, and Changes in

Cash Balances – City Agency Funds L-9 249

SINGLE AUDIT SECTION 250

Auditor's Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance With GovernmentAuditing Standards 251-252

Auditor's Report on Compliance for Each Major Federal Program; Reporton Internal Control Over Compliance; and Report on the Schedule ofExpenditures of Federal Awards Required by Uniform Guidance 253-255

Schedule of Expenditures of Federal Awards and State Grants 256-258Summary Schedule of Prior-year Findings 259Schedule of Findings and Questioned Costs 260-265Management's Corrective Action Plan 266-269Best Practice 270

5

Summary of Audit FindingsAnnual Financial Report

Sullivan County, Tennessee For the Year Ended June 30, 2018

Scope

We have audited the basic financial statements of Sullivan County as of and for the year ended June 30, 2018.

Results

Our report on Sullivan County’s financial statements is unmodified.

Our audit resulted in three findings and recommendations, which we have reviewed with Sullivan County management. Detailed findings, recommendations, and management’s responses are included in the Single Audit section of this report.

Findings

The following are summaries of the audit findings:

OFFICE OF DIRECTOR OF SCHOOLS

♦ General ledger insurance liability accounts were not reconciled with payroll reports andpayments.

OFFICE OF CIRCUIT, GENERAL SESSIONS, AND LAW COURTS CLERK

♦ Execution docket trial balances were not maintained properly.

OFFICE OF SHERIFF

♦ The Sheriff’s Office had deficiencies in the maintenance of seized property and evidencerecords.

6

INTRODUCTORY SECTION

7

Sullivan County Officials June 30, 2018

Officials

Richard Venable, County Mayor Jim Belgeri, Highway Commissioner Evelyn Rafalowski, Director of Schools Frances Harrell, Trustee Kristinia Davis, Purchasing Agent Larry Bailey, Director of Accounts and Budgets Jeanie Gammon, County Clerk Tommy Kerns, Circuit, General Sessions, and Law Courts Clerk Katherine Priester, Clerk and Master Sheena Tinsley, Register of Deeds Russell Baker, Assessor of Property Wayne Anderson, Sheriff

Board of County Commissioners

Richard Venable, County Mayor, Chairman Dennis Houser Mark Bowery Matthew Johnson Bryan Boyd Bill Kilgore Darlene Calton Kit McGlothlin Michael Cole Randy Morrell Larry Crawford Bob Neal John Gardner Cheryl Russell Sherry Grubb Bobbie Russell, Jr. Andy Hare Patrick Shull Mack Harr Angie Stanley Joe Herron Mark Vance Terry Harkleroad Eddie Williams Baxter Hood

Board of Education

Michael Hughes, Chairman Matthew Spivey Jerry Greene Jane Thomas Mark Ireson Dan Wells Randall Jones

Audit Committee

Eddie Williams, Chairman Terry Harkleroad Cheryl Russell

8

FINANCIAL SECTION

9

Independent Auditor's Report

Sullivan County Mayor and Board of County Commissioners Sullivan County, Tennessee

To the County Mayor and Board of County Commissioners:

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Sullivan County, Tennessee, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the county’s basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of

10

significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Sullivan County, Tennessee, as of June 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General and Highway/Public Works funds for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As described in Note V.B., Sullivan County has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinion is not modified with respect to this matter.

Emphasis of Matter

We draw attention to Note I.D.9. to the financial statements, which describes restatements reducing the beginning net position of the Governmental Activities of the primary government and the discretely presented Sullivan County School Department by $18,886,303 and $20,936,003, respectively, on the Government-wide Statement of Activities. These restatements were necessary because of the transitional requirements of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.

Accounting principles generally accepted in the United States of America require that the schedule of changes in the county’s net pension liability and related ratios, schedule of county and school contributions, schedule of school’s proportionate share of the net pension liability, and schedule of county and school changes in the total other postemployment benefits

11

liability and related ratios on pages 114-124 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Sullivan County’s basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the Sullivan County School Department (a discretely presented component unit), miscellaneous schedules and the other information such as the introductory section and management’s corrective action plans are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is also presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the Sullivan County School Department (a discretely presented component unit), schedule of expenditures of federal awards, and miscellaneous schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the Sullivan County School Department (a discretely presented component unit), schedule of expenditures of federal awards, and miscellaneous schedules are fairly stated in all material respects in relation to the basic financial statements as a whole.

12

The introductory section and management’s corrective action plans have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2018, on our consideration of Sullivan County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely 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 effectiveness of Sullivan County’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Sullivan County’s internal control over financial reporting and compliance.

Very truly yours,

Justin P. Wilson Comptroller of the Treasury Nashville, Tennessee

December 20, 2018

JPW/tg

13

BASIC FINANCIAL STATEMENTS

14

Exhibit A

Sullivan County, TennesseeStatement of Net PositionJune 30, 2018

ASSETS

Cash $ 915,822 $ 104,792Equity in Pooled Cash and Investments 27,535,565 96,730,397Inventories 42,061 177,003Accounts Receivable 3,985,451 38,751Allowance for Uncollectibles (1,160,308) 0Due from Other Governments 3,731,264 3,809,054Due from Primary Government 0 1,100,000Due from Component Units 15,486 0Property Taxes Receivable 48,928,051 25,711,128Allowance for Uncollectible Property Taxes (1,344,324) (706,427)Prepaid Items 190,377 4,795Net Pension Asset - Agent Plan 348,574 103,122Net Pension Asset - Teacher Retirement Plan 0 165,450Net Pension Asset - Teacher Legacy Retirement Plan 0 326,927Capital Assets: Assets Not Depreciated: Land 2,458,142 5,649,582 Construction in Progress 348,709 3,855,228 Assets Net of Accumulated Depreciation: Buildings and Improvements 22,136,789 60,392,474 Infrastructure 10,093,055 0 Other Capital Assets 11,854,896 1,431,151Total Assets $ 130,079,610 $ 198,893,427

DEFERRED OUTFLOWS OF RESOURCES

Deferred Charge on Refunding $ 541,482 $ 0Pension Changes in Experience 533,131 360,615Pension Changes in Assumptions 2,555,179 3,539,341Pension Changes in Investment Earnings 0 49,627Pension Contributions After Measurement Date 4,805,414 4,597,412Pension Other Deferrals 0 313,544OPEB Contributions after Measurement Date 553,006 2,955,909Total Deferred Outflows of Resources $ 8,988,212 $ 11,816,448

LIABILITIES

Accounts Payable $ 551,459 $ 175,895Accrued Payroll 1,063,076 7,685Accrued Interest Payable 1,203,666 0Payroll Deductions Payable 450,582 1,005,573Retainage Payable 15,431 0Claims and Judgments Payable 175,453 0Due to Primary Government 0 15,486Due to Component Units 1,100,000 0Other Current Liabilities 930,691 161,477Unearned Revenue 0 20,000,000

(Continued)

SullivanCountySchool

Department

Component Unit

Activities

PrimaryGovernment

Governmental

15

Exhibit A

Sullivan County, TennesseeStatement of Net Position (Cont.)

LIABILITIES (CONT.)

Noncurrent Liabilities: Due Within One Year $ 10,646,812 $ 578,892 Due in More Than One Year 198,803,742 69,327,815Total Liabilities $ 214,940,912 $ 91,272,823

DEFERRED INFLOWS OF RESOURCES

Deferred Current Property Taxes $ 46,585,914 $ 24,480,361Deferred Credit on Refunding 30,526 0Pension Changes in Experience 2,193,550 7,410,887Pension Changes in Investment Earnings 6,008 10,680Pension Other Deferrals 0 662,659OPEB Changes in Experience 1,591,961 0OPEB Changes in Assumptions 589,696 5,112,011Total Deferred Inflows of Resources $ 50,997,655 $ 37,676,598

NET POSITION

Net Investment in Capital Assets $ 34,706,835 $ 71,328,435Restricted for: General Government 694,987 0 Finance 147,523 0 Administration of Justice 217,711 0 Public Safety 306,831 0 Public Health and Welfare 34,116 0 Agriculture and Natural Resources 396,459 0 Education 0 4,178,578 Capital Projects 255,107 59,080,999 Pensions 348,574 595,499 Debt Service 3,306,557 0Unrestricted (167,285,445) (53,423,057)

Total Net Position $ (126,870,745) $ 81,760,454

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

SchoolDepartment

SullivanCounty

PrimaryGovernment

Component Unit

Governmental Activities

16

Exhibit B

Sullivan County, TennesseeStatement of ActivitiesFor the Year Ended June 30, 2018

SullivanOperating Capital County

Charges for Grants and Grants and SchoolFunctions/Programs Expenses Services Contributions Contributions Department

Primary Government: Governmental Activities: General Government $ 5,019,618 $ 1,611,115 $ 630,682 $ 0 $ (2,777,821) $ 0 Finance 5,926,466 4,501,600 0 0 (1,424,866) 0 Administration of Justice 5,422,104 2,795,140 217,922 0 (2,409,042) 0 Public Safety 25,962,475 2,081,292 461,942 131,338 (23,287,903) 0 Public Health and Welfare 14,832,971 9,105,047 4,547,806 47,850 (1,132,268) 0 Social, Cultural, and Recreational Services 2,358,734 365,319 0 1,677 (1,991,738) 0 Agriculture and Natural Resources 252,127 0 0 348,709 96,582 0 Highways 8,287,017 98,511 3,466,289 742,001 (3,980,216) 0 Education 2,547,727 251,671 0 0 (2,296,056) 0

Debt Service: Interest 7,586,654 0 2,547,916 0 (5,038,738) 0

Total Primary Government $ 78,195,893 $ 20,809,695 $ 11,872,557 $ 1,271,575 $ (44,242,066) $ 0

Component Unit: Sullivan County School Department $ 90,565,709 $ 2,227,641 $ 8,839,987 $ 1,865,169 $ 0 $ (77,632,912)

Total Component Unit $ 90,565,709 $ 2,227,641 $ 8,839,987 $ 1,865,169 $ 0 $ (77,632,912)

(Continued)

Program RevenuesComponent Unit

Net (Expense) Revenue and

PrimaryGovernment

Changes in Net Position

GovernmentalActivities

17

Exhibit B

Sullivan County, TennesseeStatement of Activities (Cont.)

Changes in Net Position

SullivanOperating Capital County

Charges for Grants and Grants and SchoolFunctions/Programs Expenses Services Contributions Contributions Department

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 38,781,570 $ 25,127,165 Property Taxes Levied for Debt Service 8,683,007 0 Local Option Sales Taxes 3,397,085 13,026,365 Litigation Tax - General 312,560 0 Litigation Tax - Office of Public Defender 159,644 0 Litigation Tax - Jail, Workhouse, or Courthouse 146,812 0 Litigation Tax - Courtroom Security 443,280 0 Business Tax 2,511,658 0 Mixed Drink Tax 12,101 0 Mineral Severance Tax 151,540 0 Wholesale Beer Tax 365,409 0 Grants and Contributions Not Restricted to Specific Programs 2,531,348 43,587,155 Unrestricted Investment Income 1,100,579 10 Miscellaneous 49,485 47,831 Gain on Sale of Capital Assets 132,000 0Total General Revenues $ 58,778,078 $ 81,788,526

Change in Net Position $ 14,536,012 $ 4,155,614Net Position, July 1, 2017 (122,520,454) 98,540,843Restatement - See Notes I.D.9. (18,886,303) (20,936,003)

Net Position, June 30, 2018 $ (126,870,745) $ 81,760,454


Activities

Program Revenues

Net (Expense) Revenue and

Component UnitPrimary

Government

Governmental

18

Exhibit C-1

Sullivan County, TennesseeBalance SheetGovernmental FundsJune 30, 2018

OtherHighway / General Govern- Total

Public Debt mental GovernmentalGeneral Works Service Funds Funds

ASSETS

Cash $ 570,905 $ 0 $ 0 $ 258,171 $ 829,076Equity in Pooled Cash and Investments 13,039,538 7,113,520 1,869,062 4,998,290 27,020,410Inventories 42,061 0 0 0 42,061Accounts Receivable 208,794 102,894 205,862 3,452,933 3,970,483Allowance for Uncollectibles 0 0 0 (1,160,308) (1,160,308)Due from Other Governments 3,103,373 618,850 0 9,041 3,731,264Due from Other Funds 496,098 0 2,331,888 13,815 2,841,801Due from Component Units 752 0 0 0 752Property Taxes Receivable 32,291,698 3,065,667 8,992,624 4,578,062 48,928,051Allowance for Uncollectible Property Taxes (887,232) (84,231) (247,077) (125,784) (1,344,324)Prepaid Items 3,258 0 187,119 0 190,377

Total Assets $ 48,869,245 $ 10,816,700 $ 13,339,478 $ 12,024,220 $ 85,049,643

LIABILITIES

Accounts Payable $ 532,652 $ 0 $ 400 $ 18,245 $ 551,297Accrued Payroll 767,986 136,986 0 158,104 1,063,076Payroll Deductions Payable 345,395 48,603 0 56,584 450,582Retainage Payable 15,431 0 0 0 15,431Due to Other Funds 1,536,254 57,168 0 2,368,260 3,961,682Due to Component Units 1,100,000 0 0 0 1,100,000Other Current Liabilities 540,718 6,963 383,010 0 930,691Total Liabilities $ 4,838,436 $ 249,720 $ 383,410 $ 2,601,193 $ 8,072,759

(Continued)

Major FundsNonmajor

Funds

19

Exhibit C-1

Sullivan County, TennesseeBalance SheetGovernmental Funds (Cont.)




Deferred Current Property Taxes $ 30,745,925 $ 2,918,917 $ 8,562,156 $ 4,358,916 $ 46,585,914Deferred Delinquent Property Taxes 584,188 55,460 162,685 82,821 885,154Other Deferred/Unavailable Revenue 1,021,604 261,320 0 1,776,522 3,059,446Total Deferred Inflows of Resources $ 32,351,717 $ 3,235,697 $ 8,724,841 $ 6,218,259 $ 50,530,514

FUND BALANCES

Nonspendable:Inventory $ 42,061 $ 0 $ 0 $ 0 $ 42,061Prepaid Items 3,258 0 187,119 0 190,377

Restricted:Restricted for General Government 694,987 0 0 0 694,987Restricted for Finance 147,523 0 0 0 147,523Restricted for Administration of Justice 217,711 0 0 0 217,711Restricted for Public Safety 123,467 0 0 183,364 306,831Restricted for Public Health and Welfare 34,116 0 0 0 34,116Restricted for Agriculture and Natural Resources 396,459 0 0 0 396,459Restricted for Debt Service 0 0 4,044,108 116,311 4,160,419Restricted for Capital Projects 0 0 0 255,107 255,107

Committed:Committed for Finance 1,021,574 0 0 0 1,021,574Committed for Public Health and Welfare 0 0 0 2,649,986 2,649,986Committed for Other Operations 521,353 0 0 0 521,353Committed for Highways/Public Works 0 7,331,283 0 0 7,331,283

Assigned:Assigned for General Government 2,574,090 0 0 0 2,574,090

(Continued)

Major FundsNonmajor

Funds

20

Exhibit C-1

Sullivan County, TennesseeBalance SheetGovernmental Funds (Cont.)



FUND BALANCES (Cont.)

Assigned (Cont.):Assigned for Finance $ 93,981 $ 0 $ 0 $ 0 $ 93,981Assigned for Administration of Justice 79,604 0 0 0 79,604Assigned for Public Safety 438,642 0 0 0 438,642Assigned for Public Health and Welfare 111,330 0 0 0 111,330Assigned for Social, Cultural, and Recreational Services 49,435 0 0 0 49,435

Unassigned 5,129,501 0 0 0 5,129,501Total Fund Balances $ 11,679,092 $ 7,331,283 $ 4,231,227 $ 3,204,768 $ 26,446,370

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 48,869,245 $ 10,816,700 $ 13,339,478 $ 12,024,220 $ 85,049,643


Major FundsNonmajor

Funds

21

Exhibit C-2

Sullivan County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to the Statement of Net PositionJune 30, 2018

Amounts reported for governmental activities in the statement of net position (Exhibit A) are different because:

Total fund balances - balance sheet - governmental funds (Exhibit C-1) $ 26,446,370

(1) Capital assets used in governmental activities are not financial resources and therefore are not reported inthe governmental funds. Add: land $ 2,458,142 Add: construction in progress 348,709 Add: infrastructure net of accumulated depreciation 10,093,055 Add: buildings and improvements net of accumulated depreciation 22,136,789 Add: other capital assets net of accumulated depreciation 11,854,896 46,891,591

(2) Other long-term assets are not available to pay forcurrent-period expenditures and therefore are deferredin the governmental funds. 3,944,600

(3) Internal service funds are used by management to chargethe cost of liability, workers' compensation, and employeedental benefits to individual funds. The assets and liabilities are included in governmental activities in thestatement of net position. 1,575,869

(4) Long-term liabilities are not due and payable in the current-period and therefore are not reported in thegovernmental funds. Less: notes payable $ (936,585) Less: other loans payable (14,035,714) Less: capital leases payable (1,040,608) Less: bonds payable (163,160,000) Add: deferred charge on refunding 541,482 Less: compensated absences payable (2,064,028) Less: other postemployment benefits liability (19,949,470) Add: net pension asset 348,574 Less: accrued interest on notes and bonds (1,203,666) Less: deferred credit on refunding (30,526) Less: other deferred revenue - premium on debt (8,264,149) (209,794,690)

(5) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions and OPEB will be amortized andrecognized as components of pension and OPEB expense in future years:

Add: deferred outflows of resources related to pensions $ 7,893,724Less: deferred inflows of resources related to pensions (2,199,558)Add: deferred outflows of resources related to OPEB 553,006Less: deferred inflows of resources related to OPEB (2,181,657) 4,065,515

Net position of governmental activities (Exhibit A) $ (126,870,745)


22

Exhibit C-3

Sullivan County, TennesseeStatement of Revenues, Expenditures,

and Changes in Fund BalancesGovernmental FundsFor the Year Ended June 30, 2018



RevenuesLocal Taxes $ 36,478,498 $ 6,005,529 $ 8,764,479 $ 4,317,427 $ 55,565,933Licenses and Permits 464,442 250,000 0 0 714,442Fines, Forfeitures, and Penalties 645,858 0 0 72,442 718,300Charges for Current Services 1,669,970 0 0 7,043,605 8,713,575Other Local Revenues 189,536 50,643 1,426,140 347,373 2,013,692Fees Received From County Officials 7,221,181 0 0 0 7,221,181State of Tennessee 5,205,818 4,215,414 0 486,816 9,908,048Federal Government 3,276,773 9,424 0 4,575 3,290,772Other Governments and Citizens Groups 427,009 91,998 611,350 2,063,288 3,193,645

Total Revenues $ 55,579,085 $ 10,623,008 $ 10,801,969 $ 14,335,526 $ 91,339,588

ExpendituresCurrent:

General Government $ 4,947,174 $ 0 $ 0 $ 0 $ 4,947,174Finance 5,960,283 0 181,827 93,499 6,235,609Administration of Justice 5,410,933 0 0 8,633 5,419,566Public Safety 25,633,509 0 0 78,860 25,712,369Public Health and Welfare 7,803,775 0 0 8,096,022 15,899,797Social, Cultural, and Recreational Services 2,348,405 0 0 0 2,348,405Agriculture and Natural Resources 547,477 0 0 0 547,477Other Operations 885,062 0 0 0 885,062Highways 0 8,867,449 0 0 8,867,449Instruction 195,247 0 0 0 195,247

Debt Service:Principal on Debt 572,758 145,625 4,646,271 1,765,000 7,129,654Interest on Debt 71,110 6,400 7,667,055 144,200 7,888,765

(Continued)

Major FundsNonmajor

Funds

23

Exhibit C-3


and Changes in Fund BalancesGovernmental Funds (Cont.)



Expenditures (Cont.)Debt Service (Cont.)

Other Debt Service $ 0 $ 0 $ 31,634 $ 300 $ 31,934Capital Projects 0 774,235 0 1,621,478 2,395,713Capital Projects - Donated 105,726 0 0 0 105,726

Total Expenditures $ 54,481,459 $ 9,793,709 $ 12,526,787 $ 11,807,992 $ 88,609,947

Excess (Deficiency) of RevenuesOver Expenditures $ 1,097,626 $ 829,299 $ (1,724,818) $ 2,527,534 $ 2,729,641

Other Financing Sources (Uses)Capital Leases Issued $ 377,004 $ 494,574 $ 0 $ 0 $ 871,578Transfers In 0 0 2,102,796 0 2,102,796Transfers Out (745,939) 0 0 (1,856,857) (2,602,796)

Total Other Financing Sources (Uses) $ (368,935) $ 494,574 $ 2,102,796 $ (1,856,857) $ 371,578

Net Change in Fund Balances $ 728,691 $ 1,323,873 $ 377,978 $ 670,677 $ 3,101,219Fund Balance, July 1, 2017 10,950,401 6,007,410 3,853,249 2,534,091 23,345,151

Fund Balance, June 30, 2018 $ 11,679,092 $ 7,331,283 $ 4,231,227 $ 3,204,768 $ 26,446,370


Major FundsNonmajor

Funds

24

Exhibit C-4

Sullivan County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesFor the Year Ended June 30, 2018

Amounts reported for governmental activities in the statement of activities (Exhibit B) are different because:

Net change in fund balances - total governmental funds (Exhibit C-3) $ 3,101,219

(1) Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of these assets is allocated over their useful lives and reported as depreciation expense. The difference between capital outlays and depreciation is itemized as follows: Add: capital assets purchased in the current period $ 4,337,723 Less: current-year depreciation expense (3,241,464) 1,096,259

(2) The net effect of various miscellaneous transactions involving capitalassets (sales, trade-ins, and donations) is to decrease net position. Less: net book value of assets disposed (188,170)

(3) Revenues in the statement of activities that do not provide currentfinancial resources are not reported as revenues in the funds. Less: deferred delinquent property taxes and other deferred June 30, 2017 $ (2,939,751) Add: deferred delinquent property taxes and other deferred June 30, 2018 3,944,600 1,004,849

(4) The issuance of long-term debt (e.g., notes, bonds, other loans, leases) provides current financial resources to governmental funds, while the repaymentof the principal of long-term debt consumes the current financialresources of governmental funds. Neither transaction, however,has any effect on net position. Also, governmental funds report the effectof premiums, discounts, and similar items when debt isfirst issued, whereas these amounts are deferred and amortized in thestatement of activities. This amount is the effect of these differencesin the treatment of long-term debt and related items: Less: capital lease proceeds $ (871,578) Add: change in premium on debt issuances 1,093,597 Add: principal payments on bonds 4,570,000 Add: principal payments on notes 143,980 Add: principal payments on other loans 1,697,291 Add: principal payments on capital leases 718,383 Less: change in deferred charge on refunding (111,855) Add: change in deferred credit on refunding 59,808 7,299,626

(5) Some expenses reported in the statement of activities do not requirethe use of current financial resources and therefore are not reportedas expenditures in the governmental funds. Change in accrued interest payable $ (739,439) Change in compensated absences payable 3,114 Change in OPEB liability (net of restatement) 1,869,757 Change in net pension liability/asset 4,599,171 Change in deferred outflows related to pensions (1,413,644) Change in deferred inflows related to pensions 116,680 Change in deferred outflows related to OPEB (net of restatement) 25,153 Change in deferred inflows related to OPEB (2,181,657) 2,279,135

(Continued)

25

Exhibit C-4

Sullivan County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities (Cont.)

(6) Internal service funds are used by management to charge the costof liability, workers' compensation, and employee dental benefitsto individual funds. The net expense of certain activities of theinternal service funds is reported with governmental activities in thestatement of activities. $ (56,906)

Change in net position of governmental activities (Exhibit B) $ 14,536,012


26

Exhibit C-5

Sullivan County, TennesseeStatement of Revenues, Expenditures, and Changes

in Fund Balance - Actual (Budgetary Basis) and BudgetGeneral FundFor the Year Ended June 30, 2018

Actual VarianceRevenues/ with Final

Actual Less: Add: Expenditures Budget -(GAAP Encumbrances Encumbrances (Budgetary PositiveBasis) 7/1/2017 6/30/2018 Basis) Original Final (Negative)

RevenuesLocal Taxes $ 36,478,498 $ 0 $ 0 $ 36,478,498 $ 36,202,443 $ 36,202,443 $ 276,055Licenses and Permits 464,442 0 0 464,442 428,440 428,440 36,002Fines, Forfeitures, and Penalties 645,858 0 0 645,858 540,530 540,530 105,328Charges for Current Services 1,669,970 0 0 1,669,970 2,099,883 2,139,883 (469,913)Other Local Revenues 189,536 0 0 189,536 223,975 255,060 (65,524)Fees Received From County Officials 7,221,181 0 0 7,221,181 6,978,207 7,108,207 112,974State of Tennessee 5,205,818 0 0 5,205,818 5,632,780 6,461,256 (1,255,438)Federal Government 3,276,773 0 0 3,276,773 3,055,613 3,184,139 92,634Other Governments and Citizens Groups 427,009 0 0 427,009 600,000 653,146 (226,137)

Total Revenues $ 55,579,085 $ 0 $ 0 $ 55,579,085 $ 55,761,871 $ 56,973,104 $ (1,394,019)

ExpendituresGeneral Government

County Commission $ 375,149 $ 0 $ 163 $ 375,312 $ 373,072 $ 391,072 $ 15,760County Mayor/Executive 225,127 0 165 225,292 233,986 233,986 8,694County Attorney 221,378 0 434 221,812 253,521 253,521 31,709Election Commission 504,142 (21,125) 279 483,296 577,917 577,917 94,621Register of Deeds 421,354 (10,924) 3,000 413,430 571,751 571,751 158,321Planning 443,909 (32,127) 1,888 413,670 448,160 448,160 34,490Geographical Information Systems 46,271 0 0 46,271 31,015 46,271 0County Buildings 1,636,918 (147,288) 15,391 1,505,021 1,700,704 1,740,304 235,283Other Facilities 241,014 0 0 241,014 211,746 329,746 88,732Preservation of Records 101,219 0 259 101,478 97,299 111,885 10,407Risk Management 730,693 0 0 730,693 1,819,118 1,319,118 588,425

FinanceAccounting and Budgeting 706,034 (2,955) 650 703,729 777,732 777,732 74,003Purchasing 606,296 (8,073) 2,096 600,319 616,735 616,735 16,416Property Assessor's Office 1,718,678 (4,006) 1,993 1,716,665 1,798,956 1,798,956 82,291County Trustee's Office 646,895 (10,945) 0 635,950 678,175 678,175 42,225County Clerk's Office 1,442,669 (9,604) 4,500 1,437,565 1,640,464 1,640,464 202,899

(Continued)

Budgeted Amounts

27

Exhibit C-5


in Fund Balance - Actual (Budgetary Basis) and BudgetGeneral Fund (Cont.)



Expenditures (Cont.)Finance (Cont.)

Data Processing $ 121,001 $ (45,393) $ 89,242 $ 164,850 $ 170,000 $ 170,000 $ 5,150Other Finance 718,710 0 0 718,710 700,000 753,000 34,290

Administration of JusticeCircuit Court Judge 10,415 0 0 10,415 13,000 13,000 2,585Circuit Court Clerk 1,647,078 (917) 1,065 1,647,226 1,722,430 1,722,421 75,195General Sessions Court 555,156 (169) 0 554,987 564,787 564,787 9,800General Sessions Judge 597,989 (169) 0 597,820 626,135 626,135 28,315Drug Court 21,518 (975) 0 20,543 27,000 27,000 6,457Chancery Court 663,740 (4,751) 0 658,989 632,557 661,776 2,787Juvenile Court 763,146 (8,942) 2,314 756,518 824,194 824,194 67,676Juvenile Court Judge 3,000 0 0 3,000 3,000 3,000 0District Attorney General 405,587 0 1,000 406,587 404,113 469,113 62,526Office of Public Defender 145,319 0 0 145,319 218,445 218,445 73,126Judicial Commissioners 67,175 0 0 67,175 70,362 70,362 3,187Other Administration of Justice 61,526 0 0 61,526 153,487 153,487 91,961Courtroom Security 393,121 0 0 393,121 389,270 397,910 4,789Victim Assistance Programs 76,163 0 0 76,163 20,500 76,163 0

Public SafetySheriff's Department 10,946,192 (79,050) 74,004 10,941,146 11,525,427 11,499,312 558,166Administration of the Sexual Offender Registry 8,968 0 0 8,968 10,500 10,500 1,532Jail 9,581,302 (132,379) 77,606 9,526,529 9,905,762 9,951,741 425,212Workhouse 103,516 0 0 103,516 109,242 109,242 5,726Juvenile Services 658,618 0 0 658,618 706,160 706,160 47,542Fire Prevention and Control 1,856,977 (286,817) 169,108 1,739,268 1,739,268 1,739,268 0Civil Defense 733,147 (828) 2,494 734,813 735,455 735,455 642Rescue Squad 1,011,467 (110,521) 113,033 1,013,979 1,013,979 1,013,979 0Disaster Relief 2,455 (3,996) 16,824 15,283 0 22,800 7,517County Coroner/Medical Examiner 466,481 (1,850) 1,385 466,016 495,888 495,888 29,872Other Public Safety 264,386 (2,432) 49,037 310,991 310,991 310,991 0

(Continued)

Budgeted Amounts

28

Exhibit C-5





Expenditures (Cont.)Public Health and Welfare

Local Health Center $ 6,412,749 $ (92,771) $ 40,266 $ 6,360,244 $ 6,955,665 $ 6,961,365 $ 601,121Rabies and Animal Control 408,910 0 13,630 422,540 364,517 493,817 71,277Ambulance/Emergency Medical Services 416,582 (133,914) 65,770 348,438 349,000 349,000 562Other Local Health Services 26,000 0 0 26,000 26,000 26,000 0Regional Mental Health Center 104,387 0 0 104,387 98,187 111,687 7,300Aid to Dependent Children 28,850 0 0 28,850 28,850 28,850 0Other Local Welfare Services 18,750 0 0 18,750 15,000 20,000 1,250Other Waste Disposal 377,547 (54,550) 25,780 348,777 349,000 349,000 223Other Public Health and Welfare 10,000 0 0 10,000 10,000 10,000 0

Social, Cultural, and Recreational ServicesLibraries 830,114 (1,295) 0 828,819 905,728 905,728 76,909Parks and Fair Boards 1,518,291 0 850 1,519,141 1,454,264 1,536,466 17,325

Agriculture and Natural ResourcesAgricultural Extension Service 490,109 (14,000) 396,459 872,568 176,546 926,546 53,978Forest Service 1,000 0 0 1,000 1,000 1,000 0Soil Conservation 56,368 0 0 56,368 77,691 77,691 21,323

Other OperationsTourism 5,000 0 0 5,000 5,000 5,000 0Industrial Development 359,124 0 0 359,124 363,940 413,940 54,816Other Economic and Community Development 92,705 0 0 92,705 167,861 167,861 75,156Veterans' Services 11,900 0 0 11,900 11,900 11,900 0Employee Benefits 348,890 (3,437) 0 345,453 489,978 489,978 144,525Miscellaneous 67,443 0 0 67,443 82,870 82,870 15,427

InstructionCareer and Technical Education Program 10,550 0 0 10,550 10,550 10,550 0Other 184,697 0 0 184,697 200,000 200,000 15,303

Principal on DebtGeneral Government 572,758 0 0 572,758 0 572,758 0

(Continued)

Budgeted Amounts

29

Exhibit C-5





Expenditures (Cont.)Interest on Debt

General Government $ 71,110 $ 0 $ 0 $ 71,110 $ 0 $ 77,057 $ 5,947Other Debt Service

General Government 0 0 0 0 22,000 0 0Capital Projects - Donated

Capital Projects Donated to Other Entities 105,726 0 0 105,726 0 105,726 0Total Expenditures $ 54,481,459 $ (1,226,203) $ 1,170,685 $ 54,425,941 $ 57,087,850 $ 58,816,712 $ 4,390,771

Excess (Deficiency) of RevenuesOver Expenditures $ 1,097,626 $ 1,226,203 $ (1,170,685) $ 1,153,144 $ (1,325,979) $ (1,843,608) $ 2,996,752

Other Financing Sources (Uses)Capital Leases Issued $ 377,004 $ 0 $ 0 $ 377,004 $ 208,036 $ 585,040 $ (208,036)Transfers Out (745,939) 0 0 (745,939) (245,939) (745,939) 0

Total Other Financing Sources $ (368,935) $ 0 $ 0 $ (368,935) $ (37,903) $ (160,899) $ (208,036)

Net Change in Fund Balance $ 728,691 $ 1,226,203 $ (1,170,685) $ 784,209 $ (1,363,882) $ (2,004,507) $ 2,788,716Fund Balance, July 1, 2017 10,950,401 (1,226,203) 0 9,724,198 6,418,860 6,418,860 3,305,338

Fund Balance, June 30, 2018 $ 11,679,092 $ 0 $ (1,170,685) $ 10,508,407 $ 5,054,978 $ 4,414,353 $ 6,094,054


Budgeted Amounts

30

Exhibit C-6


in Fund Balance - Actual (Budgetary Basis) and BudgetHighway/Public Works FundFor the Year Ended June 30, 2018



RevenuesLocal Taxes $ 6,005,529 $ 0 $ 0 $ 6,005,529 $ 5,955,076 $ 5,955,076 $ 50,453Licenses and Permits 250,000 0 0 250,000 250,000 250,000 0Other Local Revenues 50,643 0 0 50,643 39,382 69,955 (19,312)State of Tennessee 4,215,414 0 0 4,215,414 4,110,875 4,110,875 104,539Federal Government 9,424 0 0 9,424 9,445 9,445 (21)Other Governments and Citizens Groups 91,998 0 0 91,998 80,726 80,726 11,272

Total Revenues $ 10,623,008 $ 0 $ 0 $ 10,623,008 $ 10,445,504 $ 10,476,077 $ 146,931

ExpendituresHighways

Administration $ 358,665 $ (1,417) $ 6,102 $ 363,350 $ 383,549 $ 383,549 $ 20,199Highway and Bridge Maintenance 6,065,845 (51,432) 230,910 6,245,323 6,480,642 6,574,642 329,319Operation and Maintenance of Equipment 501,126 (39,759) 5,214 466,581 600,000 600,000 133,419Asphalt Plant Operations 741,490 (135,073) 1,600 608,017 785,000 741,000 132,983Traffic Control 25,697 (1,331) 0 24,366 45,000 45,000 20,634Other Charges 251,316 0 0 251,316 265,000 265,000 13,684Capital Outlay 923,310 (76,692) 0 846,618 692,225 1,034,774 188,156

Principal on DebtHighways and Streets 145,625 0 0 145,625 0 145,625 0

Interest on DebtHighways and Streets 6,400 0 0 6,400 0 6,400 0

Capital ProjectsHighway and Street Capital Projects 774,235 (285,637) 62,247 550,845 1,200,000 1,200,000 649,155

Total Expenditures $ 9,793,709 $ (591,341) $ 306,073 $ 9,508,441 $ 10,451,416 $ 10,995,990 $ 1,487,549

Excess (Deficiency) of RevenuesOver Expenditures $ 829,299 $ 591,341 $ (306,073) $ 1,114,567 $ (5,912) $ (519,913) $ 1,634,480

Other Financing Sources (Uses)Capital Leases Issued $ 494,574 $ 0 $ 0 $ 494,574 $ 0 $ 494,574 $ 0

(Continued)

Budgeted Amounts

31

Exhibit C-6


in Fund Balance - Actual (Budgetary Basis) and BudgetHighway/Public Works Fund (Cont.)



Other Financing Sources (Uses) (Cont.)Insurance Recovery $ 0 $ 0 $ 0 $ 0 $ 2,182 $ 2,182 $ (2,182)

Total Other Financing Sources $ 494,574 $ 0 $ 0 $ 494,574 $ 2,182 $ 496,756 $ (2,182)

Net Change in Fund Balance $ 1,323,873 $ 591,341 $ (306,073) $ 1,609,141 $ (3,730) $ (23,157) $ 1,632,298Fund Balance, July 1, 2017 6,007,410 (591,341) 0 5,416,069 5,393,069 5,393,069 23,000

Fund Balance, June 30, 2018 $ 7,331,283 $ 0 $ (306,073) $ 7,025,210 $ 5,389,339 $ 5,369,912 $ 1,655,298


Budgeted Amounts

32

Exhibit D-1

Sullivan County, TennesseeStatement of Net PositionProprietary FundsJune 30, 2018

Internal ServiceFunds

ASSETS

Current Assets:Cash $ 86,746Equity in Pooled Cash and Investments 515,155Accounts Receivable 14,968Due from Other Funds 1,119,881Due from Component Units 14,734

Total Assets $ 1,751,484

LIABILITIES

Current Liabilities:Accounts Payable $ 162Claims and Judgments Payable 175,453

Total Liabilities $ 175,615

NET POSITION

Unrestricted $ 1,575,869

Total Net Position $ 1,575,869



33

Exhibit D-2

Sullivan County, TennesseeStatement of Revenues, Expenses, and Changes in Net PositionProprietary FundsFor the Year Ended June 30, 2018

Operating Revenues Self-Insurance Premiums $ 994,789 Cobra Insurance Payments 1,996Total Operating Revenues $ 996,785

Operating Expenses Handling Charges and Administrative Costs $ 26,146 Dental Insurance 271,268 Audit Services 43,663 Liability Insurance 152,468 Medical Claims 238,548 Trustee's Commission 18 Vehicle and Equipment Insurance 7,151 Workers' Compensation Insurance 816,230Total Operating Expenses $ 1,555,492Operating Income (Loss) $ (558,707)

Nonoperating Revenues (Expenses) Investment Income $ 1,801Total Nonoperating Revenues (Expenses) $ 1,801

Income (Loss) before Transfers $ (556,906)Transfers In 500,000

Change in Net Position $ (56,906)Net Position, July 1, 2017 1,632,775

Net Position, June 30, 2018 $ 1,575,869


GovernmentalActivitiesInternal

Service Funds

34

Exhibit D-3

Sullivan County, TennesseeStatement of Cash FlowsProprietary FundsFor the Year Ended June 30, 2018

GovernmentalActivities Internal

Service Funds

Cash Flows from Operating Activities Receipts for Self-Insurance Premiums $ 1,098,835 Payments to Insurers and Claims Payments (1,535,850) Payments for Administrative Costs (69,827)Net Cash Provided By (Used In) Operating Activities $ (506,842)

Cash Flows from Investing Activities Interest on Investments $ 1,801Net Cash Provided By (Used In) Investing Activities $ 1,801

Cash Flows from Noncapital Financing Activities Payments made from State Insurance Clearing Account $ (574,757) Transfers In 300,000 Transfers Out (37,626)Net Cash Provided By (Used In) Noncapital Financing Activities $ (312,383)

Increase (Decrease) in Cash $ (817,424)Cash, July 1, 2017 1,419,325

Cash, June 30, 2018 $ 601,901

Reconciliation of Operating Income (Loss) to Net Cash Provided By (Used In) Operating Activities Operating Income (Loss) $ (558,707) Adjustments to Reconcile Net Operating Income (Loss) to Net Cash Provided By (Used In) Operating Activities: Changes in Assets and Liabilities: (Increase) Decrease in Receivables (non-transfers) 102,050 Increase (Decrease) in Other Current Liabilities (non-transfers) (50,185)

Net Cash Provided By (Used In) Operating Activities $ (506,842)

Reconciliation of Cash With the Statement of Net Position Cash Per Net Position $ 86,746 Equity in Pooled Cash and Investments Per Net Position 515,155

Cash, June 30, 2018 $ 601,901


35

Exhibit E

Sullivan County, TennesseeStatement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2018

ASSETS

Cash $ 9,340,612Equity in Pooled Cash and Investments 2,346,160Accounts Receivable 621Due from Other Governments 6,703,330Property Taxes Receivable 29,593,514Allowance for Uncollectible Taxes (813,096)

Total Assets $ 47,171,141

LIABILITIES

Due to Other Taxing Units $ 37,451,611Due to Litigants, Heirs, and Others 9,401,868Due to Joint Ventures 317,662

Total Liabilities $ 47,171,141


AgencyFunds

36

Note Page(s)

I. Summary of Significant Accounting PoliciesA. Reporting Entity 39B. Government-wide and Fund Financial Statements 40C. Measurement Focus, Basis of Accounting, and Financial

Statement Presentation 41D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and

Net Position/Fund Balance1. Deposits and Investments 442. Receivables and Payables 453. Inventories and Prepaid Items 464. Capital Assets 465. Deferred Outflows/Inflows of Resources 476. Compensated Absences 487. Long-term Obligations 488. Net Position and Fund Balance 499. Restatement 51

E. Pension Plans 51F. Other Postemployment Benefit (OPEB) Plans 52

II. Reconciliation of Government-wide and Fund Financial StatementsA. Explanation of Certain Differences Between the Governmental Fund

Balance Sheet and the Government-wide Statement of Net Position 52B. Explanation of Certain Differences Between the Governmental Fund

Statement of Revenues, Expenditures, and Changes in Fund Balancesand the Government-wide Statement of Activities 52

III. Stewardship, Compliance, and AccountabilityA. Budgetary Information 53B. Expenditures Exceeded Appropriations 54

IV. Detailed Notes on All FundsA. Deposits and Investments 54B. Capital Assets 56C. Commitments for Construction and Land Purchase 59D. Interfund Receivables, Payables, and Transfers 59E. Capital Leases 61F. Long-term Obligations 63G. Pledges of Future Revenues 69H. On-Behalf Payments 69I. Donor-Restricted Endowments 69J. Short-term Debt 69

(Continued)

SULLIVAN COUNTY, TENNESSEEIndex of Notes to the Financial Statements

37

Note Page(s)

V. Other InformationA. Risk Management 70B. Accounting Changes 71C. Contingent Liabilities 72D. Change in Administration 73E. Joint Ventures 73F. Jointly Governed Organization 75G. Retirement Commitments 76H. Other Postemployment Benefits (OPEB) 95I. Office of Central Accounting 111J. Purchasing Laws 111K. Subsequent Events 112

SULLIVAN COUNTY, TENNESSEEIndex of Notes to the Financial Statements (Cont.)

38

SULLIVAN COUNTY, TENNESSEE NOTES TO THE FINANCIAL STATEMENTS

For the Year Ended June 30, 2018

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Sullivan County’s financial statements are presented in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments.

The following are the more significant accounting policies of Sullivan County: A. Reporting Entity

Sullivan County is a public municipal corporation governed by an elected 24-member board. As required by GAAP, these financial statements present Sullivan County (the primary government) and its component units. The financial statements of the Sullivan County Emergency Communications District, a component unit requiring discrete presentation, were excluded from this report due to materiality calculations; therefore, the effect of its omission did not affect the independent auditor’s opinion thereon. The component units discussed below are included in the county's reporting entity because of the significance of their operational or financial relationships with the county. Discretely Presented Component Units – The following entities meet the criteria for discretely presented component units of the county. They are reported in separate columns in the government-wide financial statements to emphasize that they are legally separate from the county. The Sullivan County School Department operates the public school system in the county, and the voters of Sullivan County elect its board. The School Department is fiscally dependent on the county because it may not issue debt, and its budget and property tax levy are subject to the county commission’s approval. The School Department’s taxes are levied under the taxing authority of the county and are included as part of the county’s total tax levy. The Sullivan County Emergency Communications District provides a simplified means of securing emergency services through a uniform emergency number for the residents of Sullivan County, and the Sullivan County Commission appoints its governing body. The district is funded primarily through a service charge levied on telephone services. Before the issuance of most debt instruments, the district must obtain the county commission’s approval. The financial statements of the Sullivan County Emergency Communications District were not material to the component units’ opinion unit and therefore have been omitted from this report.

39

The Sullivan County School Department does not issue separate financial statements from those of the county. Therefore, basic financial statements of the School Department are included in this report as listed in the table of contents. Complete financial statements of the Sullivan County Emergency Communications District can be obtained from its administrative office at the following address:

Administrative Office:

Sullivan County Emergency Communications District P.O. Box 485 Blountville, TN 37618

B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. However, when applicable, interfund services provided and used between functions are not eliminated in the process of consolidation in the Statement of Activities. Governmental activities are normally supported by taxes and intergovernmental revenues. Business-type activities, which rely to a significant extent on fees and charges, are required to be reported separately from governmental activities in government-wide financial statements. However, the primary government of Sullivan County does not have any business-type activities to report. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The Sullivan County School Department component unit only reports governmental activities in the government-wide financial statements. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Sullivan County issues all debt for the discretely presented Sullivan County School Department. There were no debt issues contributed by the county to the School Department during the year ended June 30, 2018. Other significant transactions between the primary government and the School Department during the year include: $1,621,478 appropriated and paid to the School Department’s School Improvement Fund from property tax revenues

40

of the county’s General Capital Projects Fund; $2,547,916 paid from the General Purpose School Fund to the county’s General Debt Service Fund as discussed in Note IV.F; and $1,100,000 billed by the School Department to the county’s General Fund for non-education use of school facilities. Separate financial statements are provided for governmental funds, proprietary funds (internal service), and fiduciary funds. Internal service funds are reported with the governmental activities in the government-wide financial statements, and fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds and fiduciary fund financial statements, except for agency funds, which have no measurement focus. 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. Fund financial statements of Sullivan County are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues, and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental category. Sullivan County reports three proprietary funds, all internal service funds. It has no enterprise funds to report. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. All other governmental funds are aggregated into a single column on the fund financial statements. The internal service funds and the fiduciary funds in total are reported in single columns by fund type. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they become both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the county considers revenues other than grants to be available if they are collected within 30 days

41

after year-end. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met and the revenues are available. Sullivan County considers grants and similar revenues to be available if they are collected within 60 days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Principal and interest on long-term debt are recognized as fund liabilities when due or when amounts have been accumulated in the debt service funds for payments to be made early in the following year.

Property taxes for the period levied, in-lieu-of tax payments, sales taxes, interest, and miscellaneous taxes are all considered to be susceptible to accrual and have been recognized as revenues of the current period. Applicable business taxes, litigation taxes, state-shared excise taxes, fines, forfeitures, and penalties are not susceptible to accrual since they are not measurable (reasonably estimable). All other revenue items are considered to be measurable and available only when the county receives cash.

Proprietary funds and fiduciary funds financial statements are reported using the economic resources measurement focus, except for agency funds, which have no measurement focus, and the accrual basis of accounting. Revenues are recognized when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Sullivan County reports the following major governmental funds:

General Fund – This 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.

Highway/Public Works Fund – This special revenue fund accounts for transactions of the county’s Highway Department. Local and state gasoline/fuel taxes are the foundational revenues of this fund.

General Debt Service Fund – This fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.

Additionally, Sullivan County reports the following fund types:

Capital Projects Funds – These funds are used to account for and report financial resources that are restricted, committed, or assigned for expenditure for capital outlays, including the acquisition or construction of major capital facilities and other capital assets.

Internal Service Funds – The Self-Insurance Fund accounts for the self-insured general liability, property, casualty, and workers’

42

compensation programs managed by the county for the primary government and the discretely presented School Department. The Employee Insurance – General Fund accounts for the self-insured retirees’ supplemental health and employee dental programs. The Employee Insurance – Health Fund accounted for the primary government’s self-insured health programs. This fund was closed in the previous year and only a cash flow statement is presented in the current year to reflect the liquidation of fund liabilities. Agency Funds – These funds account for amounts collected in an agency capacity by the constitutional officers, local sales taxes received by the state to be forwarded to the various cities in Sullivan County, Bristol, Kingsport, and Johnson City school systems’ share of educational revenues, state grants and other restricted revenues held for the benefit of the Judicial District Drug Task Force, and restricted revenues held for the benefit of the Office of District Attorney General. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. They do, however, use the accrual basis of accounting to recognize receivables and payables.

The discretely presented Sullivan County School Department reports the following major governmental funds:

General Purpose School Fund – This fund is the primary operating fund for the School Department. It is used to account for general operations of the School Department. Education Capital Projects Fund – This fund is used to account for the receipt of debt issued by Sullivan County and contributed to the School Department for building construction and renovation.

Additionally, the Sullivan County School Department reports the following fund types:

Special Revenue Funds – These funds account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Private-Purpose Trust Fund – The Endowment Fund is used to account for resources legally held in trust to fund student scholarships at a local high school. Interest earned by the fund for a calendar year or five percent of the value of the fund on December 31, whichever is greater, may be expended for scholarships awarded to students.

Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided; (2) operating grants and contributions; and (3) capital grants and contributions. Internally dedicated

43

resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. The county has two active proprietary funds. Operating revenues and expenses generally result from providing services in connection with the funds’ principal ongoing operations. The principal operating revenues of the county’s internal service funds are self-insurance premiums. Operating expenses for the internal service funds include various self-insured insurance program expenses and fiscal agent charges.

D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance

1. Deposits and Investments

For purposes of the Statement of Cash Flows of the internal service funds, cash includes cash on hand, demand deposits, cash with paying agent, cash equivalents, and cash on deposit with the county trustee. Cash equivalents are short-term, highly liquid investments with original maturities of three months or less.

State statutes authorize the government to make direct investments in bonds, notes, or treasury bills of the U.S. government and obligations guaranteed by the U.S. government or any of its agencies; deposit accounts at state and federal chartered banks and savings and loan associations; repurchase agreements; the State Treasurer’s Investment Pool; bonds of any state or political subdivision rated A or higher by any nationally recognized rating service; nonconvertible debt securities of certain federal government sponsored enterprises; and the county’s own legally issued bonds or notes. The county trustee maintains a cash and internal investment pool that is used by all funds and the discretely presented Sullivan County School Department. Each fund’s portion of this pool is displayed on the balance sheets or statements of net position as Equity in Pooled Cash and Investments. Most income from these pooled investments is assigned to the General Debt Service Fund. Sullivan County and the School Department have adopted a policy of reporting U.S. Treasury obligations, U.S. agency obligations, and repurchase agreements with maturities of one year or less when purchased on the balance sheet at amortized cost. Certificates of deposit are reported at cost. Investments in the State Treasurer’s Investment Pool are reported at amortized cost using a stable net asset value. State statutes require the state treasurer to administer the pool under the same terms and conditions, including collateral requirements, as prescribed for other funds invested by the state treasurer. All other investments are reported at fair value.

44

2. Receivables and Payables Activity between funds for unremitted current collections outstanding at the end of the fiscal year is referred to as due to/from other funds. All property taxes receivable are shown with an allowance for uncollectibles. The allowance for uncollectible property taxes is equal to 1.41 percent of total taxes levied. Ambulance receivables are shown as gross of an allowance for uncollectibles for amounts exceeding 150 days. Property taxes receivable are recognized as of the date an enforceable legal claim to the taxable property arises. This date is January 1 and is referred to as the lien date. However, revenues from property taxes are recognized in the period for which the taxes are levied, which is the ensuing fiscal year. Since the receivable is recognized before the period of revenue recognition, the entire amount of the receivable, less an estimated allowance for uncollectible taxes, is reported as a deferred inflow of resources as of June 30.

Property taxes receivable are also reported as of June 30 for the taxes

that are levied, collected, and reported as revenue during the current fiscal year. These property taxes receivable are presented on the balance sheet as a deferred inflow of resources to reflect amounts not available as of June 30. Property taxes collected within 30 days of year-end are considered available and accrued. The allowance for uncollectible taxes represents the estimated amount of the receivable that will be filed in court for collection. Delinquent taxes filed in court for collection are not included in taxes receivable since they are neither measurable nor available.

Property taxes are levied as of the first Monday in October. Taxes become delinquent and begin accumulating interest and penalty the following March 1. Suit must be filed in Chancery Court between the following February 1 to April 1 for any remaining unpaid taxes. Additional costs attach to delinquent taxes after a court suit has been filed. Most payables are disaggregated on the face of the financial statements. The balance in the Other Current Liabilities account totaling $930,691 on the Statement of Net Position for the primary government consists mainly of a liability of $383,010 for amounts held in escrow for the Tri-Cities Regional Airport, a joint venture discussed in Note V.E., and a liability of $540,718 for undrafted deposits for health insurance premiums. The balance in the Other Current Liabilities account totaling $161,477 on the Statement of Net Position for the discretely presented Sullivan County School Department consists mainly of a liability of $94,610 for undrafted deposits for health insurance premiums and pension plans and a liability of

45

$50,285 for student meal deposits. Claims and judgments payable are discussed in Note V.A. Risk Management. The balance in Unearned Revenue on the Statement of Net Position for the discretely presented Sullivan County School Department consists of a liability totaling $20,000,000 for amounts received from the City of Kingsport pursuant to an agreement to transfer title and ownership of Sullivan North High School to the city at a future date. Retainage payable in the primary government’s General Fund represents amounts withheld from payments made on construction contracts pending completion of the projects. These amounts are held by the county trustee as Equity in Pooled Cash and Investments in the General Fund.

3. Inventories and Prepaid Items Inventories of Sullivan County and the discretely presented Sullivan County School Department are recorded at cost or estimated cost, determined on the first-in, first-out method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Inventories are offset in the nonspendable fund balance account in governmental funds. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The cost of prepaid items is recorded as an expenditure when consumed rather than when purchased. Prepaids are offset in the nonspendable fund balance account in governmental funds.

4. Capital Assets

Governmental funds do not capitalize the cost of capital outlays; these funds report capital outlays as expenditures upon acquisition. Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, and similar items), are reported in the governmental column in the government-wide financial statements. Capital assets are defined by the primary government as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than two years. Capital assets are defined by the discretely presented School Department as assets with an initial, individual cost of $15,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized.

46

Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, equipment, and infrastructure of the primary government and the discretely presented School Department are depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Building and Improvements 50Other Capital Assets 5 - 20Infrastructure 40

5. Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has items that qualify for reporting in this category. Accordingly, the items are reported in the government-wide Statement of Net Position. These items are for pension changes in experience, pension changes in assumptions, pension changes in investment earnings, pension contributions after the measurement date, other pension deferrals, OPEB contributions after the measurement date, and the deferred charge on refunding. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has items that qualify for reporting in this category. Accordingly, the items are reported in the government-wide Statement of Net Position and the governmental funds balance sheet. These items are from the following sources: current and delinquent property taxes, pension changes in experience, pension changes in investment earnings, other pension deferrals, OPEB changes in experience, OPEB changes in assumptions, the deferred credit on refunding, and various receivables for revenues, which do not meet the availability criteria for governmental funds.

47

6. Compensated Absences It is the county’s and the School Department’s policies to permit employees to accumulate earned but unused vacation benefits, which will be paid to employees upon separation from service. All vacation pay is accrued when incurred in the government-wide financial statements for the county and the School Department. A liability for vacation pay is reported in governmental funds only if amounts have matured, for example, as a result of employee resignations and retirements. The granting of sick leave for the primary government has no guaranteed payment attached and therefore is not required to be accrued or recorded. The School Department allows employees to accumulate earned but unused sick leave, which will be paid to employees upon separation from service at the rate of $28 per day for one to 100 unused sick days; $30 per day for 101 to 200 unused sick days; $32 per day for 201 to 300 unused sick days; and $34 per day for 301 and above unused sick days. This practice was negotiated by the Board of Education and the local education association. All sick leave is accrued when incurred in the government-wide statements for the School Department.

7. Long-term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities Statement of Net Position. Debt premiums and discounts are deferred and amortized over the life of the new debt. Debt issuance costs are expensed in the period incurred. In refunding transactions, the difference between the reacquisition price and the net carrying amount of the old debt is reported as a deferred outflow of resources or a deferred inflow of resources and recognized as a component of interest expense in a systematic and rational manner over the remaining life of the refunded debt or the life of the new debt issued, whichever is shorter. In the fund financial statements, governmental funds recognize debt premiums and discounts, as well as debt 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. Only the matured portion (the portion that has come due for payment) of long-term indebtedness, including bonds payable, is recognized as a liability and expenditure in the governmental fund financial statements. Liabilities and expenditures for other long-term

48

obligations, including compensated absences, pensions, other postemployment benefits, are recognized to the extent that the liabilities have matured (come due for payment) each period.

8. Net Position and Fund Balance

In the government-wide financial statements and the proprietary funds in the fund financial statements, equity is classified as net position and displayed in three components: a. Net investment in capital assets – 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.

b. Restricted net position – Consists of net position with constraints placed on the 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 position – All other net position that does not

meet the definition of restricted or net investment in capital assets.

As of June 30, 2018, Sullivan County had $162,737,699 in outstanding debt for capital purposes of the discretely presented Sullivan County School Department. In accordance with state statutes, certain county school debt proceeds must be shared with other public school systems in the county (City of Bristol School System, City of Kingsport School System, and City of Johnson City School System) based on average daily attendance prorations. This debt is a liability of Sullivan County, but the capital assets acquired are reported in the financial statements of the School Department, the City of Bristol School System, the City of Kingsport School System, and Johnson City School System. In addition, Sullivan County had outstanding debt totaling $5,530,000 on June 30, 2018, for capital purposes of a joint venture, the Sullivan County Economic Development Partnership (NETWORKS). This debt is also a liability of Sullivan County, but the capital assets acquired are reported by the Sullivan County Economic Development Partnership. Therefore, Sullivan County has incurred a liability significantly decreasing its unrestricted net position with no corresponding increase in the county’s capital assets. It is the county’s policy that restricted amounts would be reduced first followed by unrestricted amounts when expenditures are incurred for purposes for which both restricted and unrestricted fund balance is

49

available. Also, it is the county’s policy that committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of these unrestricted fund balance classifications could be used. In the fund financial statements, governmental funds report fund balance in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in these funds can be spent. These classifications may consist of the following:

Nonspendable Fund Balance – includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.

Restricted Fund Balance – includes amounts that have constraints placed on the use of the resources that are either (a) externally imposed by creditors, grantors, contributors or laws and regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation.

Committed Fund Balance – includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolutions of the County Commission, the county’s highest level of decision-making authority and the Board of Education, the School Department’s highest level of decision-making authority, and shall remain binding unless removed in the same manner. Assigned Fund Balance – includes amounts that are constrained by the county’s intent to be used for specific purposes but are neither restricted nor committed (excluding stabilization arrangements). The County Commission makes assignments for the general government and the Board of Education makes assignments for the School Department. Assigned fund balance in the General Fund consists primarily of amounts assigned for encumbrances of $657,768 and fund balance appropriated for use in the 2018-19 year budget totaling $2,553,131. Assigned fund balance in the School Department’s General Purpose School Fund consists of amounts assigned for encumbrances of $212,885 and fund balance appropriated for use in the 2018-19 year budget totaling $2,743,901.

Unassigned Fund Balance – the residual classification of the General and General Purpose School funds. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned

50

to specific purposes within the General and General Purpose School funds.

9. Restatement

In prior years, Sullivan County was required to recognize a liability for its other postemployment benefits plans under Governmental Accounting Standards Board (GASB) Statement No. 45. As of July 1, 2017, Sullivan County has adopted the provisions of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Restatements reducing the beginning net position of the Governmental Activities of the primary government and the discretely presented Sullivan County School Department by $18,886,303 and $20,936,003, respectively, have been recognized to account for the transitional requirements.

E. Pension Plans

Primary Government For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of Sullivan County’s participation in the Public Employee Retirement Plan of the Tennessee Consolidated Retirement System (TCRS), and additions to/deductions from Sullivan County’s fiduciary net position have been determined on the same basis as they are reported by the TCRS for the Public Employee Retirement Plan. For this purpose, benefits (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms of the Public Employee Retirement Plan of TCRS. Investments are reported at fair value. Discretely Presented Sullivan County School Department

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teacher Retirement Plan and the Teacher Legacy Pension Plan in the Tennessee Consolidated Retirement System, and additions to/deductions from fiduciary net position have been determined on the same basis as they are reported by the TCRS. For this purpose, benefits (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms of the Teacher Retirement Plan and the Teacher Legacy Pension Plan. Investments are reported at fair value.

51

F. Other Postemployment Benefit (OPEB) Plans

Primary Government For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, have been determined on the same basis as they are reported by Sullivan County. For this purpose, Sullivan County recognizes benefit payments when due and payable in accordance with benefit terms. Sullivan County’s OPEB plans are not administered through a trust. Discretely Presented Sullivan County School Department

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, have been determined on the same basis as they are reported by the discretely presented Sullivan County School Department. For this purpose, the School Department recognizes benefit payments when due and payable in accordance with benefit terms. The School Department’s OPEB plans are not administered through a trust.

II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of certain differences between the governmental fund

balance sheet and the government-wide Statement of Net Position Primary Government Exhibit C-2 includes explanations of the nature of individual elements of items required to reconcile the balance sheet of governmental funds with the government-wide Statement of Net Position. Discretely Presented Sullivan County School Department Exhibit K-3 includes explanations of the nature of individual elements of items required to reconcile the balance sheet of governmental funds with the government-wide Statement of Net Position.

B. Explanation of certain differences between the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the government-wide Statement of Activities Primary Government Exhibit C-4 includes explanations of the nature of individual elements of items required to reconcile the net change in fund balances – total governmental funds with the change in net position of governmental activities reported in the government-wide Statement of Activities.

52

Discretely Presented Sullivan County School Department Exhibit K-5 includes explanations of the nature of individual elements of items required to reconcile the net change in fund balances – total governmental funds with the change in net position of governmental activities reported in the government-wide Statement of Activities.

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Information

Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for all governmental funds except the Constitutional Officers - Fees Fund (special revenue fund), which is not budgeted, and the Other Capital Projects Fund, which adopts project length budgets. All annual appropriations lapse at fiscal year-end.

The county is required by state statute to adopt annual budgets. Annual budgets are prepared on the basis in which current available funds must be sufficient to meet current expenditures. Expenditures and encumbrances may not legally exceed appropriations authorized by the county commission and any authorized revisions. Unencumbered appropriations lapse at the end of each fiscal year.

The budgetary level of control is at the major category level established by the County Uniform Chart of Accounts, as prescribed by the Comptroller of the Treasury of the State of Tennessee. Major categories are at the department level (examples of General Fund major categories: County Commission, County Mayor, County Attorney, Election Commission, etc.). Management may make revisions within major categories, but only the county commission may transfer appropriations between major categories. During the year, several supplementary appropriations were necessary.

The county's budgetary basis of accounting is consistent with GAAP, except instances in which encumbrances are treated as budgeted expenditures. The difference between the budgetary basis and the GAAP basis is presented on the face of each budgetary schedule.

At June 30, 2018, Sullivan County and the discretely presented Sullivan County School Department had encumbrances in the following budgeted funds:

53

Funds Amount

Primary Government Major Fund: General $ 1,170,685 Highway/Public Works 306,073 Nonmajor Governmental 62,568

Discretely Presented School Department Major Fund: General Purpose School 212,885 Nonmajor Governmental 148,267

B. Expenditures Exceeded Appropriations

Expenditures exceeded appropriations approved by the county commission in the Support Services – Career and Technical Education Program and Capital Outlay – Regular Capital Outlay major appropriation categories (the legal level of control) of the School Department’s General Purpose School Fund by $10,453 and $10,450, respectively. Expenditures that exceed appropriations are a violation of state statutes. These expenditures in excess of appropriations were funded by greater than anticipated revenues.

IV. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments Sullivan County and the Sullivan County School Department participate in an internal cash and investment pool through the Office of Trustee. The county trustee is the treasurer of the county and in this capacity is responsible for receiving, disbursing, and investing most county funds. Each fund’s portion of this pool is displayed on the balance sheets or statements of net position as Equity in Pooled Cash and Investments. Cash reflected on the balance sheets or statements of net position represents nonpooled amounts held separately by individual funds. Deposits Legal Provisions. All deposits with financial institutions must be secured by one of two methods. One method involves financial institutions that participate in the bank collateral pool administered by the state treasurer. Participating banks determine the aggregate balance of their public fund accounts for the State of Tennessee and its political subdivisions. The amount of collateral required to secure these public deposits must equal at least 105 percent of the average daily balance of public deposits held. Collateral securities required to be pledged by the participating banks to protect their public fund accounts are pledged to the state treasurer on behalf of the bank

54

collateral pool. The securities pledged to protect these accounts are pledged in the aggregate rather than against each account. The members of the pool may be required by agreement to pay an assessment to cover any deficiency. Under this additional assessment agreement, public fund accounts covered by the pool are considered to be insured for purposes of credit risk disclosure.

For deposits with financial institutions that do not participate in the bank collateral pool, state statutes require that all deposits be collateralized with collateral whose market value is equal to 105 percent of the uninsured amount of the deposits. The collateral must be placed by the depository bank in an escrow account in a second bank for the benefit of the county.

Investments

Legal Provisions. Counties are authorized to make direct investments in bonds, notes, or treasury bills of the U.S. government and obligations guaranteed by the U.S. government or any of its agencies; deposits at state and federal chartered banks and savings and loan associations; bonds of any state or political subdivision rated A or higher by any nationally recognized rating service; nonconvertible debt securities of certain federal government sponsored enterprises; and the county’s own legally issued bonds or notes. These investments may not have a maturity greater than two years. The county may make investments with longer maturities if various restrictions set out in state law are followed. Counties are also authorized to make investments in the State Treasurer’s Investment Pool and in repurchase agreements. Repurchase agreements must be approved by the state Comptroller’s Office and executed in accordance with procedures established by the State Funding Board. Securities purchased under a repurchase agreement must be obligations of the U.S. government or obligations guaranteed by the U.S. government or any of its agencies. When repurchase agreements are executed, the purchase of the securities must be priced at least two percent below the fair value of the securities on the day of purchase.

Investment Balances. As of June 30, 2018, Sullivan County had the following investments carried at amortized cost using a stable net asset value. Separate disclosures concerning pooled investments cannot be made for Sullivan County and the discretely presented Sullivan County School Department since both pool their deposits and investments through the county trustee.

55

WeightedAverage Amortized

Investment Maturity (days) Cost

State Treasurer's Investment Pool 2 to 113 6,695,092$

POOLED INVESTMENTS

Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. State statutes limit the maturities of certain investments as previously disclosed. Sullivan County does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State statutes limit the ratings of certain investments as previously explained. Sullivan County has no investment policy that would further limit its investment choices. As of June 30, 2018, Sullivan County’s investment in the State Treasurer’s Investment Pool was unrated.

B. Capital Assets

Capital assets activity for the year ended June 30, 2018, was as follows:

56

Primary Government

Governmental Activities:Balance Balance7-1-17 Increases Decreases 6-30-18

Capital Assets Not Depreciated:Land $ 2,458,142 $ 0 $ 0 $ 2,458,142Construction in Progress 54,550 403,259 (109,100) 348,709Total Capital Assets Not Depreciated $ 2,512,692 $ 403,259 $ (109,100) $ 2,806,851

Capital Assets Depreciated:Buildings and Improvements $ 36,603,987 $ 440,633 $ 0 $ 37,044,620Infrastructure 19,809,863 1,320,096 (61,139) 21,068,820Other Capital Assets 31,297,295 2,282,835 (851,259) 32,728,871Total Capital Assets Depreciated $ 87,711,145 $ 4,043,564 $ (912,398) $ 90,842,311

Less Accumulated Depreciation For:Buildings and Improvements $ 14,128,037 $ 779,794 $ 0 $ 14,907,831Infrastructure 10,477,225 526,432 (27,892) 10,975,765Other Capital Assets 19,635,073 1,935,238 (696,336) 20,873,975Total Accumulated Depreciation $ 44,240,335 $ 3,241,464 $ (724,228) $ 46,757,571

Total Capital Assets Depreciated, Net $ 43,470,810 $ 802,100 $ (188,170) $ 44,084,740

Governmental Activities Capital Assets, Net $ 45,983,502 $ 1,205,359 $ (297,270) $ 46,891,591

Depreciation expense was charged to functions of the primary government as follows:

57

Governmental Activities:

General Government $ 108,273Administration of Justice 172,187Public Safety 1,508,102Public Health and Welfare 437,665Social, Cultural, and Recreational 34,309Agriculture and Natural Resources 54,931Highways 925,997

Total Depreciation Expense - Governmental Activities $ 3,241,464

Discretely Presented Sullivan County School Department


Balance Balance7-1-17 Increases Decreases 6-30-18

Capital Assets Not Depreciated:Land $ 5,643,859 $ 5,723 $ 0 $ 5,649,582Construction in Progress 647,800 3,516,035 (308,607) 3,855,228Total Capital Assets Not Depreciated $ 6,291,659 $ 3,521,758 $ (308,607) $ 9,504,810

Capital Assets Depreciated:Buildings and Improvements $ 123,464,657 $ 375,357 $ 0 $ 123,840,014Other Capital Assets 9,120,692 100,546 (42,077) 9,179,161Total Capital Assets Depreciated $ 132,585,349 $ 475,903 $ (42,077) $ 133,019,175

Less Accumulated Depreciation For:Buildings and Improvements $ 60,700,493 $ 2,747,047 $ 0 $ 63,447,540Other Capital Assets 7,429,636 353,650 (35,276) 7,748,010Total Accumulated Depreciation $ 68,130,129 $ 3,100,697 $ (35,276) $ 71,195,550

Total Capital Assets Depreciated, Net $ 64,455,220 $ (2,624,794) $ (6,801) $ 61,823,625

Governmental Activities Capital Assets, Net $ 70,746,879 $ 896,964 $ (315,408) $ 71,328,435

Depreciation expense was charged to functions of the discretely presented Sullivan County School Department as follows:

58


Instruction $ 2,801,233Support Services 191,512Operation of Non-instructional Services 107,952

Total Depreciation Expense − Governmental Activities $ 3,100,697

C. Commitments for Construction and Land Purchase

Primary Government

At June 30, 2018, the General Fund had uncompleted construction contracts of approximately $382,459 for construction and architectural services related to phase two in a series of renovations to the county agricultural center. Funding for these future expenditures of the General Fund is being provided from state grant reimbursements.


At June 30, 2018, the Education Capital Projects Fund had uncompleted construction contracts of approximately $20,767,847 for construction and architectural services related to a new middle school and a new high school. The School Improvement Fund had uncompleted contracts of approximately$121,614 for school repairs and renovations. Funding for these future expenditures of the Education Capital Projects and School Improvement Funds is being provided from available fund balance.

On December 22, 2016, the Sullivan County Board of Education entered an agreement to purchase 69 acres of land for the construction of a new middle school. On May 4, 2017, the Board of Education entered another agreement to delay the closing on 15 acres of this land for up to 36 months. Closing for 54 acres of the property occurred on May 26, 2017. At June 30, 2018, the Board of Education had paid $10,000 of the agreed upon total of $426,440 for the remaining 15 acres. The balance, $416,440, is reported as Committed for Education in the fund balance of the General Purpose School Fund at June 30, 2018.

D. Interfund Receivables, Payables, and Transfers

The composition of interfund balances as of June 30, 2018, was as follows:

59

Receivable Fund Payable Fund Amount

Primary Government: General Nonmajor governmental $ 496,098 General Debt Service General 475,031 " Nonmajor governmental 1,856,857 Internal Service General 1,047,688 " Highway/Public Works 56,962 " Nonmajor governmental 15,231 Nonmajor governmental General 13,535 " Highway/Public Works 206 " Nonmajor governmental 74

Discretely Presented School Department: General Purpose School Nonmajor governmental 1,515,492 Nonmajor governmental " 8,024

These balances resulted from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur and payments between funds are made.

Due to/from Primary Government and Component Unit:


Component Unit:Primary Government: School Department: General General Purpose School $ 752 Internal Service " 14,734

Component Unit: School Department: Primary Government: General Purpose School General $ 1,100,000

Interfund Transfers:

Interfund transfers for the year ended June 30, 2018, consisted of the following amounts:

60

Due to/from Other Funds:

Primary Government

General InternalDebt Service

Transfers Out Service Fund Fund

General Fund $ 245,939 $ 500,000Nonmajor Governmental Funds 1,856,857 0

Total $ 2,102,796 $ 500,000

Transfers In

Transfers to the General Debt Service Fund represent contributions towards debt service principal and interest requirements. Transfers to the Internal Service Fund represents amounts contributed for self-insured general liability, property, and workers compensation claims. Discretely Presented Sullivan County School Department

GeneralPurposeSchool

Transfer Out Fund

Nonmajor governmental funds $ 607,742

Total $ 607,742

Transfer In

These transfers included $562,000 contributed toward debt retirement and $45,742 for indirect costs. Transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and to use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

E. Capital Leases As of June 30, 2018, Sullivan County had the following outstanding capital leases.

61

Original Date Maturity Interest BalanceAmount Entered Date Rate 6-30-18

Payable through General Fund Circuit Computer Upgrades (1) $ 54,645 4-1-15 3-1-19 6% $ 7,819 Jail Camera System 459,900 12-29-15 1-20-20 3.25 186,758 Circuit Computers 2017 (1) 58,677 4-17-17 3-17-21 6 39,775 Sheriff Department Patrol Cars 208,036 5-18-17 5-18-20 3.4 103,961 Clerk and Master Computers 2018 (1) 21,067 5-24-18 3-24-22 6.5 19,800 Sheriff Vehicles 2018 355,937 6-10-18 6-10-21 4.75 273,063

Payable through Highway/PublicWorks Fund

Dump Trucks (2) 494,574 11-30-17 11-1-23 4.26 409,432

Total $ 1,040,608

(1) Equipment purchases did not meet the threshold for capitalization and are not included in the table presented below. (2) Original amount does not include $132,000 received from the value of old equipment traded towards new equipment obtained through the capital lease. Title to the equipment transfers to Sullivan County at the end of the lease period. The assets acquired through capital leases outstanding at June 30, 2018, are as follows:

Primary Government

Machinery and Equipment $ 1,650,447Less: Accumulated Depreciation (230,958)

Total Book Value $ 1,419,489


Future minimum lease payments and the net present value of these minimum lease payments as of June 30, 2018, were as follows:

62

Year Ending GovernmentalJune 30 Funds

2019 $ 368,9842020 360,9882021 199,8122022 94,4492023 90,0002024 8,134Total Minimum Lease Payments $ 1,122,367Less: Amount Representing Interest (81,759)

Present Value of Minimum Lease Payments $ 1,040,608

F. Long-term Obligations

Primary Government General Obligation Bonds, Notes, and Other Loans Sullivan County issues general obligation bonds and other loans to provide funds for the acquisition and construction of major capital facilities for the primary government and the discretely presented School Department. In addition, general obligation bonds have been issued to refund other debt obligations. Capital outlay notes are also issued to fund capital facilities and other capital outlay purchases, such as equipment. General obligation bonds, capital outlay notes, and other loans are direct obligations and pledge the full faith and credit of the government. General obligation bonds, capital outlay notes, and other loans outstanding were issued for original terms of up to 30 years for bonds, up to eight years for notes, and up to 17 years for other loans. Repayment terms are generally structured with increasing amounts of principal maturing as interest requirements decrease over the term of the debt. All bonds, notes, and other loans included in the long-term debt as of June 30, 2018, will be retired from the General Debt Service and Education Debt Service funds. General obligation bonds, capital outlay notes, other loans, and capital leases outstanding as of June 30, 2018, for governmental activities are as follows:

63

Original

Interest Final Amount Balance

Type Rate Maturity of Issue 6-30-18

General Obligation Bonds 3 to 5% 5-1-47 135,740,000$ 135,740,000$

General Obligation Bonds -

Refunding 2 to 5 4-1-28 38,100,000 27,420,000

Capital Outlay Note 2.65 10-16-23 1,500,000 936,585

Other Loans - Qualified School

Construction Bonds 0 to 1.515 8-1-27 20,553,000 10,823,493

Other Loans - Energy Efficient

Schools Initiative 0 4-16-20 5,054,635 3,212,221

Capital Leases 3.25 to 6.5 11-1-23 1,652,836 1,040,608

In 2009-10, Sullivan County entered into a loan agreement totaling $15,480,000 with the Tennessee State School Bond Authority. Qualified School Construction Bonds were issued through the authority, and the proceeds were loaned to Sullivan County and other local governments across Tennessee. The county pays interest of 1.515 percent on its share of the bonds and also pays a monthly administrative fee of $1,290 to the authority. The county and the other borrowers of the bond proceeds are required to comply with federal regulations established for the Qualified School Construction Bond program. Failure to comply with those requirements may result in the loss of the tax credit status on the bonds. This would result in further charges to the borrowers including the requirement to pay the tax-credit rate (5.86 percent) in addition to the 1.515 percent for a total rate of 7.375 percent. During 2010-11, Sullivan County entered into a loan agreement with the Tennessee State School Bond Authority. Under this loan agreement, the authority loaned Sullivan County $5,073,000 for Emmett Elementary and Holston Complex renovations. This loan is interest free after a rebate. The county pays an annual administrative fee of $4,058. The annual requirements to amortize all general obligation bonds, notes, and other loans outstanding as of June 30, 2018, including interest payments and other loan fees, are presented in the following tables:

64

Year EndingJune 30 Principal Interest Total

2019 $ 7,245,000 $ 6,616,644 $ 13,861,6442020 5,700,000 6,287,794 11,987,7942021 6,020,000 6,018,244 12,038,2442022 6,390,000 5,437,119 11,827,1192023 6,730,000 5,426,354 12,156,3542024-2028 26,150,000 22,798,689 48,948,6892029-2033 20,925,000 18,423,805 39,348,8052034-2038 25,045,000 14,308,381 39,353,3812039-2043 30,240,000 9,111,900 39,351,9002044-2047 28,715,000 2,767,800 31,482,800

Total $ 163,160,000 $ 97,196,730 $ 260,356,730

Bonds

Year EndingJune 30 Principal Interest Total

2019 $ 147,841 $ 22,913 $ 170,7542020 151,805 18,944 170,7492021 155,876 14,869 170,7452022 160,056 10,684 170,7402023 164,348 6,387 170,7352024 156,659 2,076 158,735

Total $ 936,585 $ 75,873 $ 1,012,458

Notes

Year EndingJune 30 Principal Interest Other Fees Total

2019 $ 1,700,411 $ 503,117 $ 19,539 $ 2,223,0672020 1,703,555 499,973 19,538 2,223,0662021 1,706,723 496,805 19,539 2,223,0672022 1,709,915 493,613 19,538 2,223,0662023 1,713,131 490,397 19,539 2,223,0672024-2028 5,501,979 1,741,685 67,557 7,311,221

Total $ 14,035,714 $ 4,225,590 $ 165,250 $ 18,426,554

Other Loans

65

In previous years, the county issued refunding bonds totaling $6,265,000 for the benefit of the Sullivan County Economic Development Partnership (NETWORKS), a joint venture. The refunding bonds are general obligation debt of the county. The interlocal agreement, which established the partnership, requires NETWORKS to pay the county an amount equal to the annual principal and interest requirements on the debt issues. In the event revenues of NETWORKS are not sufficient to meet those requirements, the other participating governments in NETWORKS have agreed to pay 49 percent of any such deficiency. During the year, the county paid $672,562 in principal and interest on this debt. Networks reimbursed the county $12,189 and the other participating government reimbursed the county $323,583. The county absorbed the remaining $336,790 of the debt payments. The amount of the refunding bonds outstanding at June 30, 2018, were $5,530,000. There is $4,160,419 available in the debt service funds to service long-term debt. Bonded debt per capita totaled $1,029 for residents living inside the Bristol and Kingsport districts and $1,051 for residents living outside these districts based on the 2010 census. Total debt per capita, including bonds, notes, other loans, capital leases, and unamortized premium on bonds, totaled $1,183 for residents living inside the Bristol and Kingsport school districts and $1,206 for residents living outside these districts based on the 2010 federal census. During the year, the School Department contributed $2,547,916 to the county debt service funds to be applied toward the retirement of school related debt. As described in Note IV.G., the School Department has pledged a portion of its local option sales tax revenues toward the retirement of the refunding bonds issued in 2015, which are paid through the Education Debt Service Fund. At June 30, 2018, the amount outstanding on these bonds totaled $1,840,000. Changes in Long-term Obligations Long-term obligations activity for the year ended June 30, 2018, was as follows:

66

Other Bonds Notes Loans

Balance, July 1, 2017 $ 167,730,000 $ 1,080,565 $ 15,733,005Reductions (4,570,000) (143,980) (1,697,291)

Balance, June 30, 2018 $ 163,160,000 $ 936,585 $ 14,035,714

Balance Due Within One Year $ 7,245,000 $ 147,841 $ 1,700,411

CapitalLeases

Balance, July 1, 2017 $ 887,413 $ 2,067,142 $ 21,819,227 (1)Additions 871,578 2,314,386 1,385,979Reductions (718,383) (2,317,500) (3,255,736)

Balance, June 30, 2018 $ 1,040,608 $ 2,064,028 $ 19,949,470

Balance Due Within One Year $ 335,783 $ 1,217,777 $ 0

Net PensionLiability

Agent Plan

Balance, July 1, 2017 $ 4,250,597Additions 4,018,058Reductions (8,268,655)

Balance, June 30, 2018 $ 0

Balance Due Within One Year $ 0

Other Post-Compensated Employment

Absences Benefits

(1) Restated for implementation of GASB Statement No. 75. See Note I.D.9. Analysis of Noncurrent Liabilities Presented on Exhibit A:

Total Noncurrent Liabilities, June 30, 2018 $ 201,186,405Less: Balance Due Within One Year (10,646,812)Add: Unamortized Premium on Debt 8,264,149

Noncurrent Liabilities - Due in More Than One Year - Exhibit A $ 198,803,742 Compensated absences and other postemployment benefits will be paid from the employing funds.

67

Discretely Presented Sullivan County School Department Changes in Long-term Obligations Long-term obligations activity for the discretely presented School Department for the year ended June 30, 2018, was as follows:

Other Post-Compensated Employement

Absences Benefits

Balance, July 1, 2017 $ 2,830,693 $ 70,185,216 (1)Additions 423,386 5,725,661Reductions (622,752) (8,635,497)

Balance June 30, 2018 $ 2,631,327 $ 67,275,380

Balance Due Within One Year $ 578,892 $ 0

Net PensionNet Pension Liability

Liability TeacherAgent Plan Legacy Plan

Balance, July 1, 2017 $ 1,434,299 $ 6,398,324Additions 1,188,704 3,544,113Reductions (2,623,003) (9,942,437)

Balance June 30, 2018 $ 0 $ 0

Balance Due Within One Year $ 0 $ 0

(1) Restated for implementation of GASB Statement No. 75. See Note I.D.9. Analysis of Noncurrent Liabilities Presented on Exhibit A:

Total Noncurrent Liabilities, June 30, 2018 $ 69,906,707Less: Balance Due Within One Year (578,892)

Noncurrent Liabilities - Due in More Than One Year - Exhibit A $ 69,327,815

These long-term obligations will be paid from the employing funds.

68

G. Pledges of Future Revenues – Discretely Presented Sullivan County School Department

The Sullivan County School Department has pledged a portion of its share of local option sales tax revenues toward the retirement of refunding bonds issued by Sullivan County in 2015. Total principal and interest remaining on the debt is $1,913,600 and is payable in fiscal year 2019.

H. On-Behalf Payments – Discretely Presented Sullivan County School Department The State of Tennessee pays health insurance premiums for retired teachers on-behalf of the Sullivan County School Department. These payments are made by the state to the Local Education Group Insurance Plan and the Medicare Supplement Plan. Both plans are administered by the State of Tennessee and are reported in the state’s Comprehensive Annual Financial Report. Payments by the state to the Local Education Group Insurance Plan and the Medicare Supplement Plan for the year ended June 30, 2018, were $536,068 and $11,341, respectively. The School Department has recognized these on-behalf payments as revenues and expenditures in the General Purpose School Fund.

I. Donor-Restricted Endowments – Discretely Presented Sullivan

County School Department The Sullivan County School Department accounts for an endowment totaling $115,601 in the Endowment Fund. Interest earned by the fund for a calendar year or five percent of the value of the fund on December 31, whichever is greater, may be expended for scholarships awarded to students of Sullivan North High School. During the year ended June 30, 2018, expenditures totaled $6,150.

J. Short-term Debt Primary Government Sullivan County issued tax anticipation notes in advance of property tax collections and other revenues and deposited the proceeds in the General Fund and the General Debt Service Fund. These notes were necessary because funds were not available to meet obligations coming due before current tax and other revenue collections. Short-term debt activity for the year ended June 30, 2018, was as follows:

69

Balance Balance7-1-17 Issued Paid 6-30-18

Tax Anticipation Notes - General Fund $ 0 $ 3,881,208 $ (3,881,208) $ 0 General Debt Service Fund 0 1,060,935 (1,060,935) 0

V. OTHER INFORMATION

A. Risk Management

Sullivan County participates in the Local Government Group Insurance Fund(LGGIF), a public entity risk pool established to provide a program of healthinsurance coverage for employees of local governments and quasi-governmental entities that was established for the primary purpose ofproviding services for or on behalf of state and local governments. Inaccordance with Section 8-27-207, Tennessee Code Annotated (TCA), all localgovernments and quasi-governmental entities described above are eligible toparticipate. The LGGIF is included in the Comprehensive Annual FinancialReport for the State of Tennessee, but the state does not retain any risk forlosses by this fund. The state statute provides for the LGGIF to be self-sustaining through member premiums.

The discretely presented Sullivan County School Department participates inthe Local Education Group Insurance Fund (LEGIF), a public entity risk poolestablished to provide a program of health insurance coverage for employeesof local education agencies. In accordance with Section 8-27-301, TCA, alllocal education agencies are eligible to participate. The LEGIF is included inthe Comprehensive Annual Financial Report of the State of Tennessee, butthe state does not retain any risk for losses by this fund. Section 8-27-303,TCA, provides for the LEGIF to be self-sustaining through memberpremiums.

Sullivan County established a self-insurance fund for risks associated withgeneral liability, property, casualty losses, and workers’ compensation. Boththe primary government and the discretely presented Sullivan County SchoolDepartment participate in this self-insurance fund for the risks listed above.The Self-Insurance Fund is accounted for as an internal service fund in whichassets are set aside for claim settlements. Insurance claims are reimbursedfrom the Highway/Public Works and General Purpose School funds for claimsassociated with those departments. The county’s General Fund absorbs thecosts of claims associated with other departments. The county retains therisk of loss to limits of $50,000 to $100,000 per individual claim for generalliability, property, and casualty losses. The county is self-insured to a limit of$300,000 for a single accident for workers’ compensation. Amounts exceedingthese limits are covered by excess loss policies, subject to various policy

70

limits. A fee is paid from this fund to a third-party agent who investigates claims and determines recommended action to be taken. Sullivan County maintains the Employee Insurance – General Fund (an internal service fund) for self-insured risks associated with the retirees’ supplemental health and employee dental plans for employees of the primary government. Liabilities of the self-insurance funds are reported when it is probable that a loss has occurred, and the amount of the loss can be reasonably estimated. These funds establish claims liabilities based on estimates of the ultimate cost of claims that have been reported but not settled, and of claims that have been incurred but not reported. Claims liabilities include specific, incremental claim adjustment expenditures/expenses, if any. In addition, estimated recoveries, if any, on settled claims have been deducted from the liability of unpaid claims. The process used to compute claims liabilities does not necessarily result in an exact amount. Changes in the balance of claims liabilities during the past two fiscal years are as follows: Self-Insurance Fund

Beginningof Fiscal Current-year Balance at

Year Claims and FiscalLiability Estimates Payments Year-end

2016-2017 $ 220,402 $ 922,475 $ (917,455) $ 225,4222017-2018 225,422 975,849 (1,025,818) 175,453

Employee Insurance - General Fund

Beginning Balance atof Fiscal Current-year Fiscal

Year Claims and Year-endLiability Estimates Payments (prepaid)

2016-2017 $ 0 $ 537,187 $ (537,187) $ 02017-2018 0 509,816 (509,816) 0

B. Accounting Changes Provisions of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions; Statement No. 81, Irrevocable Split-Interest Agreements; Statement No. 85, Omnibus 2017; and Statement No. 86, Certain Debt Extinguishment Issues became effective for the year ended June 30, 2018.

71

GASB Statement No. 75, establishes accounting and reporting requirements for postemployment benefits other than pensions (other postemployment benefits or OPEB), which are included in the general purpose financial reports of state and local governmental OPEB plans. This statement replaces GASB Statements No. 45 and No. 57. The scope of this statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed. GASB Statement No. 81, establishes accounting and financial reporting guidance for irrevocable split-interest agreements in which a government is a beneficiary. GASB Statement No. 85, addresses practice issues that have been identified during implementation and application of certain GASB Statements. This statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). GASB Statement No. 86, establishes guidance for transactions in which cash and other monetary assets acquired with only existing resources—resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This statement also provides guidance for accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance.

C. Contingent Liabilities On February 20, 2014, Sullivan County issued $2,975,000 of Airport Revenue and Tax Refunding Bonds for the Tri-Cities Airport (a joint venture described in Note V.E.). Sullivan County is contingently liable for 20 percent of the principal and interest on these bonds in the event revenues of the Airport Commission are not sufficient to cover the payments. The other governments participating in the joint venture are contingently liable for the remaining 80 percent of the principal and interest requirements. On March 29, 2018, Tri-Cities Regional Airport issued bonds in the amount of $8,500,000. Sullivan County is contingently liable for 26.95 percent of the principal and interest on these bonds in the event revenues of the Airport Authority are not sufficient to cover the payments. The other governments participating in the joint venture are contingently liable for the remaining 73.05 percent of the principal and interest requirements. Final maturity for

72

the bonds is May 1, 2038. The outstanding balance of the bonds was $8,500,000 at June 30, 2018. There are several pending lawsuits in which the county is involved. Management has provided for potential claims and judgments in the financial statements of the self-insurance funds in this report. Based on letters from attorneys, management believes that potential claims not already recorded in the self-insurance funds would not materially affect the financial statements of the county.

D. Change in Administration

On June 30, 2017, Robert White left the Office of Assessor of Property and was succeeded by Russell Baker on July 31, 2017.

E. Joint Ventures Primary Government The Tri-Cities Regional Airport is a joint venture in which Sullivan County participates, along with Washington County and the cities of Kingsport; Johnson City; Bristol, Tennessee; and Bristol, Virginia. The airport is governed by a 12-member board (the Tri-Cities Regional Airport Authority) comprising two members appointed by Sullivan County and ten members appointed by the other participating governments. Funding for the Airport Authority is provided primarily by revenues generated from airport services and by capital grants from the federal and state governments. Complete financial statements for the Tri-Cities Regional Airport can be requested at the following address:

Tri-Cities Regional Airport 2525 Highway 75, Suite 301 Blountville, TN 37617

The Sullivan County Economic Development Partnership (NETWORKS) is a joint venture in which Sullivan County participates, along with the cities of Kingsport, Bristol, and Bluff City. The partnership is governed by a 13-member voting board of directors comprising the four mayors, four members appointed by the Sullivan County mayor, three members appointed by the Kingsport mayor, and two members appointed by the Bristol mayor. Eleven other non-voting ex-officio members also serve on the board. Funding for the NETWORKS is provided primarily by contributions from Sullivan County and the member cities, revenues generated from capital projects and other business activities of the partnership. Complete financial statements for the NETWORKS can be requested at the following address:

73

Sullivan County Economic Development Partnership P.O. Box 426 Blountville, TN 37617

The Second Judicial District Drug Task Force (DTF) is a joint venture formed by an interlocal agreement between the district attorney general of the Second Judicial District, Sullivan County, and various cities within Sullivan County. The purpose of the DTF is to provide multi-jurisdictional law enforcement to promote the investigation and prosecution of drug-related activities. Funds for the operations of the DTF come primarily from federal grants, drug fines, and the forfeiture of drug-related assets to the DTF. The DTF is overseen by the district attorney general and is governed by a board of directors including the district attorney general, sheriff, and police chiefs of participating law enforcement agencies within each judicial district. Sullivan County made no contributions to the DTF for the year ended June 30, 2018, and does not have any equity interest in this joint venture. Complete financial statements for the DTF can be obtained from its administrative office at the following address:

District Attorney General Second Judicial District P.O. Box 526 Blountville, TN 37617

The Upper East Tennessee Juvenile Detention Center was formed through a cooperative agreement between Sullivan County and the counties of Carter, Greene, Hawkins, Johnson, Unicoi, and Washington for the operation of a program to divert youth from commitment to the Department of Correction facilities. This program is governed by a board of directors designated by the counties. The board of directors has contracted with ElyJenn Health Services, LLC, to undertake the management of this program. Operation costs to the counties are allocated according to percentages based on population. Sullivan County’s participation cost percentage is 31.7 percent. The counties also pay a daily fee for individuals from their counties using the facility. Complete financial statements for the Juvenile Detention Center can be obtained from its administrative office at the following address:

Upper East Tennessee Regional Juvenile Detention Center 307 Wesley Street Johnson City, TN 37601

Sullivan County previously participated in a joint venture with the cities of Bluff City and Kingsport for operation of an animal control center. Sullivan County terminated its participation in that joint venture effective December 31, 2017.

74

Discretely Presented School Department The discretely presented School Department participates in the Northeast Tennessee Cooperative (NETCO). The cooperative was established through a contractual agreement between the Boards of Education of Sullivan County and various other counties and cities in the upper East Tennessee area. The cooperative was authorized through Chapter 49 of Tennessee Code Annotated, and was established to obtain lower prices for food supplies, materials, equipment, and services by combining the purchasing requirements of each member’s school food service systems. The cooperative has contracted with a coordinating district (Johnson City School System) and a service provider to provide this service. NETCO is governed by a representative committee, including one representative from each of the member districts and an executive council, consisting of the chair, vice chair, secretary, treasurer, and a member-at-large from the representative committee. Complete financial statements for NETCO can be obtained from its administrative office at the following address:

Northeast Tennessee Cooperative 100 East Maple Street P.O. Box 1517 Johnson City, TN 37605

F. Jointly Governed Organization

Primary Government The East Tennessee Regional Agribusiness Marketing Authority was established through Title 64 of Tennessee Code Annotated, and includes the counties of Claiborne, Cocke, Grainger, Greene, Hamblen, Hancock, Hawkins, Jefferson, Johnson, Sullivan, Unicoi, and Washington. The purpose of the authority is to establish and operate a market for agricultural products of the region through a food distribution center. The authority is governed by a Board of Directors consisting of the county mayors of each county or the county mayor’s designee and one nonvoting member representing the Tennessee Department of Agriculture and the University of Tennessee’s Agriculture Extension Service. An executive committee, consisting of the chairman, vice-chairman, secretary, and treasurer of the Board of Directors, along with the center manager as an ex-officio member, is in charge of the daily operation of the center. Sullivan County is a participant in the joint governance of the Alliance for Business and Training (AB&T) which administers funds received under the Workforce Innovation and Opportunity Act for the Northeast Tennessee Local Workforce Development Area. An interlocal consortium agreement between Carter, Greene, Hancock, Hawkins, Johnson, Sullivan, Unicoi, and Washington counties established the Northeast Tennessee Workforce Development Board and the governing structure of AB&T. The county mayors represent each county in the consortium. The Sullivan County Mayor

75

serves as the chief local elected county official of the consortium by the majority approval of the local elected county officials in the consortium agreement and approves appointments of board members of the workforce development board following a nomination process specified in the agreement. The board has no financial activity but provides oversight for workforce development programs of the Development Area. Those programs are funded by grants passed through the state Department of Labor to AB&T. Mayors of the participating counties, along with four members jointly appointed by the mayors serve as the governing board of AB&T. The consortium agreement calls for any liability for disallowed costs of the grant programs to be shared by member counties of the consortium based on each county’s percent of the population of the local workforce development area. However, that contingent liability is to be mitigated by $3 million of insurance coverage provided by AB&T to indemnify the counties pursuant to the consortium agreement. Complete financial information for the Alliance for Business and Training can be obtained from the following address.

Alliance for Business and Training 386 Hwy 91 PO Box 249 Elizabethton, TN 37643

G. Retirement Commitments

1. Tennessee Consolidated Retirement System (TCRS)

Primary Government General Information About the Pension Plan Plan Description. Employees of Sullivan County and non-certified employees of the discretely presented Sullivan County School Department are provided a defined benefit pension plan through the Public Employee Retirement Plan, an agent multiple-employer pension plan administered by the TCRS. The primary government employees comprise 77.17 percent, the non-certified employees of the discretely presented School Department comprise 22.83 percent of the plan based on contribution data. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly

76

available financial report that can be obtained at www.treasury.state.tn.us/tcrs.

Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. The chief legislative body may adopt the benefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. Reduced benefits for early retirement are available to vested members at age 55. Members vest with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. A member who leaves employment may withdraw their employee contributions plus any accumulated interest. Employees Covered by Benefit Terms. At the measurement date of June 30, 2017, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 1,126Inactive Employees Entitled to But Not Yet Receiving Benefits 938Active Employees 1,068

Total 3,132

Contributions. Contributions for employees are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly. All employees hired on or after April 1, 2012, are required to contribute five percent of salary to the plan. As

77

of April 1, 2012, Sullivan County elected to discontinue the non-contributory provisions for all future hires. Employees who were hired prior to April 1, 2012, continue to be eligible for the non-contributory provisions.. Sullivan County makes employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. For the year ended June 30, 2018, the employer contribution for Sullivan County was $6,114,041 based on a rate of 15.56 percent of covered payroll. By law, employer contributions are required to be paid. The TCRS may intercept Sullivan County’s state shared taxes if required employer contributions are not remitted. The employer’s actuarially determined contributions (ADC) and member contributions are expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Net Pension Liability (Asset) Sullivan County’s net pension liability (asset) was measured as of June 30, 2017, and the total pension liability (asset) used to calculate net pension liability (asset) was determined by an actuarial valuation as of that date. Actuarial Assumptions. The total pension liability as of the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.5%Salary Increases Graded Salary Ranges from 8.72%

to 3.46% Based on Age, Including Inflation, Averaging 4%

Investment Rate of Return 7.25%, Net of Pension Plan Investment Expenses, Including Inflation

Cost of Living Adjustment 2.25%

Mortality rates were based on actual experience including an adjustment for some anticipated improvement. The actuarial assumptions used in the June 30, 2017, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2012, through June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with

78

the June 30, 2016, actuarial experience study. A blend of future capital market projections and historic market returns was used in a building-block method in which a best-estimate of expected future real rates of return (expected returns, net of pension plan investments expense and inflation) is developed for each major asset class. These best-estimates are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation of 2.5 percent. The best-estimates of geometric real rates of return and the TCRS investment policy target asset allocation for each major asset class are summarized in the following table:

PercentageLong-termExpected PercentageReal Rate Target

Asset Class of Return Allocations

U.S. Equity 5.69 % 31 %Developed Market International Equity 5.29 14Emerging Market International Equity 6.36 4Private Equity and Strategic Lending 5.79 20U.S. Fixed Income 2.01 20Real Estate 4.32 10Short-term Securities 0.00 1

Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.25 percent based on a blending of the factors described above. Changes of Assumptions. In 2017, the following assumptions were changed: decreased inflation rate from 3.0 percent to 2.5 percent; decreased the investment rate of return from 7.5 percent to 7.25 percent; decreased the cost-of-living adjustment from 2.5 to 2.25 percent; decreased salary growth graded ranges from an average of 4.25 percent to an average of 4.0 percent; and modified the mortality assumptions. Discount Rate. The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current rate and that contributions from Sullivan

79

County will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Net Pension Liability (Asset)

Total Plan Net Pension

Pension Fiduciary LiabilityLiability Net Position (Asset)

(a) (b) (a)-(b)

Balance, July 1, 2016 $ 172,800,036 $ 167,115,140 $ 5,684,896

Changes for the Year:

Service Cost $ 2,909,793 $ 0 $ 2,909,793 Interest 12,841,796 0 12,841,796

Differences Between Expected and Actual Experience (1,235,482) 0 (1,235,482)

Changes in Assumptions 4,414,805 0 4,414,805 Contributions-Employer 0 5,804,426 (5,804,426)

Contributions-Employees 0 552,979 (552,979) Net Investment Income 0 18,784,625 (18,784,625)

Benefit Payments, Including Refunds of Employee

Contributions (8,971,754) (8,971,754) 0 Administrative Expense 0 (87,757) 87,757

Other Changes 0 13,231 (13,231)Net Changes $ 9,959,158 $ 16,095,750 $ (6,136,592)

Balance, June 30, 2017 $ 182,759,194 $ 183,210,890 $ (451,696)

Increase (Decrease)

80

Allocation of Agent Plan Changes in the Net Pension Liability (Asset)

Plan NetTotal Fiduciary Pension

Pension Net LiabilityLiability Position (Asset)

Primary Government 77.17% $ 141,035,270 $ 141,383,844 $ (348,574)

School Department 22.83% 41,723,924 41,827,046 (103,122)

Total $ 182,759,194 $ 183,210,890 $ (451,696)

Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the net pension liability (asset) of Sullivan County calculated using the discount rate of 7.25 percent, as well as what the net pension liability (asset) would be if it were calculated using a discount rate that is one percentage point lower (6.25%) or one percentage point higher (8.25%) than the current rate:

Current1% Discount 1%

Decrease Rate Increase6.25% 7.25% 8.25%

Net Pension Liability $ 22,180,565 $ (451,696) $ (19,382,429)

Pension Expense (Income) and Deferred Outflows of Resources and Deferred Inflows of Resources to Pensions Pension Expense or Negative Pension Expense. For the year ended June 30, 2018, Sullivan County recognized pension expense of $1,870,616. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2018, Sullivan County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

81

Deferred DeferredOutflows Inflows

of of Resources Resources

Difference Between Expected and Actual Experience $ 690,853 $ 2,842,491Net Difference Between Projected and Actual Earnings on Pension Plan

Investments 0 7,785Changes in Assumptions 3,311,104 0Contributions Subsequent to the Measurement Date of June 30, 2017 (1) 6,114,041 N/A

Total $ 10,115,998 $ 2,850,276

(1) The amount shown above for “Contributions Subsequent tothe Measurement Date of June 30, 2017,” will be recognizedas a reduction (increase) to net pension liability (asset) inthe following measurement period.

Allocation of Agent Plan Deferred Outflows of Resources and Deferred Inflows of Resources

Deferred DeferredOutflows of Inflows ofResources Resources

Primary Government $ 7,893,724 $ 2,199,558

School Department 2,222,274 650,718

Total $ 10,115,998 $ 2,850,276

Amounts reported as deferred outflows of resources, with the exception of contributions subsequent to the measurement date, and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

82

Year EndingJune 30 Amount

2019 $ (969,717)2020 2,045,1312021 1,346,6342022 (1,270,364)2023 0Thereafter 0

In the table shown above, positive amounts will increase pension expense while negative amounts will decrease pension expense.

Payable to the Pension Plan

At June 30, 2018, Sullivan County reported a payable of $457,484 for the outstanding amount of contributions due to the pension plan at year end.


Non-certified Employees

General Information About the Pension Plan

Plan Description. As noted above under the primary government, employees of Sullivan County and non-certified employees of the discretely presented Sullivan County School Department are provided a defined benefit pension plan through the Public Employee Retirement Plan, an agent multiple-employer pension plan administered by the TCRS. The primary government employees comprise 77.17 percent and the non-certified employees of the discretely presented School Department comprise 22.83 percent of the plan based on contribution data.

Certified Employees

Teacher Retirement Plan

General Information About the Pension Plan

Plan Description. Teachers of the Sullivan County School Department with membership in the TCRS before July 1, 2014, are provided with pensions through the Teacher Legacy Pension Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The Teacher Legacy Pension Plan is closed to new membership. Teachers with membership in the TCRS after June 30, 2014, are provided with pensions through a legally separate plan referred to as the Teacher

83

Retirement Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of all employer pension plans in the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly available financial report that can be obtained at www.treasury.state.tn.us/tcrs. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. Members are eligible to retire with an unreduced benefit at age 65 with five years of service credit or pursuant to the rule of 90 in which the member’s age and service credit total 90. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. A reduced early retirement benefit is available to vested members at age 60 or pursuant to the rule of 80. Members are vested with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. Members who leave employment may withdraw their employee contributions, plus any accumulated interest. Under the Teacher Retirement Plan, benefit terms and conditions, including COLA, can be adjusted on a prospective basis. Moreover, there are defined cost controls and unfunded liability controls that provide for the adjustment of benefit terms and conditions on an automatic basis. Contributions. Contributions for teachers are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly or by automatic cost controls set out in law. Teachers are required to contribute five percent of their salary to the plan. The Local Education Agencies (LEAs) make employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. Per the statutory provisions governing TCRS, the employer contribution rate cannot be less than four

84

percent, except in years when the maximum funded level, approved by the TCRS Board of Trustees, is reached. By law, employer contributions for the Teacher Retirement Plan are required to be paid. The TCRS may intercept the state shared taxes of the sponsoring governmental entity of the LEA if the required employer contributions are not remitted. Employer contributions for the year ended June 30, 2018, to the Teacher Retirement Plan were $185,922, which is four percent of covered payroll. The employer rate, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Pension Liabilities (Assets). At June 30, 2018, the Sullivan County School Department reported a liability (asset) of ($165,450) for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of June 30, 2017, and the total pension asset used to calculate the net pension liability (asset) was determined by an actuarial valuation as of that date. The Sullivan County School Department’s proportion of the net pension liability (asset) was based on the Sullivan County School Department’s share of contributions to the pension plan relative to the contributions of all participating LEAs. At the measurement date of June 30, 2017, the Sullivan County School Department’s proportion was .627100 percent. The proportion as of June 30, 2016, was .636495 percent. Pension Expense. For the year ended June 30, 2018, the Sullivan County School Department recognized pension expense of $75,920. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2018, the Sullivan County School Department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

85



Difference Between Expected and Actual Experience $ 5,798 $ 12,443Net Difference Between Projected and Actual Earnings on Pension Plan Investments 0 8,903Changes in Assumptions 14,536 0Changes in Proportion of Net Pension Liability (Asset) 10,631 0LEA's Contributions Subsequent to the Measurement Date of June 30, 2017 (1) 185,922 N/A

Total $ 216,887 $ 21,346

The Sullivan County School Department’s employer contributions of $185,922, reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as an increase of net pension asset in the year ending June 30, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2019 $ 842020 842021 (426)2022 (2,716)2023 1,482Thereafter 11,112

In the table above, positive amounts will increase pension expense, while negative amounts will decrease pension expense. Actuarial Assumptions. The total pension liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

86





Mortality rates are based on actual experience including an adjustment for some anticipated improvement. The actuarial assumptions used in the June 30, 2017, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2012, through June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2016, actuarial experience study. A blend of future capital market projections and historic market returns was used in a building-block method in which a best-estimate of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) is developed for each major asset class. These best-estimates are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation of 2.5 percent. The best-estimates of geometric real rates of return and the TCRS investment policy target asset allocation for each major asset class are summarized in the following table:

87




Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.25 percent based on a blending of the factors described above. Changes of Assumptions. In 2017, the following assumptions were changed: decreased inflation rate from 3.0 percent to 2.5 percent; decreased the investment rate of return from 7.5 percent to 7.25 percent; decreased the cost-of-living adjustment from 2.5 percent to 2.25 percent; and decreased salary growth graded ranges from an average of 4.25 percent to an average of 4.0 percent, and modified the mortality assumptions. Discount Rate. The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current rate and that contributions from all the LEAs will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

88

Sensitivity of the Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the Sullivan County School Department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.25 percent, as well as what the Sullivan County School Department’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is one percentage point lower (6.25%) or one percentage point higher (8.25%) than the current rate: School Department's Current Proportionate Share of 1% Discount 1% the Net Pension Decrease Rate Increase Liability (Asset) 6.25% 7.25% 8.25%

Net Pension Liability $ 33,009 $ (165,450) $ (311,025)

Pension Plan Fiduciary Net Position. Detailed information about the pension plan’s fiduciary net position is available in a separately issued TCRS financial report. Payable to the Pension Plan At June 30, 2018, the Sullivan County School Department reported a payable of $14,211 for the outstanding amount of contributions due to the pension plan at year end. Teacher Legacy Pension Plan General Information About the Pension Plan Plan Description. Teachers of the Sullivan County School Department with membership in the TCRS before July 1, 2014, are provided with pensions through the Teacher Legacy Pension Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The Teacher Legacy Pension Plan closed to new membership on June 30, 2014, but will continue providing benefits to existing members and retirees. Beginning July 1, 2014, the Teacher Retirement Plan became effective for teachers employed by LEAs after June 30, 2014. The Teacher Retirement Plan is a separate cost-sharing, multiple-employer defined benefit plan. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of all employer pension plans in the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly available financial report that can be obtained at www.treasury.state.tn.us/tcrs.

89

Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. Members of the Teacher Legacy Pension Plan are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. A reduced early retirement benefit is available to vested members at age 55. Members are vested with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half and one percent. A member who leaves employment may withdraw their employee contributions, plus any accumulated interest. Under the Teacher Legacy Pension Plan, benefit terms and conditions, including COLAs, can be adjusted on a prospective basis. Moreover, there are defined cost controls and unfunded liability controls that provide for the adjustment of benefit terms and conditions on an automatic basis. Contributions. Contributions for teachers are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly. Teachers are required to contribute five percent of their salaries. The Local Education Agencies (LEAs) make employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. By law, employer contributions for the Teacher Legacy Pension Plan are required to be paid. The TCRS may intercept the state shared taxes of the sponsoring governmental entity of the LEA if the required employer contributions are not remitted. Employer contributions by the Sullivan County School Department for the year ended June 30, 2018, to the Teacher Legacy Pension Plan were $3,102,863, which is 9.08 percent of covered payroll. The employer rate, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability.

90

Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Pension Liability (Assets). At June 30, 2018, the Sullivan County School Department reported a liability (asset) of ($326,927) for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability (asset) was determined by an actuarial valuation as of that date. The Sullivan County School Department’s proportion of the net pension liability (asset) was based on the Sullivan County School Department’s share of contributions to the pension plan relative to the contributions of all participating LEAs. At the measurement date of June 30, 2017, the Sullivan County School Department’s proportion was .999217 percent. The proportion measured at June 30, 2016, was 1.023823 percent. Pension Expense (Negative Pension Expense). For the year ended June 30, 2018, the Sullivan County School Department recognized negative pension expense of ($104,020). Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2018, the Sullivan County School Department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



Difference Between Expected and Actual Experience $ 197,095 $ 6,749,503Changes in Assumptions 2,768,880 0Net Difference Between Projected and Actual Earnings on Pension Plan Investments 49,627 0Changes in Proportion of Net Pension Liability (Asset) 302,913 662,659LEA's Contributions Subsequent to the Measurement Date of June 30, 2017 3,102,863 N/A

Total $ 6,421,378 $ 7,412,162

The Sullivan County School Department’s employer contributions of $3,102,863 reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as an increase of net pension asset in the year ending June 30, 2019. Other

91

amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2019 $ (2,447,129)2020 897,3952021 (950,334)2022 (1,593,580)2023 0Thereafter 0

In the table above, positive amounts will increase pension expense, while negative amounts will decrease pension expense. Actuarial Assumptions. The total pension liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:





Mortality rates are based actual experience including an adjustment for some anticipated improvement. The actuarial assumptions used in the June 30, 2017, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2012, through June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2016, actuarial experience study. A blend of future capital market projections and historic market returns was used in a building-block method in which a best-estimate of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) is developed for each major asset class. These

92

best-estimates are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation of 2.5 percent. The best-estimates of geometric real rates of return and the TCRS investment policy target asset allocation for each major asset class are summarized in the following table:




Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.25 percent based on a blending of the factors described above. Changes of Assumptions. In 2017, the following assumptions were changed: decreased inflation rate from 3.0 percent to 2.5 percent; decreased the investment rate of return from 7.5 percent to 7.25 percent; decreased the cost-of-living adjustment from 2.5 percent to 2.25 percent; decreased salary growth graded ranges from an average of 4.25 percent to an average of 4.0 percent; and modified the mortality assumptions. Discount Rate. The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current rate and that contributions from all the LEAs will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit

93

payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the Sullivan County School Department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.25 percent, as well as what the Sullivan County School Department’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is one percentage point lower (6.25%) or one percentage point higher (8.25%) than the current rate: School Department's Current Proportionate Share of 1% Discount 1% the Net Pension Decrease Rate Increase Liability (Asset) 6.25% 7.25% 8.25%

Net Pension Liability $ 29,334,658 $ (326,927) $ (24,844,181)

Pension Plan Fiduciary Net Position. Detailed information about the pension plan’s fiduciary net position is available in a separately issued TCRS financial report.

Payable to the Pension Plan At June 30, 2018, the Sullivan County School Department reported a payable of $238,511 for the outstanding amount of contributions due to the pension plan at year end.

2. Deferred Compensation

Teachers hired after July 1, 2014, by the Sullivan County School Department are required to participate in a hybrid pension plan consisting of a defined benefit portion, which is detailed in the pensions footnote above and is managed by the Tennessee Consolidated Retirement System, and a defined contribution portion which is placed into the state’s 401 (K) plan and is managed by the employee. The defined contribution portion of the plan requires that the School Department contribute five percent of each teacher’s salary into their deferred compensation plan. In addition, teachers are required to contribute a minimum of two percent of their salaries into this deferred compensation plan, unless they opt out of the employee portion. During the year the School Department contributed $235,514 and teachers contributed $438,426 to this deferred compensation pension plan.

94

H. Other Postemployment Benefits (OPEB) Sullivan County and the discretely presented Sullivan County School Department provide OPEB benefits to it retirees under various plans. These include OPEB provided through a self-insured plan for the primary government and through state administered public entity risk pools for both the primary government and the discretely presented School Department. For reporting purposes the plans are all considered single employer defined benefit OPEB plans based on criteria in Statement No. 75 of the Governmental Accounting Standards Board (GASB). All of the plans are funded on a pay-as-you-go basis and there are no assets accumulating in a trust that meets the criteria of paragraph 4 of GASB Statement No. 75. OPEB Provided through Self-Insured Health Plan (Primary Government) Plan Description. Sullivan County participates in a self-insured postemployment benefits plan administered by Blue Cross Blue Shield for its post-65 retirees. The plan provides Medicare supplemental insurance coverage. Benefits Provided. For Medicare eligible retirees, the individual monthly premium was $139, changing to $111 as of January 1, 2018. The County contributes all or a percentage of the Medicare supplemental self-insured plan full monthly funding level or the Medicare Advantage plan full monthly premium based on the retiree’s date of retirement and years of service at retirement. For post-65 retirees who retired on or before January 1, 2013, the county pays 100% of the premium for retirees with 10 or more years of service. For post-65 retirees who retired after January 1, 2013, the county pays 25% to 50% of the premium based on years of service. Employees Covered by Benefit Terms At the measurement date of June 30, 2018, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 200Inactive Employees Entitled to But Not Yet Receiving Benefits 0Active Employees 388

Total 588

Total OPEB Liability The plan’s total OPEB liability of $7,193,645 was measured as of June 30, 2018, and was determined by an actuarial valuation as of July 1, 2017.

95

Actuarial Assumptions and Other Inputs. The total OPEB liability in the actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation 2%Salary Increases 2%Discount Rate 3%Healthcare Cost Trend Rates 6.5% in 2017 decreasing by 0.5% per

year to ultimate rate of 2.5% by 2025

Retirees share of Discussed under Benefits Provided Benefit-related Cost

The discount rate of three percent is within .15% of the S&P 500 index of AA rated municipal bonds as of June 30, 2017 and June 30, 2018. Mortality rates were based on SOA RP-2014 Blue Collar Mortality with Scale MP-2016 projected using generational techniques. The actuarial assumptions used in the valuation were based on plan data and costs presented by the county with concurrence by the actuary. Changes in the Total OPEB Liability

Total OPEBLiability

Balance July 1, 2017 $ 8,932,964Changes for the Year: Service Cost $ 53,667 Interest 269,599 Changes in Benefit Terms 0 Difference between Expected and Actuarial (1,814,613) Experience Changes in Assumption and Other Inputs 0

Benefit Payments (247,972)Net Changes $ (1,739,319)

Balance June 30, 2018 $ 7,193,645

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2018, the county recognized OPEB expense of $100,614. At June 30, 2018, the county reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

96



Difference Between Expected and Actual Experience $ 0 $ 1,591,961Changes of Assumptions/Inputs 0Net Difference Between Projected and Actual Investments 0 0Benefit Payment Subsequent to the Measurement Date 0 0

Total $ 0 $ 1,591,961

Amounts reported as deferred outflows and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows:


2019 $ (222,652)2020 (222,652)2021 (222,652)2022 (222,652)2023 (222,652)Thereafter (478,701)

In the table shown above, positive amounts will increase OPEB expense while negative amounts will decrease OPEB expense.

Sensitivity of the Total OPEB Liability to Changes in the Discount Rate. The following presents the total OPEB liability calculated using the current discount rate, as well as what the OPEB liability would be if it was calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:


Decrease Rate Increase2% 3% 4%

Total OPEB Liability $ 8,354,081 $ 7,193,645 $ 6,264,109

97

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rate. The following presents the total OPEB liability calculated using the current healthcare cost trend rate as well as what the OPEB liability would be if it was calculated using a trend rate that is one percentage point lower or one percentage point higher than the current rate:

Current1% Trend 1%

Decrease Rate Increase(5.5% to 1.5%) (6.5% to 2.5%) (7.5% to 3.5%)


OPEB Provided through State Administered Public Entity Risk Pools Pre-65 retirees of the Sullivan County primary government are provided healthcare benefits under the Local Government Plan (LGP). The School Department provides healthcare benefits to its employees under the Local Education Plan (LEP) until they reach Medicare eligibility. Employees of the School Department may then join the Tennessee Plan - Medicare (TNM) which provides supplemental medical insurance for retirees with Medicare. The county and School Department’s total OPEB liability for each plan was measured as of June 30, 2017, and was determined by an actuarial valuation as of that date. Actuarial Assumptions and other inputs. The total OPEB liability in the June 30, 2017, actuarial valuation of each plan was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:

98

Actuarial Cost Method Entry Age NormalInflation 2.25%Salary Increases Salary increases used in the July 1, 2107

TCRS actuarial valuation; 3.44% to 8.2%, including inflation

Discount Rate 3.56%Healthcare Cost Trend Rates LEP -

Based on the Getzen Model, with trend starting 7.5% for the 2018 calendar year, and gradually decreasing 33-year period to an ultimate trend of rate of 3.53 percent with .18% added to approximate the effect if the excise taxTNMs- Employer - 4.6% for 2019 and grade down to ultimate rate of 3.53% over 33 years. State - no change projected

Retirees Share of Benefit Related Cost Discussed under each plan

The discount rate was 3.56 percent, based on the daily rate of Fidelity’s 20-Year Municipal GO AA index closest to but not later than the measurement date. Mortality rates were based on the results of a statewide experience study undertake on behalf of the Tennessee Consolidated Retirement System (TCRS). These mortality rates were used in the July 1, 2017, actuarial valuation of the TCRS. Unless noted otherwise, the actuarial demographic assumptions used in the June 30, 2017, valuations were the same as those employed in the July 1, 2017 Pension Actuarial Valuation of the Tennessee Consolidated Retirement System (TCRS). These assumptions were developed by TCRS based on the results of an actuarial experience study for the period July 1, 2012 - June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. Mortality tables are used to measure the probabilities of participants dying before and after retirement. The mortality rates employed in this valuation are taken from the RP-2014 Healthy Participant Mortality Table for Annuitants for non-disabled post-retirement mortality, with mortality improvement projected to all future years using Scale MP-2016. Post-retirement tables are Blue Collar and adjusted with a 2% load for males and a -3% load for females. Mortality rates for impaired lives are the same as those used by TCRS and are taken from a gender distinct table published in the IRS Ruling 96-7 for disabled lives with a 10% load.

99

Changes in Assumptions. The discount rate changed from 2.92 percent as of the beginning of the measurement period to 3.56 percent as of the measurement date of June 30, 2017.

Closed Local Government OPEB Plan (Primary Government)

Plan Description. Employees of Sullivan County who were hired prior to July 1, 2015, are provided with pre-65 retiree health insurance benefits through the closed Local Government Plan (LGP) administered by the Tennessee Department of Finance and Administration. All eligible pre-65 retired employees and disability participants of local governments, who choose coverage, participate in the LGP. This plan is closed to the employees of all participating employers that were hired on or after July 1, 2015.

Benefits Provided. Sullivan County offers the LGP to provide health insurance coverage to eligible pre-65 retirees and disabled participants of local governments. With the exception of a small group of grandfathered individuals, retirees are required to discontinue coverage under the LGP upon obtaining Medicare eligibility. Insurance coverage is the only postemployment benefit provided to retirees. An insurance committee created in accordance with Tennessee Code Annotated (TCA) 8-27-701 establishes and amends the benefit terms of the LGP. All members have the option of choosing between the premier preferred provider organization (PPO), standard PPO, limited PPO or the wellness health savings consumer-driven health plan (CDHP) for healthcare benefits. Retired plan members of the LGP, receives the same plan benefits as active employees, at a blended premium rate that considers the cost of all participants. This creates an implicit subsidy for retirees. Participating employers determine their own policy related to direct subsidies provided for the retiree premiums. Sullivan County provides a direct subsidy for retirees with at least 25 years of service and who are at least 55 years of age. The subsidy ranges from $383 to $1,292 per month based on coverage selected.

Employees Covered by Benefit Terms

At the measurement date of June 30, 2017, the following employees were covered by the benefit terms:

100

PrimaryGovernment

Inactive Employees or Beneficiaries Currently Receiving Benefits 53Inactive Employees Entitled to But Not Yet Receiving Benefits 0Active Employees 613

Total 666

An insurance committee, created in accordance with TCA 8-27-701, establishes the required payments to the LGP by member employers and employees through the blended premiums established for active and retired employees. Claims liabilities of the plan are periodically computed using actuarial and statistical techniques to establish premium rates. For the fiscal year ended June 30, 2018, the county paid $553,006 to the LGP for OPEB benefits as they came due. Changes in the Total OPEB Liability

PrimaryGovernment

Balance July 1, 2016 $ 12,886,263Changes for the Year: Service Cost $ 674,447 Interest 388,266 Changes in Benefit Terms 0 Difference between Expected and Actuarial Experience 0 Changes in Assumption and Other Inputs (665,298)

Benefit Payments (527,853)Net Changes $ (130,438)

Balance June 30, 2017 $ 12,755,825

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2018, the county recognized OPEB expense of $987,111. At June 30, 2018, the county reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

101



Difference Between Expected and Actual Experience $ 0 $ 0Changes of Assumptions/Inputs 0 589,696Net Difference Between Projected and Actual Investment Earnings 0 0Benefits Paid After the Measurement Date 553,006 0

Total $ 553,006 $ 589,696

Amounts reported as deferred inflows and deferred outflows of resources (excluding benefits paid after the measurement date) related to OPEB will be recognized in OPEB expense as follows: Year Ending PrimaryJune 30 Government

2019 $ (75,602)2020 (75,602)2021 (75,602)2022 (75,602)2023 (75,602)Thereafter (211,686)

In the table shown above, positive amounts will increase OPEB expense while negative amounts will decrease OPEB expense. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate. The following presents the total OPEB liability of the county calculated using the current discount rate as well as what the OPEB liability would be if it was calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:




102

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rate. The following presents the total OPEB liability of the county calculated using the current healthcare cost trend rate, as well as what the OPEB liability would be if it was calculated using a trend rate that is one percentage point lower or one percentage point higher than the current rate:

Current1% Trend 1%

Decrease Rates Increase6 to 3.77% 7 to 4.77% 8 to 5.77%


Closed Local Education (LEP) OPEB Plan (Discretely Presented School Department) Plan Description. Employees of the Sullivan County School Department who were hired prior to July 1, 2015, are provided with pre-65 retiree health insurance benefits through the closed Local Education Plan (LEP) administered by the Tennessee Department of Finance and Administration. All eligible pre-65 retired teachers, support staff, and disability participants of local education agencies, who choose coverage, participate in the LEP. This plan is closed to the employees of all participating employers that were hired on or after July 1, 2015. Benefits Provided. The Sullivan County School Department offers the LEP to provide health insurance coverage to eligible pre-65 retirees, support staff, and disabled participants of local education agencies. Retirees are required to discontinue coverage under the LEP upon obtaining Medicare eligibility. Insurance coverage is the only postemployment benefit provided to retirees. An insurance committee created in accordance with TCA 8-27-301 establishes and amends the benefit terms of the LEP. All members have the option of choosing between the premier preferred provider organization (PPO), standard PPO, limited PPO or the wellness health savings consumer-driven health plan (CDHP) for healthcare benefits. Retired plan members of the LEP receive the same plan benefits as active employees at a blended premium rate that considers the cost of all participants. This creates an implicit subsidy for retirees. Participating employers determine their own policy related to direct subsidies provided for retiree premiums. The School Department provides a direct subsidy ranging from $210 to $621 per month toward the cost of insurance for retirees based on retirement date, years of service, and insurance coverage selected. The state, as a governmental non-employer contributing entity, provides a direct subsidy for eligible retirees premiums based on years of service. Retirees with 30 or more years of service will receive 45%; 20 but less than 30 years, 35%; and less than 20 years, 20% of the scheduled premium. No subsidy is provided for enrollees of the health savings CDHP.

103

Employees Covered by Benefit Terms At the measurement date of June 30, 2017, the following employees were covered by the benefit terms:

SchoolDepartment

Inactive Employees or Beneficiaries Currently Receiving Benefits 240Inactive Employees Entitled to But Not Yet Receiving Benefits 0Active Employees 1,058

Total 1,298

A state insurance committee, created in accordance with TCA 8-27-301, establishes the required payments to the LEP by member employers and employees through the blended premiums established for active and retired employees. Claims liabilities of the plan are periodically computed using actuarial and statistical techniques to establish premium rates. Administrative costs are allocated to plan participants. Employers contribute towards employee costs based on their own developed policies. During the current reporting period, the School Department paid $2,104,408 to the LEP for OPEB benefits as they came due.

104

Changes in the Collective Total OPEB Liability

Sullivan County State ofSchool Department TN Total OPEB

74.8093% 25.1907% Liability

Balance July 1, 2016 $ 22,657,743 $ 7,629,591 $ 30,287,334Changes for the Year: Service Cost $ 1,033,776 $ 348,106 $ 1,381,882 Interest 664,102 223,625 887,727 Changes in Benefit Terms 0 0 0 Difference between Expected and Actuarial Experience 0 0 0 Changes in Assumption and Other Inputs (833,834) (280,779) (1,114,613)

Benefit Payments (1,896,566) (638,635) (2,535,201)Net Changes $ (1,032,522) $ (347,683) $ (1,380,205)

Balance June 30, 2017 $ 21,625,221 $ 7,281,908 $ 28,907,129

Share of Collective Liability

The Sullivan County School Department has a special funding situation related to benefits paid by the State of Tennessee for its eligible retired employees participating in the LEP. The Sullivan County School Department's proportionate share of the collective total OPEB liability was based on a projection of the employers long-term share of benefit payments to the OPEB plan relative to the projected share of benefit payments of all participating employers and nonemployer contributing entities, actuarially determined. The School Department recognized $538,304 in revenue for subsidies provided by nonemployer contributing entities for benefits paid by the LEP for School Department retirees. During the year, the Sullivan County School Department’s proportionate share of the collective OPEB liability was 74.8093% and the State of Tennessee’s share was 25.1907%. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2018, the School Department recognized OPEB expense of $2,136,917, which includes expenses funded by nonemployer contributing entities. At June 30, 2018, the School Department reported deferred outflows of resources and deferred inflows of resources related to its proportionate share of OPEB from the following sources:

105



Difference Between Expected and Actual Experience $ 0 $ 0Changes of Assumptions/Inputs 0 734,568Changes in Proportion and Differences Between Amounts Paid as Benefits Came Due and Proportionate Share Amounts Paid by the Employee and Nonemployer Contributors As Benefits Came Due 0 0Benefits Paid After the Measurement Date 2,104,408 0

Total $ 2,104,408 $ 734,568

Amounts reported as deferred inflows and deferred outflows of resources (excluding benefits paid after the measurement date) related to OPEB will be recognized in OPEB expense as follows: Year Ending SchoolJune 30 Department

2019 $ (99,266)2020 (99,266)2021 (99,266)2022 (99,266)2023 (99,266)Thereafter (238,238)

In the table shown above, positive amounts will increase OPEB expense while negative amounts will decrease OPEB expense.

Sensitivity of Proportionate Share of the Collective Total OPEB Liability to Changes in the Discount Rate. The following presents the School Department’s proportionate share of the collective total OPEB liability related to the LEP, as well as what the proportionate share of the collective total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current discount rate.

106

Discount Rate Current1% Discount 1%


Proportionate Share of the Collective Total OPEB Liability $ 22,937,610 $ 21,625,221 $ 20,371,050

Sensitivity of Proportionate Share of the Collective Total OPEB Liability to Changes in the Healthcare Cost Trend Rate. The following presents the School Department’s proportionate share of the collective total OPEB liability related to the LEP, as well as what the proportionate share of the collective total OPEB liability would be if it were calculated using a healthcare cost trend rate that is one percentage point lower or one percentage point higher than the current healthcare cost trend rate. Healthcare Cost Trend Rate

1% Curent 1%Decrease Rates Increase

6.5 to 2.71% 7.5 to 3.71% 8.5 to 4.71%

Proportionate Share of the Collective Total OPEB Liability $ 19,646,665 $ 21,625,221 $ 23,939,488

Closed Tennessee Plan – Medicare (Discretely Presented School Department) Plan Description. Employees of the Sullivan County School Department, who were hired prior to July 1, 2015, are provided with post-65 retiree health insurance benefits through the closed Tennessee Plan - Medicare (TNM) administered by the Tennessee Department of Finance and Administration. All eligible post-65 retirees and disability participants of local education agencies, who choose coverage, participate in the TNM. The TNM also includes eligible retirees of the state, certain component units of the state, and certain local governmental entities. This plan is closed to the employees of all participating employers that were hired on or after July 1, 2015. The School Department’s total OPEB liability for the TNM Plan was measured as of June 30, 2017, and was determined by an actuarial valuation as of that date. Benefits Provided. The state offers the TNM to help fill most of the coverage gaps created by Medicare for eligible post-65 retired teachers, noncertified employees, and disabled participants of local education agencies. Insurance coverage is the only postemployment benefit provided to retirees. The TNM does not include pharmacy. In accordance with TCA 8-27-209, benefits of the

107

TNM are established and amended by cooperation of insurance committees created by TCA 8-27-201, 8-27-301 and 8-27-701. Retirees and disabled employees of the state, component units, local education agencies, and certain local governments who have reached the age of 65, are Medicare eligible and also receives a benefit from the Tennessee Consolidated Retirement System may participate in this plan. All plan members receive the same plan benefits at the same premium rates. Participating employers determine their own policy related to subsidizing the retiree premiums. The Sullivan County School Department provides a direct subsidy to retirees who retired before July 1, 2012. The subsidy amounts to $138 per month for noncertified retirees and from $88 to $113 per month for certified retirees based on years of service. The School Department does not provide a direct subsidy to retirees who retired after July 1, 2012. The state, as a governmental nonemployer contributing entity contributes to the premiums of certain eligible retirees (teachers) of local education agencies based on years of service. The State of Tennessee provided a direct subsidy of $50 for eligible retirees (teachers) with 30 or more years of service, $37.50 for eligible retirees with 20-29 years of service, and $20 for eligible retirees with less than 20 years of service. Employees Covered by Benefit Terms At the measurement date of June 30, 2017, the following employees were covered by the benefit terms:

SchoolDepartment

Inactive Employees or Beneficiaries Currently Receiving Benefits 503Inactive Employees Entitled to But Not Yet Receiving Benefits 230Active Employees 1,058

Total 1,791

In accordance with TCA 8-27-209, the state insurance committees established by TCA Sections 8-27-201, 8-27-301 and 8-27-701 determine the required payments to the plan by member employers and employees. Claims liabilities of the plan are periodically computed using actuarial and statistical techniques to establish premium rates. Administrative costs are allocated to plan participants. Employers contribute towards employee costs based on their own developed policies. For the fiscal year ended June 30, 2018, the School Department paid $851,501 to the TNM for OPEB benefits as they came due.

108

Changes in the Collective Total OPEB Liability

Sullivan County State ofSchool Department TN Total OPEB

94.4917% 5.5083% Liability

Balance July 1, 2016 $ 47,527,473 $ 2,770,567 $ 50,298,040Changes for the Year: Service Cost $ 2,576,401 $ 150,189 $ 2,726,590 Interest 1,451,381 84,607 1,535,988 Changes in Benefit Terms 0 0 0 Difference between Expected and Actuarial Experience 0 0 0 Changes in Assumption and Other Inputs (5,107,017) (297,709) (5,404,726)

Benefit Payments (798,079) (46,523) (844,602)Net Changes $ (1,877,314) $ (109,436) $ (1,986,750)

Balance June 30, 2017 $ 45,650,159 $ 2,661,131 $ 48,311,290

Share of Collective Liability

The Sullivan County School Department has a special funding situation related to benefits paid by the State of Tennessee for its eligible retired teachers participating in the TNM. The Sullivan County School Department's proportionate share of the collective total OPEB liability was based on a projection of the employer’s long-term share of benefit payments to the OPEB plan relative to the projected share of benefit payments of all participating employers and nonemployer contributing entities, actuarially determined. The School Department recognized $192,266 in revenue for subsidies provided by nonemployer contributing entities for benefits paid by the TMN for School Department retirees. During the year, the Sullivan County School Department’s proportionate share of the collective OPEB liability for the TNM plan was 94.4917 percent and the State of Tennessee’s share was 5.5083 percent. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2018, the School Department recognized OPEB expense of $3,490,474, which includes expenses funded by nonemployer contributing entities. At June 30, 2018, the School Department reported deferred outflows of resources and deferred inflows of resources related to its proportionate share of OPEB from the following sources:

109



Difference Between Expected and Actual Experience $ 0 $ 0Changes of Assumptions/Inputs 0 4,377,443Changes in Proportion and Differences Between Amounts Paid as Benefits Came Due and Proportionate Share Amounts Paid by the Employee and Nonemployer Contributors As Benefits Came Due 0 0Benefits Paid After the Measurement Date 851,501 0

Total $ 851,501 $ 4,377,443

Amounts reported as deferred inflows and deferred outflows of resources (excluding benefits paid after the measurement date) related to OPEB will be recognized in OPEB expense as follows:

Year Ending SchoolJune 30 Department

2019 $ (729,574)2020 (729,574)2021 (729,574)2022 (729,574)2023 (729,574)Thereafter (729,573)

In the table shown above, positive amounts will increase OPEB expense while negative amounts will decrease OPEB expense. Sensitivity of Proportionate Share of the Collective Total OPEB Liability to Changes in the Discount Rate. The following presents the School Department’s proportionate share of the collective total OPEB liability related to the TNM, as well as what the proportionate share of the collective total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate.

110



Proportionate Share of the Collective Total OPEBLiability $ 53,917,216 $ 45,650,159 $ 38,848,765

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rate. The following presents the plan’s total OPEB liability, calculated using the assumed trend rates as well as what the plan’s total OPEB liability would be if it were calculated using a trend rate that is one percent lower or one percent higher:

Current1% Trend 1%

Decrease Rates Increase3.6% to 2.53% 4.6% to 3.53% 5.6% to 4.53%

Proportionate Share of the Collective Total OPEBLiability $ 37,601,078 $ 45,650,159 $ 56,179,126

I. Office of Central Accounting

Sullivan County operates under the provisions of Section 5-12-101, et seq., Tennessee Code Annotated (TCA), and Section 5-13-101, et seq., TCA, which provide for accounting records of the funds under the supervision of the county mayor and highway commissioner to be maintained by personnel of the Central Accounting Office under the administration of the director of accounts and budgets. Records for funds administered by the director of schools were maintained by the School Department personnel.

J. Purchasing Laws The Office of Purchasing Agent was established by Chapter 261, Private Acts of 1947, as amended. This statute provides for the purchasing agent to make all purchases and to enter into all contracts for Sullivan County. The county commission has adopted a resolution pursuant to Section 12-3-1212, Tennessee Code Annotated, requiring competitive bids on purchases exceeding $15,000.

111

K. Subsequent Events

On June 30, 2018, Frances Harrell left the Office of Trustee and was succeeded by Susan Ramsey. On August 31, 2018, Russell Baker left the Office of Property Assessor and was succeeded by Donna Whitaker, Jeanie Gammon left the Office of County Clerk and was succeeded by Teresa Jacobs, Tommy Kerns left the Office of Circuit, General Sessions, and Law Courts Clerk and was succeeded by Bobby Russell, Wayne Anderson left the Office of Sheriff and was succeeded by Jeff Cassidy, and Jim Belgeri left the Office of Highway Commissioner and was succeeded by Scott Murray. On October 16, 2018, Sullivan County issued a $31,190 capital lease through the General Fund for circuit, general sessions, and law courts computer servers and a $87,273 operating lease through the General Fund for sheriff vehicles. On October 26, 2018, Sullivan County issued a $1,799,275 tax anticipation note for the General Fund.

112

REQUIRED SUPPLEMENTARY INFORMATION

113

Exhibit F-1

Sullivan County, TennesseeSchedule of Changes in Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Plan of TCRSPrimary GovernmentFor the Fiscal Year Ended June 30

2014 2015 2016 2017

Total Pension Liability Service Cost $ 2,831,605 $ 2,806,297 $ 2,762,316 $ 2,909,793Interest 11,770,957 12,081,223 12,279,709 12,841,796Changes in Benefit Terms 0 0 0 0Differences Between Actual and Expected Experience (2,239,987) (3,669,701) 1,151,421 (1,235,482)Changes in Assumptions 0 0 0 4,414,805Benefit Payments, Including Refunds of Employee Contributions (8,067,161) (8,333,619) (8,721,095) (8,971,754)Net Change in Total Pension Liability $ 4,295,414 $ 2,884,200 $ 7,472,351 $ 9,959,158Total Pension Liability, Beginning 158,148,071 162,443,485 165,327,685 172,800,036

Total Pension Liability, Ending (a) $ 162,443,485 $ 165,327,685 $ 172,800,036 $ 182,759,194

Plan Fiduciary Net PositionContributions - Employer $ 5,101,066 $ 5,272,228 $ 5,523,734 $ 5,804,426Contributions - Employee 181,889 314,187 411,340 552,979Net Investment Income 23,440,229 4,990,588 4,355,091 18,784,625Benefit Payments, Including Refunds of Employee Contributions (8,067,161) (8,333,619) (8,721,095) (8,971,754)Administrative Expense (46,764) (54,252) (80,776) (87,757)Other 0 0 0 13,231Net Change in Plan Fiduciary Net Position $ 20,609,259 $ 2,189,132 $ 1,488,294 $ 16,095,750Plan Fiduciary Net Position, Beginning 142,828,455 163,437,714 165,626,846 167,115,140

Plan Fiduciary Net Position, Ending (b) $ 163,437,714 $ 165,626,846 $ 167,115,140 $ 183,210,890

Net Pension Liability (Asset), Ending (a - b) $ (994,229) $ (299,161) $ 5,684,896 $ (451,696)

Plan Fiduciary Net Position as a Percentage of Total Pension Liability 100.61% 100.18% 96.71% 100.25%Covered Payroll $ 33,976,288 $ 33,926,820 $ 35,615,606 $ 37,303,498Net Pension Liability (Asset) as a Percentage of Covered Payroll (2.93%) (0.88%) 15.96% (1.21)%

Note: ten years of data will be presented when available.

Note: data presented includes primary government and non-certified employees of the discretely presented School Department.

114

Exhibit F-2

Sullivan County, TennesseeSchedule of Contributions Based on Participation in the Public Employee Pension Plan of TCRSPrimary GovernmentFor the Fiscal Year Ended June 30

2014 2015 2016 2017 2018

Actuarially Determined Contribution $ 5,101,066 $ 5,272,228 $ 5,523,734 $ 5,804,426 $ 6,114,041Less Contributions in Relation to the Actuarially Determined Contribution (5,101,066) (5,272,228) (5,523,734) (5,804,426) (6,114,041)

Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 33,976,288 $ 33,926,820 $ 35,615,606 $ 37,303,498 $ 39,353,535

Contributions as a Percentage of Covered Payroll 15.01% 15.54% 15.51% 15.56% 15.54%


Note: data presented includes primary government and non-certified employees of the discretely presented School Department.

115

Exhibit F-3

Sullivan County, TennesseeSchedule of Contributions Based on Participation in the Teacher Retirement Plan of TCRSDiscretely Presented Sullivan County School DepartmentFor the Fiscal Year Ended June 30

2015 2016 2017 2018

Contractually Required Contribution $ 85,668 $ 112,024 $ 164,636 $ 185,922Less Contributions in Relation to the Contractually Required Contribution (85,668) (112,024) (164,636) (185,922)

Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 2,141,724 $ 2,800,606 $ 4,119,746 $ 4,648,043

Contributions as a Percentage of Covered Payroll 4.00% 4.00% 4.00% 4.00%


116

Exhibit F-4

Sullivan County, TennesseeSchedule of Contributions Based on Participation in the Teacher Legacy Pension Plan of TCRSDiscretely Presented Sullivan County School DepartmentFor the Fiscal Year Ended June 30

2014 2015 2016 2017 2018

Contractually Required Contribution $ 3,498,250 $ 3,295,803 $ 3,340,997 $ 3,193,092 $ 3,102,863Less Contributions in Relation to the Contractually Required Contribution (3,498,250) (3,295,803) (3,340,997) (3,193,092) (3,102,863)

Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 39,394,704 $ 36,458,004 $ 36,957,928 $ 35,317,964 $ 34,172,475

Contributions as a Percentage of Covered Payroll 8.88% 9.04% 9.04% 9.04% 9.08%


117

Exhibit F-5

Sullivan County, TennesseeSchedule of Proportionate Share of the Net Pension Asset in the Teacher Pension Plan of TCRSDiscretely Presented Sullivan County School DepartmentFor the Fiscal Year Ended June 30 *

2016 2017 2018

School Department's Proportion of the Net PensionLiabtility/Asset 1.030791% 0.636495% 0.627100%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (41,468) $ (66,261) $ (165,450)

Covered Payroll $ 2,141,724 $ 2,800,606 $ 4,119,746

School Department's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll (1.94)% (2.37)% (4.02)%

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 127.46% 121.88% 126.81%

* The amounts presented were determined as of June 30 of the prior fiscal year.

Note: ten years of data will be precented when available.

118

Exhibit F-6

Sullivan County, TennesseeSchedule of Proportionate Share of the Net Pension Liability (Asset) in the Teacher Legacy Pension Plan of TCRSDiscretely Presented Sullivan County School DepartmentFor the Fiscal Year Ended June 30 *

2015 2016 2017 2018

School Department's Proportion of the Net Pension Liability/Asset 1.003689% 0.973901% 1.023823% 0.999217%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (163,095) $ 398,943 $ 6,398,324 $ (326,927)

Covered Payroll $ 39,394,704 $ 36,458,004 $ 36,957,928 $ 35,317,964

School Department's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll (0.41)% 1.09% 17.31% (0.93)%

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 100.08% 99.81% 97.14% 100.14%



119

Exhibit F-7

Sullivan County, TennesseeSchedule of Changes in the Total OPEB Liability and Related Ratios - Local Government PlanFor the Fiscal Year Ended June 30 *

2017Total OPEB LiabilityService Cost $ 674,447 Interest 388,266 Changes in Benefit Terms 0Differences Between Actual and Expected Experience 0Changes in Assumptions or Other Inputs (665,298)Benefit Payments (527,853) Net Change in Total OPEB Liability $ (130,438) Total OPEB Liability, Beginning 12,886,263

Total OPEB Liability, Ending $ 12,755,825

Covered Employee Payroll $ 29,584,358 Net OPEB Liability as a Percentage of Covered Employee Payroll 43.12%


Note 1: Ten years of data will be presented when available.

Note 2: Changes in assumptions. Changes in assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period:

2017 2.92%2018 3.56%

Note 3: No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.

120

Exhibit F-8

Sullivan County, TennesseeSchedule of Changes in the Total OPEB Liability and Related Ratios - Medicare Supplement PlanPrimary GovernmentFor the Fiscal Year Ended June 30

2018Total OPEB LiabilityService Cost $ 53,667 Interest 269,599 Changes in Benefit Terms 0Differences Between Actual and Expected Experience (1,814,613)Changes in Assumptions or Other Inputs 0Benefit Payments (247,972) Net Change in Total OPEB Liability $ (1,739,319) Total OPEB Liability, Beginning 8,932,964


Covered Employee Payroll $ N/ANet OPEB Liability as a Percentage of Covered Employee Payroll N/A



121

Exhibit F-9

Sullivan County, TennesseeSchedule of Changes in the Total OPEB Liability and Related Ratios - Local Education PlanDiscretely Presented Sullivan County School DepartmentFor the Fiscal Year Ended June 30 *

2017Total OPEB LiabilityService Cost $ 1,381,882 Interest 887,727 Changes in Benefit Terms 0Differences Between Actual and Expected Experience 0Changes in Assumptions or Other Inputs (1,114,613)Benefit Payments (2,535,201) Net Change in Total OPEB Liability $ (1,380,205) Total OPEB Liability, Beginning 30,287,334


Nonemployer Contributing Entity Proportionate Share of the Total OPEB Liability $ 7,281,908 Employer Proportionate Share of the Total OPEB Liability 21,625,221

Covered Employee Payroll $ 51,009,548 Net OPEB Liability as a Percentage of Covered Employee Payroll 42.39%




2017 2.92%2018 3.56%


122

Exhibit F-10

Sullivan County, TennesseeSchedule of Changes in the Total OPEB Liability and Related Ratios - Tennessee Plan - MedicareDiscretely Presented Sullivan County School DepartmentFor the Fiscal Year Ended June 30 *

2017Total OPEB LiabilityService Cost $ 2,726,590 Interest 1,535,988 Changes in Benefit Terms 0Differences Between Actual and Expected Experience 0Changes in Assumptions or Other Inputs (5,404,726)Benefit Payments (844,602) Net Change in Total OPEB Liability $ (1,986,750) Total OPEB Liability, Beginning 50,298,040


Nonemployer Contributing Entity Proportionate Share of the Total OPEB Liability $ 2,661,131 Employer Proportionate Share of the Total OPEB Liability 45,650,159

Covered Employee Payroll $ N/ANet OPEB Liability as a Percentage of Covered Employee Payroll N/A




2017 2.92%2018 3.56%


123

SULLIVAN COUNTY, TENNESSEE NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION


TENNESSEE CONSOLIDATED RETIREMENT SYSTEM Valuation Date: Actuarially determined contribution rates for fiscal year 2017 were calculated based on the June 30, 2016, actuarial valuation. Methods and assumptions used to determine contribution rates:

Actuarial Cost Method Entry Age NormalAmortization Method Level Dollar, Closed (Not to Exceed 20 Years)Remaining Amortization Period Varies by YearAsset Valuation 10-Year Smoothed Within a 20%

Corridor to Market ValueInflation 3%Salary Increases Graded Salary Ranges from 8.97% to

3.71% Based on Age, Including InflationInvestment Rate of Return 7.5%, Net of Investment Expense,

Including InflationRetirement Age Pattern of Retirement Determined by

Experience StudyMortality Customized Table Based on Actual

Experience Including an Adjustment for Some Anticipated Improvement


124

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

125

Nonmajor Governmental Funds

Special Revenue Funds ________________________________________

Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.

________________________________________

Solid Waste/Sanitation Fund – The Solid Waste/Sanitation Fund is used to account for transactions relating to the county’s trash collection and waste disposal. Ambulance Service Fund – The Ambulance Service Fund is used to account for transactions relating to emergency medical services. Drug Control Fund – The Drug Control Fund is used to account for revenues received from drug-related fines, forfeitures, and seizures. Other Special Revenue Fund – The Other Special Revenue Fund is used to account for transactions relating to the county’s animal shelter. Constitutional Officers - Fees Fund – The Constitutional Officers - Fees Fund is used to account for operating expenses paid directly from the fee and commission accounts of the trustee, clerks, register of deeds, and sheriff.

126

Debt Service Funds ________________________________________

Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.

________________________________________

Education Debt Service Fund – The Education Debt Service Fund is used to account for the accumulation of resources for, and the payment of, education related long-term debt principal, interest, and related costs.

Capital Projects Funds ________________________________________

Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.

________________________________________

General Capital Projects Fund – The General Capital Projects Fund is used to account for general capital expenditures of the county. Other Capital Projects Fund – The Other Capital Projects Fund is used to account for financial resources from the issuance of bonds and capital outlay notes to be used for the acquisition or construction/renovation of major capital facilities.

127

Exhibit G-1

Sullivan County, TennesseeCombining Balance SheetNonmajor Governmental FundsJune 30, 2018

Constitu -Solid Other tional

Waste / Ambulance Drug Special Officers -Sanitation Service Control Revenue Fees Total

ASSETS

Cash $ 250 $ 0 $ 0 $ 0 $ 257,921 $ 258,171Equity in Pooled Cash and Investments 1,260,898 1,299,200 172,064 46,606 0 2,778,768Accounts Receivable 120,236 3,244,596 0 0 88,101 3,452,933Allowance for Uncollectibles 0 (1,160,308) 0 0 0 (1,160,308)Due from Other Governments 9,041 0 0 0 0 9,041Due from Other Funds 2,515 0 11,300 0 0 13,815Property Taxes Receivable 776,635 0 0 0 0 776,635Allowance for Uncollectible Property Taxes (21,338) 0 0 0 0 (21,338)

Total Assets $ 2,148,237 $ 3,383,488 $ 183,364 $ 46,606 $ 346,022 $ 6,107,717

LIABILITIES

Accounts Payable $ 0 $ 18,245 $ 0 $ 0 $ 0 $ 18,245Accrued Payroll 22,520 135,584 0 0 0 158,104Payroll Deductions Payable 5,700 50,884 0 0 0 56,584Due to Other Funds 17,731 101,044 0 46,606 346,022 511,403Total Liabilities $ 45,951 $ 305,757 $ 0 $ 46,606 $ 346,022 $ 744,336


Deferred Current Property Taxes $ 739,459 $ 0 $ 0 $ 0 $ 0 $ 739,459Deferred Delinquent Property Taxes 14,050 0 0 0 0 14,050Other Deferred/Unavailable Revenue 0 1,776,522 0 0 0 1,776,522Total Deferred Inflows of Resources $ 753,509 $ 1,776,522 $ 0 $ 0 $ 0 $ 2,530,031

(Continued)

Special Revenue Funds

128

Exhibit G-1

Sullivan County, TennesseeCombining Balance SheetNonmajor Governmental Funds (Cont.)

Constitu -Solid Other tional

Waste / Ambulance Drug Special Officers -Sanitation Service Control Revenue Fees Total

FUND BALANCES

Restricted:Restricted for Public Safety $ 0 $ 0 $ 183,364 $ 0 $ 0 $ 183,364Restricted for Debt Service 0 0 0 0 0 0Restricted for Capital Projects 0 0 0 0 0 0

Committed:Committed for Public Health and Welfare 1,348,777 1,301,209 0 0 0 2,649,986

Total Fund Balances $ 1,348,777 $ 1,301,209 $ 183,364 $ 0 $ 0 $ 2,833,350

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 2,148,237 $ 3,383,488 $ 183,364 $ 46,606 $ 346,022 $ 6,107,717

(Continued)


129

Exhibit G-1


TotalEducation General Other Nonmajor

Debt Capital Capital GovernmentalService Projects Projects Total Funds

ASSETS

Cash $ 0 $ 0 $ 0 $ 0 $ 258,171Equity in Pooled Cash and Investments 116,311 1,857,857 245,354 2,103,211 4,998,290Accounts Receivable 0 0 0 0 3,452,933Allowance for Uncollectibles 0 0 0 0 (1,160,308)Due from Other Governments 0 0 0 0 9,041Due from Other Funds 0 0 0 0 13,815Property Taxes Receivable 0 3,801,427 0 3,801,427 4,578,062Allowance for Uncollectible Property Taxes 0 (104,446) 0 (104,446) (125,784)

Total Assets $ 116,311 $ 5,554,838 $ 245,354 $ 5,800,192 $ 12,024,220

LIABILITIES

Accounts Payable $ 0 $ 0 $ 0 $ 0 $ 18,245Accrued Payroll 0 0 0 0 158,104Payroll Deductions Payable 0 0 0 0 56,584Due to Other Funds 0 1,856,857 0 1,856,857 2,368,260Total Liabilities $ 0 $ 1,856,857 $ 0 $ 1,856,857 $ 2,601,193


Deferred Current Property Taxes $ 0 $ 3,619,457 $ 0 $ 3,619,457 $ 4,358,916Deferred Delinquent Property Taxes 0 68,771 0 68,771 82,821Other Deferred/Unavailable Revenue 0 0 0 0 1,776,522Total Deferred Inflows of Resources $ 0 $ 3,688,228 $ 0 $ 3,688,228 $ 6,218,259

(Continued)

Debt Service Fund Capital Projects Funds

130

Exhibit G-1


TotalEducation General Other Nonmajor

Debt Capital Capital GovernmentalService Projects Projects Total Funds

FUND BALANCES

Restricted:Restricted for Public Safety $ 0 $ 0 $ 0 $ 0 $ 183,364Restricted for Debt Service 116,311 0 0 0 116,311Restricted for Capital Projects 0 9,753 245,354 255,107 255,107

Committed:Committed for Public Health and Welfare 0 0 0 0 2,649,986

Total Fund Balances $ 116,311 $ 9,753 $ 245,354 $ 255,107 $ 3,204,768

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 116,311 $ 5,554,838 $ 245,354 $ 5,800,192 $ 12,024,220

Debt Service Fund Capital Projects Funds

131

Exhibit G-2

Sullivan County, TennesseeCombining Statement of Revenues, Expenditures,

and Changes in Fund BalancesNonmajor Governmental FundsFor the Year Ended June 30, 2018

Constitu -Solid tional Education

Waste / Ambulance Drug Officers - DebtSanitation Service Control Fees Total Service

RevenuesLocal Taxes $ 757,189 $ 0 $ 0 $ 0 $ 757,189 $ 0Fines, Forfeitures, and Penalties 0 0 72,442 0 72,442 0Charges for Current Services 356,697 6,675,830 0 11,078 7,043,605 0Other Local Revenues 344,717 2,381 275 0 347,373 0State of Tennessee 135,332 351,484 0 0 486,816 0Federal Government 0 0 4,575 0 4,575 0Other Governments and Citizens Groups 95,499 31,223 0 0 126,722 1,936,566

Total Revenues $ 1,689,434 $ 7,060,918 $ 77,292 $ 11,078 $ 8,838,722 $ 1,936,566


Finance $ 0 $ 0 $ 0 $ 1,983 $ 1,983 $ 19,366Administration of Justice 0 0 0 8,633 8,633 0Public Safety 0 0 78,398 462 78,860 0Public Health and Welfare 1,492,316 6,603,706 0 0 8,096,022 0

Debt Service:Principal on Debt 0 0 0 0 0 1,765,000Interest on Debt 0 0 0 0 0 144,200Other Debt Service 0 0 0 0 0 300

Capital Projects 0 0 0 0 0 0Total Expenditures $ 1,492,316 $ 6,603,706 $ 78,398 $ 11,078 $ 8,185,498 $ 1,928,866

(Continued)

Special Revenue FundsDebt Service

Fund

132

Exhibit G-2


and Changes in Fund BalancesNonmajor Governmental Funds (Cont.)

Constitu -Solid tional Education

Waste / Ambulance Drug Officers - DebtSanitation Service Control Fees Total Service

Excess (Deficiency) of RevenuesOver Expenditures $ 197,118 $ 457,212 $ (1,106) $ 0 $ 653,224 $ 7,700

Other Financing Sources (Uses)Transfers Out $ 0 $ 0 $ 0 $ 0 $ 0 $ 0

Total Other Financing Sources (Uses) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0

Net Change in Fund Balances $ 197,118 $ 457,212 $ (1,106) $ 0 $ 653,224 $ 7,700Fund Balance, July 1, 2017 1,151,659 843,997 184,470 0 2,180,126 108,611

Fund Balance, June 30, 2018 $ 1,348,777 $ 1,301,209 $ 183,364 $ 0 $ 2,833,350 $ 116,311

(Continued)

Special Revenue FundsDebt Service

Fund

133

Exhibit G-2



TotalGeneral Other NonmajorCapital Capital GovernmentalProjects Projects Total Funds

RevenuesLocal Taxes $ 3,560,238 $ 0 $ 3,560,238 $ 4,317,427Fines, Forfeitures, and Penalties 0 0 0 72,442Charges for Current Services 0 0 0 7,043,605Other Local Revenues 0 0 0 347,373State of Tennessee 0 0 0 486,816Federal Government 0 0 0 4,575Other Governments and Citizens Groups 0 0 0 2,063,288

Total Revenues $ 3,560,238 $ 0 $ 3,560,238 $ 14,335,526


Finance $ 72,150 $ 0 $ 72,150 $ 93,499Administration of Justice 0 0 0 8,633Public Safety 0 0 0 78,860Public Health and Welfare 0 0 0 8,096,022

Debt Service:Principal on Debt 0 0 0 1,765,000Interest on Debt 0 0 0 144,200Other Debt Service 0 0 0 300

Capital Projects 1,621,478 0 1,621,478 1,621,478Total Expenditures $ 1,693,628 $ 0 $ 1,693,628 $ 11,807,992

(Continued)

Capital Projects Funds

134

Exhibit G-2



TotalGeneral Other NonmajorCapital Capital GovernmentalProjects Projects Total Funds

Excess (Deficiency) of RevenuesOver Expenditures $ 1,866,610 $ 0 $ 1,866,610 $ 2,527,534

Other Financing Sources (Uses)Transfers Out $ (1,856,857) $ 0 $ (1,856,857) $ (1,856,857)

Total Other Financing Sources (Uses) $ (1,856,857) $ 0 $ (1,856,857) $ (1,856,857)

Net Change in Fund Balances $ 9,753 $ 0 $ 9,753 $ 670,677Fund Balance, July 1, 2017 0 245,354 245,354 2,534,091

Fund Balance, June 30, 2018 $ 9,753 $ 245,354 $ 255,107 $ 3,204,768

Capital Projects Funds

135

Exhibit G-3

Sullivan County, TennesseeSchedule of Revenues, Expenditures, and Changes

in Fund Balance - Actual (Budgetary Basis) and BudgetSolid Waste/Sanitation FundFor the Year Ended June 30, 2018



RevenuesLocal Taxes $ 757,189 $ 0 $ 0 $ 757,189 $ 760,279 $ 760,279 $ (3,090)Charges for Current Services 356,697 0 0 356,697 325,000 325,000 31,697Other Local Revenues 344,717 0 0 344,717 305,172 305,172 39,545State of Tennessee 135,332 0 0 135,332 213,863 218,863 (83,531)Other Governments and Citizens Groups 95,499 0 0 95,499 93,919 93,919 1,580

Total Revenues $ 1,689,434 $ 0 $ 0 $ 1,689,434 $ 1,698,233 $ 1,703,233 $ (13,799)

ExpendituresPublic Health and Welfare

Sanitation Education/Information $ 4,444 $ 0 $ 0 $ 4,444 $ 26,000 $ 26,000 $ 21,556Transfer Stations 1,487,872 (143,052) 16,906 1,361,726 1,979,538 1,989,538 627,812

Total Expenditures $ 1,492,316 $ (143,052) $ 16,906 $ 1,366,170 $ 2,005,538 $ 2,015,538 $ 649,368

Excess (Deficiency) of RevenuesOver Expenditures $ 197,118 $ 143,052 $ (16,906) $ 323,264 $ (307,305) $ (312,305) $ 635,569

Net Change in Fund Balance $ 197,118 $ 143,052 $ (16,906) $ 323,264 $ (307,305) $ (312,305) $ 635,569Fund Balance, July 1, 2017 1,151,659 (143,052) 0 1,008,607 1,012,590 1,012,590 (3,983)

Fund Balance, June 30, 2018 $ 1,348,777 $ 0 $ (16,906) $ 1,331,871 $ 705,285 $ 700,285 $ 631,586

Budgeted Amounts

136

Exhibit G-4


in Fund Balance - Actual (Budgetary Basis) and BudgetAmbulance Service FundFor the Year Ended June 30, 2018



RevenuesCharges for Current Services $ 6,675,830 $ 0 $ 0 $ 6,675,830 $ 5,983,830 $ 6,675,830 $ 0Other Local Revenues 2,381 0 0 2,381 1,492 13,492 (11,111)State of Tennessee 351,484 0 0 351,484 0 480,000 (128,516)Other Governments and Citizens Groups 31,223 0 0 31,223 53,170 53,170 (21,947)

Total Revenues $ 7,060,918 $ 0 $ 0 $ 7,060,918 $ 6,038,492 $ 7,222,492 $ (161,574)

ExpendituresPublic Health and Welfare

Ambulance/Emergency Medical Services $ 6,603,706 $ (23,204) $ 45,162 $ 6,625,664 $ 6,036,985 $ 7,220,985 $ 595,321Total Expenditures $ 6,603,706 $ (23,204) $ 45,162 $ 6,625,664 $ 6,036,985 $ 7,220,985 $ 595,321

Excess (Deficiency) of RevenuesOver Expenditures $ 457,212 $ 23,204 $ (45,162) $ 435,254 $ 1,507 $ 1,507 $ 433,747

Net Change in Fund Balance $ 457,212 $ 23,204 $ (45,162) $ 435,254 $ 1,507 $ 1,507 $ 433,747Fund Balance, July 1, 2017 843,997 (23,204) 0 820,793 617,675 617,675 203,118

Fund Balance, June 30, 2018 $ 1,301,209 $ 0 $ (45,162) $ 1,256,047 $ 619,182 $ 619,182 $ 636,865

Budgeted Amounts

137

Exhibit G-5


in Fund Balance - Actual (Budgetary Basis) and BudgetDrug Control FundFor the Year Ended June 30, 2018



RevenuesFines, Forfeitures, and Penalties $ 72,442 $ 0 $ 0 $ 72,442 $ 74,630 $ 74,630 $ (2,188)Other Local Revenues 275 0 0 275 0 0 275Federal Government 4,575 0 0 4,575 30,000 30,000 (25,425)

Total Revenues $ 77,292 $ 0 $ 0 $ 77,292 $ 104,630 $ 104,630 $ (27,338)

ExpendituresPublic Safety

Sheriff's Department $ 78,398 $ (250) $ 500 $ 78,648 $ 79,872 $ 79,872 $ 1,224Total Expenditures $ 78,398 $ (250) $ 500 $ 78,648 $ 79,872 $ 79,872 $ 1,224

Excess (Deficiency) of RevenuesOver Expenditures $ (1,106) $ 250 $ (500) $ (1,356) $ 24,758 $ 24,758 $ (26,114)

Net Change in Fund Balance $ (1,106) $ 250 $ (500) $ (1,356) $ 24,758 $ 24,758 $ (26,114)Fund Balance, July 1, 2017 184,470 (250) 0 184,220 181,870 181,870 2,350

Fund Balance, June 30, 2018 $ 183,364 $ 0 $ (500) $ 182,864 $ 206,628 $ 206,628 $ (23,764)

Budgeted Amounts

138

Exhibit G-6


in Fund Balance - Actual and BudgetEducation Debt Service FundFor the Year Ended June 30, 2018

Variancewith FinalBudget -Positive

Actual Original Final (Negative)

RevenuesLocal Taxes $ 0 $ 1,936,566 $ 0 $ 0Other Governments and Citizens Groups 1,936,566 0 1,936,566 0

Total Revenues $ 1,936,566 $ 1,936,566 $ 1,936,566 $ 0

ExpendituresFinance

Other Finance $ 19,366 $ 19,366 $ 26,366 $ 7,000Principal on Debt

Education 1,765,000 1,765,000 1,765,000 0Interest on Debt

Education 144,200 144,200 144,200 0Other Debt Service

Education 300 8,000 8,000 7,700Total Expenditures $ 1,928,866 $ 1,936,566 $ 1,943,566 $ 14,700

Excess (Deficiency) of RevenuesOver Expenditures $ 7,700 $ 0 $ (7,000) $ 14,700

Net Change in Fund Balance $ 7,700 $ 0 $ (7,000) $ 14,700Fund Balance, July 1, 2017 108,611 108,611 108,611 0

Fund Balance, June 30, 2018 $ 116,311 $ 108,611 $ 101,611 $ 14,700

Budgeted Amounts

139

Exhibit G-7


in Fund Balance - Actual and BudgetGeneral Capital Projects FundFor the Year Ended June 30, 2018



RevenuesLocal Taxes $ 3,560,238 $ 3,589,926 $ 3,662,926 $ (102,688)

Total Revenues $ 3,560,238 $ 3,589,926 $ 3,662,926 $ (102,688)

ExpendituresFinance

Other Finance $ 72,150 $ 0 $ 73,000 $ 850Capital Projects

Education Capital Projects 1,621,478 0 1,621,478 0Total Expenditures $ 1,693,628 $ 0 $ 1,694,478 $ 850

Excess (Deficiency) of RevenuesOver Expenditures $ 1,866,610 $ 3,589,926 $ 1,968,448 $ (101,838)

Other Financing Sources (Uses)Transfers Out $ (1,856,857) $ (3,546,035) $ (1,924,557) $ 67,700

Total Other Financing Sources $ (1,856,857) $ (3,546,035) $ (1,924,557) $ 67,700

Net Change in Fund Balance $ 9,753 $ 43,891 $ 43,891 $ (34,138)Fund Balance, July 1, 2017 0 0 0 0

Fund Balance, June 30, 2018 $ 9,753 $ 43,891 $ 43,891 $ (34,138)

Budgeted Amounts

140

Major Governmental Fund

General Debt Service Fund________________________________________

The General Debt Service Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.

________________________________________

141

Exhibit H


in Fund Balance - Actual and BudgetGeneral Debt Service FundFor the Year Ended June 30, 2018



RevenuesLocal Taxes $ 8,764,479 $ 8,872,499 $ 8,872,499 $ (108,020)Other Local Revenues 1,426,140 1,121,856 1,121,856 304,284Other Governments and Citizens Groups 611,350 814,260 611,350 0

Total Revenues $ 10,801,969 $ 10,808,615 $ 10,605,705 $ 196,264

ExpendituresFinance

Other Finance $ 181,827 $ 126,690 $ 182,690 $ 863Principal on Debt

General Government 2,805,000 3,125,000 2,805,000 0Education 1,841,271 1,697,291 1,841,271 0

Interest on DebtGeneral Government 1,253,963 1,307,631 1,253,963 0Education 6,413,092 6,386,314 6,413,092 0

Other Debt ServiceGeneral Government 11,696 4,000 14,500 2,804Education 19,938 22,039 22,039 2,101

Total Expenditures $ 12,526,787 $ 12,668,965 $ 12,532,555 $ 5,768

Excess (Deficiency) of RevenuesOver Expenditures $ (1,724,818) $ (1,860,350) $ (1,926,850) $ 202,032

Other Financing Sources (Uses)Transfers In $ 2,102,796 $ 2,136,986 $ 2,136,986 $ (34,190)

Total Other Financing Sources $ 2,102,796 $ 2,136,986 $ 2,136,986 $ (34,190)

Net Change in Fund Balance $ 377,978 $ 276,636 $ 210,136 $ 167,842Fund Balance, July 1, 2017 3,853,249 3,437,038 3,437,038 416,211

Fund Balance, June 30, 2018 $ 4,231,227 $ 3,713,674 $ 3,647,174 $ 584,053

Budgeted Amounts

142

Proprietary Funds ________________________________________

Internal Service Funds are used to account for the financing of goods and services provided by one department or agency to other departments or agencies of the county, or to other governments, on a cost-reimbursement basis.

________________________________________ Self-Insurance Fund – The Self-Insurance Fund is used to account for the self-insured general liability, property, casualty, and workers’ compensation programs managed by the county for the primary government and the discretely presented School Department. Employee Insurance - General Fund – The Employee Insurance - General Fund is used to account for the primary government’s self-insured retirees’ supplemental health and employee dental programs. Employee Insurance - Health Fund – The Employee Insurance - Health Fund was used to account for the primary government’s self-insured employee health programs. The county has changed from the self-insured health program to participating in a public entity risk pool for health benefits and this fund has been closed.

143

Exhibit I-1

Sullivan County, TennesseeCombining Statement of Net PositionProprietary FundsJune 30, 2018

Employee TotalSelf- Insurance - Proprietary

Insurance General FundsASSETS

Current Assets:Cash $ 86,746 $ 0 $ 86,746Equity in Pooled Cash and Investments 377,307 137,848 515,155Accounts Receivable 14,968 0 14,968Due from Other Funds 889,983 229,898 1,119,881Due from Component Units 14,734 0 14,734

Total Assets $ 1,383,738 $ 367,746 $ 1,751,484

LIABILITIES

Current Liabilities:Accounts Payable $ 0 $ 162 $ 162Claims and Judgments Payable 175,453 0 175,453

Total Liabilities $ 175,453 $ 162 $ 175,615

NET POSITION

Unrestricted $ 1,208,285 $ 367,584 $ 1,575,869

Total Net Position $ 1,208,285 $ 367,584 $ 1,575,869

Internal Service Funds

144

Exhibit I-2

Sullivan County, TennesseeCombining Statement of Revenues, Expenses, and Changes in Net PositionAll Proprietary FundsFor the Year Ended June 30, 2018

EmployeeSelf- Insurance -

Insurance General Total

Operating Revenues Self-Insurance Premiums $ 424,704 $ 570,085 $ 994,789 Cobra Insurance Payments 0 1,996 1,996Total Operating Revenues $ 424,704 $ 572,081 $ 996,785

Operating Expenses Handling Charges and Administrative Costs $ 0 $ 26,146 $ 26,146 Dental Insurance 0 271,268 271,268 Audit Services 43,663 0 43,663 Liability Insurance 152,468 0 152,468 Medical Claims 0 238,548 238,548 Trustee's Commission 18 0 18 Vehicle and Equipment Insurance 7,151 0 7,151 Workers' Compensation Insurance 816,230 0 816,230 Total Operating Expenses $ 1,019,530 $ 535,962 $ 1,555,492Operating Income (Loss) $ (594,826) $ 36,119 $ (558,707)

Nonoperating Revenues (Expenses) Investment Income $ 1,801 $ 0 $ 1,801Total Nonoperating Revenues (Expenses) $ 1,801 $ 0 $ 1,801

Income (Loss) before Transfers $ (593,025) $ 36,119 $ (556,906)Transfers In 500,000 0 500,000

Change in Net Position $ (93,025) $ 36,119 $ (56,906)Net Position, July 1, 2017 1,301,310 331,465 1,632,775

Net Position, June 30, 2018 $ 1,208,285 $ 367,584 $ 1,575,869


145

Exhibit I-3

Sullivan County, TennesseeCombining Statement of Cash FlowsAll Proprietary FundsFor the Year Ended June 30, 2018

Employee EmployeeSelf- Insurance - Insurance -

Insurance General Health Total

Cash Flows from Operating Activities Receipts for Self-Insurance Premiums $ 499,168 $ 599,667 $ 0 $ 1,098,835 Payments to Insurers and Claims Payments (1,025,818) (510,032) 0 (1,535,850) Payments for Administrative Costs (43,681) (26,146) 0 (69,827)Net Cash Provided By (Used In) Operating Activities $ (570,331) $ 63,489 $ 0 $ (506,842)

Cash Flows from Investing Activities Interest on Investments $ 1,801 $ 0 $ 0 $ 1,801Net Cash Provided By (Used In) Investing Activities $ 1,801 $ 0 $ 0 $ 1,801

Cash Flows from Noncapital Financing Activities Disbursements for State Insurance Clearing Account $ 0 $ 0 $ (574,757) $ (574,757) Transfers In 300,000 0 0 300,000 Transfers Out 0 0 (37,626) (37,626)Net Cash Provided By (Used In) Noncapital Financing Activities $ 300,000 $ 0 $ (612,383) $ (312,383)

Increase (Decrease) in Cash $ (268,530) $ 63,489 $ (612,383) $ (817,424)Cash, July 1, 2017 732,583 74,359 612,383 1,419,325

Cash, June 30, 2018 $ 464,053 $ 137,848 $ 0 $ 601,901

Reconciliation of Operating Income (Loss) to Net Cash Provided By (Used In) Operating Activities Operating Income (Loss) $ (594,826) $ 36,119 $ 0 $ (558,707) Adjustments to Reconcile Net Operating Income (Loss) to Net Cash Provided By (Used In) Operating Activities: Changes in Assets and Liabilities: (Increase) Decrease in Operating Receivables 74,464 27,586 0 102,050 Increase (Decrease) in Other Current Liabilities (49,969) (216) 0 (50,185)

Net Cash Provided By (Used In) Operating Activities $ (570,331) $ 63,489 $ 0 $ (506,842)

Reconciliation of Cash With the Statement of Net Position Cash Per Net Position $ 86,746 $ 0 $ 0 $ 86,746 Equity in Pooled Cash and Investments Per Net Position 377,307 137,848 0 515,155

Cash, June 30, 2018 $ 464,053 $ 137,848 $ 0 $ 601,901


146

Fiduciary Funds ________________________________________

Agency Funds are used to account for assets held by the county in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or other funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations.

________________________________________ Cities - Sales Tax Fund – The Cities - Sales Tax Fund is used to account for the second half of the sales tax revenues collected inside incorporated cities of the county. These revenues are received by the county from the State of Tennessee and forwarded to the various cities on a monthly basis.

City School ADA - Bristol Fund, City School ADA - Kingsport Fund, and City School ADA – Johnson City Fund – These three funds are used to account for the city school systems’ shares of education revenues collected by the county that must be apportioned between the various school systems on an average daily attendance basis. These collections are remitted to the city school systems on a monthly basis. Constitutional Officers - Agency Fund – The Constitutional Officers - Agency Fund is used to account for amounts collected in an agency capacity by the county clerk; circuit, general sessions, and law courts clerk; clerk and master; register of deeds; and sheriff. Such collections include amounts due the state, cities, other county funds, litigants, heirs, and others. Judicial District Drug Fund – The Judicial District Drug Fund is used to account for state grants and other restricted revenues held in trust for the benefit of the multi-jurisdictional drug task force, which was created by contract (mutual aid agreement) between the participating city and county governments.

District Attorney General Fund – The District Attorney General Fund is used to account for restricted revenue held for the benefit of the Office of District Attorney General.

147

Exhibit J-1

Sullivan County, TennesseeCombining Statement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2018

City City Constitu -Cities - School School tional JudicialSales ADA - ADA - Officers - DistrictTax Bristol Kingsport Agency Drug

ASSETS

Cash $ 0 $ 0 $ 0 $ 9,340,612 $ 0Equity in Pooled Cash and Investments 0 727,435 1,236,367 0 312,092Accounts Receivable 0 229 389 0 0Due from Other Governments 4,173,260 931,401 1,581,678 0 5,570Property Taxes Receivable 0 10,911,606 18,549,177 0 0Allowance for Uncollectible Property Taxes 0 (299,802) (509,648) 0 0

Total Assets $ 4,173,260 $ 12,270,869 $ 20,857,963 $ 9,340,612 $ 317,662

LIABILITIES

Due to Other Taxing Units $ 4,173,260 $ 12,270,869 $ 20,857,963 $ 0 $ 0Due to Litigants, Heirs, and Others 0 0 0 9,340,612 0Due to Joint Ventures 0 0 0 0 317,662

Total Liabilities $ 4,173,260 $ 12,270,869 $ 20,857,963 $ 9,340,612 $ 317,662

(Continued)

Agency Funds

148

Exhibit J-1

Sullivan County, TennesseeCombining Statement of Fiduciary Assets and LiabilitiesFiduciary Funds (Cont.)

CityDistrict School

Attorney ADA -General Johnson City Total

ASSETS

Cash $ 0 $ 0 $ 9,340,612Equity in Pooled Cash and Investments 61,256 9,010 2,346,160Accounts Receivable 0 3 621Due from Other Governments 0 11,421 6,703,330Property Taxes Receivable 0 132,731 29,593,514Allowance for Uncollectible Property Taxes 0 (3,646) (813,096)

Total Assets $ 61,256 $ 149,519 $ 47,171,141

LIABILITIES

Due to Other Taxing Units $ 0 $ 149,519 $ 37,451,611Due to Litigants, Heirs, and Others 61,256 0 9,401,868Due to Joint Ventures 0 0 317,662

Total Liabilities $ 61,256 $ 149,519 $ 47,171,141

Agency Funds (Cont.)

149

Exhibit J-2

Sullivan County, TennesseeCombining Statement of Changes in Assets and Liabilities - All Agency FundsFor the Year Ended June 30, 2018

Beginning EndingBalance Additions Deductions Balance

Cities - Sales Tax Fund Assets Equity in Pooled Cash and Investments $ 0 $ 24,608,171 $ 24,608,171 $ 0 Due from Other Governments 4,145,409 4,173,260 4,145,409 4,173,260

Total Assets $ 4,145,409 $ 28,781,431 $ 28,753,580 $ 4,173,260

Liabilities Due to Other Taxing Units $ 4,145,409 $ 28,781,431 $ 28,753,580 $ 4,173,260

Total Liabilities $ 4,145,409 $ 28,781,431 $ 28,753,580 $ 4,173,260

City School ADA - Bristol Fund Assets Equity in Pooled Cash and Investments $ 795,973 $ 16,173,030 $ 16,241,568 $ 727,435 Accounts Receivable 251 229 251 229 Due from Other Governments 930,048 931,401 930,048 931,401 Taxes Receivable 10,262,993 10,911,606 10,262,993 10,911,606 Allowance for Uncollectible Taxes (350,077) (299,802) (350,077) (299,802)

Total Assets $ 11,639,188 $ 27,716,464 $ 27,084,783 $ 12,270,869



City School ADA - Kingsport Fund Assets Equity in Pooled Cash and Investments $ 1,346,598 $ 27,488,483 $ 27,598,714 $ 1,236,367 Accounts Receivable 426 389 426 389 Due from Other Governments 1,536,128 1,581,678 1,536,128 1,581,678 Taxes Receivable 17,413,439 18,549,177 17,413,439 18,549,177 Allowance for Uncollectible Taxes (593,984) (509,648) (593,984) (509,648)

Total Assets $ 19,702,607 $ 47,110,079 $ 45,954,723 $ 20,857,963



(Continued)

150

Exhibit J-2

Sullivan County, TennesseeCombining Statement of Changes in Assets and Liabilities - All Agency Funds (Cont.)


City School ADA - Johnson City Fund Assets Equity in Pooled Cash and Investments $ 0 $ 200,538 $ 191,528 $ 9,010 Accounts Receivable 0 3 0 3 Due from Other Governments 0 11,421 0 11,421 Taxes Receivable 0 132,731 0 132,731 Allowance for Uncollectible Taxes 0 (3,646) 0 (3,646)

Total Assets $ 0 $ 341,047 $ 191,528 $ 149,519

Liabilities Due to Other Taxing Units $ 0 $ 341,047 $ 191,528 $ 149,519

Total Liabilities $ 0 $ 341,047 $ 191,528 $ 149,519

Constitutional Officers - Agency Fund Assets Cash $ 8,664,965 $ 29,833,781 $ 29,158,134 $ 9,340,612

Total Assets $ 8,664,965 $ 29,833,781 $ 29,158,134 $ 9,340,612

Liabilities Due to Litigants, Heirs, and Others $ 8,664,965 $ 29,833,781 $ 29,158,134 $ 9,340,612


Judicial District Drug Fund Assets Equity in Pooled Cash and Investments $ 313,035 $ 148,455 $ 149,398 $ 312,092 Due from Other Governments 3,858 5,570 3,858 5,570

Total Assets $ 316,893 $ 154,025 $ 153,256 $ 317,662

Liabilities Due to Joint Ventures $ 316,893 $ 154,025 $ 153,256 $ 317,662

Total Liabilities $ 316,893 $ 154,025 $ 153,256 $ 317,662

(Continued)

151

Exhibit J-2

Sullivan County, TennesseeCombining Statement of Changes in Assets and Liabilities - All Agency Funds (Cont.)


District Attorney General Fund Assets Equity in Pooled Cash and Investments $ 46,734 $ 25,159 $ 10,637 $ 61,256

Total Assets $ 46,734 $ 25,159 $ 10,637 $ 61,256

Liabilities Due to Litigants, Heirs, and Others $ 46,734 $ 25,159 $ 10,637 $ 61,256

Total Liabilities $ 46,734 $ 25,159 $ 10,637 $ 61,256

Totals - All Agency Funds Assets Cash $ 8,664,965 $ 29,833,781 $ 29,158,134 $ 9,340,612 Equity in Pooled Cash and Investments 2,502,340 68,643,836 68,800,016 2,346,160 Accounts Receivable 677 621 677 621 Due from Other Governments 6,615,443 6,703,330 6,615,443 6,703,330 Taxes Receivable 27,676,432 29,593,514 27,676,432 29,593,514 Allowance for Uncollectible Taxes (944,061) (813,096) (944,061) (813,096)

Total Assets $ 44,515,796 $ 133,961,986 $ 131,306,641 $ 47,171,141

Liabilities Due to Joint Ventures $ 316,893 $ 154,025 $ 153,256 $ 317,662 Due to Other Taxing Units 35,487,204 103,949,021 101,984,614 37,451,611 Due to Litigants, Heirs, and Others 8,711,699 29,858,940 29,168,771 9,401,868


152

Sullivan County School Department________________________________________

This section presents combining and individual fund financial statements for the Sullivan County School Department, a discretely presented component unit. The School Department uses a General Fund, four Special Revenue Funds, a Capital Projects Fund, and a Fiduciary Fund.

________________________________________

General Purpose School Fund – The General Purpose School Fund is used to account for general operations of the School Department.

School Federal Projects Fund – The School Federal Projects Fund is used to account for restricted federal revenues, which must be expended on specific education programs.

Central Cafeteria Fund – The Central Cafeteria Fund is used to account for the cafeteria operations in each of the schools.

Other Education Special Revenue Fund – This fund is used to account for the operations of the prepaid pre-kindergarten childcare program.

School Improvement Fund – This fund is used to account for transactions involving school maintenance and building improvements.

Education Capital Projects Fund – The Education Capital Projects Fund is used to account for building construction and renovations of the School Department.

Endowment Fund – The Endowment Fund is used to account for an endowment received by the School Department for which the principal amount and interest earned is to be expended for the benefit of scholarships for Sullivan County students.

153

Exhibit K-1

Sullivan County, TennesseeStatement of ActivitiesDiscretely Presented Sullivan County School DepartmentFor the Year Ended June 30, 2018

Net (Expense)Revenue and

Program Revenues Changes inOperating Capital Net Position

Charges Grants Grants Totalfor and and Governmental

Functions/Programs Expenses Services Contributions Contributions Activities

Governmental Activities: Instruction $ 55,651,594 $ 13,252 $ 4,614,077 $ 1,865,169 $ (49,159,096) Support Services 29,925,569 1,151,310 764,417 0 (28,009,842) Operation of Non-instructional Services 4,988,546 1,063,079 3,461,493 0 (463,974)

Total Governmental Activities $ 90,565,709 $ 2,227,641 $ 8,839,987 $ 1,865,169 $ (77,632,912)

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 25,127,165 Local Option Sales Tax 13,026,365 Grants and Contributions Not Restricted for Specific Programs 43,587,155 Unrestricted Investment Income 10 Miscellaneous 47,831Total General Revenues $ 81,788,526

Change in Net Position $ 4,155,614Net Position, July 1, 2017 98,540,843Restatement - See note I.D.9. (20,936,003)

Net Position, June 30, 2018 $ 81,760,454

154

Exhibit K-2

Sullivan County, TennesseeBalance Sheet - Governmental FundsDiscretely Presented Sullivan County School DepartmentJune 30, 2018

OtherGeneral Education Govern- TotalPurpose Capital mental GovernmentalSchool Projects Funds Funds

ASSETS

Cash $ 104,762 $ 0 $ 30 $ 104,792Equity in Pooled Cash and Investments 12,029,789 79,080,999 5,619,609 96,730,397Inventories 130,873 0 46,130 177,003Accounts Receivable 1,893 0 36,858 38,751Due from Other Governments 3,470,500 0 338,554 3,809,054Due from Other Funds 1,515,492 0 8,024 1,523,516Due from Primary Government 1,100,000 0 0 1,100,000Property Taxes Receivable 25,711,128 0 0 25,711,128Allowance for Uncollectible Property Taxes (706,427) 0 0 (706,427)Prepaid Items 4,795 0 0 4,795

Total Assets $ 43,362,805 $ 79,080,999 $ 6,049,205 $ 128,493,009

LIABILITIES

Accounts Payable $ 162,721 $ 0 $ 13,174 $ 175,895Accrued Payroll 7,685 0 0 7,685Payroll Deductions Payable 982,325 0 23,248 1,005,573Due to Other Funds 0 0 1,523,516 1,523,516Due to Primary Government 15,486 0 0 15,486Other Current Liabilities 111,192 0 50,285 161,477Unearned/Unavailable Revenue 0 20,000,000 0 20,000,000Total Liabilities $ 1,279,409 $ 20,000,000 $ 1,610,223 $ 22,889,632

(Continued)

Major FundsNonmajor

Funds

155

Exhibit K-2

Sullivan County, TennesseeBalance Sheet - Governmental FundsDiscretely Presented Sullivan County School Department (Cont.)



Deferred Current Property Taxes $ 24,480,361 $ 0 $ 0 $ 24,480,361Deferred Delinquent Property Taxes 465,139 0 0 465,139Other Deferred/Unavailable Revenue 1,141,706 0 0 1,141,706Total Deferred Inflows of Resources $ 26,087,206 $ 0 $ 0 $ 26,087,206

FUND BALANCES

Nonspendable:Inventory $ 130,873 $ 0 $ 46,130 $ 177,003Prepaid Items 4,795 0 0 4,795

Restricted:Restricted for Education 229,637 0 3,948,941 4,178,578Restricted for Capital Projects 0 59,080,999 0 59,080,999

Committed:Committed for Education 416,440 0 443,911 860,351

Assigned:Assigned for Education 2,956,786 0 0 2,956,786

Unassigned 12,257,659 0 0 12,257,659Total Fund Balances $ 15,996,190 $ 59,080,999 $ 4,438,982 $ 79,516,171

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 43,362,805 $ 79,080,999 $ 6,049,205 $ 128,493,009

Major FundsNonmajor

Funds

156

Exhibit K-3

Sullivan County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to the Statement of Net PositionDiscretely Presented Sullivan County School DepartmentJune 30, 2018

Amounts reported for governmental activities in the statement of net position (Exhibit A) are different because:

Total fund balances - balance sheet - governmental funds (Exhibit K-2) $ 79,516,171

(1) Capital assets used in governmental activities are not financial resources and therefore are not reported inthe governmental funds. Add: land $ 5,649,582 Add: construction in progress 3,855,228 Add: buildings and improvements net of accumulated depreciation 60,392,474 Add: other capital assets net of accumulated depreciation 1,431,151 71,328,435

(2) Other long-term assets are not available to pay forcurrent-period expenditures and therefore are deferredin the governmental funds. 1,606,845

(3) Long-term liabilities are not due and payable in the current period and therefore are not reportedin the governmental funds. Less: compensated absences payable $ (2,631,327) Less: other postemployment benefits liability (67,275,380) (69,906,707)

(4) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions and OPEB will be amortized andrecognized as components of pension and OPEB expense in future years: Add: deferred outflows of resources related to pensions $ 8,860,539 Less: deferred inflows of resources related to pensions (8,084,226) Add: deferred outflows of resources related to OPEB 2,955,909 Less: deferred inflows of resources related to OPEB (5,112,011) (1,379,789)

(5) Net pension assets are not current financial resourcesand therefore are not reported in the governmental funds. Add: net pension assets - agent plan $ 103,122 Add: net pension asset - teacher retirement plans 165,450 Add: net pension assets - teacher retirement plans 326,927 595,499

Net position of governmental activities (Exhibit A) $ 81,760,454

157

Exhibit K-4


and Changes in Fund Balances - Governmental Funds

Discretely Presented Sullivan County School DepartmentFor the Year Ended June 30, 2018


RevenuesLocal Taxes $ 38,130,090 $ 0 $ 66,936 $ 38,197,026Licenses and Permits 5,224 0 0 5,224Charges for Current Services 1,116,119 0 1,084,967 2,201,086Other Local Revenues 30,387 2 44,007 74,396State of Tennessee 43,231,773 0 40,519 43,272,292Federal Government 241,298 0 9,085,571 9,326,869Other Governments and Citizens Groups 35,129 0 1,621,478 1,656,607

Total Revenues $ 82,790,020 $ 2 $ 11,943,478 $ 94,733,500


Instruction $ 47,791,832 $ 0 $ 4,252,821 $ 52,044,653Support Services 28,986,860 0 1,243,119 30,229,979Operation of Non-Instructional Services 668,964 0 4,278,489 4,947,453Capital Outlay 50,450 0 546,372 596,822

Debt Service:Other Debt Service 2,547,916 0 0 2,547,916

Capital Projects 0 3,292,504 0 3,292,504Total Expenditures $ 80,046,022 $ 3,292,504 $ 10,320,801 $ 93,659,327

Excess (Deficiency) of RevenuesOver Expenditures $ 2,743,998 $ (3,292,502) $ 1,622,677 $ 1,074,173

(Continued)

Major FundsNonmajor

Funds

158

Exhibit K-4


and Changes in Fund Balances - Governmental Funds

Discretely Presented Sullivan County School Department (Cont.)


Other Financing Sources (Uses)Transfers In $ 607,742 $ 0 $ 0 $ 607,742Transfers Out 0 0 (607,742) (607,742)

Total Other Financing Sources (Uses) $ 607,742 $ 0 $ (607,742) $ 0

Net Change in Fund Balances $ 3,351,740 $ (3,292,502) $ 1,014,935 $ 1,074,173Fund Balance, July 1, 2017 12,644,450 62,373,501 3,424,047 78,441,998

Fund Balance, June 30, 2018 $ 15,996,190 $ 59,080,999 $ 4,438,982 $ 79,516,171

Major FundsNonmajor

Funds

159

Exhibit K-5

Sullivan County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and Changesin Fund Balances of Governmental Funds to the Statement of Activities


Amounts reported for governmental activities in the statementof activities (Exhibit B) are different because:

Net change in fund balances - total governmental funds (Exhibit K-4) $ 1,074,173

(1) Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of these assets is allocatedover their useful lives and reported as depreciation expense. Thedifference between capital outlays and depreciation is itemized asfollows:

Add: capital assets purchased in the current period $ 3,689,054Less: current-year depreciation expense (3,100,697) 588,357

(2) The net effect of various miscellaneous transactions involving capitalassets (sales, trade-ins, and donations) is to decrease net position.

Less: net book value of assets disposed (6,801)

(3) Revenues in the statement of activities that do not provide currentfinancial resources are not reported as revenues in the funds.

Less: deferred delinquent property taxes/other deferred June 30, 2017 $ (1,619,022)Add: deferred delinquent property taxes/other deferred June 30, 2018 1,606,845 (12,177)

(4) Some expenses reported in the statement of activities do not requirethe use of current financial resources and therefore are not reportedas expenditures in the governmental funds.

$ 199,3662,909,836

99,1896,725,2511,537,421

(5,270,476)1,162,222

261,264

Change in compensated absences payable Change in other postemployment benefits liability (net of restatement) Change in pension asset - teacher retirement plan Change in pension liability - teacher legacy retirement plan Change in pension liability - agent plan Change in deferred outflows related to pensions Change in deferred inflows related to pensions Change in deferred outflows related to OPEB (net of restatement) Change in deferred inflows related to OPEB (5,112,011) 2,512,062

Change in net position of governmental activities (Exhibit B) $ 4,155,614

160

Exhibit K-6

Sullivan County, TennesseeCombining Balance Sheet - Nonmajor Governmental FundsDiscretely Presented Sullivan County School DepartmentJune 30, 2018

Other TotalSchool Education NonmajorFederal Central Special School GovernmentalProjects Cafeteria Revenue Improvement Funds

ASSETS

Cash $ 0 $ 30 $ 0 $ 0 $ 30Equity in Pooled Cash and Investments 872,327 2,188,220 44,179 2,514,883 5,619,609Inventories 0 46,130 0 0 46,130Accounts Receivable 0 36,858 0 0 36,858Due from Other Governments 332,200 6,354 0 0 338,554Due from Other Funds 0 8,024 0 0 8,024

Total Assets $ 1,204,527 $ 2,285,616 $ 44,179 $ 2,514,883 $ 6,049,205

LIABILITIES

Accounts Payable $ 11,908 $ 171 $ 0 $ 1,095 $ 13,174Payroll Deductions Payable 21,233 2,015 0 0 23,248Due to Other Funds 944,915 578,333 268 0 1,523,516Other Current Liabilities 0 50,285 0 0 50,285Total Liabilities $ 978,056 $ 630,804 $ 268 $ 1,095 $ 1,610,223

FUND BALANCES

Nonspendable:Inventory $ 0 $ 46,130 $ 0 $ 0 $ 46,130

Restricted:Restricted for Education 26,471 1,408,682 0 2,513,788 3,948,941

Committed:Committed for Education 200,000 200,000 43,911 0 443,911

Total Fund Balances $ 226,471 $ 1,654,812 $ 43,911 $ 2,513,788 $ 4,438,982

Total Liabilities and Fund Balances $ 1,204,527 $ 2,285,616 $ 44,179 $ 2,514,883 $ 6,049,205


161

Exhibit K-7


and Changes in Fund Balances - Nonmajor Governmental Funds



RevenuesLocal Taxes $ 0 $ 0 $ 0 $ 66,936 $ 66,936Charges for Current Services 0 1,071,715 13,252 0 1,084,967Other Local Revenues 0 39,497 10 4,500 44,007State of Tennessee 0 40,519 0 0 40,519Federal Government 5,562,752 3,522,819 0 0 9,085,571Other Governments and Citizens Groups 0 0 0 1,621,478 1,621,478

Total Revenues $ 5,562,752 $ 4,674,550 $ 13,262 $ 1,692,914 $ 11,943,478


Instruction $ 4,252,821 $ 0 $ 0 $ 0 $ 4,252,821Support Services 1,242,015 0 0 1,104 1,243,119Operation of Non-Instructional Services 971 4,256,684 20,834 0 4,278,489Capital Outlay 0 0 0 546,372 546,372

Total Expenditures $ 5,495,807 $ 4,256,684 $ 20,834 $ 547,476 $ 10,320,801

Excess (Deficiency) of RevenuesOver Expenditures $ 66,945 $ 417,866 $ (7,572) $ 1,145,438 $ 1,622,677

Other Financing Sources (Uses)Transfers Out $ (45,742) $ 0 $ 0 $ (562,000) $ (607,742)

Total Other Financing Sources (Uses) $ (45,742) $ 0 $ 0 $ (562,000) $ (607,742)

(Continued)


162

Exhibit K-7


and Changes in Fund Balances - Nonmajor Governmental Funds

Discretely Presented Sullivan County School Department (Cont.)


Net Change in Fund Balances $ 21,203 $ 417,866 $ (7,572) $ 583,438 $ 1,014,935Fund Balance, July 1, 2017 205,268 1,236,946 51,483 1,930,350 3,424,047

Fund Balance, June 30, 2018 $ 226,471 $ 1,654,812 $ 43,911 $ 2,513,788 $ 4,438,982


163

Exhibit K-8


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Sullivan County School DepartmentGeneral Purpose School FundFor the Year Ended June 30, 2018



RevenuesLocal Taxes $ 38,130,090 $ 0 $ 0 $ 38,130,090 $ 37,210,500 $ 37,210,500 $ 919,590Licenses and Permits 5,224 0 0 5,224 4,000 4,000 1,224Charges for Current Services 1,116,119 0 0 1,116,119 316,000 1,316,000 (199,881)Other Local Revenues 30,387 0 0 30,387 1,408,500 408,500 (378,113)State of Tennessee 43,231,773 0 0 43,231,773 42,568,167 43,115,576 116,197Federal Government 241,298 0 0 241,298 282,500 282,500 (41,202)Other Governments and Citizens Groups 35,129 0 0 35,129 50,000 66,147 (31,018)

Total Revenues $ 82,790,020 $ 0 $ 0 $ 82,790,020 $ 81,839,667 $ 82,403,223 $ 386,797

ExpendituresInstruction

Regular Instruction Program $ 39,417,968 $ (186) $ 176,347 $ 39,594,129 $ 41,878,371 $ 41,846,968 $ 2,252,839Special Education Program 5,393,481 (2,106) 0 5,391,375 5,656,333 5,656,333 264,958Career and Technical Education Program 2,980,383 (1,503) 1,195 2,980,075 3,115,915 3,115,915 135,840

Support ServicesHealth Services 849,070 0 0 849,070 946,866 946,866 97,796Other Student Support 1,957,980 0 0 1,957,980 2,048,160 2,048,160 90,180Regular Instruction Program 2,476,167 (643) 820 2,476,344 2,884,252 2,884,252 407,908Special Education Program 198,107 0 0 198,107 243,738 243,738 45,631Career and Technical Education Program 185,533 0 0 185,533 175,080 175,080 (10,453)Other Programs 547,409 0 0 547,409 0 547,409 0Board of Education 1,335,993 0 0 1,335,993 1,740,844 1,740,844 404,851Director of Schools 460,176 0 0 460,176 515,824 515,824 55,648Office of the Principal 5,793,340 0 23,214 5,816,554 6,118,132 6,118,132 301,578Fiscal Services 384,179 0 0 384,179 451,863 451,863 67,684Human Services/Personnel 334,844 (75) 8 334,777 345,718 345,718 10,941Operation of Plant 6,406,161 0 3,069 6,409,230 6,634,266 6,634,266 225,036Maintenance of Plant 3,177,336 (5,479) 8,207 3,180,064 3,502,180 3,502,180 322,116Transportation 4,880,565 0 25 4,880,590 5,261,248 5,261,248 380,658

(Continued)

Budgeted Amounts

164

Exhibit K-8


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Sullivan County School DepartmentGeneral Purpose School Fund (Cont.)



Expenditures (Cont.)Operation of Non-Instructional Services

Community Services $ 14,664 $ 0 $ 0 $ 14,664 $ 30,798 $ 30,798 $ 16,134Early Childhood Education 654,300 0 0 654,300 662,336 709,886 55,586

Capital OutlayRegular Capital Outlay 50,450 0 0 50,450 40,000 40,000 (10,450)

Interest on DebtEducation 0 0 0 0 25,250 25,250 25,250

Other Debt ServiceEducation 2,547,916 0 0 2,547,916 0 2,557,300 9,384


Excess (Deficiency) of RevenuesOver Expenditures $ 2,743,998 $ 9,992 $ (212,885) $ 2,541,105 $ (437,507) $ (2,994,807) $ 5,535,912

Other Financing Sources (Uses)Transfers In $ 607,742 $ 0 $ 0 $ 607,742 $ 610,000 $ 610,000 $ (2,258)Transfers Out 0 0 0 0 (2,557,300) 0 0

Total Other Financing Sources $ 607,742 $ 0 $ 0 $ 607,742 $ (1,947,300) $ 610,000 $ (2,258)

Net Change in Fund Balance $ 3,351,740 $ 9,992 $ (212,885) $ 3,148,847 $ (2,384,807) $ (2,384,807) $ 5,533,654Fund Balance, July 1, 2017 12,644,450 (9,992) 0 12,634,458 8,985,142 8,985,142 3,649,316


Budgeted Amounts

165

Exhibit K-9


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Sullivan County School DepartmentSchool Federal Projects FundFor the Year Ended June 30, 2018



RevenuesFederal Government $ 5,562,752 $ 0 $ 0 $ 5,562,752 $ 6,605,933 $ 7,214,483 $ (1,651,731)

Total Revenues $ 5,562,752 $ 0 $ 0 $ 5,562,752 $ 6,605,933 $ 7,214,483 $ (1,651,731)

ExpendituresInstruction

Regular Instruction Program $ 2,054,286 $ (1,363) $ 0 $ 2,052,923 $ 1,894,423 $ 2,402,931 $ 350,008Special Education Program 2,052,825 0 0 2,052,825 2,607,718 2,607,718 554,893Career and Technical Education Program 145,710 (3,906) 26,471 168,275 168,000 168,275 0

Support ServicesOther Student Support 214,792 0 0 214,792 264,382 292,271 77,479Regular Instruction Program 547,831 0 0 547,831 1,009,249 1,086,127 538,296Special Education Program 459,196 0 0 459,196 565,359 565,359 106,163Transportation 20,196 0 0 20,196 45,031 40,031 19,835

Operation of Non-Instructional ServicesFood Service 971 0 0 971 1,100 1,100 129


Excess (Deficiency) of RevenuesOver Expenditures $ 66,945 $ 5,269 $ (26,471) $ 45,743 $ 50,671 $ 50,671 $ (4,928)

Other Financing Sources (Uses)Transfers Out $ (45,742) $ 0 $ 0 $ (45,742) $ (50,671) $ (50,671) $ 4,929

Total Other Financing Sources $ (45,742) $ 0 $ 0 $ (45,742) $ (50,671) $ (50,671) $ 4,929

Net Change in Fund Balance $ 21,203 $ 5,269 $ (26,471) $ 1 $ 0 $ 0 $ 1Fund Balance, July 1, 2017 205,268 (5,269) 0 199,999 0 0 199,999

Fund Balance, June 30, 2018 $ 226,471 $ 0 $ (26,471) $ 200,000 $ 0 $ 0 $ 200,000

Budgeted Amounts

166

Exhibit K-10


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Sullivan County School DepartmentCentral Cafeteria FundFor the Year Ended June 30, 2018


Actual Add: Expenditures Budget -(GAAP Encumbrances (Budgetary PositiveBasis) 6/30/2018 Basis) Original Final (Negative)

RevenuesCharges for Current Services $ 1,071,715 $ 0 $ 1,071,715 $ 1,151,500 $ 1,151,500 $ (79,785)Other Local Revenues 39,497 0 39,497 1,300 1,300 38,197State of Tennessee 40,519 0 40,519 50,000 50,000 (9,481)Federal Government 3,522,819 0 3,522,819 3,649,012 3,649,012 (126,193)Other Governments and Citizens Groups 0 0 0 2,000 2,000 (2,000)

Total Revenues $ 4,674,550 $ 0 $ 4,674,550 $ 4,853,812 $ 4,853,812 $ (179,262)

ExpendituresOperation of Non-Instructional Services

Food Service $ 4,256,684 $ 182 $ 4,256,866 $ 4,853,812 $ 4,853,812 $ 596,946Total Expenditures $ 4,256,684 $ 182 $ 4,256,866 $ 4,853,812 $ 4,853,812 $ 596,946

Excess (Deficiency) of RevenuesOver Expenditures $ 417,866 $ (182) $ 417,684 $ 0 $ 0 $ 417,684

Net Change in Fund Balance $ 417,866 $ (182) $ 417,684 $ 0 $ 0 $ 417,684Fund Balance, July 1, 2017 1,236,946 0 1,236,946 471,657 471,657 765,289

Fund Balance, June 30, 2018 $ 1,654,812 $ (182) $ 1,654,630 $ 471,657 $ 471,657 $ 1,182,973

Budgeted Amounts

167

Exhibit K-11


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Sullivan County School DepartmentOther Education Special Revenue FundFor the Year Ended June 30, 2018


Actual Less: Expenditures Budget -(GAAP Encumbrances (Budgetary PositiveBasis) 7/1/2017 Basis) Original Final (Negative)

RevenuesCharges for Current Services $ 13,252 $ 0 $ 13,252 $ 200,000 $ 200,000 $ (186,748)Other Local Revenues 10 0 10 0 0 10State of Tennessee 0 0 0 40,000 40,000 (40,000)

Total Revenues $ 13,262 $ 0 $ 13,262 $ 240,000 $ 240,000 $ (226,738)

ExpendituresOperation of Non-Instructional Services

Early Childhood Education $ 20,834 $ (9,575) $ 11,259 $ 235,896 $ 235,896 $ 224,637Total Expenditures $ 20,834 $ (9,575) $ 11,259 $ 235,896 $ 235,896 $ 224,637

Excess (Deficiency) of RevenuesOver Expenditures $ (7,572) $ 9,575 $ 2,003 $ 4,104 $ 4,104 $ (2,101)

Net Change in Fund Balance $ (7,572) $ 9,575 $ 2,003 $ 4,104 $ 4,104 $ (2,101)Fund Balance, July 1, 2017 51,483 (9,575) 41,908 43,634 43,634 (1,726)

Fund Balance, June 30, 2018 $ 43,911 $ 0 $ 43,911 $ 47,738 $ 47,738 $ (3,827)

Budgeted Amounts

168

Exhibit K-12


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Sullivan County School DepartmentSchool Improvement FundFor the Year Ended June 30, 2018



RevenuesLocal Taxes $ 66,936 $ 0 $ 0 $ 66,936 $ 1,654,988 $ 1,654,988 $ (1,588,052)Other Local Revenues 4,500 0 0 4,500 0 0 4,500Other Governments and Citizens Groups 1,621,478 0 0 1,621,478 0 0 1,621,478

Total Revenues $ 1,692,914 $ 0 $ 0 $ 1,692,914 $ 1,654,988 $ 1,654,988 $ 37,926

ExpendituresSupport Services

Board of Education $ 1,104 $ 0 $ 0 $ 1,104 $ 35,000 $ 35,000 $ 33,896Capital Outlay

Regular Capital Outlay 546,372 (190,572) 121,614 477,414 1,057,988 1,057,988 580,574Total Expenditures $ 547,476 $ (190,572) $ 121,614 $ 478,518 $ 1,092,988 $ 1,092,988 $ 614,470

Excess (Deficiency) of RevenuesOver Expenditures $ 1,145,438 $ 190,572 $ (121,614) $ 1,214,396 $ 562,000 $ 562,000 $ 652,396

Other Financing Sources (Uses)Transfers Out $ (562,000) $ 0 $ 0 $ (562,000) $ (562,000) $ (562,000) $ 0

Total Other Financing Sources $ (562,000) $ 0 $ 0 $ (562,000) $ (562,000) $ (562,000) $ 0

Net Change in Fund Balance $ 583,438 $ 190,572 $ (121,614) $ 652,396 $ 0 $ 0 $ 652,396Fund Balance, July 1, 2017 1,930,350 (190,572) 0 1,739,778 1,168,603 1,168,603 571,175


Budgeted Amounts

169

Exhibit K-13

Sullivan County, TennesseeStatement of Fiduciary Net PositionDiscretely Presented Sullivan County School DepartmentFiduciary FundJune 30, 2018

Private-Purpose

TrustFund

EndowmentFund

ASSETS

Equity in Pooled Cash and Investments $ 121,751

Total Assets $ 121,751

LIABILITIES

Accounts Payable $ 6,150Total Liabilities $ 6,150

NET POSITION

Unrestricted $ 115,601Total Net Position $ 115,601

170

Exhibit K-14

Sullivan County, TennesseeStatement of Changes in Fiduciary Net PositionDiscretely Presented Sullivan County School DepartmentFiduciary FundFor the Year Ended June 30, 2018

Private-Purpose

TrustFund

EndowmentFund

ADDITIONS

Investment Income $ 756Total Additions $ 756

DEDUCTIONS

Education: Scholarships: $ 6,150Total Deductions $ 6,150

Change in Net Position $ (5,394)Net Position, July 1, 2017 120,995

Net Position, June 30, 2018 $ 115,601

171

MISCELLANEOUS SCHEDULES

172

Exhibit L-1

Sullivan County, TennesseeSchedule of Changes in Long-term Notes, Other Loans, Capital Leases, and BondsFor the Year Ended June 30, 2018

Original Date Last Issued MaturedAmount Interest of Maturity Outstanding During During Outstanding

Description of Indebtedness of Issue Rate Issue Date 7-1-17 Period Period 6-30-18

NOTES PAYABLE Payable through General Debt Service Fund School Roof $ 1,500,000 2.65% 10-12-15 10-16-23 $ 1,080,565 $ 0 $ 143,980 $ 936,585

Total Notes Payable $ 1,080,565 $ 0 $ 143,980 $ 936,585

OTHER LOANS PAYABLE Payable through General Debt Service Fund Qualified School Construction Bonds, Series 2009 (1) 15,480,000 1.515 12-17-09 7-1-26 $ 8,879,493 $ 0 $ 965,928 $ 7,913,565 Qualified School Construction Bonds, Series 2010 (1) 5,073,000 0 10-7-10 8-1-27 3,226,475 0 316,547 2,909,928 Energy Efficient Schools Initiative 5,054,635 0 5-16-11 4-16-20 3,627,037 0 414,816 3,212,221

Total Other Loans Payable $ 15,733,005 $ 0 $ 1,697,291 $ 14,035,714

CAPITAL LEASES PAYABLE Payable through General Fund Clerk and Master Computers 20,679 6 1-15-14 11-15-17 $ 2,369 $ 0 $ 2,369 $ 0 Circuit Computer Upgrades 54,645 6 4-1-15 3-1-19 22,772 0 14,953 7,819 Patrol Cars 1,260,505 2.25 5-7-15 5-31-18 318,554 0 318,554 0 Jail Camera System 459,900 3.25 12-29-15 1-20-20 275,752 0 88,994 186,758 Circuit Computers 2017 58,677 6 4-17-17 3-17-21 54,092 0 14,317 39,775 Sheriff Vehicles 208,036 3.4 5-18-17 5-18-20 153,391 0 49,430 103,961 Clerk and Master Computers 2018 21,067 6.5 5-24-18 3-24-22 0 21,067 1,267 19,800 Sheriff Vehicles 2018 355,937 4.75 6-10-18 6-10-21 0 355,937 82,874 273,063

Total Payable through General Fund $ 826,930 $ 377,004 $ 572,758 $ 631,176

Payable through Highway/Public Works Fund Dump Trucks 295,080 2.55 9-20-13 9-20-17 $ 60,483 $ 0 $ 60,483 $ 0 Dump Trucks 2018 494,574 4.26 11-30-17 11-1-23 0 494,574 85,142 409,432 Total Payable through Highway/Public Works Fund $ 60,483 $ 494,574 $ 145,625 $ 409,432

Total Capital Leases Payable $ 887,413 $ 871,578 $ 718,383 $ 1,040,608

(Continued)

173

Exhibit L-1

Sullivan County, TennesseeSchedule of Changes in Long-term Notes, Other Loans, Capital Leases, and Bonds (Cont.)

Original Date Last Issued MaturedAmount Interest of Maturity Outstanding During During Outstanding

Description of Indebtedness of Issue Rate Issue Date 7-1-17 Period Period 6-30-18

BONDS PAYABLE Payable through General Debt Service Fund General Obligation Refunding Bonds, Series 2015A $ 24,870,000 2 to 5% 3-30-15 4-1-26 $ 22,340,000 $ 0 $ 2,290,000 $ 20,050,000 General Obligation Refunding Bonds, Series 2015C 6,265,000 2 to 3.35 3-30-15 4-1-28 6,045,000 0 515,000 5,530,000 General Obligation Bonds, Series 2017 135,740,000 3 to 5 3-30-17 5-1-47 135,740,000 0 0 135,740,000 Total Payable through General Debt Service Fund $ 164,125,000 $ 0 $ 2,805,000 $ 161,320,000

Payable through Education Debt Service Fund General Obligation Refunding Bonds, Series 2015B 6,965,000 2 to 4 3-30-15 5-1-19 $ 3,605,000 $ 0 $ 1,765,000 $ 1,840,000 Total Payable through Education Debt Service Fund $ 3,605,000 $ 0 $ 1,765,000 $ 1,840,000

Total Bonds Payable $ 167,730,000 $ 0 $ 4,570,000 $ 163,160,000

(1) Interest rate is offset by a federal rate subsidy.

174

Exhibit L-2

Sullivan County, TennesseeSchedule of Long-term Debt Requirements by Year

YearEndingJune 30 Principal Interest Total

2019 $ 147,841 $ 22,913 $ 170,7542020 151,805 18,944 170,7492021 155,876 14,869 170,7452022 160,056 10,684 170,7402023 164,348 6,387 170,7352024 156,659 2,076 158,735Total $ 936,585 $ 75,873 $ 1,012,458

YearEndingJune 30 Principal Interest Other Fees Total

2019 $ 1,700,411 $ 503,117 $ 19,539 $ 2,223,0672020 1,703,555 499,973 19,538 2,223,0662021 1,706,723 496,805 19,539 2,223,0672022 1,709,915 493,613 19,538 2,223,0662023 1,713,131 490,397 19,539 2,223,0672024 1,716,371 487,157 19,538 2,223,0662025 1,719,635 483,893 19,539 2,223,0672026 1,597,364 480,931 19,538 2,097,8332027 438,768 265,483 7,928 712,1792028 29,841 24,221 1,014 55,076

Total $ 14,035,714 $ 4,225,590 $ 165,250 $ 18,426,554


2019 $ 335,783 $ 33,201 $ 368,9842020 335,838 25,150 360,9882021 188,337 11,475 199,8122022 86,844 7,605 94,4492023 86,004 3,996 90,0002024 7,802 332 8,134

Total $ 1,040,608 $ 81,759 $ 1,122,367

Capital Leases

Notes

Other Loans

175

Exhibit L-2

Sullivan County, TennesseeSchedule of Long-term Debt Requirements by Year (Cont.)


2019 $ 7,245,000 $ 6,616,644 $ 13,861,6442020 5,700,000 6,287,794 11,987,7942021 6,020,000 6,018,244 12,038,2442022 6,390,000 5,437,119 11,827,1192023 6,730,000 5,426,354 12,156,3542024 7,110,000 5,102,934 12,212,9342025 5,390,000 4,759,809 10,149,8092026 5,080,000 4,502,349 9,582,3492027 4,230,000 4,280,849 8,510,8492028 4,340,000 4,152,748 8,492,7482029 3,885,000 3,983,081 7,868,0812030 4,040,000 3,827,681 7,867,6812031 4,165,000 3,706,481 7,871,4812032 4,330,000 3,539,881 7,869,8812033 4,505,000 3,366,681 7,871,6812034 4,685,000 3,186,481 7,871,4812035 4,835,000 3,034,219 7,869,2192036 4,995,000 2,877,081 7,872,0812037 5,160,000 2,708,500 7,868,5002038 5,370,000 2,502,100 7,872,1002039 5,585,000 2,287,300 7,872,3002040 5,805,000 2,063,900 7,868,9002041 6,040,000 1,831,700 7,871,7002042 6,280,000 1,590,100 7,870,1002043 6,530,000 1,338,900 7,868,9002044 6,770,000 1,102,188 7,872,1882045 7,040,000 831,387 7,871,3872046 7,320,000 549,788 7,869,7882047 7,585,000 284,437 7,869,437

Total $ 163,160,000 $ 97,196,730 $ 260,356,730

Bonds

176

Exhibit L-3

Sullivan County, TennesseeSchedule of TransfersPrimary Government and Discretely Presented Sullivan County School DepartmentFor the Year Ended June 30, 2018

From Fund To Fund Purpose

PRIMARY GOVERNMENT

General General Debt Service Tax credit rebate $ 245,939" Self-Insurance Operations 500,000General Capital Projects General Debt Service Debt retirement 1,856,857

Total Transfers Primary Government $ 2,602,796

DISCRETELY PRESENTED SULLIVAN COUNTY SCHOOL DEPARTMENT

School Federal Projects General Purpose School Indirect cost $ 45,742School Improvement " Debt retirement 562,000

Total Transfers Discretely Presented Sullivan County School Department $ 607,742

Amount

177

Exhibit L-4

Sullivan County, TennesseeSchedule of Salaries and Official Bonds of Principal OfficialsPrimary Government and Discretely Presented Sullivan County School DepartmentFor the Year Ended June 30, 2018

SalaryPaid

DuringOfficial Authorization for Salary Period Bond Surety

County Mayor Section 8-24-102, TCA $ 116,577 (1) $ 100,000 Cincinnati Insurance CompanyHighway Commissioner Section 8-24-102, TCA 111,026 100,000 "Director of Schools State Board of Education and

County Board of Education 127,296 (2) 100,000 "Trustee Section 8-24-102, TCA 94,719 5,200,598 "Assessor of Property Section 8-24-102, TCA 86,736 (3) 50,000 "Director of Accounts and Budgets County Commission 94,719 100,000 "Purchasing Agent Section 261, Private Acts of 1947,

as amended 75,464 100,000 "County Clerk Section 8-24-102, TCA 94,719 100,000 "Circuit, General Sessions, and Law Courts Clerk Section 8-24-102, TCA 94,719 100,000 "Clerk and Master Section 8-24-102, TCA, and

Chancery Court Judge 94,719 (4) 150,000 Western Surety CompanyRegister of Deeds Section 8-24-102, TCA 94,719 100,000 Cincinnati Insurance CompanySheriff Section 8-24-102, TCA, and 111,626 (5) 100,000 "

County Commission

Employee Blanket Bonds - All County and School Department Employees:Public Employee Dishonesty

(self-insured to $25,000 through county Self-Insurance Fund) 250,000 Princeton Excess and Surplus Lines Insurance Company

(1) Does not include vehicle allowance of $7,800.(2) Does not include vehicle allowance of $7,800 and career ladder supplement of $1,000.(3) Position was vacant from July 1, 2017, until the County Commission appointed Russell Baker effective 7-31-17.(4) Does not include special commissioner fees of $2,400.(5) Includes a $6,835 supplement as workhouse superintendent and a $600 law enforcement training supplement.

178

Exhibit L-5

Sullivan County, TennesseeSchedule of Detailed Revenues -

All Governmental Fund TypesFor the Year Ended June 30, 2018

Constitu -Solid tional Highway /

Waste / Ambulance Drug Officers - PublicGeneral Sanitation Service Control Fees Works

Local TaxesCounty Property Taxes

Current Property Tax $ 29,525,889 $ 710,069 $ 0 $ 0 $ 0 $ 2,802,931Trustee's Collections - Prior Year 594,062 15,371 0 0 0 60,482Circuit Clerk/Clerk and Master Collections - Prior Years 285,202 8,279 0 0 0 32,578Interest and Penalty 235,300 6,514 0 0 0 25,655Pickup Taxes 669,466 16,101 0 0 0 63,558Payments in-Lieu-of Taxes - T.V.A. 5,905 0 0 0 0 0Payments in-Lieu-of Taxes - Local Utilities 758,641 0 0 0 0 0

County Local Option TaxesLocal Option Sales Tax 929,230 0 0 0 0 2,500,000Litigation Tax - General 312,560 0 0 0 0 0Litigation Tax - Office of Public Defender 159,644 0 0 0 0 0Litigation Tax - Jail, Workhouse, or Courthouse 0 0 0 0 0 0Litigation Tax - Courthouse Security 443,280 0 0 0 0 0Business Tax 2,511,658 0 0 0 0 0Mixed Drink Tax 12,101 0 0 0 0 0Mineral Severance Tax 0 0 0 0 0 151,540

Statutory Local TaxesBank Excise Tax 35,560 855 0 0 0 3,376Wholesale Beer Tax 0 0 0 0 0 365,409

Total Local Taxes $ 36,478,498 $ 757,189 $ 0 $ 0 $ 0 $ 6,005,529

Licenses and PermitsLicenses

Cable TV Franchise $ 360,577 $ 0 $ 0 $ 0 $ 0 $ 250,000

(Continued)


179

Exhibit L-5


All Governmental Fund Types (Cont.)



Licenses and Permits (Cont.)Permits

Beer Permits $ 475 $ 0 $ 0 $ 0 $ 0 $ 0Building Permits 103,390 0 0 0 0 0

Total Licenses and Permits $ 464,442 $ 0 $ 0 $ 0 $ 0 $ 250,000

Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 15,879 $ 0 $ 0 $ 0 $ 0 $ 0Officers Costs 70,025 0 0 0 0 0Jail Fees 64,405 0 0 0 0 0Data Entry Fee - Circuit Court 65,259 0 0 0 0 0

Criminal CourtDUI Treatment Fines 27,602 0 0 0 0 0

General Sessions CourtFines 73,409 0 0 0 0 0Fines for Littering 105 0 0 0 0 0Officers Costs 155,087 0 0 0 0 0Game and Fish Fines 3,639 0 0 0 0 0Drug Control Fines 0 0 0 7,080 0 0Drug Court Fees 0 0 0 25,861 0 0Victims Assistance Assessments 78,322 0 0 0 0 0

Juvenile CourtFines 912 0 0 0 0 0Jail Fees 51,798 0 0 0 0 0

Chancery CourtOfficers Costs 4,672 0 0 0 0 0Data Entry Fee - Chancery Court 19,315 0 0 0 0 0

(Continued)


180

Exhibit L-5





Fines, Forfeitures, and Penalties (Cont.)Judicial District Drug Program

Drug Task Force Forfeitures and Seizures $ 0 $ 0 $ 0 $ 15,530 $ 0 $ 0Other Fines, Forfeitures, and Penalties

Proceeds from Confiscated Property 0 0 0 23,971 0 0Other Fines, Forfeitures, and Penalties 15,429 0 0 0 0 0

Total Fines, Forfeitures, and Penalties $ 645,858 $ 0 $ 0 $ 72,442 $ 0 $ 0

Charges for Current ServicesGeneral Service Charges

Tipping Fees $ 0 $ 356,697 $ 0 $ 0 $ 0 $ 0Patient Charges 324,608 0 6,675,830 0 0 0Zoning Studies 3,435 0 0 0 0 0Work Release Charges for Board 7,945 0 0 0 0 0Health Department Collections 603,700 0 0 0 0 0Other General Service Charges 29,497 0 0 0 0 0Service Charges 97,286 0 0 0 0 0Backflow Charges 420 0 0 0 0 0

FeesRecreation Fees 335,054 0 0 0 0 0Copy Fees 12,719 0 0 0 0 0Library Fees 17,546 0 0 0 0 0Archives and Records Management Fee 16,137 0 0 0 0 0Greenbelt Late Application Fee 250 0 0 0 0 0Telephone Commissions 142,976 0 0 0 0 0Constitutional Officers' Fees and Commissions 0 0 0 0 8,678 0Special Commissioner Fees/Special Master Fees 0 0 0 0 2,400 0

(Continued)


181

Exhibit L-5





Charges for Current Services (Cont.)Fees (Cont.)

Data Processing Fee - Register $ 46,258 $ 0 $ 0 $ 0 $ 0 $ 0Data Processing Fee - Sheriff 2,696 0 0 0 0 0Sexual Offender Registration Fee - Sheriff 12,000 0 0 0 0 0Data Processing Fee - County Clerk 16,266 0 0 0 0 0Vehicle Insurance Coverage and Reinstatement Fees 685 0 0 0 0 0

Education ChargesOther Charges for Services 492 0 0 0 0 0

Total Charges for Current Services $ 1,669,970 $ 356,697 $ 6,675,830 $ 0 $ 11,078 $ 0

Other Local RevenuesRecurring Items

Investment Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 41,910Lease/Rentals 55,180 0 0 0 0 0Sale of Materials and Supplies 0 0 0 0 0 6,513Commissary Sales 37,608 0 0 0 0 0Sale of Maps 40 0 0 0 0 0Sale of Recycled Materials 1,272 343,630 0 0 0 0Miscellaneous Refunds 37,497 289 2,381 275 0 722

Nonrecurring ItemsRevenue from Joint Ventures 0 0 0 0 0 0Sale of Equipment 44,194 798 0 0 0 0Sale of Property 0 0 0 0 0 0Damages Recovered from Individuals 2,216 0 0 0 0 1,498Contributions and Gifts 10,279 0 0 0 0 0

(Continued)


182

Exhibit L-5





Other Local Revenues (Cont.)Other Local Revenues

Other Local Revenues $ 1,250 $ 0 $ 0 $ 0 $ 0 $ 0Total Other Local Revenues $ 189,536 $ 344,717 $ 2,381 $ 275 $ 0 $ 50,643

Fees Received From County OfficialsFees In-Lieu-of Salary

County Clerk $ 1,649,044 $ 0 $ 0 $ 0 $ 0 $ 0Circuit Court Clerk 492,624 0 0 0 0 0General Sessions Court Clerk 1,005,249 0 0 0 0 0Clerk and Master 567,605 0 0 0 0 0Register 692,039 0 0 0 0 0Sheriff 7,567 0 0 0 0 0Trustee 2,807,053 0 0 0 0 0

Total Fees Received From County Officials $ 7,221,181 $ 0 $ 0 $ 0 $ 0 $ 0

State of TennesseeGeneral Government Grants

Juvenile Services Program $ 73,980 $ 0 $ 0 $ 0 $ 0 $ 0Public Safety Grants

Law Enforcement Training Programs 70,200 0 0 0 0 0Health and Welfare Grants

Health Department Programs 694,761 0 0 0 0 0Public Works Grants

State Aid Program 0 0 0 0 0 742,001Litter Program 21,764 28,338 0 0 0 0Other Public Works Grants 578,612 0 0 0 0 0

(Continued)


183

Exhibit L-5





State of Tennessee (Cont.)Other State Revenues

Income Tax $ 462,480 $ 0 $ 0 $ 0 $ 0 $ 0Beer Tax 17,839 0 0 0 0 0Vehicle Certificate of Title Fees 26,529 0 0 0 0 0Alcoholic Beverage Tax 233,655 0 0 0 0 0State Revenue Sharing - Telecommunications 309,208 0 0 0 0 0Prisoner Transportation 29,242 0 0 0 0 0Contracted Prisoner Boarding 1,446,666 0 0 0 0 0Gasoline and Motor Fuel Tax 0 0 0 0 0 3,360,258Petroleum Special Tax 0 0 0 0 0 113,155Registrar's Salary Supplement 15,164 0 0 0 0 0Other State Grants 640,340 0 0 0 0 0Other State Revenues 585,378 106,994 351,484 0 0 0

Total State of Tennessee $ 5,205,818 $ 135,332 $ 351,484 $ 0 $ 0 $ 4,215,414

Federal GovernmentFederal Through State

Civil Defense Reimbursement $ 62,500 $ 0 $ 0 $ 0 $ 0 $ 0Homeland Security Grants 124,782 0 0 0 0 0Other Federal through State 2,531,700 0 0 0 0 0

Direct Federal RevenueForest Service 92,608 0 0 0 0 9,424Asset Forfeiture Funds 0 0 0 4,575 0 0Tax Credit Bond Rebate 229,338 0 0 0 0 0Other Direct Federal Revenue 235,845 0 0 0 0 0

Total Federal Government $ 3,276,773 $ 0 $ 0 $ 4,575 $ 0 $ 9,424

(Continued)


184

Exhibit L-5





Other Governments and Citizens GroupsOther Governments

Paving and Maintenance $ 0 $ 0 $ 0 $ 0 $ 0 $ 26,437Contributions 18,000 0 0 0 0 0Contracted Services 408,009 95,499 0 0 0 65,561

Citizens GroupsDonations 1,000 0 31,223 0 0 0

Total Other Governments and Citizens Groups $ 427,009 $ 95,499 $ 31,223 $ 0 $ 0 $ 91,998

Total $ 55,579,085 $ 1,689,434 $ 7,060,918 $ 77,292 $ 11,078 $ 10,623,008

(Continued)


185

Exhibit L-5



General Education GeneralDebt Debt Capital

Service Service Projects Total


Current Property Tax $ 8,225,013 $ 0 $ 3,478,879 $ 44,742,781Trustee's Collections - Prior Year 106,138 0 0 776,053Circuit Clerk/Clerk and Master Collections - Prior Years 47,684 0 0 373,743Interest and Penalty 41,387 0 2,547 311,403Pickup Taxes 187,542 0 78,812 1,015,479Payments in-Lieu-of Taxes - T.V.A. 0 0 0 5,905Payments in-Lieu-of Taxes - Local Utilities 0 0 0 758,641

County Local Option TaxesLocal Option Sales Tax 0 0 0 3,429,230Litigation Tax - General 0 0 0 312,560Litigation Tax - Office of Public Defender 0 0 0 159,644Litigation Tax - Jail, Workhouse, or Courthouse 146,812 0 0 146,812Litigation Tax - Courthouse Security 0 0 0 443,280Business Tax 0 0 0 2,511,658Mixed Drink Tax 0 0 0 12,101Mineral Severance Tax 0 0 0 151,540

Statutory Local TaxesBank Excise Tax 9,903 0 0 49,694Wholesale Beer Tax 0 0 0 365,409

Total Local Taxes $ 8,764,479 $ 0 $ 3,560,238 $ 55,565,933


Cable TV Franchise $ 0 $ 0 $ 0 $ 610,577

(Continued)

Capital Projects FundDebt Service Funds

186

Exhibit L-5





Licenses and Permits (Cont.)Permits

Beer Permits $ 0 $ 0 $ 0 $ 475Building Permits 0 0 0 103,390

Total Licenses and Permits $ 0 $ 0 $ 0 $ 714,442

Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 0 $ 0 $ 0 $ 15,879Officers Costs 0 0 0 70,025Jail Fees 0 0 0 64,405Data Entry Fee - Circuit Court 0 0 0 65,259

Criminal CourtDUI Treatment Fines 0 0 0 27,602

General Sessions CourtFines 0 0 0 73,409Fines for Littering 0 0 0 105Officers Costs 0 0 0 155,087Game and Fish Fines 0 0 0 3,639Drug Control Fines 0 0 0 7,080Drug Court Fees 0 0 0 25,861Victims Assistance Assessments 0 0 0 78,322

Juvenile CourtFines 0 0 0 912Jail Fees 0 0 0 51,798

Chancery CourtOfficers Costs 0 0 0 4,672Data Entry Fee - Chancery Court 0 0 0 19,315

(Continued)

Debt Service FundsCapital

Projects Fund

187

Exhibit L-5





Fines, Forfeitures, and Penalties (Cont.)Judicial District Drug Program

Drug Task Force Forfeitures and Seizures $ 0 $ 0 $ 0 $ 15,530Other Fines, Forfeitures, and Penalties

Proceeds from Confiscated Property 0 0 0 23,971Other Fines, Forfeitures, and Penalties 0 0 0 15,429

Total Fines, Forfeitures, and Penalties $ 0 $ 0 $ 0 $ 718,300

Charges for Current ServicesGeneral Service Charges

Tipping Fees $ 0 $ 0 $ 0 $ 356,697Patient Charges 0 0 0 7,000,438Zoning Studies 0 0 0 3,435Work Release Charges for Board 0 0 0 7,945Health Department Collections 0 0 0 603,700Other General Service Charges 0 0 0 29,497Service Charges 0 0 0 97,286Backflow Charges 0 0 0 420

FeesRecreation Fees 0 0 0 335,054Copy Fees 0 0 0 12,719Library Fees 0 0 0 17,546Archives and Records Management Fee 0 0 0 16,137Greenbelt Late Application Fee 0 0 0 250Telephone Commissions 0 0 0 142,976Constitutional Officers' Fees and Commissions 0 0 0 8,678Special Commissioner Fees/Special Master Fees 0 0 0 2,400

(Continued)


Projects Fund

188

Exhibit L-5





Charges for Current Services (Cont.)Fees (Cont.)

Data Processing Fee - Register $ 0 $ 0 $ 0 $ 46,258Data Processing Fee - Sheriff 0 0 0 2,696Sexual Offender Registration Fee - Sheriff 0 0 0 12,000Data Processing Fee - County Clerk 0 0 0 16,266Vehicle Insurance Coverage and Reinstatement Fees 0 0 0 685

Education ChargesOther Charges for Services 0 0 0 492

Total Charges for Current Services $ 0 $ 0 $ 0 $ 8,713,575


Investment Income $ 1,056,868 $ 0 $ 0 $ 1,098,778Lease/Rentals 0 0 0 55,180Sale of Materials and Supplies 0 0 0 6,513Commissary Sales 0 0 0 37,608Sale of Maps 0 0 0 40Sale of Recycled Materials 0 0 0 344,902Miscellaneous Refunds 0 0 0 41,164

Nonrecurring ItemsRevenue from Joint Ventures 323,583 0 0 323,583Sale of Equipment 0 0 0 44,992Sale of Property 45,689 0 0 45,689Damages Recovered from Individuals 0 0 0 3,714Contributions and Gifts 0 0 0 10,279

(Continued)


Projects Fund

189

Exhibit L-5





Other Local Revenues (Cont.)Other Local Revenues

Other Local Revenues $ 0 $ 0 $ 0 $ 1,250Total Other Local Revenues $ 1,426,140 $ 0 $ 0 $ 2,013,692

Fees Received From County OfficialsFees In-Lieu-of Salary

County Clerk $ 0 $ 0 $ 0 $ 1,649,044Circuit Court Clerk 0 0 0 492,624General Sessions Court Clerk 0 0 0 1,005,249Clerk and Master 0 0 0 567,605Register 0 0 0 692,039Sheriff 0 0 0 7,567Trustee 0 0 0 2,807,053

Total Fees Received From County Officials $ 0 $ 0 $ 0 $ 7,221,181


Juvenile Services Program $ 0 $ 0 $ 0 $ 73,980Public Safety Grants

Law Enforcement Training Programs 0 0 0 70,200Health and Welfare Grants

Health Department Programs 0 0 0 694,761Public Works Grants

State Aid Program 0 0 0 742,001Litter Program 0 0 0 50,102Other Public Works Grants 0 0 0 578,612

(Continued)


Projects Fund

190

Exhibit L-5





State of Tennessee (Cont.)Other State Revenues

Income Tax $ 0 $ 0 $ 0 $ 462,480Beer Tax 0 0 0 17,839Vehicle Certificate of Title Fees 0 0 0 26,529Alcoholic Beverage Tax 0 0 0 233,655State Revenue Sharing - Telecommunications 0 0 0 309,208Prisoner Transportation 0 0 0 29,242Contracted Prisoner Boarding 0 0 0 1,446,666Gasoline and Motor Fuel Tax 0 0 0 3,360,258Petroleum Special Tax 0 0 0 113,155Registrar's Salary Supplement 0 0 0 15,164Other State Grants 0 0 0 640,340Other State Revenues 0 0 0 1,043,856

Total State of Tennessee $ 0 $ 0 $ 0 $ 9,908,048


Civil Defense Reimbursement $ 0 $ 0 $ 0 $ 62,500Homeland Security Grants 0 0 0 124,782Other Federal through State 0 0 0 2,531,700

Direct Federal RevenueForest Service 0 0 0 102,032Asset Forfeiture Funds 0 0 0 4,575Tax Credit Bond Rebate 0 0 0 229,338Other Direct Federal Revenue 0 0 0 235,845

Total Federal Government $ 0 $ 0 $ 0 $ 3,290,772

(Continued)

Capital Projects FundDebt Service Funds

191

Exhibit L-5






Paving and Maintenance $ 0 $ 0 $ 0 $ 26,437Contributions 611,350 1,936,566 0 2,565,916Contracted Services 0 0 0 569,069

Citizens GroupsDonations 0 0 0 32,223

Total Other Governments and Citizens Groups $ 611,350 $ 1,936,566 $ 0 $ 3,193,645

Total $ 10,801,969 $ 1,936,566 $ 3,560,238 $ 91,339,588


Projects Fund

192

Exhibit L-6


All Governmental Fund TypesDiscretely Presented Sullivan County School DepartmentFor the Year Ended June 30, 2018

OtherGeneral School EducationPurpose Federal Central Special SchoolSchool Projects Cafeteria Revenue Improvement


Current Property Tax $ 23,505,628 $ 0 $ 0 $ 0 $ 0Trustee's Collections - Prior Year 526,085 0 0 0 33,076Circuit Clerk/Clerk and Master Collections - Prior Years 283,004 0 0 0 18,316Interest and Penalty 220,748 0 0 0 13,562Pickup Taxes 533,025 0 0 0 0

County Local Option TaxesLocal Option Sales Tax 13,032,263 0 0 0 0

Statutory Local TaxesBank Excise Tax 29,337 0 0 0 1,982

Total Local Taxes $ 38,130,090 $ 0 $ 0 $ 0 $ 66,936


Marriage Licenses $ 5,224 $ 0 $ 0 $ 0 $ 0Total Licenses and Permits $ 5,224 $ 0 $ 0 $ 0 $ 0

Charges for Current ServicesEducation Charges

Tuition - Other $ 0 $ 0 $ 0 $ 13,252 $ 0Lunch Payments - Children 0 0 571,805 0 0Income from Breakfast 0 0 77,481 0 0A la Carte Sales 0 0 413,793 0 0Receipts from Individual Schools 14,718 0 1,781 0 0TBI Criminal Background Fee 1,401 0 0 0 0

(Continued)


193

Exhibit L-6


All Governmental Fund TypesDiscretely Presented Sullivan County School Department (Cont.)


Charges for Current Services (Cont.)Education Charges (Cont.)

Other Charges for Services $ 1,100,000 $ 0 $ 6,855 $ 0 $ 0Total Charges for Current Services $ 1,116,119 $ 0 $ 1,071,715 $ 13,252 $ 0


Investment Income $ 0 $ 0 $ 0 $ 10 $ 0Sale of Materials and Supplies 12,639 0 0 0 0Sale of Recycled Materials 3,436 0 0 0 0Commodity Rebates 0 0 37,249 0 0Miscellaneous Refunds 2,852 0 0 0 0

Nonrecurring ItemsSale of Equipment 8,232 0 2,248 0 0Damages Recovered from Individuals 2,774 0 0 0 0Performance Bond Forfeitures 0 0 0 0 4,500

Other Local RevenuesOther Local Revenues 454 0 0 0 0

Total Other Local Revenues $ 30,387 $ 0 $ 39,497 $ 10 $ 4,500


On-behalf Contributions for OPEB $ 547,409 $ 0 $ 0 $ 0 $ 0State Education Funds

Basic Education Program 39,388,000 0 0 0 0Early Childhood Education 580,624 0 0 0 0

(Continued)


194

Exhibit L-6




State of Tennessee (Cont.)State Education Funds (Cont.)

School Food Service $ 0 $ 0 $ 40,519 $ 0 $ 0Other State Education Funds 520,716 0 0 0 0Career Ladder Program 213,042 0 0 0 0Vocational Equipment 193,691 0 0 0 0

Other State RevenuesState Revenue Sharing - T.V.A. 1,788,291 0 0 0 0

Total State of Tennessee $ 43,231,773 $ 0 $ 40,519 $ 0 $ 0


USDA School Lunch Program $ 0 $ 0 $ 2,279,673 $ 0 $ 0USDA - Commodities 0 0 348,012 0 0Breakfast 0 0 784,424 0 0USDA - Other 0 0 8,865 0 0Vocational Education - Basic Grants to States 0 157,718 0 0 0Other Vocational 0 50,000 0 0 0Title I Grants to Local Education Agencies 0 2,374,321 0 0 0Special Education - Grants to States 45,218 2,445,458 0 0 0Special Education Preschool Grants 0 91,591 0 0 0Education for Homeless Children and Youth 0 56,028 0 0 0Eisenhower Professional Development State Grants 0 328,831 0 0 0Other Federal through State 0 58,805 0 0 0

Direct Federal RevenueROTC Reimbursement 167,500 0 0 0 0

(Continued)


195

Exhibit L-6




Federal Government (Cont.)Direct Federal Revenue (Cont.)

Forest Service $ 28,580 $ 0 $ 0 $ 0 $ 0Other Direct Federal Revenue 0 0 101,845 0 0

Total Federal Government $ 241,298 $ 5,562,752 $ 3,522,819 $ 0 $ 0


Contributions $ 0 $ 0 $ 0 $ 0 $ 1,621,478Citizens Groups

Donations 4,667 0 0 0 0Other

Other 30,462 0 0 0 0Total Other Governments and Citizens Groups $ 35,129 $ 0 $ 0 $ 0 $ 1,621,478

Total $ 82,790,020 $ 5,562,752 $ 4,674,550 $ 13,262 $ 1,692,914

(Continued)


196

Exhibit L-6



EducationCapitalProjects Total


Current Property Tax $ 0 $ 23,505,628Trustee's Collections - Prior Year 0 559,161Circuit Clerk/Clerk and Master Collections - Prior Years 0 301,320Interest and Penalty 0 234,310Pickup Taxes 0 533,025

County Local Option TaxesLocal Option Sales Tax 0 13,032,263

Statutory Local TaxesBank Excise Tax 0 31,319

Total Local Taxes $ 0 $ 38,197,026


Marriage Licenses $ 0 $ 5,224Total Licenses and Permits $ 0 $ 5,224

Charges for Current ServicesEducation Charges

Tuition - Other $ 0 $ 13,252Lunch Payments - Children 0 571,805Income from Breakfast 0 77,481A la Carte Sales 0 413,793Receipts from Individual Schools 0 16,499TBI Criminal Background Fee 0 1,401

(Continued)

Capital Projects Fund

197

Exhibit L-6




Charges for Current Services (Cont.)Education Charges (Cont.)

Other Charges for Services $ 0 $ 1,106,855Total Charges for Current Services $ 0 $ 2,201,086


Investment Income $ 0 $ 10Sale of Materials and Supplies 0 12,639Sale of Recycled Materials 0 3,436Commodity Rebates 0 37,249Miscellaneous Refunds 2 2,854

Nonrecurring ItemsSale of Equipment 0 10,480Damages Recovered from Individuals 0 2,774Performance Bond Forfeitures 0 4,500

Other Local RevenuesOther Local Revenues 0 454

Total Other Local Revenues $ 2 $ 74,396


On-behalf Contributions for OPEB $ 0 $ 547,409State Education Funds

Basic Education Program 0 39,388,000Early Childhood Education 0 580,624

(Continued)


198

Exhibit L-6




State of Tennessee (Cont.)State Education Funds (Cont.)

School Food Service $ 0 $ 40,519Other State Education Funds 0 520,716Career Ladder Program 0 213,042Vocational Equipment 0 193,691

Other State RevenuesState Revenue Sharing - T.V.A. 0 1,788,291

Total State of Tennessee $ 0 $ 43,272,292


USDA School Lunch Program $ 0 $ 2,279,673USDA - Commodities 0 348,012Breakfast 0 784,424USDA - Other 0 8,865Vocational Education - Basic Grants to States 0 157,718Other Vocational 0 50,000Title I Grants to Local Education Agencies 0 2,374,321Special Education - Grants to States 0 2,490,676Special Education Preschool Grants 0 91,591Education for Homeless Children and Youth 0 56,028Eisenhower Professional Development State Grants 0 328,831Other Federal through State 0 58,805

Direct Federal RevenueROTC Reimbursement 0 167,500

(Continued)


199

Exhibit L-6




Federal Government (Cont.)Direct Federal Revenue (Cont.)

Forest Service $ 0 $ 28,580Other Direct Federal Revenue 0 101,845

Total Federal Government $ 0 $ 9,326,869


Contributions $ 0 $ 1,621,478Citizens Groups

Donations 0 4,667Other

Other 0 30,462Total Other Governments and Citizens Groups $ 0 $ 1,656,607

Total $ 2 $ 94,733,500


200

Exhibit L-7

Sullivan County, TennesseeSchedule of Detailed Expenditures -

All Governmental Fund TypesFor the Year Ended June 30, 2018

General FundGeneral Government

County CommissionBoard and Committee Members Fees $ 195,667Social Security 12,131Employer Medicare 2,837Audit Services 58,025Contracts with Government Agencies 23,840Dues and Memberships 675Legal Services 66,383Legal Notices, Recording, and Court Costs 4,867Maintenance and Repair Services - Office Equipment 3,127Postal Charges 499Travel 5,611Tuition 765Data Processing Supplies 42Food Preparation Supplies 200Office Supplies 256Other Supplies and Materials 224

Total County Commission $ 375,149

County Mayor/ExecutiveCounty Official/Administrative Officer $ 116,577Secretary(ies) 43,219Social Security 10,110Pensions 24,857Life Insurance 100Medical Insurance 10,050Dental Insurance 897Employer Medicare 2,364Communication 3,050Dues and Memberships 3,371Maintenance and Repair Services - Office Equipment 629Postal Charges 96Travel 9,507Data Processing Supplies 105Office Supplies 99Periodicals 96

Total County Mayor/Executive 225,127

County AttorneyCounty Official/Administrative Officer $ 122,406Secretary(ies) 29,715Social Security 8,857Pensions 23,569Life Insurance 96Medical Insurance 16,643Dental Insurance 784Employer Medicare 2,071Advertising 275

(Continued)

201

Exhibit L-7



General Fund (Cont.)General Government (Cont.)

County Attorney (Cont.)Communication $ 2,711Data Processing Services 2,260Dues and Memberships 695Legal Notices, Recording, and Court Costs 17Licenses 409Maintenance and Repair Services - Office Equipment 373Postal Charges 187Printing, Stationery, and Forms 79Travel 1,874Data Processing Supplies 1,570Office Supplies 549Periodicals 4,238Data Processing Equipment 2,000

Total County Attorney $ 221,378

Election CommissionCounty Official/Administrative Officer $ 94,719Clerical Personnel 134,106Temporary Personnel 49,830Election Commission 18,000Election Workers 28,097Social Security 18,015Pensions 35,582Life Insurance 250Medical Insurance 46,293Dental Insurance 2,017Employer Medicare 4,213Communication 13,463Data Processing Services 29,493Dues and Memberships 25Legal Notices, Recording, and Court Costs 5,416Maintenance and Repair Services - Equipment 1,986Maintenance and Repair Services - Office Equipment 605Postal Charges 6,784Printing, Stationery, and Forms 1,020Travel 4,006Food Supplies 1,170Office Supplies 6,380Other Charges 26Furniture and Fixtures 2,646

Total Election Commission 504,142

Register of DeedsCounty Official/Administrative Officer $ 94,719Clerical Personnel 162,788Social Security 15,369Pensions 39,558

(Continued)

202

Exhibit L-7




Register of Deeds (Cont.)Life Insurance $ 250Medical Insurance 44,288Dental Insurance 1,568Employer Medicare 3,594Communication 5,989Data Processing Services 34,776Dues and Memberships 983Maintenance and Repair Services - Office Equipment 2,587Postal Charges 1,182Printing, Stationery, and Forms 317Travel 1,180Tuition 175Maintenance and Repair Services - Records 7,000Data Processing Supplies 2,421Food Supplies 200Office Supplies 2,410

Total Register of Deeds $ 421,354

PlanningSupervisor/Director $ 59,237Clerical Personnel 28,640Other Salaries and Wages 152,139Board and Committee Members Fees 1,925Social Security 14,246Pensions 37,083Life Insurance 266Medical Insurance 43,255Dental Insurance 1,847Employer Medicare 3,332Communication 7,621Contracts with Other Public Agencies 7,000Data Processing Services 8,276Dues and Memberships 1,769Legal Notices, Recording, and Court Costs 2,114Licenses 17Maintenance and Repair Services - Office Equipment 4,255Maintenance and Repair Services - Vehicles 60Postal Charges 705Printing, Stationery, and Forms 599Travel 2,557Tuition 1,207Permits 3,460Other Contracted Services 3,689Data Processing Supplies 2,840Food Supplies 169Gasoline 5,728Office Supplies 1,232

(Continued)

203

Exhibit L-7




Planning (Cont.)Periodicals $ 282Tires and Tubes 132Uniforms 373Vehicle Parts 1,332Other Supplies and Materials 28Motor Vehicles 21,806Other Equipment 24,688

Total Planning $ 443,909

Geographical Information SystemsContracts with Government Agencies $ 15,256Data Processing Services 284Other Contracted Services 30,540Data Processing Supplies 191

Total Geographical Information Systems 46,271

County BuildingsSupervisor/Director $ 53,195Mechanic(s) 77,443Clerical Personnel 38,646Custodial Personnel 94,642Maintenance Personnel 224,815Overtime Pay 840Social Security 29,057Pensions 66,107Life Insurance 582Medical Insurance 119,592Dental Insurance 4,799Unemployment Compensation 2,181Employer Medicare 6,796Architects 11,880Communication 10,446Contracts with Government Agencies 873Data Processing Services 1,885Engineering Services 5,385Evaluation and Testing 1,143Legal Services 150Licenses 100Maintenance Agreements 1,377Maintenance and Repair Services - Buildings 24,152Maintenance and Repair Services - Equipment 61,079Maintenance and Repair Services - Vehicles 163Pest Control 3,065Rentals 362Travel 89Tuition 210Disposal Fees 8,334

(Continued)

204

Exhibit L-7




County Buildings (Cont.)Permits $ 635Other Contracted Services 4,947Custodial Supplies 17,844Data Processing Supplies 2,154Electricity 340,224Equipment and Machinery Parts 5,114Food Supplies 106Garage Supplies 1,531Gasoline 7,730General Construction Materials 32,625Natural Gas 11,675Office Supplies 2,823Road Signs 1,699Small Tools 3,138Tires and Tubes 798Uniforms 4,207Vehicle Parts 64Water and Sewer 15,088Chemicals 989Other Supplies and Materials 3,553Building Improvements 227,252Data Processing Equipment 3,134Furniture and Fixtures 5,301Heating and Air Conditioning Equipment 63,267Maintenance Equipment 547Motor Vehicles 24,600Other Equipment 6,485

Total County Buildings $ 1,636,918

Other FacilitiesContracts with Government Agencies $ 223,014Contributions 18,000

Total Other Facilities 241,014

Preservation of RecordsSupervisor/Director $ 44,626Part-time Personnel 14,559Social Security 3,604Pensions 6,936Life Insurance 50Medical Insurance 5,205Dental Insurance 448Employer Medicare 843Advertising 2,971Communication 4,383Data Processing Services 2,675Maintenance and Repair Services - Office Equipment 1,246

(Continued)

205

Exhibit L-7




Preservation of Records (Cont.)Postal Charges $ 89Rentals 88Other Contracted Services 2,684Food Supplies 612Office Supplies 4,032Other Charges 6,168

Total Preservation of Records $ 101,219

Risk ManagementSupervisor/Director $ 49,519Social Security 3,076Pensions 8,004Life Insurance 50Medical Insurance 11,286Dental Insurance 336Employer Medicare 719Communication 230Tuition 110Other Contracted Services 2,500Boiler Insurance 22,343Building and Contents Insurance 198,361Liability Insurance 237,095Premiums on Corporate Surety Bonds 4,168Vehicle and Equipment Insurance 98,228Workers' Compensation Insurance 94,668

Total Risk Management 730,693

FinanceAccounting and Budgeting

County Official/Administrative Officer $ 94,719Supervisor/Director 168,564Clerical Personnel 224,422Part-time Personnel 10,254Social Security 28,990Pensions 60,805Life Insurance 499Medical Insurance 65,983Dental Insurance 3,698Unemployment Compensation 3,025Employer Medicare 6,779Bank Charges 446Communication 14,263Dues and Memberships 100Freight Expenses 69Licenses 400Maintenance and Repair Services - Office Equipment 1,506Postal Charges 8,049

(Continued)

206

Exhibit L-7



General Fund (Cont.)Finance (Cont.)

Accounting and Budgeting (Cont.)Printing, Stationery, and Forms $ 146Travel 634Tuition 1,025Disposal Fees 1,006Other Contracted Services 960Data Processing Supplies 4,800Food Supplies 467Office Supplies 4,425

Total Accounting and Budgeting $ 706,034

PurchasingCounty Official/Administrative Officer $ 75,464Assistant(s) 56,640Purchasing Personnel 138,812Equipment Operators 32,888Clerical Personnel 53,184Social Security 21,488Pensions 55,157Life Insurance 449Medical Insurance 69,773Dental Insurance 2,778Employer Medicare 5,025Communication 13,191Data Processing Services 2,800Dues and Memberships 1,802Freight Expenses 17Legal Notices, Recording, and Court Costs 5,638Licenses 18Maintenance and Repair Services - Equipment 8,317Maintenance and Repair Services - Office Equipment 7,949Postal Charges 4,019Printing, Stationery, and Forms 2,089Rentals 156Travel 1,948Tuition 1,660Custodial Supplies 354Data Processing Supplies 8,490Duplicating Supplies 1,212Equipment and Machinery Parts 2,724Food Supplies 452Gasoline 1,814Office Supplies 3,397Periodicals 257Propane Gas 86Small Tools 300Uniforms 1,770Vehicle Parts 178

(Continued)

207

Exhibit L-7




Purchasing (Cont.)Motor Vehicles $ 23,113Other Equipment 887

Total Purchasing $ 606,296

Property Assessor's OfficeCounty Official/Administrative Officer $ 86,736Assistant(s) 7,650Supervisor/Director 53,303Deputy(ies) 372,669Internal Audit Personnel 48,253Clerical Personnel 499,864Board and Committee Members Fees 1,580Social Security 63,850Pensions 165,054Employee and Dependent Insurance 4,503Life Insurance 1,244Medical Insurance 207,440Dental Insurance 8,002Employer Medicare 14,933Audit Services 14,468Communication 24,603Data Processing Services 33,225Dues and Memberships 2,710Legal Services 2,311Legal Notices, Recording, and Court Costs 415Licenses 35Maintenance Agreements 792Maintenance and Repair Services - Office Equipment 5,709Maintenance and Repair Services - Vehicles 1,032Postal Charges 8,817Printing, Stationery, and Forms 2,167Travel 6,762Tuition 210Data Processing Supplies 1,446Food Supplies 725Gasoline 10,613Office Supplies 4,574Tires and Tubes 546Vehicle Parts 2,576Other Supplies and Materials 516Other Charges 1,571Motor Vehicles 56,760Other Equipment 1,014

Total Property Assessor's Office 1,718,678

County Trustee's OfficeCounty Official/Administrative Officer $ 94,719

(Continued)

208

Exhibit L-7




County Trustee's Office (Cont.)Assistant(s) $ 56,341Deputy(ies) 217,789Part-time Personnel 24,331Social Security 23,573Pensions 47,470Life Insurance 395Medical Insurance 63,193Dental Insurance 2,874Employer Medicare 5,513Communication 13,500Data Processing Services 690Dues and Memberships 1,133Maintenance Agreements 28,441Maintenance and Repair Services - Office Equipment 2,458Postal Charges 48,758Printing, Stationery, and Forms 6,375Rentals 156Travel 1,005Data Processing Supplies 4,895Office Supplies 3,286

Total County Trustee's Office $ 646,895

County Clerk's OfficeCounty Official/Administrative Officer $ 94,719Deputy(ies) 724,551Part-time Personnel 32,983Board and Committee Members Fees 440Social Security 50,220Pensions 126,823Life Insurance 1,052Medical Insurance 234,414Dental Insurance 8,253Employer Medicare 11,745Communication 10,146Data Processing Services 8,516Dues and Memberships 1,353Legal Services 42Legal Notices, Recording, and Court Costs 499Maintenance Agreements 42,941Maintenance and Repair Services - Equipment 2,003Maintenance and Repair Services - Office Equipment 430Postal Charges 41,417Printing, Stationery, and Forms 1,265Travel 961Tuition 50Other Contracted Services 525Data Processing Supplies 15,380

(Continued)

209

Exhibit L-7




County Clerk's Office (Cont.)Food Supplies $ 280Office Supplies 31,661

Total County Clerk's Office $ 1,442,669

Data ProcessingData Processing Services $ 19,152Licenses 27,935Maintenance Agreements 47,581Maintenance and Repair Services - Office Equipment 10,023Other Contracted Services 10,380Data Processing Supplies 5,055Office Supplies 875

Total Data Processing 121,001

Other FinanceRefunds $ 6,165Trustee's Commission 712,545

Total Other Finance 718,710

Administration of JusticeCircuit Court Judge

Communication $ 8,407Postal Charges 178Data Processing Supplies 207Office Supplies 1,623

Total Circuit Court Judge 10,415

Circuit Court ClerkCounty Official/Administrative Officer $ 94,719Clerical Personnel 891,300Part-time Personnel 68,742Social Security 62,560Pensions 152,512Life Insurance 1,335Medical Insurance 211,842Dental Insurance 8,600Employer Medicare 14,631Communication 17,620Contracts with Other Public Agencies 2,100Data Processing Services 46,012Dues and Memberships 318Freight Expenses 9Maintenance and Repair Services - Equipment 395Maintenance and Repair Services - Office Equipment 20,823Postal Charges 19,084Printing, Stationery, and Forms 3,301Rentals 38

(Continued)

210

Exhibit L-7



General Fund (Cont.)Administration of Justice (Cont.)

Circuit Court Clerk (Cont.)Travel $ 999Data Processing Supplies 8,151Food Supplies 576Office Supplies 20,865Periodicals 546

Total Circuit Court Clerk $ 1,647,078

General Sessions CourtJudge(s) $ 327,181Secretary(ies) 77,251Social Security 20,533Pensions 62,916Life Insurance 200Medical Insurance 33,389Dental Insurance 1,568Employer Medicare 5,771Communication 4,310Dues and Memberships 1,964Maintenance Agreements 1,169Maintenance and Repair Services - Office Equipment 536Postal Charges 522Printing, Stationery, and Forms 1,907Travel 5,678Tuition 855Other Contracted Services 20Food Supplies 43Library Books/Media 602Office Supplies 30Periodicals 8,711

Total General Sessions Court 555,156

General Sessions JudgeJudge(s) $ 327,181Assistant(s) 70,694Secretary(ies) 37,128Social Security 22,382Pensions 67,665Life Insurance 250Medical Insurance 44,308Dental Insurance 2,242Employer Medicare 6,256Communication 4,313Dues and Memberships 1,703Licenses 170Maintenance Agreements 1,169Maintenance and Repair Services - Office Equipment 1,226Postal Charges 737

(Continued)

211

Exhibit L-7




General Sessions Judge (Cont.)Printing, Stationery, and Forms $ 490Travel 6,041Tuition 805Library Books/Media 572Office Supplies 1,430Periodicals 1,227

Total General Sessions Judge $ 597,989

Drug CourtTravel $ 2,491Tuition 750Drug Treatment 18,277

Total Drug Court 21,518

Chancery CourtCounty Official/Administrative Officer $ 94,719Clerical Personnel 281,028Part-time Personnel 13,483Social Security 22,705Pensions 58,305Life Insurance 449Medical Insurance 97,827Dental Insurance 3,137Employer Medicare 5,310Bank Charges 285Communication 6,944Data Processing Services 22,220Dues and Memberships 1,125Legal Notices, Recording, and Court Costs 231Maintenance and Repair Services - Office Equipment 5,016Postal Charges 4,423Printing, Stationery, and Forms 350Rentals 140Travel 2,424Other Contracted Services 163Data Processing Supplies 104Office Supplies 7,458Periodicals 493Other Charges 10,015Other Debt Service 156Office Equipment 25,230

Total Chancery Court 663,740

Juvenile CourtProbation Officer(s) $ 32,262Guidance Personnel 324,295Secretary(ies) 57,955

(Continued)

212

Exhibit L-7




Juvenile Court (Cont.)Clerical Personnel $ 37,128Social Security 28,024Pensions 67,942Life Insurance 499Medical Insurance 101,308Dental Insurance 3,358Employer Medicare 6,554Communication 2,786Data Processing Services 288Dues and Memberships 1,450Legal Services 19,700Maintenance and Repair Services - Equipment 500Maintenance and Repair Services - Office Equipment 859Maintenance and Repair Services - Vehicles 468Printing, Stationery, and Forms 78Travel 7,309Tuition 4,532Other Contracted Services 55,858Data Processing Supplies 2,566Drugs and Medical Supplies 2,122Food Supplies 310Gasoline 652Library Books/Media 342Office Supplies 3,758Periodicals 243

Total Juvenile Court $ 763,146

Juvenile Court JudgeOther Contracted Services $ 3,000

Total Juvenile Court Judge 3,000

District Attorney GeneralAssistant(s) $ 182,541Supervisor/Director 76,673Salary Supplements 4,240Secretary(ies) 23,790Part-time Personnel 4,650Social Security 17,781Pensions 44,169Life Insurance 291Medical Insurance 22,260Dental Insurance 1,322Employer Medicare 4,158Communication 59Travel 4,123Tuition 127Other Contracted Services 5,581

(Continued)

213

Exhibit L-7




District Attorney General (Cont.)Data Processing Supplies $ 263Electricity 7,329Office Supplies 1,486Other Supplies and Materials 4,744

Total District Attorney General $ 405,587

Office of Public DefenderParaprofessionals $ 107,019Social Security 6,682Pensions 17,057Life Insurance 71Medical Insurance 10,686Dental Insurance 316Employer Medicare 1,563Licenses 400Travel 1,497Tuition 28

Total Office of Public Defender 145,319

Judicial CommissionersOther Salaries and Wages $ 61,800Social Security 3,831Employer Medicare 896Dues and Memberships 300Maintenance and Repair Services - Equipment 246Data Processing Supplies 58Office Supplies 44

Total Judicial Commissioners 67,175

Other Administration of JusticeJury and Witness Expense $ 58,916Legal Services 2,610

Total Other Administration of Justice 61,526

Courtroom SecurityDeputy(ies) $ 202,590Part-time Personnel 58,201Social Security 15,438Pensions 31,450Life Insurance 250Medical Insurance 60,778Dental Insurance 2,240Unemployment Compensation 2,710Employer Medicare 3,611Maintenance and Repair Services - Buildings 1,100Medical and Dental Services 400Law Enforcement Supplies 7,909

(Continued)

214

Exhibit L-7




Courtroom Security (Cont.)Uniforms $ 4,084Other Supplies and Materials 2,360

Total Courtroom Security $ 393,121

Victim Assistance ProgramsRemittance of Revenue Collected $ 76,163

Total Victim Assistance Programs 76,163

Public SafetySheriff's Department

County Official/Administrative Officer $ 111,626Assistant(s) 272,500Deputy(ies) 2,347,719Captain(s) 354,453Lieutenant(s) 689,733Sergeant(s) 1,378,294Mechanic(s) 119,049Dispatchers/Radio Operators 617,428Secretary(ies) 427,336School Resource Officer 175,505Social Security 386,964Pensions 982,551Life Insurance 6,968Medical Insurance 1,249,724Dental Insurance 47,098Employer Medicare 90,381Communication 71,211Data Processing Services 83,855Dues and Memberships 11,759Freight Expenses 185Licenses 5,058Maintenance and Repair Services - Buildings 30,283Maintenance and Repair Services - Equipment 52,160Maintenance and Repair Services - Office Equipment 21,430Maintenance and Repair Services - Vehicles 3,691Medical and Dental Services 2,428Pest Control 400Postal Charges 5,707Printing, Stationery, and Forms 3,709Rentals 1,492Towing Services 4,070Travel 52,197Tuition 61,635Veterinary Services 3,169Disposal Fees 3,425Permits 55Other Contracted Services 10,351

(Continued)

215

Exhibit L-7



General Fund (Cont.)Public Safety (Cont.)

Sheriff's Department (Cont.)Animal Food and Supplies $ 2,799Custodial Supplies 10,036Data Processing Supplies 54,927Electricity 21,344Equipment and Machinery Parts 9,083Food Supplies 5,425Garage Supplies 3,351Gasoline 290,939General Construction Materials 2,920Instructional Supplies and Materials 920Law Enforcement Supplies 167,188Lubricants 5,323Office Supplies 46,403Periodicals 1,195Road Signs 261Small Tools 1,955Tires and Tubes 30,299Uniforms 87,684Vehicle Parts 73,475Water and Sewer 2,691Other Supplies and Materials 14,308Other Charges 25,344Heating and Air Conditioning Equipment 11,434Law Enforcement Equipment 25,895Motor Vehicles 336,659Solid Waste Equipment 28,735

Total Sheriff's Department $ 10,946,192

Administration of the Sexual Offender RegistryCommunication $ 850Travel 135Tuition 1,293Other Contracted Services 2,950Data Processing Supplies 3,740

Total Administration of the Sexual Offender Registry 8,968

JailAssistant(s) $ 64,717Deputy(ies) 3,363,490Captain(s) 123,566Lieutenant(s) 359,515Sergeant(s) 330,319Psychological Personnel 39,557Medical Personnel 462,587Secretary(ies) 27,332Cafeteria Personnel 201,611Board and Committee Members Fees 7,550

(Continued)

216

Exhibit L-7




Jail (Cont.)Social Security $ 297,985Pensions 766,291Life Insurance 5,429Medical Insurance 761,503Dental Insurance 34,341Unemployment Compensation 207Employer Medicare 69,690Advertising 925Communication 17,876Data Processing Services 37,772Dues and Memberships 423Engineering Services 30,417Licenses 189Maintenance Agreements 8,000Maintenance and Repair Services - Buildings 14,556Maintenance and Repair Services - Equipment 69,595Maintenance and Repair Services - Office Equipment 10,779Maintenance and Repair Services - Vehicles 80Medical and Dental Services 560,619Pest Control 1,000Postal Charges 588Printing, Stationery, and Forms 1,996Rentals 2,674Transportation - Other than Students 31,544Travel 10,635Tuition 3,746Disposal Fees 12,696Permits 55Other Contracted Services 11,154Custodial Supplies 37,546Data Processing Supplies 11,584Diesel Fuel 1,468Drugs and Medical Supplies 55,078Electricity 318,123Equipment and Machinery Parts 63,762Food Preparation Supplies 34,247Food Supplies 767,052Garage Supplies 266Gasoline 37,940General Construction Materials 17,304Law Enforcement Supplies 49,664Natural Gas 54,760Office Supplies 12,175Prisoners Clothing 41,587Small Tools 606Tires and Tubes 2,552Uniforms 46,841

(Continued)

217

Exhibit L-7




Jail (Cont.)Vehicle Parts $ 8,384Water and Sewer 196,525Other Supplies and Materials 8,600Food Service Equipment 3,506Heating and Air Conditioning Equipment 11,434Law Enforcement Equipment 4,980Motor Vehicles 52,309

Total Jail $ 9,581,302

WorkhouseDeputy(ies) $ 63,902Social Security 3,698Pensions 9,870Life Insurance 100Medical Insurance 19,869Dental Insurance 672Employer Medicare 865Disposal Fees 2,264Custodial Supplies 2,276

Total Workhouse 103,516

Juvenile ServicesContracts with Government Agencies $ 351,438Contributions 307,180

Total Juvenile Services 658,618

Fire Prevention and ControlContributions $ 1,856,977

Total Fire Prevention and Control 1,856,977

Civil DefenseSupervisor/Director $ 59,666Medical Personnel 316,229Paraprofessionals 47,136Secretary(ies) 28,541Part-time Personnel 45,479Social Security 29,295Pensions 70,877Life Insurance 549Medical Insurance 111,291Dental Insurance 4,276Employer Medicare 6,851Communication 5,169Dues and Memberships 300Medical and Dental Services 35Postal Charges 63Travel 420

(Continued)

218

Exhibit L-7




Civil Defense (Cont.)Food Supplies $ 96Gasoline 3,248Office Supplies 878Tires and Tubes 326Uniforms 1,302Vehicle Parts 612Other Supplies and Materials 508

Total Civil Defense $ 733,147

Rescue SquadContributions $ 1,011,467

Total Rescue Squad 1,011,467

Disaster ReliefOther Supplies and Materials $ 2,455

Total Disaster Relief 2,455

County Coroner/Medical ExaminerOther Per Diem and Fees $ 50,741Communication 393Contributions 315,174Maintenance and Repair Services - Vehicles 913Printing, Stationery, and Forms 133Other Contracted Services 86,175Drugs and Medical Supplies 4,191Gasoline 3,450Office Supplies 120Vehicle Parts 41Other Charges 3,300Other Equipment 1,850

Total County Coroner/Medical Examiner 466,481

Other Public SafetyCommunication $ 1,928Contracts with Government Agencies 246,394Maintenance Agreements 1,850Postal Charges 42Travel 651Electricity 12,084Equipment Parts - Light 582Natural Gas 855

Total Other Public Safety 264,386

Public Health and WelfareLocal Health Center

County Official/Administrative Officer $ 80,961Assistant(s) 222,350

(Continued)

219

Exhibit L-7



General Fund (Cont.)Public Health and Welfare (Cont.)

Local Health Center (Cont.)Supervisor/Director $ 301,437Teachers 315,779Medical Personnel 1,842,135Education Media Personnel 30,022Clerical Personnel 683,118Educational Assistants 2,333Custodial Personnel 35,235Part-time Personnel 31,628Social Security 207,574Pensions 522,851Life Insurance 3,902Medical Insurance 605,487Dental Insurance 24,931Unemployment Compensation 1,494Employer Medicare 49,450Advertising 15,000Bank Charges 6,377Communication 59,780Contracts with Government Agencies 63,640Contracts with Private Agencies 37,266Data Processing Services 107Licenses 1,779Maintenance and Repair Services - Equipment 58,519Maintenance and Repair Services - Vehicles 186Medical and Dental Services 133,983Pest Control 1,300Postal Charges 5,443Printing, Stationery, and Forms 6,437Rentals 298Travel 67,348Tuition 7,811Disposal Fees 5,010Other Contracted Services 98,115Custodial Supplies 3,022Data Processing Supplies 73,630Drugs and Medical Supplies 329,373Electricity 89,776Equipment and Machinery Parts 2,599Food Supplies 7,834Gasoline 3,204General Construction Materials 13,470Instructional Supplies and Materials 239,620Natural Gas 4,339Office Supplies 30,534Periodicals 1,382Tires and Tubes 640Uniforms 946

(Continued)

220

Exhibit L-7




Local Health Center (Cont.)Water and Sewer $ 15,566Other Supplies and Materials 32,669Building Improvements 19,366Data Processing Equipment 3,795Health Equipment 11,898

Total Local Health Center $ 6,412,749

Rabies and Animal ControlTruck Drivers $ 39,566Clerical Personnel 32,940Part-time Personnel 28,064Social Security 5,803Pensions 10,608Life Insurance 104Medical Insurance 13,704Dental Insurance 634Employer Medicare 1,358Bank Charges 688Communication 3,809Contributions 182,259Licenses 808Maintenance and Repair Services - Buildings 2,068Maintenance and Repair Services - Equipment 93Maintenance and Repair Services - Vehicles 1,749Medical and Dental Services 63Pest Control 640Postal Charges 56Printing, Stationery, and Forms 122Towing Services 65Travel 493Veterinary Services 16,434Disposal Fees 1,201Animal Food and Supplies 9,657Custodial Supplies 8,040Data Processing Supplies 2,424Drugs and Medical Supplies 2,479Electricity 3,478Food Supplies 128Gasoline 3,102General Construction Materials 1,793Natural Gas 2,318Office Supplies 2,918Road Signs 131Tires and Tubes 337Uniforms 1,112Vehicle Parts 3,942Water and Sewer 1,447Motor Vehicles 22,275

Total Rabies and Animal Control 408,910

(Continued)

221

Exhibit L-7




Ambulance/Emergency Medical ServicesOther Contracted Services $ 4,200Motor Vehicles 394,978Health Equipment 16,390Other Equipment 1,014

Total Ambulance/Emergency Medical Services $ 416,582

Other Local Health ServicesContributions $ 26,000

Total Other Local Health Services 26,000

Regional Mental Health CenterContracts with Government Agencies $ 21,200Contributions 83,187

Total Regional Mental Health Center 104,387

Aid to Dependent ChildrenContributions $ 28,850

Total Aid to Dependent Children 28,850

Other Local Welfare ServicesPauper Burials $ 18,750

Total Other Local Welfare Services 18,750

Other Waste DisposalSolid Waste Equipment $ 377,547

Total Other Waste Disposal 377,547

Other Public Health and WelfareContributions $ 10,000

Total Other Public Health and Welfare 10,000

Social, Cultural, and Recreational ServicesLibraries

Supervisor/Director $ 79,889Clerical Personnel 297,507Custodial Personnel 77,225Part-time Personnel 7,995Social Security 27,704Pensions 57,916Life Insurance 508Medical Insurance 58,416Dental Insurance 2,944Unemployment Compensation 41Employer Medicare 6,479Advertising 3,100Communication 10,096Contributions 30,000

(Continued)

222

Exhibit L-7



General Fund (Cont.)Social, Cultural, and Recreational Services (Cont.)

Libraries (Cont.)Data Processing Services $ 10,586Dues and Memberships 200Janitorial Services 1,403Licenses 476Maintenance and Repair Services - Buildings 3,955Maintenance and Repair Services - Equipment 30Maintenance and Repair Services - Office Equipment 932Matching Share 13,979Pest Control 820Postal Charges 303Rentals 1,430Travel 2,573Tuition 1,505Disposal Fees 222Other Contracted Services 546Custodial Supplies 787Data Processing Supplies 7,976Electricity 18,740Food Supplies 283General Construction Materials 30Instructional Supplies and Materials 20,325Library Books/Media 44,020Natural Gas 4,235Office Supplies 7,741Periodicals 1,810Water and Sewer 1,716Other Supplies and Materials 12,925Other Charges 10,746

Total Libraries $ 830,114

Parks and Fair BoardsSupervisor/Director $ 75,005Laborers 1,366Temporary Personnel 112,415Social Security 11,274Pensions 11,368Life Insurance 100Medical Insurance 21,723Dental Insurance 897Unemployment Compensation 3,726Employer Medicare 2,637Bank Charges 5,207Communication 1,345Contributions 41,500Licenses 230Maintenance and Repair Services - Equipment 540Maintenance and Repair Services - Vehicles 51

(Continued)

223

Exhibit L-7



General Fund (Cont.)Social, Cultural, and Recreational Services (Cont.)

Parks and Fair Boards (Cont.)Payments to Schools - Other $ 1,100,000Postal Charges 106Printing, Stationery, and Forms 284Disposal Fees 6,337Other Contracted Services 245Custodial Supplies 642Diesel Fuel 500Electricity 66,541Equipment Parts - Light 2,719Garage Supplies 130Gasoline 3,958General Construction Materials 8,040Ice 2,650Office Supplies 282Propane Gas 270Small Tools 1,158Uniforms 548Vehicle Parts 577Water and Sewer 33,464Gravel and Chert 456

Total Parks and Fair Boards $ 1,518,291

Agriculture and Natural ResourcesAgricultural Extension Service

Communication $ 800Contributions 2,500Data Processing Services 15Matching Share 138,085Building Improvements 348,709

Total Agricultural Extension Service 490,109

Forest ServiceContributions $ 1,000

Total Forest Service 1,000

Soil ConservationSecretary(ies) $ 31,075Social Security 1,875Pensions 4,830Life Insurance 46Medical Insurance 4,791Dental Insurance 204Employer Medicare 439Contributions 13,100Printing, Stationery, and Forms 8

Total Soil Conservation 56,368

(Continued)

224

Exhibit L-7



General Fund (Cont.)Other Operations

TourismContributions $ 5,000

Total Tourism $ 5,000

Industrial DevelopmentContracts with Private Agencies $ 4,762Contributions 353,940Electricity 422

Total Industrial Development 359,124

Other Economic and Community DevelopmentContracts with Government Agencies $ 74,845Contributions 17,860

Total Other Economic and Community Development 92,705

Veterans' ServicesRentals $ 11,900

Total Veterans' Services 11,900

Employee BenefitsSupervisor/Director $ 71,042Social Security 4,274Pensions 11,042Employee and Dependent Insurance 157,912Life Insurance 50Medical Insurance 15,453Dental Insurance 448Employer Medicare 1,000Other Fringe Benefits 27,241Bank Charges 98Communication 586Consultants 3,250Contracts with Other Public Agencies 24,793Travel 267Tuition 2,621Other Contracted Services 27,000Instructional Supplies and Materials 577Uniforms 706Other Supplies and Materials 530

Total Employee Benefits 348,890

MiscellaneousDues and Memberships $ 32,870Other Contracted Services 13,207Other Charges 21,366

Total Miscellaneous 67,443

(Continued)

225

Exhibit L-7



General Fund (Cont.)Instruction

Career and Technical Education ProgramContributions $ 10,550

Total Career and Technical Education Program $ 10,550

OtherContracts with Other Public Agencies $ 184,697

Total Other 184,697

Principal on DebtGeneral Government

Principal on Capital Leases $ 572,758Total General Government 572,758

Interest on DebtGeneral Government

Interest on Notes $ 33,213Interest on Capital Leases 37,897

Total General Government 71,110

Capital Projects - DonatedCapital Projects Donated to Other Entities

Other Supplies and Materials $ 105,726Total Capital Projects Donated to Other Entities 105,726

Total General Fund $ 54,481,459

Solid Waste/Sanitation FundPublic Health and Welfare

Sanitation Education/InformationCommunication $ 3,899Tuition 545

Total Sanitation Education/Information $ 4,444

Transfer StationsSupervisor/Director $ 63,492Truck Drivers 212,366Clerical Personnel 14,345Maintenance Personnel 216,376Part-time Personnel 69,954Social Security 34,701Pensions 62,049Employee and Dependent Insurance 12,024Life Insurance 532Medical Insurance 120,304Dental Insurance 3,619Unemployment Compensation 7,150Employer Medicare 8,116Communication 7,390

(Continued)

226

Exhibit L-7



Solid Waste/Sanitation Fund (Cont.)Public Health and Welfare (Cont.)

Transfer Stations (Cont.)Contracts with Private Agencies $ 43,519Data Processing Services 148Dues and Memberships 10,370Evaluation and Testing 1,250Freight Expenses 10Licenses 17Maintenance Agreements 36Maintenance and Repair Services - Buildings 8,423Maintenance and Repair Services - Equipment 27,091Maintenance and Repair Services - Office Equipment 909Maintenance and Repair Services - Vehicles 72,434Medical and Dental Services 138Postal Charges 217Printing, Stationery, and Forms 287Rentals 309Towing Services 565Travel 9,857Disposal Fees 224,482Permits 3,000Other Contracted Services 3,698Data Processing Supplies 5,094Electricity 22,959Equipment Parts - Light 5,205Equipment and Machinery Parts 48Fuel Oil 1,072Garage Supplies 13,884Gasoline 6,537General Construction Materials 1,815Lubricants 82,695Office Supplies 2,022Propane Gas 2,380Structural Steel 6,732Tires and Tubes 28,953Uniforms 803Vehicle Parts 20,258Water and Sewer 2,308Gravel and Chert 186Other Supplies and Materials 5,076Trustee's Commission 22,791Workers' Compensation Insurance 3,332Solid Waste Equipment 14,544

Total Transfer Stations $ 1,487,872

Total Solid Waste/Sanitation Fund $ 1,492,316

(Continued)

227

Exhibit L-7



Ambulance Service FundPublic Health and Welfare

Ambulance/Emergency Medical ServicesCaptain(s) $ 168,969Lieutenant(s) 53,410Medical Personnel 3,022,332Clerical Personnel 175,514Part-time Personnel 337,865Social Security 224,743Pensions 534,734Employee and Dependent Insurance 3,000Life Insurance 3,332Medical Insurance 658,681Dental Insurance 24,321Unemployment Compensation 534Employer Medicare 52,561Bank Charges 585Communication 31,731Data Processing Services 331,565Legal Services 835Licenses 6,053Maintenance Agreements 240Maintenance and Repair Services - Buildings 4,735Maintenance and Repair Services - Equipment 1,560Maintenance and Repair Services - Vehicles 151Medical and Dental Services 2,748Pest Control 455Postal Charges 487Printing, Stationery, and Forms 221Rentals 15,932Towing Services 1,475Travel 5,859Tuition 4,550Disposal Fees 7,767Permits 750Other Contracted Services 142,098Custodial Supplies 2,773Data Processing Supplies 27,302Diesel Fuel 134,752Drugs and Medical Supplies 190,232Electricity 29,700Equipment Parts - Light 19,398Equipment and Machinery Parts 148Food Supplies 148Gasoline 14,723Instructional Supplies and Materials 2,279Lubricants 3,666Natural Gas 4,479Office Supplies 1,893Tires and Tubes 16,990

(Continued)

228

Exhibit L-7



Ambulance Service Fund (Cont.)Public Health and Welfare (Cont.)

Ambulance/Emergency Medical Services (Cont.)Uniforms $ 19,038Vehicle Parts 85,510Water and Sewer 1,939Other Supplies and Materials 17,648Liability Insurance 13,754Refunds 47,057Trustee's Commission 68,301Communication Equipment 31,369Motor Vehicles 50,814

Total Ambulance/Emergency Medical Services $ 6,603,706

Total Ambulance Service Fund $ 6,603,706

Drug Control FundPublic Safety

Sheriff's DepartmentCommunication $ 5,166Data Processing Services 4,802Licenses 48Matching Share 9,800Rentals 2,750Towing Services 740Travel 3,755Tuition 955Other Contracted Services 2,000Data Processing Supplies 4,598Law Enforcement Supplies 1,648Office Supplies 208Uniforms 620Vehicle Parts 807Trustee's Commission 737Motor Vehicles 39,764

Total Sheriff's Department $ 78,398

Total Drug Control Fund 78,398

Constitutional Officers - Fees FundFinance

County Clerk's OfficeConstitutional Officers' Operating Expenses $ 1,983

Total County Clerk's Office $ 1,983

Administration of JusticeCircuit Court

Constitutional Officers' Operating Expenses $ 1,345Total Circuit Court 1,345

(Continued)

229

Exhibit L-7



Constitutional Officers - Fees Fund (Cont.)Administration of Justice (Cont.)

General Sessions CourtConstitutional Officers' Operating Expenses $ 4,888

Total General Sessions Court $ 4,888

Chancery CourtSpecial Commissioner Fees/Special Master Fees $ 2,400

Total Chancery Court 2,400

Public SafetySheriff's Department

Constitutional Officers' Operating Expenses $ 462Total Sheriff's Department 462

Total Constitutional Officers - Fees Fund $ 11,078

Highway/Public Works FundHighways

AdministrationCounty Official/Administrative Officer $ 111,026Social Security 6,905Pensions 17,276Life Insurance 50Employer Medicare 1,615Communication 17,942Data Processing Services 959Dues and Memberships 3,975Engineering Services 5,000Evaluation and Testing 3,204Janitorial Services 108Licenses 399Maintenance Agreements 257Maintenance and Repair Services - Buildings 4,995Maintenance and Repair Services - Office Equipment 3,349Postal Charges 447Printing, Stationery, and Forms 372Rentals 1,374Travel 178Tuition 1,504Other Contracted Services 638Custodial Supplies 148Data Processing Supplies 4,094Electricity 31,232Library Books/Media 250Natural Gas 6,340Office Supplies 3,242Uniforms 601Water and Sewer 3,408Trustee's Commission 127,777

Total Administration $ 358,665

(Continued)

230

Exhibit L-7



Highway/Public Works Fund (Cont.)Highways (Cont.)

Highway and Bridge MaintenanceAssistant(s) $ 88,181Supervisor/Director 354,191Paraprofessionals 68,169Foremen 335,244Mechanic(s) 228,052Equipment Operators 355,177Equipment Operators - Heavy 426,617Equipment Operators - Light 801,832Truck Drivers 677,286Dispatchers/Radio Operators 29,856Laborers 74,557Temporary Personnel 94,051Part-time Personnel 47,931Social Security 212,024Pensions 529,782Employee and Dependent Insurance 56,962Life Insurance 4,738Medical Insurance 1,026,132Dental Insurance 34,585Unemployment Compensation 4,575Employer Medicare 49,588Engineering Services 19,986Evaluation and Testing 810Explosive and Drilling Services 2,500Freight Expenses 219Janitorial Services 19,396Licenses 2,524Maintenance and Repair Services - Buildings 802Maintenance and Repair Services - Equipment 7,957Rentals 5,510Travel 12Tuition 160Disposal Fees 15,236Contracts for Landfill Facilities 181Other Contracted Services 13,076Asphalt - Cold Mix 418Asphalt - Hot Mix 57,732Concrete 8,866Crushed Stone 47,821Custodial Supplies 2,140Data Processing Supplies 10,016Equipment Parts - Light 4,450Fertilizer, Lime, and Seed 260General Construction Materials 39,554Office Supplies 10,458Other Road Materials 20,856Pipe 7,858

(Continued)

231

Exhibit L-7




Highway and Bridge Maintenance (Cont.)Pipe - Metal $ 21,532Propane Gas 273Salt 161,291Small Tools 15,601Structural Steel 39,502T&I Construction Materials 1,792Uniforms 23,100Wood Products 1,901Testing 1,034Chemicals 1,267Other Supplies and Materials 224

Total Highway and Bridge Maintenance $ 6,065,845

Operation and Maintenance of EquipmentMaintenance and Repair Services - Equipment $ 12,615Maintenance and Repair Services - Vehicles 20,958Rentals 3,711Disposal Fees 2,058Other Contracted Services 8,091Custodial Supplies 3,527Diesel Fuel 121,330Drugs and Medical Supplies 266Equipment Parts - Heavy 59,488Equipment Parts - Light 23,146Equipment and Machinery Parts 6,832Fuel Oil 2,968Garage Supplies 13,587Gasoline 102,362General Construction Materials 284Lubricants 27,104Pipe 312Small Tools 9,813Structural Steel 725Tires and Tubes 33,788Vehicle Parts 45,545Other Supplies and Materials 2,616

Total Operation and Maintenance of Equipment 501,126

Asphalt Plant OperationsLicenses $ 919Rentals 712Asphalt 187,998Asphalt - Hot Mix 359,278Crushed Stone 136,549Electricity 26,405Equipment Parts - Heavy 11,194Equipment Parts - Light 80

(Continued)

232

Exhibit L-7




Asphalt Plant Operations (Cont.)Lubricants $ 680Natural Gas 16,543Water and Sewer 914Chemicals 218

Total Asphalt Plant Operations $ 741,490

Traffic ControlGeneral Construction Materials $ 298Other Road Materials 667Road Signs 24,732

Total Traffic Control 25,697

Other ChargesVehicle and Equipment Insurance $ 81,615Workers' Compensation Insurance 169,701

Total Other Charges 251,316

Capital OutlayAsphalt Plant Equipment $ 117,417Highway Equipment 19,095Maintenance Equipment 566,098Motor Vehicles 195,700Other Capital Outlay 25,000

Total Capital Outlay 923,310

Principal on DebtHighways and Streets

Principal on Capital Leases $ 145,625Total Highways and Streets 145,625

Interest on DebtHighways and Streets

Interest on Capital Leases $ 6,400Total Highways and Streets 6,400

Capital ProjectsHighway and Street Capital Projects

State Aid Projects $ 774,235Total Highway and Street Capital Projects 774,235

Total Highway/Public Works Fund $ 9,793,709

General Debt Service FundFinance

Other FinanceTrustee's Commission $ 181,827

Total Other Finance $ 181,827

(Continued)

233

Exhibit L-7



General Debt Service Fund (Cont.)Principal on Debt

General GovernmentPrincipal on Bonds $ 2,805,000

Total General Government $ 2,805,000

EducationPrincipal on Notes $ 143,980Principal on Other Loans 1,697,291

Total Education 1,841,271

Interest on DebtGeneral Government

Interest on Bonds $ 1,253,963Total General Government 1,253,963

EducationInterest on Bonds $ 5,880,077Interest on Notes 26,778Interest on Other Loans 506,237

Total Education 6,413,092

Other Debt ServiceGeneral Government

Interest on Other Loans $ 11,096Other Debt Service 600

Total General Government 11,696

EducationOther Debt Service $ 19,938

Total Education 19,938

Total General Debt Service Fund $ 12,526,787

Education Debt Service FundFinance



Principal on DebtEducation

Principal on Bonds $ 1,765,000Total Education 1,765,000

Interest on DebtEducation

Interest on Bonds $ 144,200Total Education 144,200

(Continued)

234

Exhibit L-7



Education Debt Service Fund (Cont.)Other Debt Service

EducationOther Debt Service $ 300

Total Education $ 300

Total Education Debt Service Fund $ 1,928,866

General Capital Projects FundFinance



Capital ProjectsEducation Capital Projects

Contributions $ 1,621,478Total Education Capital Projects 1,621,478

Total General Capital Projects Fund 1,693,628

Total Governmental Funds - Primary Government $ 88,609,947

235

Exhibit L-8


All Governmental Fund TypesDiscretely Presented Sullivan County School DepartmentFor the Year Ended June 30, 2018

General Purpose School FundInstruction

Regular Instruction ProgramADA Coordinator $ 161,478Teachers 25,757,671Career Ladder Program 128,040Career Ladder Extended Contracts 21,695Homebound Teachers 72,060Salary Supplements 828,504Educational Assistants 708,857Other Salaries and Wages 347,739Certified Substitute Teachers 135,195Non-certified Substitute Teachers 155,245Social Security 1,621,829Pensions 2,496,053Life Insurance 28,449Medical Insurance 5,107,823Dental Insurance 79,266Employer Medicare 384,935Contracts with Government Agencies 115,982Evaluation and Testing 170,380Travel 3,833Other Contracted Services 515Equipment and Machinery Parts 13,177Instructional Supplies and Materials 403,419Textbooks - Bound 448,651Other Supplies and Materials 698In Service/Staff Development 974Other Charges 134,651Data Processing Equipment 19,176Regular Instruction Equipment 71,673

Total Regular Instruction Program $ 39,417,968

Special Education ProgramTeachers $ 2,504,775Career Ladder Program 14,328Career Ladder Extended Contracts 4,200Homebound Teachers 22,097Educational Assistants 591,553Speech Pathologist 491,329Other Salaries and Wages 222,054Certified Substitute Teachers 19,050Non-certified Substitute Teachers 46,655Social Security 226,286Pensions 350,510Life Insurance 4,466Medical Insurance 763,118Dental Insurance 12,135Employer Medicare 53,391

(Continued)

236

Exhibit L-8



General Purpose School Fund (Cont.)Instruction (Cont.)

Special Education Program (Cont.)Evaluation and Testing $ 10,463Other Contracted Services 39,933Instructional Supplies and Materials 10,099Other Supplies and Materials 306Special Education Equipment 6,733

Total Special Education Program $ 5,393,481

Career and Technical Education ProgramTeachers $ 1,920,024Career Ladder Program 6,000Certified Substitute Teachers 14,850Non-certified Substitute Teachers 10,438Social Security 111,557Pensions 175,109Life Insurance 1,972Medical Insurance 377,000Dental Insurance 5,814Employer Medicare 26,168Maintenance and Repair Services - Equipment 826Travel 800Other Contracted Services 4,052Equipment and Machinery Parts 932General Construction Materials 272Instructional Supplies and Materials 96,314Vocational Instruction Equipment 228,255

Total Career and Technical Education Program 2,980,383

Support ServicesHealth Services

Supervisor/Director $ 83,146Medical Personnel 536,252Secretary(ies) 22,117Social Security 38,407Pensions 13,014Life Insurance 152Medical Insurance 86,591Dental Insurance 512Employer Medicare 8,982Communication 940Travel 4,828Other Contracted Services 1,000Other Supplies and Materials 48,284In Service/Staff Development 700Data Processing Equipment 4,145

Total Health Services 849,070

(Continued)

237

Exhibit L-8



General Purpose School Fund (Cont.)Support Services (Cont.)

Other Student SupportCareer Ladder Program $ 3,000Guidance Personnel 1,354,874Secretary(ies) 86,928Social Security 83,729Pensions 136,182Life Insurance 1,636Medical Insurance 267,282Dental Insurance 4,767Employer Medicare 19,582

Total Other Student Support $ 1,957,980

Regular Instruction ProgramSupervisor/Director $ 208,244Career Ladder Program 5,000Librarians 968,943Secretary(ies) 93,904Other Salaries and Wages 158,113Social Security 82,938Pensions 143,559Life Insurance 1,458Medical Insurance 276,876Dental Insurance 4,191Employer Medicare 19,625Communication 2,921Dues and Memberships 260Operating Lease Payments 29,577Maintenance Agreements 272,048Maintenance and Repair Services - Equipment 1,585Printing, Stationery, and Forms 1,349Travel 13,950Other Contracted Services 5,187Gasoline 11,921Instructional Supplies and Materials 42,042Library Books/Media 40,520Office Supplies 4,530Periodicals 9,109Propane Gas 218Other Supplies and Materials 33,215In Service/Staff Development 34,339Other Charges 6,881Administration Equipment 747Data Processing Equipment 2,917

Total Regular Instruction Program 2,476,167

Special Education ProgramSupervisor/Director $ 84,540

(Continued)

238

Exhibit L-8




Special Education Program (Cont.)Secretary(ies) $ 33,522Social Security 7,118Pensions 12,892Life Insurance 98Medical Insurance 12,877Dental Insurance 329Employer Medicare 1,665Operating Lease Payments 408Maintenance and Repair Services - Equipment 200Travel 29,100Office Supplies 356In Service/Staff Development 14,092Administration Equipment 910

Total Special Education Program $ 198,107

Career and Technical Education ProgramSupervisor/Director $ 105,585Secretary(ies) 33,526Social Security 8,342Pensions 12,988Life Insurance 100Medical Insurance 15,784Dental Insurance 252Employer Medicare 1,951Communication 480Printing, Stationery, and Forms 84Travel 5,259Office Supplies 150Propane Gas 432In Service/Staff Development 600

Total Career and Technical Education Program 185,533

Other ProgramsOn-behalf Payments to OPEB $ 547,409

Total Other Programs 547,409

Board of EducationBoard and Committee Members Fees $ 53,123Social Security 2,350Medical Insurance 928Dental Insurance 336Unemployment Compensation 40,845Employer Medicare 759Advertising 2,508Audit Services 74,875Dues and Memberships 15,066

(Continued)

239

Exhibit L-8




Board of Education (Cont.)Legal Services $ 61,022Maintenance Agreements 1,500Travel 9,920Other Supplies and Materials 2,304Building and Contents Insurance 5,986Liability Insurance 167,201Trustee's Commission 620,599Workers' Compensation Insurance 251,671Other Charges 25,000

Total Board of Education $ 1,335,993

Director of SchoolsCounty Official/Administrative Officer $ 127,296Assistant(s) 4,225Career Ladder Program 500Secretary(ies) 40,350Other Salaries and Wages 8,800Social Security 10,330Pensions 19,111Life Insurance 102Medical Insurance 42,888Dental Insurance 343Employer Medicare 2,463Communication 143,823Dues and Memberships 7,415Operating Lease Payments 4,326Postal Charges 13,503Travel 3,401Other Contracted Services 27,432Equipment and Machinery Parts 830Office Supplies 2,788Other Supplies and Materials 250

Total Director of Schools 460,176

Office of the PrincipalPrincipals $ 1,602,759Career Ladder Program 15,000Accountants/Bookkeepers 430,222Assistant Principals 1,261,536Secretary(ies) 692,125Social Security 230,671Pensions 428,745Life Insurance 4,571Medical Insurance 883,497Dental Insurance 11,507Employer Medicare 54,111

(Continued)

240

Exhibit L-8




Office of the Principal (Cont.)Travel $ 1,301Other Contracted Services 163,256Office Supplies 7,591Data Processing Equipment 6,448

Total Office of the Principal $ 5,793,340

Fiscal ServicesSupervisor/Director $ 71,400Accountants/Bookkeepers 177,705Social Security 13,902Pensions 38,761Life Insurance 300Medical Insurance 59,342Dental Insurance 1,008Employer Medicare 3,252Bank Charges 2,800Maintenance and Repair Services - Equipment 898Printing, Stationery, and Forms 1,315Travel 627Other Contracted Services 2,940Office Supplies 3,336In Service/Staff Development 485Other Charges 6,108

Total Fiscal Services 384,179

Human Services/PersonnelSupervisor/Director $ 79,816Career Ladder Program 1,000Secretary(ies) 33,539Clerical Personnel 100,175Social Security 12,113Pensions 28,144Life Insurance 248Medical Insurance 46,439Dental Insurance 834Employer Medicare 2,833Advertising 487Communication 219Dues and Memberships 150Maintenance and Repair Services - Equipment 290Travel 3,529Other Contracted Services 23,372Office Supplies 1,224Premiums on Corporate Surety Bonds 40Office Equipment 392

Total Human Services/Personnel 334,844

(Continued)

241

Exhibit L-8




Operation of PlantCustodial Personnel $ 1,975,371Social Security 114,330Pensions 301,287Life Insurance 3,917Medical Insurance 629,598Dental Insurance 10,528Employer Medicare 26,739Licenses 4,928Maintenance and Repair Services - Buildings 48,534Maintenance and Repair Services - Equipment 252Disposal Fees 63,997Custodial Supplies 121,294Diesel Fuel 3,048Electricity 2,448,882Equipment Parts - Light 16,464Fuel Oil 59,686Natural Gas 145,757Propane Gas 87,155Tires and Tubes 992Uniforms 5,399Water and Sewer 330,456Plant Operation Equipment 7,547

Total Operation of Plant $ 6,406,161

Maintenance of PlantSupervisor/Director $ 61,200Foremen 124,348Secretary(ies) 48,262Maintenance Personnel 1,538,441Social Security 102,117Pensions 270,824Life Insurance 2,536Medical Insurance 492,680Dental Insurance 6,771Employer Medicare 24,223Communication 9,676Dues and Memberships 200Maintenance Agreements 27,268Maintenance and Repair Services - Buildings 38,660Maintenance and Repair Services - Equipment 2,310Maintenance and Repair Services - Vehicles 5,172Rentals 3,104Towing Services 265Travel 2,213Other Contracted Services 1,382Asphalt 956

(Continued)

242

Exhibit L-8




Maintenance of Plant (Cont.)Concrete $ 5,676Equipment Parts - Light 3,768Equipment and Machinery Parts 44,842Garage Supplies 6,565Gasoline 83,731General Construction Materials 134,975Office Supplies 1,360Salt 720Small Tools 3,021Tires and Tubes 6,803Uniforms 10,344Vehicle Parts 35,036Wood Products 900Chemicals 11,281In Service/Staff Development 2,589Motor Vehicles 27,015Other Equipment 36,102

Total Maintenance of Plant $ 3,177,336

TransportationMechanic(s) $ 34,400Bus Drivers 317,873Social Security 21,439Pensions 5,713Life Insurance 100Medical Insurance 25,987Dental Insurance 336Employer Medicare 5,014Contracts with Vehicle Owners 4,358,698Maintenance and Repair Services - Vehicles 2,237Garage Supplies 4,489Gasoline 76,631Tires and Tubes 9,407Vehicle Parts 17,266Maintenance Equipment 975

Total Transportation 4,880,565

Operation of Non-Instructional ServicesCommunity Services

Other Salaries and Wages $ 12,306Social Security 744Pensions 1,440Employer Medicare 174

Total Community Services 14,664

(Continued)

243

Exhibit L-8



General Purpose School Fund (Cont.)Operation of Non-Instructional Services (Cont.)

Early Childhood EducationTeachers $ 345,226Educational Assistants 123,137Social Security 26,948Pensions 38,993Life Insurance 497Medical Insurance 83,141Dental Insurance 1,671Employer Medicare 6,302Travel 130Instructional Supplies and Materials 24,540In Service/Staff Development 3,715

Total Early Childhood Education $ 654,300

Capital OutlayRegular Capital Outlay

Other Contracted Services $ 46,500Land 3,950

Total Regular Capital Outlay 50,450

Other Debt ServiceEducation

Debt Service Contribution to Primary Government $ 2,547,916Total Education 2,547,916

Total General Purpose School Fund $ 80,046,022

School Federal Projects FundInstruction

Regular Instruction ProgramTeachers $ 28,307Educational Assistants 717,721Other Salaries and Wages 119,002Social Security 44,750Pensions 44,478Life Insurance 836Medical Insurance 125,475Dental Insurance 2,097Employer Medicare 11,682Instructional Supplies and Materials 273,030Other Charges 1,125Regular Instruction Equipment 685,783

Total Regular Instruction Program $ 2,054,286

Special Education ProgramTeachers $ 551,752Educational Assistants 907,121

(Continued)

244

Exhibit L-8



School Federal Projects Fund (Cont.)Instruction (Cont.)

Special Education Program (Cont.)Other Salaries and Wages $ 6,207Social Security 83,704Pensions 138,315Life Insurance 2,426Medical Insurance 326,070Dental Insurance 6,067Employer Medicare 19,634Instructional Supplies and Materials 11,429Special Education Equipment 100

Total Special Education Program $ 2,052,825

Career and Technical Education ProgramInstructional Supplies and Materials $ 1,225Other Supplies and Materials 7,486Vocational Instruction Equipment 136,999

Total Career and Technical Education Program 145,710

Support ServicesOther Student Support

Other Salaries and Wages $ 96,171Social Security 5,625Pensions 8,732Life Insurance 109Medical Insurance 16,362Dental Insurance 357Employer Medicare 1,316Communication 358Travel 35,360Other Contracted Services 2,725Other Supplies and Materials 37,860In Service/Staff Development 9,817

Total Other Student Support 214,792

Regular Instruction ProgramSupervisor/Director $ 82,249Clerical Personnel 16,767Other Salaries and Wages 213,244Social Security 18,768Pensions 29,460Life Insurance 238Medical Insurance 34,238Dental Insurance 450Employer Medicare 4,389Maintenance and Repair Services - Equipment 2,378Travel 240Other Supplies and Materials 2,602

(Continued)

245

Exhibit L-8



School Federal Projects Fund (Cont.)Support Services (Cont.)

Regular Instruction Program (Cont.)In Service/Staff Development $ 135,005Other Equipment 7,803

Total Regular Instruction Program $ 547,831

Special Education ProgramPsychological Personnel $ 84,886Other Salaries and Wages 248,496Social Security 16,887Pensions 27,165Life Insurance 309Medical Insurance 61,826Dental Insurance 855Employer Medicare 4,445Travel 1,122Other Supplies and Materials 5,617In Service/Staff Development 7,588

Total Special Education Program 459,196

TransportationContracts with Private Agencies $ 4,525Travel 15,671

Total Transportation 20,196

Operation of Non-Instructional ServicesFood Service

Food Supplies $ 971Total Food Service 971

Total School Federal Projects Fund $ 5,495,807

Central Cafeteria FundOperation of Non-Instructional Services

Food ServiceSupervisor/Director $ 54,570Accountants/Bookkeepers 23,347Truck Drivers 32,477Secretary(ies) 7,001Cafeteria Personnel 1,271,036Other Salaries and Wages 100,464Social Security 87,580Pensions 103,744Life Insurance 1,559Medical Insurance 387,098Dental Insurance 3,453Employer Medicare 20,484Bank Charges 877

(Continued)

246

Exhibit L-8



Central Cafeteria Fund (Cont.)Operation of Non-Instructional Services (Cont.)

Food Service (Cont.)Consultants $ 1,474Contracts with Other School Systems 9,470Data Processing Services 18,420Dues and Memberships 1,048Operating Lease Payments 2,343Licenses 1,440Maintenance and Repair Services - Equipment 10,827Printing, Stationery, and Forms 203Travel 11,668Other Contracted Services 9,464Equipment and Machinery Parts 28,582Food Preparation Supplies 218,695Food Supplies 1,494,915Gasoline 2,375Office Supplies 3,442USDA - Commodities 348,012Data Processing Equipment 616

Total Food Service $ 4,256,684

Total Central Cafeteria Fund $ 4,256,684

Other Education Special Revenue FundOperation of Non-Instructional Services

Early Childhood EducationEducational Assistants $ 10,236Social Security 635Employer Medicare 148Other Contracted Services 9,815

Total Early Childhood Education $ 20,834

Total Other Education Special Revenue Fund 20,834

School Improvement FundSupport Services

Board of EducationTrustee's Commission $ 1,104

Total Board of Education $ 1,104

Capital OutlayRegular Capital Outlay

Building Improvements $ 546,372Total Regular Capital Outlay 546,372

Total School Improvement Fund 547,476

(Continued)

247

Exhibit L-8



Education Capital Projects FundCapital Projects

Education Capital ProjectsArchitects $ 2,428,005Licenses 137,320Other Contracted Services 63,127Building Construction 247,107Land 1,773Site Development 415,172

Total Education Capital Projects $ 3,292,504

Total Education Capital Projects Fund $ 3,292,504

Total Governmental Funds - Sullivan County School Department $ 93,659,327

248

Exhibit L-9

Sullivan County, TennesseeSchedule of Detailed Receipts, Disbursements, and Changes in Cash Balances - City Agency FundsFor the Year Ended June 30, 2018

City City CitySchool School School

Cities - ADA - ADA - ADA -Sales Tax Bristol Kingsport Johnson City

Fund Fund Fund Fund Total

Cash Receipts Current Property Taxes $ 0 $ 9,961,048 $ 16,930,254 $ 123,433 $ 27,014,735 Trustee's Collections - Prior Years 0 237,955 404,440 2,948 645,343 Circuit/Clerk and Master Collections - Prior Years 0 113,223 192,460 1,488 307,171 Interest and Penalty 0 92,861 157,844 1,196 251,901 Pick-up Taxes 0 226,229 384,512 2,803 613,544 Local Option Sales Tax 24,608,171 5,527,084 9,394,110 68,490 39,597,855 Bank Excise Tax 0 12,451 21,163 154 33,768 Marriage Licenses 0 1,998 3,394 24 5,416 Other Local Revenues 0 181 306 2 489Total Cash Receipts $ 24,608,171 $ 16,173,030 $ 27,488,483 $ 200,538 $ 68,470,222

Cash Disbursements Remittance of Revenues Collected $ 24,362,089 $ 15,971,593 $ 27,139,737 $ 187,695 $ 67,661,114 Trustee's Commission 246,082 269,975 458,977 3,833 978,867Total Cash Disbursements $ 24,608,171 $ 16,241,568 $ 27,598,714 $ 191,528 $ 68,639,981

Excess of Cash Receipts Over (Under) Cash Disbursements $ 0 $ (68,538) $ (110,231) $ 9,010 $ (169,759)Cash Balance, July 1, 2017 0 795,973 1,346,598 0 2,142,571

Cash Balance, June 30, 2018 $ 0 $ 727,435 $ 1,236,367 $ 9,010 $ 1,972,812

249

SINGLE AUDIT SECTION

250

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in

Accordance With Government Auditing Standards

Independent Auditor’s Report



We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Sullivan County, Tennessee, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise Sullivan County's basic financial statements, and have issued our report thereon dated December 20, 2018.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Sullivan County's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Sullivan County's internal control. Accordingly, we do not express an opinion on the effectiveness of Sullivan County's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during

251

our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying Schedule of Findings and Questioned Costs, that we consider to be significant deficiencies: 2018-001, 2018-002(A), and 2018-003.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Sullivan County's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and is described in the accompanying Schedule of Findings and Questioned Costs as item 2018-002(B).

Sullivan County's Responses to the Findings

Sullivan County's responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. Sullivan County's responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Sullivan County’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Very truly yours,


December 20, 2018

JPW/tg

252

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal

Awards Required by the Uniform Guidance

Independent Auditor’s Report



Report on Compliance for Each Major Federal Program

We have audited Sullivan County's compliance with the types of compliance requirements

described in the OMB Compliance Supplement that could have a direct and material effect on each of Sullivan County's major federal programs for the year ended June 30, 2018. Sullivan County's major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs.

Management's Responsibility

Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of Sullivan County's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Sullivan County's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

253

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Sullivan County's compliance.

Opinion on Each Major Federal Program

In our opinion, Sullivan County complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018.

Report on Internal Control Over Compliance

Management of Sullivan County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Sullivan County's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Sullivan County's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

254

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

We have audited the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Sullivan County, Tennessee, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise Sullivan County’s basic financial statements. We issued our report thereon dated December 20, 2018, which contained unmodified opinions on those financial statements.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Very truly yours,


December 20, 2018

JPW/tg

255

Sullivan County, Tennessee, and the Sullivan County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2)For the Year-Ended June 30, 2018

Federal Pass-throughFederal/Pass-Through Agency/State CFDA Entity IdentifyingGrantor Program Title Number Number Expenditures

U.S. Department of Agriculture: Direct Program: Forest Service Schools and Roads Cluster: Schools and Roads - Grants to States 10.665 N/A $ 38,004 Passed-through State Department of Education: Child Nutrition Cluster: (4) School Breakfast Program 10.553 N/A 784,424 National School Lunch Program 10.555 N/A 2,288,538 (12) Passed-through State Department of Agriculture: Child Nutrition Cluster: (4) National School Lunch Program (Commodities - Noncash Assistance) 10.555 N/A 348,012 (12) Passed-through State Department of Health: Special Supplemental Nutrition Program for Women, Infants, and Children 10.557 GG-15-43129-00 849,380Total U.S. Department of Agriculture $ 4,308,358

U.S. Department of Interior: Direct Program: Payments in Lieu of Taxes 15.226 N/A $ 92,608Total U.S. Department of Interior $ 92,608

U.S. Department of Justice: Passed-through State Commission on Children and Youth: Juvenile Justice and Delinquency Prevention - Allocation to States 16.540 (5) $ 63,720 Passed-through State Department of Finance and Administration: Crime Victim Assistance 16.575 30147 44,361 Violence Against Women Formula Grants 16.588 26708 53,262 Edward Byrne Memorial Justice Assistance Grant Program 16.738 28891 62,222 Direct Program: Equitable Sharing Program 16.922 (3) 4,575Total U.S. Department of Justice $ 228,140

U.S. Department of Transportation: Passed-through State Department of Transportation: Alcohol Open Container Requirements 20.607 (6) $ 63,034Total U.S. Department of Transportation $ 63,034

U.S. Institute of Museums and Library Services: Passed-through State Library and Archives: Grants to States 45.310 30504-00517 $ 1,677Total U.S. Institute of Museums and Library Services $ 1,677

U.S. Department of Education: Passed-through State Department of Education: Title 1 Grants to Local Educational Agencies 84.010 N/A $ 2,374,095 Special Education Cluster: (4) Special Education - Grants to States 84.027 N/A 2,490,676 Special Education - Preschool Grants 84.173 N/A 91,591 Career and Technical Education - Basic Grants to States 84.048 N/A 185,153 Education for Homeless Children and Youth 84.196 N/A 56,028 Improving Teacher Quality State Grants 84.367 N/A 329,056Total U.S. Department of Education $ 5,526,599

(Continued)

256

Sullivan County, Tennessee, and the Sullivan County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2) (Cont.)

Federal Pass-throughFederal/Pass-Through Agency/State CFDA Entity IdentifyingGrantor Program Title Number Number Expenditures

U.S. Department of Health and Human Services: Passed-through State Department of Health: Hospital Preparedness Program (HPP) and Public Health Emergency Preparedness (PHEP) Aligned Cooperative Agreements 93.074 GG-18-53923-00 $ 453,565 Injury Prevention and Control Research and State and Community Based Programs 93.136 GG-15-44160-00 40,007 Family Planning Services 93.217 GG-18-54804-00 162,968 Immunization Cooperative Agreements 93.268 GG-17-53706-00 107,718 Centers for Disease Control and Prevention - Investigations and Technical Assistance 93.283 (7) 215,953 Preventive Health and Health Services Block Grant Funded Solely with Prevention and Public Health Funds (PPHF) 93.758 GG-18-53664-00 28,885 HIV Prevention Activities - Health Department Based 93.940 (8) 43,087 Assistance Programs for Chronic Disease Prevention and Control 93.945 GG-14-40524-00 74,925 Cooperative Agreements to Support State-based Safe Motherhood and Infant Health Initiative Programs 93.946 GG-15-45635-00 3,000 Maternal and Child Health Services Block Grant to the States 93.994 (9) 233,761 Passed-through State Department of Education: CCDF Cluster: Child Care and Development Block Grant 93.575 (3) 60,168Total U.S. Department of Health and Human Services $ 1,424,037

U.S. Department of Homeland Security: Passed-through State Department of Military: Emergency Management Performance Grants 97.042 52021-22238 $ 62,500 Homeland Security Grant Program 97.067 34101-29316 124,782Total U.S. Department of Homeland Security $ 187,282

Total Expenditures of Federal Grants $ 11,831,735

ContractState Grants Number Care and Coordination Services - State Department of Health N/A GG-18-53704-00 $ 83,398 Adolescent Pregnancy - State Department of Health N/A GG-18-53553-00 57,758 Tenncare Dental Prevention - State Department of Health N/A GG-17-50603-00 276,603 Tuberculosis Control and Prevention Program - State Department of Health N/A GG-18-54188-00 70,674 Home Visiting - State Department of Heath N/A GG-15-41198-00 377,358 Tenndercare Outreach - State Department of Health N/A GG-17-49872-00 167,746 HIV Prevention Program - State Department of Health N/A (10) 67,563 Neonatal Abstinence Syndrome Education Services - State Department of Health N/A GG-18-54870-00 76,384 Immunization Grants - State Department of Health N/A GG-17-53706-00 39,802 Grant in Aid - State Department of Health N/A GE-18-54925-00 458,906 Prenatal Presumptive Eligibility Expansion Program - State Department of Health N/A GU-18-54888-00 41,500 Juvenile Services Program - State Commission on Children and Youth N/A (11) 73,980 Multipurpose Agricultural Facility Grant - State Department of

General Services N/A 460/000-03-15 348,709 State Aid Program - State Department of Transportation N/A (3) 742,001 Litter Program - State Department of Transportation N/A (3) 50,102

(Continued)

257

Sullivan County, Tennessee, and the Sullivan County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2) (Cont.)

FederalFederal/Pass-Through Agency/State CFDA ContractGrantor Program Title Number Number Expenditures

State Grants (Cont.) Recycling Equipment Grant - State Department of Environment and

Conservation N/A 32701-02949 $ 47,850Court Security Grant Program - Administrative Office of the Courts N/A (3) 6,556

Read to be Ready Coaching Network Program - State Department of Education N/A (3) 9,970 CTE Equipment Grant - State Department of Education N/A (3) 193,691 Safe Schools Act Grant - State Department of Education N/A (3) 36,102 Connect TN - State Department of Education N/A (3) 25,628 Coordinated School Health - State Department of Education N/A (3) 90,604 Early Childhood Education Project - State Department of Education N/A (3) 580,624

Total State Grants $ 3,923,509

CFDA = Catalog of Federal Domestic AssistanceN/A = Not Applicable

(1) Presented in conformity with generally accepted accounting principles using the modified accrual basis of accounting.(2) Sullivan County elected not to use the 10% de minimis cost rate permitted in the Uniform Guidance.(3) Information not available.(4) Child Nutrition Cluster total $3,420,974; Special Education Cluster total $2,582,267.(5) 43850: $53,720; 31601-1830: $10,000.(6) Z-17THS310: $1,613; Z-18THS300: $61,421.(7) GG-17-53331-00: $30,204; GG-18-56074-00: $185,749.(8) GG-17-52721-00: $22,163; GG-18-56737-00: $20,924.(9) GG-15-41329-00: $16,965; GU-16-46488-01: 30,000; GG-18-53704-00: $125,096; GG-18-54086-00: $61,700.(10) GG-17-52721-00: $20,234; GG-18-56737-00: $47,329.(11) 43829: $55,980; Information not available: $18,000.(12) Total for CFDA No 10.555 is $2,636,550.

258

Sullivan County, TennesseeSummary Schedule of Prior-year FindingsFor the Year Ended June 30, 2018

Fiscal Page Finding CFDAYear Number Number Number

OFFICES OF COUNTY MAYOR AND DIRECTOR OF ACCOUNTS AND BUDGETS

2017 245 2017-001 N/A


2017 247 2017-002 N/A

There were no prior-year federal award findings to report.

Government Auditing Standards require auditors to report the status of uncorrected findings from prioraudits. In addition, OMB's Uniform Guidance requires auditees to report the status of all prior-yearfindings whether corrected or not. Presented below are financial statement findings along with theircurrent status from the Annual Financial Report for Sullivan County, Tennessee, for the year endedJune 30, 2018.

Prior-year Financial Statement Findings

Prior-year Federal Award Findings

Title of Finding Current Status

Corrected

Deficiencies were noted in the Maintenance of Execution Docket Trial Balances.

County Health Department Personnel Failed to Request Reimbursements for Grant Expenditures on a Timely Basis.

Not Corrected - See Explanation on Corrective Action Plan

259

Financial Statements:

1. Our report on the financial statements of Sullivan County is unmodified.

2. Internal Control Over Financial Reporting:

* Material weakness identified? NO

* Significant deficiency identified? YES

3. Noncompliance material to the financial statements noted? NO

Federal Awards:

4. Internal Control Over Major Federal Programs:

* Material weakness identified? NO

* Significant deficiency identified? NONE REPORTED

5. Type of report auditor issued on compliance for major programs. UNMODIFIED

6. Any audit findings disclosed that are required to be reported inaccordance with 2 CFR 200.516(a)? NO

7. Identification of Major Federal Programs:

* CFDA Numbers: 10.553 and 10.555 Nutrition Cluster: School Breakfast Program and National School Lunch Program

* CFDA Number 10.557 Special Supplmental Nutrition Program for -Women, Infants, and Children

8. Dollar threshold used to distinguish between type A and Type B Programs. $750,000

9. Auditee qualified as low-risk auditee? YES

SULLIVAN COUNTY, TENNESSEE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS


PART I, SUMMARY OF AUDITOR'S RESULTS

260

PART II, FINDINGS RELATING TO THE FINANCIAL STATEMENTS

Findings and recommendations, as a result of our audit, are presented below. We reviewed these findings and recommendations with management to provide an opportunity for their response. Written responses for all findings are paraphrased and presented following each finding and recommendation. Management’s corrective action plans, whether related to the financial statements or federal awards, are presented separately in the Management’s Corrective Action Plan in the Single Audit Section of this report. Findings relating specifically to the audit of federal awards, if any, are separately presented under Part III, Findings and Questioned Costs for Federal Awards.


FINDING 2018-001 GENERAL LEDGER INSURANCE LIABILITY ACCOUNTS WERE NOT RECONCILED WITH PAYROLL REPORTS AND PAYMENTS (Internal Control – Significant Deficiency Under Government Auditing Standards)

The School Department pays its employee health benefits insurance deductions for the General Purpose School Fund and its special revenue funds monthly through the General Purpose School Fund; however, the special revenue funds do not transfer their deduction amounts to the General Purpose School Fund until after year-end. At year-end, the deduction balances due to the General Purpose School Fund are reflected as Due from Other Funds and the remaining balances in the special revenue funds as Due to Other Funds. However, the department does not reconcile individual funds’ general ledger insurance liability accounts with subsidiary payroll records and monthly billings; therefore, there is the potential for unidentified amounts to accumulate. Likewise, this delay in remitting deduction amounts until after year-end decreases the operating cash in the General Purpose School Fund and could result in a fund deficit in the special revenue funds. The amounts that represent insurance liability account balances reflected as Due to/from Other Funds at June 30, 2018, are as follows:

Due to/from Other Funds:


General Purpose School School Federal Projects (1) $ 887,940 " Central Cafeteria 486,778 " Other Special Revenue (2) 268Central Cafeteria School Federal Projects (2) 8,024Total $ 1,383,010

(1) = Amount includes $73,227 from fiscal year 2016-17(2) = Total presented from fiscal year 2016-17.

261

Sound business practices dictate that insurance liability accounts should be reconciled monthly with insurance reports and monthly billings. The failure to regularly reconcile insurance liability accounts increases the risks that errors will occur and not be detected and corrected in a timely manner. This deficiency resulted from a lack of management oversight and a lack of understanding of sound business practices and internal controls.

RECOMMENDATION General ledger insurance liability accounts should be reconciled monthly with subsidiary records, monthly billings, and payments by individual fund. Any errors discovered should be corrected promptly. Management should pay insurance liabilities from each respective fund. MANAGEMENT’S RESPONSE – DIRECTOR OF SCHOOLS We hereby concur with this finding, and we agree that detailed reconciliation was not performed on the insurance liability accounts and that the special revenue liabilities were only transferred annually. However, additional information has been discovered when preparing a corrective action plan. While speaking with the payroll department and human resources, it was learned that some reconciliations are included in Skyward, the financial management system of SCDE, which the Business Manager was not aware of. Skyward does not offer a specific reconciliation application within its Insurance Tracking module, but a reconciliation is accomplished behind the scenes in the background of the database. Payroll exception reports are produced that detail some of the results of said reconciliation. Additionally, the human resource staff is also completing manual reconciliations above and beyond what the system completes of employee accounts for those who terminate employment. We realize that additional reconciliations can be completed, and we plan to implement those immediately. Also, the Insurance Tracking module does not have a way of distinguishing liabilities across the different funds. So, the invoice that it creates cannot be easily broken down. Therefore, monthly bills are paid through the GPS fund and transfers are made. We feel that more timely transfers could occur from the special revenue funds to the GPS fund. This annual transfer has historically been the normal operation. We will implement a change in that normal operation, and transfers will be made quarterly.

___________________________ OFFICE OF CIRCUIT, GENERAL SESSIONS, AND LAW COURTS CLERK FINDING 2018-002 EXECUTION DOCKET TRIAL BALANCES WERE NOT

MAINTAINED PROPERLY (A. – Internal Control – Significant Deficiency Under Government Auditing Standards; B. – Noncompliance Under Government Auditing Standards)

During the period under audit, the following deficiencies were noted in the maintenance of execution docket trial balances:

A. At June 30, 2018, the circuit and general sessions courts clerk had prepared trial balances of execution docket cause balances as required by Section 18-2-103, Tennessee Code Annotated (TCA); however, these trial balances did not reconcile with general ledger accounts in Circuit Court by $6,412,567 and in General Sessions Court by $52,821. As stated in the prior-year audit finding, beginning in June 2015, the office started using a new court computer application. It appears

262

that differences between execution docket trial balances and general ledger accounts have existed since the 2015 application conversion, and the differences noted above are in part due to the software vendor making changes to the execution docket trial balances without reviewing the balances with the clerk. It should be noted that subsequent to June 30, 2018, the software vendor in consultation with representatives from the Circuit and General Sessions Courts Clerk Office made changes to the execution docket trial balances. These changes resulted in the execution docket trial balances not reconciling with the general ledger accounts in Circuit Court by $159,774 and in General Sessions Court by $217,339 as of July 31, 2018.

B. Based on the deficiency noted above, we were unable to determine if the clerk had

fully complied with provisions of the Unclaimed Property Act, Section 66-29-110, TCA. This statute provides that any funds held by the court for one year and unclaimed by the owner are considered abandoned. Section 66-29-113, TCA, further requires these funds to be reported and paid to the state Treasurer’s Office.

These deficiencies are attributable to the failure of management to ensure that the software vendor correctly entered the execution docket trial balance information when the office changed software. Additionally, subsequent changes made by the vendor were not confirmed by management for accuracy and appropriateness. The failure to accurately reconcile execution docket trial balances with general ledger accounts in a timely manner could lead to inaccurate accounting records and increase the risks of misappropriation of funds. Also, these deficiencies are the result of management’s failure to correct the finding reported in the prior-year audit report and the failure to implement their corrective action plan. RECOMMENDATION Management should ensure an accurate execution docket trial balance is maintained for each court. Execution docket trial balances should be reconciled with general ledger accounts and reviewed by management for accuracy. Any funds held by the court for one year and unclaimed by the owner are considered abandoned and should be reported and paid to the state Treasurer’s Office in compliance with statute. MANAGEMENT’S RESPONSE – CIRCUIT, GENERAL SESSIONS, AND LAW COURTS CLERK BOBBY L. RUSSELL In reference to deficiency A: This office has been corresponding with the software vendor to correct this deficiency since the conversion of July 2015. These deficiencies occurred in the conversion from the previous software program to a new state approved software. I became aware of this situation only a few weeks ago and have been assured that the vendor has made significant progress concerning the Circuit Court docket balances. They are continuing to work on the General Sessions docket balances to correct the problem. In reference to deficiency B: This office has been complying with the Unclaimed Property Act TCA 66-29-110-113, but the auditors state they cannot determine that we have complied due to the execution trial docket balances. My bookkeeper assures me that she is compliance with the above statutes.

We will diligently continue to work with the software vendor to correct these deficiencies.

________________________________________

263

OFFICE OF SHERIFF

FINDING 2018-003 THE SHERIFF’S OFFICE HAD DEFICIENCIES IN THE

MAINTENANCE OF SEIZED PROPERTY AND EVIDENCE RECORDS (Internal Control – Significant Deficiency Under Government Auditing Standards)

As part of our audit procedures for obtaining reasonable assurance that seized property and evidence records were properly maintained by the Sheriff’s Department, we judgmentally examined and tested the seized property and evidence records. Our examination revealed the following deficiencies, which can be attributed to a lack of management oversight.

A. Evidence logs did not agree with seized cash located in the possession of the evidence custodian. When reviewing the evidence logs, auditors were assured that all seized cash had been deposited into the official bank account used for evidence. However, during a review of the evidence room with the officers on duty, we observed that cash totaling $42,141 was being maintained in a safe. This cash related to approximately 66 cases dating as far back as 2005. Evidence logs for many of these cases indicated that these seized funds had been deposited in a prior year. Since evidence logs were not adequately updated and maintained, we were unable to determine if the office properly accounted for all evidence and seized property. All seized cash in the safe was deposited subsequent to June 30, 2018.

B. Officers turning in property to the department’s evidence custodian were not always issued a property receipt. From our review, only two property receipts were issued by the evidence custodian for the entire 2017-18 fiscal year; however, multiple items were processed and added to the evidence inventory records. The failure to issue property receipts decreases controls over evidence and increases the risk of loss.

RECOMMENDATION A perpetual inventory log should be accurately maintained for all seized property. At a minimum, this log should include the following: date received, defendant, case number, description, location, signatures of individuals signing evidence in and out, and disposition. The inventory log should be periodically reconciled with the seized property on hand by personnel independent of maintaining the log. Property receipts should be issued to personnel submitting property to the evidence custodian. MANAGEMENT’S RESPONSE – SHERIFF JEFF CASSIDY We concur with the audit findings and have taken appropriate steps to make corrections.

264

PART III, FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS

There were no findings and questioned costs related to federal awards for the year ended June 30, 2018.

265

FindingNumber


2018-001 267


2018-002 268

OFFICE OF SHERIFF

2018-003 269The Sheriff's Office had Deficiencies in the Maintenance of Seized Property and Evidence Records

Execution Docket Trial Balances were not Maintained Properly

General Ledger Insurance Liability Accounts were not Reconciled with Payroll Reports and Payments

We reviewed the financial statement and federal award findings and recommendations with management toprovide an opportunity for their response as required by the auditee requirements within Title 2 U.S. Code ofFederal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirementsfor Federal Awards (Uniform Guidance). Management’s corrective action plans for all financial statementfindings and federal award findings are presented in this section and have been indexed below. The correctiveaction plans were prepared by management and have been presented as they were submitted.

Sullivan County, TennesseeManagement's Corrective Action Plan


Title of FindingCorrective Action

Plan Page Number

266

DIRECTOR OF SCHOOLS EVELYN RAFALOWSKI

ASSISTANT DIRECTOR ANGELA BUCKLES

December 14, 2018

Mark Treece, Audit Manager

Division of Local Government Audit

5401 Kingston Pike, Building 2, Suite 300

Knoxville, TN 37919

BOARD OF EDUCATION

MICHAEL HUGHES. CHAIRMAN

RANDALL JONES, VICE CHAIRMAN

RANDALL GILMORE MARX IRESON

!'AUL ROBINSON

MATTHEW SPIVEY JANE THOMAS

Management's Corrective Action Plan

GENERAL LEDGER INSURANCE LIABILITY ACCOUNTS WERE NOT

RECONCILED WITH PAYROLL REPORTS AND PAYMENTS

Person Preparing Corrective Action Plan: Ingrid Deloach

Persons Responsible for Implementing the Corrective Action Plan: Ingrid Deloach and HR Staff

Anticipated Completion Date of Corrective Action: December 14, 2018

Repeat Finding: No

Planned Corrective Action:

The Business Manager and staff of the Human Resources Department will work closely

together to compile monthly payroll verification reports that will be reconciled with monthly

insurance premium statements. Any discrepancies will be corrected immediately following

their discovery. In addition, insurance liabilities from the special revenue funds will be

transferred to the General Purpose School Fund quarterly beginning with the December 2018

balances.

Evelyn Rafalowski

Director of Schools

Ingrid Deloach

Business Manager

SULLIVAN COUNTY SCHOOLS PO BOX 306 J BLOUNTVILLE. TN 37617

Phone 423.354.1000 I Fax 423.354.1074Iwww.sullivank12.net

267

Office of the Circuit Court Clerk of Sullivan County, Tennessee

Bobby L. Russell, Clerk

140 Blountville Bypass - P.O. Box 585 - Blountville. Tennessee 37617 - (423) 279 2752 - Fox (423) 323 3741

Corrective Action Plan

EXECUTION DOCKET TRIAL BALANCES WERE NOT

MAINTAINED PROPERLY

Response and Corrective Action Plan Prepared by:

Bobby L. Russell, Circuit Court Clerk

Person Responsible for Implementing the Corrective Action: Bobby L. Russell. Circuit Court Clerk Sandra Tate, Book Keeper, Assistant Manager

Anticipated Completion Date of Corrective Action: 2019

Repeat Finding:

Yes

Reason Corrective Action was Not Taken in the Prior Year: Work began in 2018 by the former clerk on implementing a corrective action plan with the software vendor and a significant amount of the discrepancies have been corrected.

Planned Corrective Action: I , along with my staff , will continue to work with the software vendor in correcting the discrepancies that occurred when the clerk's office performed a software conversion in 2015 to a new state approved software. This is the reason that the discrepancies have occurred and the process of correcting them is time consuming as well as tedious taking longer than expected. Once this plan is completed this office will be in compliance with TCA 18-2-103.

This office is in compliance with TCA 66-29-110 and once the corrections are made to the software conversion this will be shown.

Signature:

268

Jeff Cassidy SHERIFF

s��7� S�t�/liee

An Accredited Agency

Corrective Action Plan

FINDING: THE SHERIFF'S OFFICE HAD DEFICIENCIES IN THE

MAINTENANCE OF SEIZED PROPERTY AND EVIDENCE

RECORDS

Response and Corrective Action Plan Prepared by: Jeff Cassidy, Sullivan County Sheriff

Person Responsible for Implementing the Corrective Action: Andy Seabolt, Captain

Anticipated Completion Date of Corrective Action: July 2018

Repeat Finding: No

Planned Corrective Action: We concur, the former Evidence Custodian resigned in May 2018 and changes were made immediately after deficiencies were brought to management's attention. The new Evidence Custodian will properly maintain the Evidence Log and ensure seized funds are properly accounted for. We concur, the new Evidence Custodian will issue proper receipts to the Officers submitting the seized property in a timely manner.

Signature:

PO BOX 589 (423) 279-7500

FAX (423) 279-7516 BLOUNTVILLE, TENNESSEE 37617

269

BEST PRACTICE

Accounting literature describes a best practice as a recommended policy, procedure, or technique that aids management in improving financial performance. Historically, a best practice has consistently shown superior results over conventional methods.

The Division of Local Government Audit strongly believes that the item noted below is a best practice that should be adopted by the governing body as a means of significantly improving accountability and the quality of services provided to the citizens of Sullivan County.

SULLIVAN COUNTY SHOULD ADOPT A CENTRAL SYSTEM OF ACCOUNTING AND BUDGETING COVERING ALL DEPARTMENTS

Sullivan County operates a central purchasing department that makes purchases and enters into contracts for all departments pursuant to Chapter 261, Private Acts of 1947, as amended. For its accounting and budgeting, Sullivan County operates under provisions of Section 5-12-101, et seq., Tennessee Code Annotated (TCA), and Section 5-13-101, et seq., TCA. These acts include provisions for centralized accounting and budgeting under the administration of the director of accounts and budgets for funds maintained by the mayor and road superintendent. However, accounting records for the School Department are maintained by School Department personnel. Sound business practices dictate that establishing a central system would significantly improve internal controls over the accounting and budgeting processes. The absence of a central system of accounting and budgeting has been a management decision by the County Commission resulting in decentralization and some duplication of effort. The Division of Local Government Audit strongly believes that the adoption of a central system of accounting and budgeting is a best practice that would significantly improve accountability and the quality of services provided to the citizens of Sullivan County. Therefore, we recommend the adoption of the County Financial Management System of 1981 or a private act, which would provide for a central system of accounting and budgeting covering all county departments.

270

sullivan county tennessee - tn comptrollersullivan county, tennessee for the year ended june 30,...

Documents