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Home My WebLink AboutDeschutes County 911 2019 Financial StatementsFinancial Statements As of and For the Year Ended June 30, 2019 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon EideBaiffly. eidebailly.com Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Table of Contents June 30, 2019 IndependentAuditor's Report ..................................................................................................................................... 1 Management's Discussion and Analysis..................................................................................................................... 4 Financial Statements Statementof Net Position.................................................................................................................................... 10 Statementof Activities......................................................................................................................................... 11 Balance Sheet — General Fund............................................................................................................................. 12 Reconciliation of the of the Governmental Fund Balance Sheet for the General Fund to the Statementof Net Position................................................................................................................................ 13 Statement of Revenues, Expenditures and Changes in Fund Balances General Fund ...................................... 14 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of the General Fund to the Statement of Activities.................................................................................................... 15 Notes to Financial Statements.............................................................................................................................. 16 Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund................................................................................................................................................................. 34 Schedule of Proportionate Share of the Net Pension Liability (Asset)................................................................ 35 Schedule of Employer Contributions................................................................................................................... 36 Schedule of Changes in Total OPEB Liability.................................................................................................... 37 Notes to Required Supplementary Information................................................................................................... 38 Other Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget to Actual- Reserve Sub - Fundof General Fund...................................................................................................................................... 39 Combining Balance Sheet — General Fund and Reserve Sub-Fund..................................................................... 40 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — General Fund and Reserve Sub-Fund............................................................................................ 41 Schedule of Property Tax Transactions............................................................................................................... 42 Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.. 43 Audit Comments and Disclosures Required by State Regulations............................................................................ 45 Independent Auditor's Report Required by Oregon State Regulations..................................................................... 46 EideBailly CPAs & BUSINESS ADVISORS Independent Auditor's Report The Deschutes County Commissioners Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Bend, Oregon Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities and the general fund of Deschutes County 9-1-1 County Service District (the District), a component unit of Deschutes County, Oregon, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the District'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 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. What inspires you, inspires us. I eidebailly.com 877 W. Main St., Ste. 800 1 Boise, ID 83702-5858 1 T 208.344.7150 1 F 208.344.7435 1 EOE Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the general fund of the District, as of June 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter As discussed in Note 1, the financial statements of the District are intended to present the financial position and changes in financial position attributable to the District. They do not purport to, and do not present fairly the financial position of Deschutes County, Oregon as of June 30, 2019, and the changes in its financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our opinions have not been modified with respect to this matter. Emphasis of a Matter — Adoption of New Accounting Standard As described in Notes 1, 5 and 8 to the financial statements, the County adopted the provisions of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which has resulted in a restatement of the net position as of July 1, 2017. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, the schedule of revenues, expenditures and changes in fund balance — budget and actual — general fund (budgetary schedule), schedule of proportionate share of the net pension liability (asset), the schedule of employer contributions, and schedule of changes in District's total OPEB liability (RSI), as listed in the table of contents, 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 RSI 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 RSI because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's basic financial statements. The budgetary schedule described above 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 budgetary schedule 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 budgetary schedule is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 2 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's financial statements. The schedule of revenues, expenditures and changes in fund balance — budget and actual — (general and reserve sub -fund of general fund), combining balance sheet — general fund and reserve sub -fund, and combining statement of revenues, expenditures and changes in fund balances - general fund and reserve sub -fund, and the schedule of property tax transactions (supplementary information) are presented for purposes of additional analysis and are not a required part of the financial statements. The supplementary 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. 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 supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2019 on our consideration of the District'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 the District'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 the District's internal control over financial reporting and compliance. Report on Other Legal and Regulatory Requirements In accordance with the Minimum Standards of Audits of Oregon Municipal Corporations, we have issued our report dated November 18, 2019 on our consideration of the District's compliance with certain provisions of laws and regulations, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing and not to provide an opinion on compliance. r For Eide Bailly LLP Boise, Idaho November 18, 2019 3 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Management's Discussion and Analysis June 30, 2019 As management of Deschutes County 9-1-1 County Service District (the District), a component unit of Deschutes County, Oregon, we offer readers of the District's financial statements this narrative overview and analysis of the financial activities of the District for the fiscal year ended June 30, 2019. Financial Highlights • The assets and deferred outflows of resources of Deschutes County 9-1-1 County Service District exceeded its liabilities and deferred inflows of resources at June 30, 2019, by $11,673,403. Of this amount, $3,093,860 is unrestricted. • Total net position decreased by $628,248, from June 30, 2018. • As of June 30, 2019, Deschutes County 9-1-1 County Service District's governmental funds reported a combined ending fund balance of $8,642,092. • As of June 30, 2019, the unassigned fund balance in the General Fund was $5,946,674 or 56%, of total General Fund Fiscal Year 2019 revenues. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Deschutes County 9-1-1 County Service District's basic financial statements. These basic financial statements comprise three components: 1) government - wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of Deschutes County 9-1-1 County Service District's finances, in a manner similar to a private -sector business. The Statement of Net Position presents information on all of the District's assets and deferred outflows of resources and liabilities and deferred inflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of Deschutes County 9-1-1 County Service District is improving or deteriorating. The Statement of Activities presents information showing how the District's net position changed during the fiscal year ended June 30, 2019. Changes in net position are reported when the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items, for example, accrued property taxes and accrued vacation that will result in cash flows in future fiscal periods. Each of these government -wide financial statements, Statement of Net Position and Statement of Activities, show the functions of the District that are supported primarily by taxes and intergovernmental revenues (governmental activities). The governmental activity of the District is public safety. The government -wide financial statements can be found on pages 10-11 of this report. 0 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Management's Discussion and Analysis June 30, 2019 Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local government entities, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Each of the funds of the District is classified as governmental funds. Governmental funds Governmental funds are used to account for essentially the same functions as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. A reconciliation from the Governmental Fund Balance Sheet for the General Fund to the Government -wide Statement of Net Position and a reconciliation from the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balance of the General Fund to the Government -wide Statement of Activities have been included in this report. The District reported activity in one governmental fund during the Fiscal Year ended June 30, 2019. Information on the General Fund and Sub -Fund are shown in the Combining funds Balance Sheet and in the Combining Schedule of Revenues, Expenditures and Changes in Fund Balances that are presented as Other Supplementary Information. The District adopts an annual budget for its General and Sub -Fund. A budgetary comparison statement has been provided for each of these funds to demonstrate compliance with the annual budget. The General Fund Financial Statements can be found on pages 12-15 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 16-33 of this report. Government -wide Financial Analysis Net position, at a specific point in time, serves as a useful indicator of an entity's financial position. In the case of Deschutes County 9-1-1 County Service District, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $11,673,403 at June 30, 2019. Approximately 73%, $8,579,543 of the District's net position represents its investment in capital assets. The District uses these capital assets to provide services to citizens and are, therefore, not available for future spending. Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Management's Discussion and Analysis June 30, 2019 The remaining 27%, $3,093,860, of Deschutes County 9-1-1 County Service District's net position may be used to meet the District's on-going obligations to citizens and creditors. The District's net position decreased by $628,248 during the year ended June 30, 2019. A comparison of the summarized government -wide statements to the prior year is as follows: Assets Current and other assets Capital assets Total assets Deferred Outflows of Resources Liabilities Current liabilities Noncurrent liabilities Total liabilities Deferred Inflows of Resources Net Position Investment in capital assets Unrestricted Total net position Statements of Net Position June 30, 2019 June 30, 2018 Change $ 9,439,636 $ 9,441,150 $ (1,514) 8,579,543 8,877,867 (298,324) 18,019,179 18,319,017 (299,838) 1,918,095 1,616,336 301,759 104,258 105,838 (1,580) 7,250,968 7,388,065 (137,097) 7,355,226 7,493,903 (138,677) 908,644 139,799 768,845 8,579,543 8,877,867 (298,324) 3,093,860 3,423,784 (329,924) $ 11,673,403 $ 12,301,651 $ (628,248) 9 Program revenues Charges for services General revenues Property taxes Investment earnings Total revenues Expenses Public safety Change in Net Position Net Position, Beginning of Year Net Position, End of Year Governmental Activities Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Management's Discussion and Analysis June 30, 2019 Statements of Activities Year Ended Year Ended June 30, 2019 June 30, 2018 Change $ 1,752,080 $ 1,657,884 $ 94,196 8,572,315 8,072,686 499,629 261,714 121,446 140,268 10,586,109 9,852,016 734,093 11,214,357 11,275,405 (61,048) (628,248) (1,423,389) 795,141 12,301,651 13,725,040 (1,423,389) $ 11,673,403 $ 12,301,651 $ (628,248) Governmental activities, the only type of activity of Deschutes County 9-1-1 County Service District, decreased net position by $628,248 during the Fiscal Year ended June 30, 2019. Financial Analysis of the District's Funds Deschutes County 9-1-1 County Service District uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. General Fund The focus of Deschutes County 9-1-1 County Service District's governmental funds are to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing Deschutes County 9-1-1 County Service District's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending as of the end of the fiscal year. As of June 30, 2019, $8,642,092 is the reported combined ending fund balance for Deschutes County 9-1-1 County Service District's governmental funds, an increase of $2,502 from June 30, 2018. This increase is due primarily to lower than expected expenditures and partially due to higher than anticipated property tax collections. 7 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Management's Discussion and Analysis June 30, 2019 As of June 30, 2019, the unassigned fund balance of Deschutes County 9-1-1 County Service District's General Fund was $5,946,674. One measure of the General Fund's liquidity is the relationship of the total fund balance to the Fund's total expenditures. The unassigned fund balance as of June 30, 2019, for the General Fund is 56% of total General Fund Fiscal Year 2019 expenditures. The remainder of the General Fund balance, is $2,695,418, and is intended to be used for future capital asset replacement. General Fund Budgetary Highlights General Fund actual revenues exceeded estimated revenues by $261,182. Property taxes were $132,787 in excess of budget, due to conservative budgeting practices in the estimated taxable assessed value growth rate. The amount received for services was $48,052 less than estimated due a change in the method of charging third party agencies for the use of the communication systems. Capital Asset and Debt Administration Capital Assets Deschutes County 9-1-1 County Service District's investment in capital assets for its governmental activities as of June 30, 2019, is $8,579,543, net of accumulated depreciation. This investment in capital assets includes equipment, vehicles, intangibles and construction in progress on an upgrade to its CAD and communication systems. Additional information on Deschutes County 9-1-1 County Service District's depreciable capital assets is included in Note 3. Long-term Debt Deschutes County 9-1-1 County Service District has no long-term debt; therefore, the District has not been separately rated by any of the bond rating agencies. Key Economic Factors and Budgets Information for the Future • In May 2016, the voters approved authorization to form a new district upon withdrawal of territory from the existing District, effective July 1, 2017. Upon the withdrawal and formation, the assets and liabilities of the District were transferred to the new district. The permanent tax rate for the new District is higher than that of the former District thereby eliminating the need to rely on serial levies. • The District's Assessed Valuation of Taxable Property increased from fiscal year 2019 to fiscal year 2020 by 5.37% to approximately $25.9 billion. Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Management's Discussion and Analysis June 30, 2019 Request for Information This financial report is designed to provide a general overview to those parties interested in Deschutes County 9-1-1 County Service District's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Deschutes County Finance Department, 1300 NW Wall Street, Suite 200, Bend, Oregon 97703. 9 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Statement of Net Position June 30, 2019 Assets Current Assets Cash and investments Property taxes receivable Accounts receivable Prepaid PERS expense Total current assets Capital Assets Construction in process Land improvements Equipment and vehicles Intangible assets Accumulated depreciation Total capital assets Total assets Deferred Outflows of Resources Net pension liability: Differences between expected and actual experience Changes in assumptions or other inputs Changes in proportionate share Contributions subsequent to the measurement date Total deferred outflows of resources Liabilities Current liabilities - due within one year Accounts payable Noncurrent liabilities - due in more than one year Compensated leave Net pension liability Total OPEB liability Total liabilities Deferred Inflows of Resources Net pension liability: Changes in proportionate share Net difference between projected and actual earnings on investments Changes between employer's contributions and proportionate share of contributions Total OPEB liability: Differences between expected and actual experience Changes in assumptions or other inputs Total deferred inflows of resources Net Position Investment in capital assets Unrestricted Total net position Primary Government - Governmental Activities 8,417,482 202,169 307,292 512,694 9,439,636 1,855,944 254,783 10,124,906 1,814,617 (5,470,707) 8,579,543 18,019,179 174,908 1,195,454 55,091 492,642 1,918,095 104,258 667,162 5,141,779 1,442,028 7,355,226 34,067 228,324 63,367 241,183 341,703 908,644 8,579,543 3,093,860 $ 11,673,403 See Notes to Financial Statements 10 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Statement of Activities Year Ended June 30, 2019 Primary Government - Governmental Activities Expenses Public safety $ 11,214,357 Program Revenues Charges for services 1,752,080 Net program expenses 9,462,277 General Revenues Property taxes levied for general purposes 8,572,315 Interest on investments 261,714 Total general revenues 8,834,029 Change in Net Position (628,248) Net Position, Beginning of Year 12,301,651 Net Position, End of Year $ 11.673.403 See Notes to Financial Statements 11 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Balance Sheet — General Fund June 30, 2019 Assets Cash and investments $ 8,417,482 Property taxes receivable 202,169 Accounts receivable 307,292 Total assets $ 8,926,943 Liabilities Accounts payable $ 104,258 Deferred Inflows of Resources Unavailable revenue - property taxes 180,593 Fund Balance Assigned for future expenditures 2,695,418 Unassigned 5,946,674 Total fund balance 8,642,092 Total liabilities, deferred inflows of resources and fund balance $ 8,926,943 See Notes to Financial Statements 12 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Reconciliation of the of the Governmental Fund Balance Sheet for the General Fund to the Statement of Net Position June 30, 2019 Fund Balance $ 8,642,092 Amounts reported for governmental activities in the Statement of Net Position are different because: Prepaid PERS expenses are not financial resources and, therefore, are not reported in the fund. 512,694 Capital assets used in governmental activities are not financial resources and, therefore, are not reported on the Balance Sheet. 8,579,543 Contributions to the pension plan subsequent to measurement date - pension liability 492,642 Some of the District's receivables will be collected after year-end, but are not currently available resources and, therefore, are deferred in the General Fund. 180,593 Compensated absences are reported as expenditures in the period paid and, therefore, are not reported as obligations on the Balance Sheet. (667,162) Net pension liability is not due and payable in the current period and, therefore, is not reported on the Balance Sheet. (5,141,779) Contributions to the pension plan subsequent to measurement date - pension liability - Differences between expected and actual experience - pension liability 174,908 Changes between employer contributions and proportionate share of contributions - pension liability (63,367) Changes in proportionate share - pension liability 21,024 Net change in proportionate share - pension liability (228,324) Change in assumptions and other inputs - pension liability 1,195,454 Other post -employment benefits are not due and payable in the current period and, therefore, are reported on the Balance Sheet. (1,442,028) Differences between expected and actual experience - OPEB liability (241,183) Change in assumptions and other inputs - OPEB liability (341,703) Net Position of Governmental Activities $ 11,673,403 See Notes to Financial Statements 13 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Statement of Revenues, Expenditures and Changes in Fund Balances — General Fund Year Ended June 30, 2019 Revenues Property taxes $ 8,558,820 Interest 261,714 Charges for services 490,928 Other 3,022 Intergovernmental revenue 1,258,131 Total revenues 10,572,614 Expenditures Public safety 10,040,735 Capital outlay 529,377 Total expenditures 10,570,113 Net Change in Fund Balance 2,502 Fund Balance, Beginning of Year 8,639,590 Fund Balance, End of Year $ 8,642,092 See Notes to Financial Statements 14 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of the General Fund to the Statement of Activities Year Ended June 30, 2019 Net Change in Fund Balance - Total Governmental Fund $ 2,502 Amounts reported for governmental activities in the Statement of Activities are different because: Some expenses reported in the Statement of Activities (e.g. the change in prepaid PERS expenses, accrued compensated absences and total OPEB liability) do not require the use of current financial resources and, therefore, are not reported as expenditures 12,825 Accounting for the District's defined benefit cost-sharing pension plan. Contributions to pension plan made subsequent to measurement date 17,931 Pension expense (376,677) Governmental funds report capital outlay as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciated expense. Capital outlay 542,158 Depreciation (840,482) Property tax revenue is recognized under the modified accrual basis of accounting only to the extent it has been collected within sixty days of year-end. On the accrual basis, Statement of Activities, such revenue is recognized regardless of when collected. 13,495 Total of reconciling items (630,750) Changes in Net Position of Governmental Activities $ (628,248) See Notes to Financial Statements 15 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Note 1 - Organization and Summary of Significant Accounting Policies The District The Deschutes County 9-1-1 Service District (the District), a component unit of Deschutes County, Oregon, was established under ORS 401.720 on April 13, 1988, for the purpose of providing emergency communication (9-1- 1) services for Deschutes County (the County). The County Board of Commissioners is the governing body of the District. 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 activities of the government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The District has no business -type activities or fiduciary funds. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment; and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. 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. Revenues are recorded when earned and expenses are recorded when a liability is incurred. 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. It is the District's policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Revenues received after this period, are considered unavailable. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to compensated absences and other post -employment benefits are recorded only when payment is due. Property taxes associated with the fiscal period are considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the District. As a general rule, the effect of any interfund activity has been eliminated from the government -wide financial statements. 16 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 The District reports the following governmental funds: General Fund - The General Fund is utilized to account for the transactions of the District. Property taxes and law enforcement contracts are its principal sources of revenue. Expenditures are for the operation and administration of the District. Reserve Sub -Fund - The Reserve Sub -Fund accumulates resources for acquisition of capital assets. Transfers from the General Fund and interest are its principal sources of revenue. Expenditures are for capital outlay of the District. Budget Policy The District prepares a budget for all funds, which meets the requirements of state laws. The resolution authorizing appropriations for each fund sets the level by which expenditures cannot legally exceed appropriations. Appropriations are established on a programmatic basis. Budget categories are: public safety, debt service, transfers, and contingency. The detailed budget document contains more specific detailed information for the above-mentioned expenditure categories. Unexpected additional resources may be added to the budget through the use of a supplemental budget and appropriations resolution. Original and supplemental budgets may be modified by the use of appropriation transfers between the levels of control. Appropriations lapse as of year- end. Reporting Entity The District's financial statements include the accounts of all District operations. The criteria for including organizations as component units with the District's reporting entity, as set forth in GASB 61, The Financial Reporting Entity: Omnibus, include whether: • The organization is legally separate (can sue and be sued in its own name). • The District holds the corporate powers of the organization. • The District appoints a voting majority of the organization's board. • The District is able to impose its will on the organization. • The organization has the potential to impose a financial benefit/burden on the District. • There is fiscal dependency by the organization on the District. There were no specific agencies which required consideration under criterion in the current fiscal year for inclusion in the District's reporting entity. Under the above criterion, the District is includable as a component unit of the financial statements of Deschutes County, since the District's governing board is comprised of the Deschutes County Commissioners. The District also has a seven -member executive board that oversees operations. 17 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Cash, Investments in External Investment Pool and Investment Income Cash and investments are comprised of funds held by the Deschutes County Treasurer, in the County's cash and investment pool. The District's cash and investments participate in this pool rather than specific, identifiable securities. The District's share of County pooled cash and investments can be drawn upon demand, and therefore, the entire amount on deposit with the County is considered cash and cash equivalents. Interest earned on pooled investments is allocated monthly based on the average daily balance of the District in relation to total investments in the pool. It is not practical to determine the investment risk, collateral, or insurance coverage for the District's share of these pooled investments. This pool generally includes demand deposits, investments in the Oregon State Treasurer's Local Government Investment Pool (LGIP), obligations of the United States Treasury and United States Government agencies and instrumentalities, certain high-grade commercial paper and corporate bonds. This policy is in accordance with ORS 294.035 which specifies the types of investments authorized for municipal corporations. State statutes authorize the County to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds, municipal bonds, banker's acceptances, repurchase agreements, and the State Treasurer's Local Government Investment Pool (LGIP). Investments for the County, as well as for its component units, are reported at fair value. The LGIP operates in accordance with appropriate state laws and regulations. Information about the pooled cash and investments is included in the County's annual financial report and may be obtained by contacting the Deschutes County Finance Department, 1300 NW Wall Street, Suite 200, Bend, Oregon, 97703. Accounts Receivable The District considers all receivables as fully collectible; therefore, no allowance for uncollectible accounts has been established. Capital Assets Capital assets, which include land improvements, equipment, vehicles, intangibles and construction in progress are reported in the government -wide financial statements. In the governmental fund statements, capital assets are charged to expenditures as purchased. Capital assets are recorded at historical cost. Per GASB 72, Fair Value Measurement and Application, donated assets are recorded at acquisition value as of the date of the donation. Capital assets are defined by the District as assets with an initial cost of $5,000 or more and an estimated useful life greater than one year. Additions or improvements and other capital outlays that significantly extend the useful life of an asset, or that significantly increase the capacity of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Major outlays for capital assets and improvements are capitalized as projects are constructed. 18 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of Activities with accumulated depreciation reflected in the Statement of Net Position and is calculated on the straight-line basis over the following estimated useful lives: Asset Years Land improvements 10 - 15 years Equipment, vehicles and intangibles 5 years Deferred Outflows / Inflows of Resources In addition to assets, the Government -wide Statement of Net Position and/or the Governmental Fund Balance Sheet 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 future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. Deferred outflows arising from the District's participation in the Oregon Public Employees Retirement System (OPERS) comprise this statement element. In addition to liabilities, the Government -wide Statement of Net Position and/or the Governmental Fund Balance Sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Deferred inflows of resources, as a result of the accounting for the District's post -employment retirement plans, are reported on the Government - wide Statement of Net Position. Deferred inflows of resources are reported on the Governmental Fund Balance Sheet of the General Fund as a result of reporting using the modified accrual method. The government fund reports unavailable revenues from property taxes. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available. Compensated Absences Accumulated vested vacation pay is accrued as it is earned. Accrued vacation payable is recorded at actual accrued hours times current pay rates plus related fringe benefits. The amount represents a reconciling item between the fund -level and government -wide presentations. Sick pay, which does not vest, is recognized when leave is taken. Pension Plans For purposes of measuring the net pension liability and pension expense, information about the fiduciary net position of the OPERS cost-sharing multiple employer defined benefit pension plan (benefit plan) and additions to/deductions from the benefit plan's fiduciary net position have been determined on the same basis as they are reported by the benefit plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments of the plan are reported at fair value. 19 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Other Post -Employment Benefits Obligation (Total OPEB liability) The total OPEB liability is recognized as a long-term liability in the government -wide Statement of Net Position. The liability reflects the present value of expected future payments for post -employment benefits other than pension. Property Taxes/Unavailable Revenue Property taxes are assessed on a July 1 - June 30 fiscal year basis. The taxes are levied as of July 1 based on assessed values as of January 1. Property tax payments are due in three equal installments, on November 15, February 15 and May 15. A discount of 3% is available if taxes are paid in full by November 15 and a discount of 2% on the unpaid balance is available if taxes are paid in full by February 15. Property taxes attach as an enforceable lien July 1 and are considered delinquent if not paid by the following May 15. The Deschutes County Treasurer is the tax collection agent for the District. The District's 2019 fiscal year tax levy was $8,789,642. Tax revenue is considered available for expenditure upon receipt by the County, which serves as the intermediary collecting agency. Uncollected property taxes are shown on the government funds balance sheet as receivables. Collections within sixty days subsequent to year-end have been accrued and the remaining taxes receivable are recorded as deferred revenue on the modified accrual basis of accounting since they are not deemed available to finance operations of the current period. Fund Balance Reporting The Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54), defines the different types of fund balances that a governmental entity must use for financial reporting purposes. GASB 54 requires the fund balance amounts to be properly reported within one of the fund balance categories listed below: 1. Nonspendable such as fund balance associated with inventories, prepaids, long-term loans and notes receivable, and property held for resale (unless the proceeds are restricted, committed or assigned). 2. Restricted fund balance category includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers or through enabling legislation. 3. Committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the District's governing board (the District's highest level of decision- making authority). Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. 4. Assigned fund balance classification is intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. Assignments are made by the District Administrator based on the District Governing Board's direction. 5. Unassigned fund balance is the residual classification for the District's general fund and includes all spendable amounts not contained in the other classifications. The District reduces restricted amounts first when expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned or unassigned) amounts are available. The District reduces committed amounts first, followed by assigned amounts and then unassigned amounts when expenditures are incurred for the purpose for which amounts in any of those unrestricted fund balance classifications could be used. 20 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates. Note 2 - Cash and Investments As of June 30, 2019, the District had a deposit of $8,417,482 with the Deschutes County Treasurer. All of the District's deposits were adequately insured or collateralized by securities held by the pledging financial institution in the financial institution's name during the year. Note 3 - Capital Assets Capital asset activity for the fiscal year ended June 30, 2019, is as follows: Construction in progress Land improvements Software Equipment and vehicles Total Less accumulated depreciation Land improvements Software Equipment Total accumulated depreciation Balance June 30, 2018 Increases $ 1,378,759 $ 477,184 254,783 - 1,814,617 - 10,059,932 64,974 Balance Decreases June 30, 2019 $ - $ 1,855,944 254,783 1,814,617 10,124,906 13,508,092 542,158 - 14,050,250 (63,696) (18,199) (1,752,363) (29,879) (2,814,166) (792,405) (4,630,225) (840,482) $ 8,877,867 $ (298,324) - (81,895) - (1,782,241) (3,606,571) - (5,470,707) $ - $ 8,579,543 21 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Note 4 - Participation in Public Employees Retirement System Plan descriptions: Employees of the District are provided with pensions through the Oregon Public Employees Retirement System, (OPERS), which is a cost-sharing multiple -employer defined benefit plan. All the benefits of OPERS are established by the Oregon legislature pursuant to Oregon Revised Statute (ORS) Chapters 238 and 238A. The ORS Chapter 238 Defined Benefit Pension Plan, known as Tier 1/Tier 2 is closed to new members hired on or after August 29, 2003. A second program, the Chapter 238A-OPERS Pension Program (OP SRP -DB), is described in the second portion of this note. Membership in the programs is delineated based on date of hire. OPERS issues a publicly available financial report which can be obtained at haps://www. oregon. goy/pers/EMP/Pages/Actuarial-Financial-Information. aspx Benefits Provided Under the Programs Pension Benefits Chapter 238 -Tier One and Tier Two The OPERS retirement allowance is payable monthly for life. The allowance may be selected from 13 retirement benefit options. These options include survivorship benefits and lump - sum refunds. The basic benefit is based on years of service and final average salary. A percentage (2.0 percent for police and fire employees, 1.67 percent for general service employees) is multiplied by the number of years of service and the final average salary. Benefits may also be calculated under a formula plus an annuity (for members who were contributing before August 21, 1981,) or a money match computation if a greater benefit results. Chapter 238A-OPERS Pension Program The ORS 238A Defined Benefit Pension Program provides benefits to members hired on or after August 29, 2003. This portion of the OPSRP provides a life pension funded by employer contributions. Benefits are calculated with the following formula for members who attain normal retirement age: Police and fire: 1.8 percent is multiplied by the number of years of service and the final average salary. Normal retirement age for police and fire members is age 60 or age 53 with 25 years of retirement credit. To be classified as a police or fire member, the individual must have been employed continuously as a police or fire member for at least five years immediately preceding retirement. General service: 1.5 percent is multiplied by the number of years of service and the final average salary. Normal retirement age for general service members is 65, or age 58 with 30 years of retirement credit. A member of the pension program becomes vested on the earliest of the following dates: the date the member completes 600 hours of service in each of five calendar years, the date the member reaches normal retirement age, and, if the pension program is terminated, the date on which termination becomes effective. 22 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Disability A member with 10 or more years of A member who has accrued 10 or more years of Benefits creditable service who becomes disabled retirement credits before the member becomes from other than duty -connected causes may disabled or a member who becomes disabled due receive a non -duty disability benefit. A to job-related injury shall receive a disability disability resulting from a job -incurred benefit of 45 percent of the member's salary injury or illness qualifies a member determined as the last full month of employment (including OPERS judge members) for before the disability occurred. disability benefits regardless of the length of OPERS-covered service. Upon qualifying for either a non -duty or duty disability, service time is computed to age 58 (55 for police and fire members) when determining the monthly benefit. Benefit Members may choose to continue No ability to change. Changes participation in a variable equities after investment account after retiring and may Retirement experience annual benefit fluctuations due to changes in the market value of equity investments. Cost of Under ORS 238.360 monthly benefits are Under ORS 238A.210 monthly benefits are Living adjusted annually through cost -of -living adjusted annually through cost -of -living changes. Adjustments changes (COLA). The cap on the COLA in The cap on the COLA in fiscal year 2017 and fiscal year 2017 and beyond will vary based beyond will vary based on the amount of the on the amount of the annual benefit. annual benefit. Contributions OPERS funding policy provides for monthly employer contributions at actuarially determined rates. These contributions, expressed as a percentage of covered payroll, are intended to accumulate sufficient assets to pay benefits when due. This funding policy applies to the OPERS Defined Benefit Plan and the Other Postemployment Benefit Plans. Ultimate authority for setting and changing the laws governing contributions rests with the Oregon legislature. Employer contribution rates during the period were based on the December 31, 2015 actuarial valuation, which became effective July 1, 2017. The state of Oregon and certain schools, community colleges, and political subdivisions have made unfunded actuarial liability payments, and their rates have been reduced. Employer contributions for the year ended June 30, 2019, were $492,642, excluding amounts to fund employer specific liabilities. The rates, presented as a percentage of covered payroll, for the District in effect for the fiscal year ended June 30, 2019, were: Chapter 238 - Tier One and Tier Chapter 238A - OPERS Pension Two Program (OPSRP - DB) General Service 15.64% 9.25% Police and Fire 21.12% 14.02% 23 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the District reported a liability of $5,141,779 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2016 and rolled forward to June 30, 2018. The District's proportion of the net pension liability was based on the District's projected long-term contribution effort as compared to the total projected long-term contribution effort of all employers. Rates of every employer have at least two major components: Normal Cost Rate: The economic value, stated as a percent of payroll, for the portion of each active member's total projected retirement benefit that is allocated to the upcoming year of service. The rate is in effect for as long as each member continues in OPERS-covered employment. The current value of all projected future Normal Cost Rate contributions is the Present Value of Future Normal Costs (PVFNC). The PVFNC represents the portion of the projected long-term contribution effort related to future service. 2. UAL Rate: If system assets are less than the actuarial liability, an Unfunded Actuarial Liability (UAL) exists. UAL can arise in a biennium when an event such as experience differing from the assumptions used in the actuarial valuation occurs. An amortization schedule is established to eliminate the UAL that arises in a given biennium over a fixed period of time if future experience follows assumptions. The UAL Rate is the upcoming year's fixed component of the cumulative amortization schedules, stated as a percent of payroll. The employer's PVFNC depends on both the normal cost rates charged on the employer's payrolls, and on the underlying demographics of the respective payrolls. For OPERS funding, employers have up to three different payrolls, each with a different normal cost rate: (1) Tier 1/Tier 2 payroll, (2) OPSRP general service payroll, and (3) OPSRP police and fire payroll. Since many governments in Oregon have sold pension obligation bonds and deposited the proceeds with OPERS (referred to as side accounts or transitional liability or surplus), adjustments are required. After each employer's projected long-term contribution effort is calculated, that amount is reduced by the value of the employer's side account, transitional liability/surplus, and the pre-SLGRP liability/surplus (if any). This is done as those balances increase/decrease the employer's projected long-term contribution effort because side accounts are effectively pre -paid contributions. Looking at both rate components, the projected long-term contribution effort is the sum of the PVFNC and UAL. The PVFNC part of the contribution effort pays for the value of future service while the UAL part of the contribution effort pays for the value of past service not already funded by accumulated contributions and investment earnings. Each of the two contribution effort components are calculated at the employer -specific level. The sum of these components across all employers is the total projected long-term contribution effort. As the County's share in the Oregon Public Employees Retirement System is .632%, which is an increase of 1.64% from its proportion presented on June 30, 2018 and the County's allocation to the District is 5.365% and the District's share of OPERS is .034% which is a decrease of .197% and .001%, respectively, from the prior year. 24 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 For the year ended June 30, 2019, the District recognized a pension expense of $962,555. At June 30, 2019, the District reports deferred outflows of resources and deferred inflows of resources related to pensions from the following sources. Net difference between projected and actual earnings on investments Differences between expected and actual experience Changes in proportionate share Changes of assumptions or other inputs Changes between employer's contributions and proportionate share of contributions Contributions subsequent to measurement date Total Deferred Outflow Deferred Inflow of Resources of Resources $ - $ 228,324 174,908 - 55,091 34,067 1,195,454 - 63,367 492,642 $ 1,918,095 $ 325,758 The District's contributions made subsequent to the measurement date, $492,642, will be recognized in the District's pension expense in the following year. The net amount of the District's remaining deferred outflows of resources and deferred inflows of resources that will be recognized in the District's pension expense in the subsequent five years in the aggregate are shown in the table below. Actuarial Assumptions The employer contribution rates effective July 1, 2017, through June 30, 2019, were set using the entry age normal actuarial cost method. For the Tier One / Tier Two component of the OPERS Defined Benefit Plan, this method produced an employer contribution rate consisting of (1) an amount for normal cost (the estimated amount necessary to finance benefits earned by the employees during the current service year), and (2) an amount for the amortization of unfunded actuarial accrued liabilities, which are being amortized over a fixed period with new unfunded actuarial accrued liabilities being amortized over 20 years. For the OPSRP Pension Program component of the PERS Defined Benefit Plan, this method produced an employer contribution rate consisting of (a) an amount for the normal cost (the estimated amount necessary to finance benefits earned by the employees during the current service year), (b) an actuarially determined amount for funding a disability benefit component, and (c) an amount for the amortization of unfunded actuarially accrued 25 Amounts Subsequent fiscal years Reported 2019-2020 $ 612,426 2020- 2021 436,362 2021- 2022 (51,199) 2022- 2023 70,351 2023- 2024 31,755 Total $ 1,099,695 Actuarial Assumptions The employer contribution rates effective July 1, 2017, through June 30, 2019, were set using the entry age normal actuarial cost method. For the Tier One / Tier Two component of the OPERS Defined Benefit Plan, this method produced an employer contribution rate consisting of (1) an amount for normal cost (the estimated amount necessary to finance benefits earned by the employees during the current service year), and (2) an amount for the amortization of unfunded actuarial accrued liabilities, which are being amortized over a fixed period with new unfunded actuarial accrued liabilities being amortized over 20 years. For the OPSRP Pension Program component of the PERS Defined Benefit Plan, this method produced an employer contribution rate consisting of (a) an amount for the normal cost (the estimated amount necessary to finance benefits earned by the employees during the current service year), (b) an actuarially determined amount for funding a disability benefit component, and (c) an amount for the amortization of unfunded actuarially accrued 25 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 liabilities, which are being amortized over a fixed period with new unfunded actuarially accrued liabilities being amortized over 16 years. For comparison purposes a summary of the economic assumptions used for the December 31, 2016 actuarial valuation are shown below: Actuarial Methods and Assumptions: Vahiation Date December31.2016 Measurement Date June 30.2018 Experience Study 2010 published July 26, 2017 Actuarial Assumptions: Actuarial Cost Method Entry Age Nonual Inflation Rate 2.50 percent Investment Rate of Return 7.70 percent Discount Rate 7.20 percent Projected Salary Increases 3.50 percent Blend of 2.00% COLA and graded COLA (1.250/o/0.150/o) Cost of living adj tstments in accordance with Moro Decision: blend based on service Healthy retir ees And beneficiaries: RP -2014 Healthy annuitant, sex -distinct, generational with Unisex, Social Security Data Scale, with collaradjustments and set -backs as described in the valuation. Actiiv members: Mortality RP -2014 Employees, sex -distinct, generational with Unisex. Social Security Data Scale, with collar adjustments and set -backs as described in the valuation. Disabled retirees: RP -2014 Disabled retirees, sextdistinct. Et enerat ion a I with Unisex. Social Security Data Scale. Actuarial valuations of an on-going plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Experience studies are performed as of December 31St of even numbered years. The economic assumptions and estimates shown above are based on the 2016 experience study which reviewed experience for the four-year period ended December 31, 2016. 26 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 The long-term expected rate of return on plan investments was developed based on the forward looking capital market economic model. The table below presents the assumptions related to asset allocation and expected rates of return by major asset class using the 50th percentile. The target allocation and best estimates of arithmetic real rates of return for each major class are summarized in the following table: Asset Class Target Annual Compound Standard Core Fixed Income 8.00% 3.59% 3.49% 4.55% Short -Term Bonds 8.00% 3.42% 3.38% 2.70% Bank/Leveraged Loans 3.00% 5.34% 5.09% 7.50% High Yield Bonds 1.00% 6.90% 6.45% 10.00% Large/Mid Cap US Equities 15.75% 7.45% 6.30% 16.25% Small Cap US Equities 1.31% 8.49% 6.69% 20.55% Micro Cap US Equities 1.31% 9.01% 6.80% 22.90% Developed Foreign Equities 13.13% 8.21% 6.71% 18.70% Emerging Market Equities 4.13% 10.53% 7.45% 27.35% Non US Small Cap Equities 1.88% 8.67% 7.01% 19.75% Private Equity 17.50% 11.45% 7.82% 30.00% Real Estate (Property) 10.00% 6.15% 5.51% 12.00% Real Estate (REITS) 2.50% 8.26% 6.37% 21.00% Hedge Fund of Funds - Diversified 2.50% 4.36% 4.09% 7.80% Hedge Fund - Event - Driven 0.63% 6.21% 5.86% 8.90% Timber 1.88% 6.37% 5.62% 13.00% Farmland 1.88% 6.90% 6.15% 13.00% Infrastructure 3.75% 7.54% 6.60% 14.65% Commodities 1.88% 5.43% 3.84% 18.95% Assumed Inflation - Mean 2.50% 1.85% Discount Rate The discount rate used to measure the total pension liability was 7.20 percent for the Defined Benefit Pension Plan. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments for the Defined Benefit Pension Plan was applied to all periods of projected benefit payments to determine the total pension liability. 27 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Sensitivity of the County's Proportionate share of the Net Pension Liability to Changes in the Discount Rate The following presents the County's proportionate share of the net pension liability (asset) calculated using the discount rate of 7.20 percent, as well as what the County's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percentage point lower (6.20 percent) or 1 -percentage point higher (8.20 percent) than the current rate: Current 1% Decrease Discount Rate 1% Increase (6.20%) (7.20%) (8.20%) Employers' Net Pension Liability Employer -Specific $ 8,592,884 $ 5,141,779 $ 2,293,174 Pension Plan Fiduciary Net Position Detailed information about the pension plan's fiduciary net position is available in the separately issued OPERS financial report that can be found at hqp://www.oregon.govL/pers. Note 5 - Other Post -Employment Benefits Oregon Public Employees Retirement System — Retirement Health Insurance Account (RHIA) Plan Description As a member of Oregon Public Employees Retirement System (OPERS) the District contributes to the Retirement Health Insurance Account (RHIA) for each of its eligible employees. RHIA is a cost-sharing multiple -employer defined benefit other postemployment benefit plan administered by OPERS. RHIA pays a monthly contribution (currently $60 per month) toward the cost of Medicare companion health insurance premiums of eligible retirees. Oregon Revised Statute (ORS) 238.420 established this trust fund. Authority to establish and amend the benefit provisions of RHIA reside with the Oregon Legislature. The Plan is closed to new entrants after January 1, 2004. OPERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Oregon Public Employees Retirement System, PO Box 23700, Tigard, OR 97281-3700. Funding Policy Because RHIA was created by enabling legislation (ORS 238.420), contribution requirements of the plan members and the participating employers were established and may be amended only by the Oregon Legislature. ORS requires that an amount equal to $60 or the total monthly cost of Medicare companion health insurance premiums coverage, whichever is less, shall be paid from the Retirement Health Insurance Account established by the employer, and any monthly cost in excess of $60 shall be paid by the eligible retired member in the manner provided in ORS 238.410. To be eligible to receive this monthly payment toward the premium cost the member must: (1) have eight years or more of qualifying service in PERS at the time of retirement or receive a disability allowance as if the member had eight years or more of creditable service in PERS; (2) receive both Medicare Parts A and B coverage; and (3) enroll in a PERS-sponsored health plan. A surviving spouse or dependent of a deceased PERS retiree who was eligible to receive the subsidy is eligible to receive the subsidy if he or she (1) is receiving a retirement benefit or allowance from PERS, or (2) was insured at the time the member died and the member retired before May 1, 1991. 28 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Contributions Participating public employers are contractually required to contribute to RHIA at a rate assessed each biennium by OPERS. For fiscal year 2019 the rate is 0.50% of annual covered payroll for Tier 1/Tier 2 employees and 0.43% for OPSRP employees. The OPERS sets the net -retiree healthcare rate based on the estimated OPEB expense of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 75 Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The OPEB expense represents the annual cost allocated to the current year (normal cost) and the amortization of any unfunded accrued liabilities of the plan (UAL cost). The unfunded accrued liabilities are amortized over a closed period equal to the average of the expected remaining lives of all employees that are provided with OPEB through the OPEB plan (active employees and inactive employees). The County's contributions to RHIA were consistent with the net -retiree healthcare rate as charged by OPERS. Amounts paid for RHIA were included with the payments for the retirement plan in Note 4. The District's participation in RHIA is immaterial to the financial statements. Deschutes County Retiree Health Plan Plan Description The District participates in Deschutes County's single -employer defined benefit postemployment healthcare plan, Deschutes County Retiree Health Plan which provides medical benefits to eligible retired employees of Deschutes County, Deschutes County 9-1-1 County Service District and their beneficiaries. The Plan has two components: the Self -Pay Health Plan (COBRA) which is required by Oregon Revised Statutes 243.303 to provide retirees with group health and dental insurance from the date of retirement to age 65 at the same rate provided to current employees and the Subsidized Health Plan under which the District pays all or part of the health care costs for eligible retirees under several collective bargaining agreements. The criteria to determine whether an employee is eligible include: years of service, employee age, disability due to line of duty and whether the employee has vested in the respective retirement plan. Employees who retire from the District with more than fifteen (15) years and less than thirty (30) years of fulltime service are eligible to receive a District contribution towards their monthly insurance premiums until age sixty- five (65) or until eligible for Medicare, in accordance with a schedule recommended by the EBAC and approved by the Board of County Commissioners. The schedule of retiree premiums and District contributions is shown below for Calendar year 2019. 29 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Deschutes County Retirement Health Plan Rates Active Employee Standard Plan High Deductible Dental Plan Monthly Premiums: $77.00 Plan $1,493.00 Composite Rate $1,534.61 $933.19 $170.73 *Opt -out stipend is $125 to employee per month. 30+ Years of 1.0 FTE Service: Retiree Monthly Premiums (dental): Standard Plan Dental Plan Retiree Only $746.00 $77.00 Retiree + Spouse $1,493.00 $154.00 Retiree + Children $1,305.00 $135.00 Retiree + Family $2,052.00 $212.00 <30 Years of Service: COBRA Monthly Standard Plan High Deductible Dental Plan Retiree Monthly per years of Plan service: Premiums: $746.00 $589.00 $77.00 Retiree Only $746.00 $589.00 $77.00 Retiree + Spouse $1,493.00 $1,168.00 $154.00 Retiree + Children $1,305.00 $1,022.00 $135.00 Retiree + Family $2,052.00 $1,606.00 $212.00 COBRA Monthly Standard Plan High Deductible Dental Plan Premiums: per years of Plan service: Employee Only $746.00 $589.00 $77.00 Employee + Spouse $1,493.00 $1,168.00 $154.00 Employee + Children $1,305.00 $1,022.00 $135.00 Employee + Family $2,052.00 $1,606.00 $212.00 Premium Cost Sharing Employee cost share is $85 of Medical Plan and $5 of Dental Plan. 30+ Year Retiree cost share is $85 of Medical Plan and $5 of Dental Plan. COBRA participant pays 100% of premium. 30 County Years of Contribution Service: per years of service: 0-14 $0.00 15-19 $172.20 20-24 $345.45 25-29 $517.65 COBRA participant pays 100% of premium. 30 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information, presents trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the Plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Assumptions used in calculating the actuarial liabilities associated with the Deschutes County Retiree Health Plan include a 3.50% investment return; an assumed inflation rate of 2.50%; an insurance premium annual trend rate of 5.00% into perpetuity; a retiree health claims annual trend rate of 5.00% into perpetuity; and retirement rates used by Oregon PERS adjusted for County trends. Because there are no assets, the investment return of 3% is set to equal the expected long-term return on the County's own investments. The annual salary increase for employees are assumed to be 3.50% in all future years. Rates of withdrawal and mortality are generally the same rates that were used in the December 31, 2016 actuarial valuation of the Oregon Public Employees Retirement System as referenced in the PERS footnote 4. The Actuarial cost method used in the valuation of this plan is the Entry Age Normal. Under this method, the actuarial present value of the projected benefits of each active employee included in the valuation is allocated on a level dollar basis over the service of the active employee between assumed Entry Age (date of hire) and assumed Exit Age(s). The portion of this actuarial present value allocated to the valuation year is called the normal cost for that active employee. The sum of these individual normal costs is the Plan's Normal Cost for the valuation year. The portion of the actuarial present value of all projected benefits (including benefits for non-active participants) that is not provided for at the valuation date by the actuarial present value of future normal costs is called the Actuarial Accrued Liability. Under this method, the actuarial gains (losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability. The Deschutes County Retiree Health Plan is deemed "unfunded" in accordance with the relevant GASB statements. Category District Plan Balance at 06/30/2018 $ 2,054,864 Changes for the year Service cost 77,870 Interest 68,855 Changes in assumptions or other inputs (696,769) Benefit payments (62,792) Net change in total OPEB liability (612,836) Total OPEB liability - ending $ 1,442,028 31 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Total OPEB liability for the District Plan as of the measurement date is presented below showing the sensitivity of that amount to a 1 % higher and lower Discount rate and a 1 % higher or lower Health Care trend rate. 1% Decrease Current Discount 1% Increase (2.50%) Rate (3.50%) (4.50%) Total OPEB Liability on June 30, 2019 $ 1,583,896 $ 1,442,028 $ 1,311,857 1% Decrease Current Health Care 1% Increase Trend Rates Total OPEB Liability on June 30, 2019 $ 1,265,629 $ 1,442,028 $ 1,652,599 The County's contributions made subsequent to the measurement date will be recognized in the County's OPEB expense in the following year. The net amount of the County's deferred outflows of resources and deferred inflows of resources that will be recognized in the County's OPEB expense in the subsequent five years, and in the aggregate, are shown in the table below. Employer subsequent fiscal yearspost-measurement Deferred Outflow/(Inflow) of Resources (prior to date contributions FY 2020 $ 57,712 FY 2021 57,712 FY 2022 57,712 FY 2023 57,712 FY 2024 57,712 Thereafter 294,326 Total 582,886 Note 6 - Risk Management The District is exposed to various risks of loss related to torts; theft of, damage and destruction of assets; errors and omissions; injuries to employees and others; and natural disasters for which the District participates in the County's self-insurance program. There have been no settlements in excess of insurance coverage and reserves in any of the past three fiscal years. 32 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Financial Statements June 30, 2019 Note 7 - Intergovernmental Agreement The District entered into an intergovernmental agreement with the County in fiscal year 2009. Under this agreement, the District is responsible to pay its share of debt incurred by the County, which was issued to finance the construction of a building to be used by the District for its operations. The future minimum payments under this agreement, subject to continued funding are as follows: Fiscal Year Ending June 30, 2020 $ 175,348 2021 172,098 2022 168,995 2023 175,895 2024 177,130 2025-2028 686,309 Total $ 1,555,775 33 Required Supplementary Information As of and For the Year Ended June 30, 2019 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon eidebailly.com Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund Year Ended June 30, 2019 REVENUES Taxes - property Investment earnings Charges for services Other Intergovernmental Total revenues EXPENDITURES Current - departmental: Emergency services Not allocated to organizational units: Contingency Total expenditures Net change in fund balance Fund balance - Beginning of year Budgeted Amounts Original Budget Final Budget Variance with Final Actual Budget $ 8,426,033 $ 8,426,033 $ 8,558,820 $ 132,787 138,000 138,000 148,294 10,294 538,980 538,980 490,928 (48,052) - - 3,022 3,022 1,095,000 IA InoAl1 1,095,000 1A InoAl1 1,258,131 1nACA inc 163,131 nci ion 13,379,064 13,379,064 10,570,113 2,808,951 2,818,949 2,818,949 - 2,818,949 16,198,013 16,198,013 10,570,113 5,627,900 (6,000,000) (6,000,000) (110,918) 5,889,082 K Ann Ann t- Ann nn() 4 Anti nl n AK ni Q Fund balance - End of year $ - $ - Unrealized gain (loss) on investments Deschutes County 9-1-1 Equipment Reserve Total fund balance, GAAP basis - End of Year 5,936,001 $ 5,936,001 10,672 2,695,418 $ 8,642,092 See Notes to Required Supplementary Information 34 Proportionate of net pension liability (asset) Proportionate share of the net pension liability (asset) Covered payroll Proportionate share of the net pension liability (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Schedule of Proportionate Share of the Net Pension Liability (Asset) Oregon Public Retirement System Defined Benefit Pension Plan Last 5 Fiscal Years* 2015 2016 2017 2018 2019 0.01% 0.03% 0.03% 0.03% 0.03% $ (596,590) $ 1,736,619 $ 4,723,906 $ 4,667,224 $ 5,141,779 $ 2,903,539 $ 2,943,341 $ 3,208,843 $ 3,644,740 $ 4,359,939 -20.55% 62.15% 169.07% 128.05% 117.93% 103.59% 91.88% 80.53% 83.12% 82.07% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10 - year trend is compiled, the District will present information for those use for which information is available. The amounts presented for each fiscal year was determined as of June 30. See Notes to Required Supplementary Information 35 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Schedule of Employer Contributions Oregon Public Retirement System Defined Benefit Pension Plan Last 5 Fiscal Years* *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10 - year trend is compiled, the District will present information for those use for which information is available. The amounts presented for each fiscal year was determined as of June 30. See Notes to Required Supplementary Information 36 2015 2016 2017 2018 2019 Contractually required contributions $ 225,456 $ 287,456 $ 319,262 $ 519,614 $ 519,818 Contributions in relation to the contractually required contribution 225,456 287,456 319,262 519,614 519,818 Contribution deficiency (excess) - - - - - District's covered payroll $ 2,943,341 $ 3,208,843 $ 3,644,740 $ 4,359,939 $ 4,343,589 Contributions as a percentage of covered payroll 8.62% 9.72% 10.81% 11.92% 11.97% *GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10 - year trend is compiled, the District will present information for those use for which information is available. The amounts presented for each fiscal year was determined as of June 30. See Notes to Required Supplementary Information 36 Service cost Interest Changes in assumptions or other inputs Benefit payments Net change in total OPEB liability Total OPEB liability -beginning Total OPEB liability - ending Covered payroll Total OPEB liability as a percentage of covered payroll Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Schedule of Changes in Total OPEB Liability Last 2 Fiscal Years* June 30, 2018 June 30, 2019 $ 105,012 $ 77,870 68,868 68,855 (292,284) (696,769) (85,419) (62,792) (203,823) (612,836) 2,258,687 2,054,864 $ 2,054,864 $ 1,442,028 $ 3,644,740 $ 4,359,939 56.38% 33.07% *GASB Statement No. 75 requires ten years of information to be presented in this table. However, until a full 10 - year trend is compiled, the District will present information for those years for which information is available. Data reported is measured as of July 1 st of each fiscal year. See Notes to Required Supplementary Information 37 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Notes to Required Supplementary Information June 30, 2019 Note 1 - Stewardship, Compliance and Accountability The District adopts a resolution authorizing appropriations for each fund, which establishes the level by which expenditures cannot lawfully exceed appropriations. Appropriations are established at the principal object level for each fund — programmatic (personnel, materials and services, capital outlay), debt service, transfers to other funds and operating contingency. 38 Other Supplementary Information As of and For the Year Ended June 30, 2019 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon eidebailly.com Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget to Actual- Reserve Sub -Fund of General Fund Year Ended June 30, 2019 REVENUES Investment earnings Total revenues EXPENDITURES Current - departmental: Emergency services Total expenditures Net change in fund balance Fund balance - Beginning of year Fund balance - End of year Unrealized gain (loss) on investments Total fund balance, GAAP basis - End of Year Budgeted Amounts Variance Original with Final Budget Final Budget Actual Budget $ 62,000 $ 62,000 $ 57,275 $ (4,725) 62,000 62,000 57,275 (4,725) 62,000 62,000 57,275 (4,725) $ 2,687,000 $ 2,687,000 2,690,390 $ 3,390 5,027 $ 2,695,418 39 Assets Cash and investments Property taxes receivable Accounts receivable Total assets Liabilities Accounts payable Total liabilities Deferred Inflows of Resources Unavailable revenue - property taxes Total deferred inflows of resources Fund Balances Assigned for future expenditures Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Combining Balance Sheet — General Fund and Reserve Sub -Fund June 30, 2019 General Reserve Fund Sub -Fund Total $ 5,722,064 $ 2,695,418 $ 8,417,482 202,169 - 202,169 307,292 - 307,292 $ 6,231,526 $ 2,695,418 $ 8,926,943 $ 104,258 $ - $ 104,258 104,258 - 104,258 180,593 - 180,593 180,593 - 180,593 - 2,695,418 2,695,418 5,946,674 - 5,946,674 5,946,674 2,695,418 8,642,092 $ 6,231,526 $ 2,695,418 $ 8,926,943 40 Revenues Property taxes Interest Charges for services Other Intergovernmental Total revenues Expenditures Public safety Capital outlay Total expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Net Change in Fund Balances Fund Balances, Beginning of Year Fund Balances, End of Year Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Combining Statement of Revenues, Expenditures and Changes in Fund Balances — General Fund and Reserve Sub -Fund Year Ended June 30, 2019 General Reserve Fund Sub -Fund Total $ 8,558,820 $ - $ 8,558,820 186,718 74,996 261,714 490,928 - 490,928 3,022 - 3,022 1,258,131 - 1,258,131 10,497,618 74,996 10,572,614 10,040,735 529,377 10,570,113 10,040,735 529,377 10,570,113 (72,494) 74,996 2,502 (72,494) 74,996 2,502 6,019,168 2,620,422 8,639,590 $ 5,946,674 $ 2,695,418 $ 8,642,092 41 Tax Year Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Schedule of Property Tax Transactions Year Ended June 30, 2019 Beginning Balance and Interest 2018-19 Levy Adjustments (Discounts) Collections Taxes Receivable June 30, 2019 2018-2019 $ 8,789,642 $ (8,093) $ (223,887) $ 8,444,643 $ 113,019 2017-2018 105,778 (294) 3,090 61,586 46,987 2016-2017 44,992 (388) 3,225 21,720 26,109 2015-2016 22,467 (281) 3,180 14,495 10,872 2014-2015 9,116 (107) 2,264 8,988 2,285 2013-2014 1,090 (38) 217 663 605 2012-2013 720 (9) 103 321 493 2011-2012 483 (7) 87 263 301 2010-2011 478 (69) 44 120 333 Prior 1,393 (80) 111 259 1,165 Totals $ 8,976,159 $ (9,366) $ (211,565) Adjustments for Accruals June 30, 2018 June 30, 2019 Other tax distribution Modified accrual basis tax revenue 8,553,059 $ 202,169 (19,419) 21,576 3,604 $ 8,558,820 42 EideBailly CPAs & BUSINESS ADVISORS Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Deschutes County Commissioners Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Bend, Oregon We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities and the general fund of Deschutes County 9-1-1 County Service District (the District), a component unit of Deschutes County, Oregon, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the District's basic financial statements, and have issued our report thereon dated November 18, 2019. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District'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 District'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 over financial reporting 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 financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not yet been identified. What inspires you, inspires us. I eidebailly.com 43 877 W. Main St., Ste. 800 1 Boise, ID 83702-5858 1 T 208.344.7150 1 F 208.344.7435 1 EOE Compliance and Other Matters As part of obtaining reasonable assurance about whether the District'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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Boise, Idaho November 18, 2019 44 Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Audit Comments and Disclosures Required by State Regulations June 30, 2019 Audit Comments and Disclosures Required by State Regulations Oregon Administrative Rules 162-010-0000 through 162-010-0330 of the Minimum Standards for Audits of Oregon Municipal Corporations, prescribed by the Secretary of State in cooperation with the Oregon State Board of Accountancy, enumerate the financial statements, schedules, comments, and disclosures required in audit reports. The required statements and schedules are set forth in the preceding sections of this report. Required comments and disclosures related to the audit of such statements and schedules are set forth in the following pages. 45 EideBailly CPAs & BUSINESS ADVISORS Independent Auditor's Report Required by Oregon State Regulations To Deschutes County Commissioners Deschutes County 9-1-1 County Service District A Component Unit of Deschutes County, Oregon Bend, Oregon We have audited the basic financial statements of Deschutes County 9-1-1 County Service District (the District), a component unit of Deschutes County, Oregon, as of and for the year ended June 30, 2019, and have issued our report thereon dated November 18, 2019. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to the financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the provisions of the Minimum Standards for Audits of Oregon Municipal Corporations, prescribed by the Secretary of State. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free from material misstatement. Compliance As part of obtaining reasonable assurance about whether the District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-010-0000 through 162-010-0330 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statements 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. We performed procedures to the extent we considered necessary to address the required comments and disclosures which included, but were not limited to the following: What inspires you, inspires us. I eidebailly.com 46 877 W. Main St., Ste. 800 1 Boise, ID 83702-5858 1 T 208.344.7150 1 F 208.344.7435 1 EOE Instances of Non - OAR Section Compliance Identified 162-010-0000 Preface Not Applicable 162-010-0010 Definitions Not Applicable 162-010-0020 General Requirements None Noted 162-010-0030 Contracts None Noted 162-010-0050 Financial Statements None Noted 162-010-0115 Required Supplementary Information (RSI) None Noted 162-010-0120 Supplementary Financial Information None Noted 162-010-0130 Schedule of Revenues, Expenditures / Expenses, and Changes in Fund None Noted Balances / Net Position, Budget and Actual (Each Fund) 162-010-0140 Schedule of Accountability for Independently Elected Officials Not Applicable 162-010-0190 Other Financial or Statistical Information Not Applicable 162-010-0200 Independent Auditor's Review of Fiscal Affairs None Noted 162-010-0230 Accounting Records and Internal Control None Noted What inspires you, inspires us. I eidebailly.com 46 877 W. Main St., Ste. 800 1 Boise, ID 83702-5858 1 T 208.344.7150 1 F 208.344.7435 1 EOE OAR Section 162-010-0240 Public Fund Deposits 162-010-0250 Indebtedness 162-010-0260 Budget 162-010-0270 Insurance and Fidelity Bonds 162-010-0280 Programs Funded from Outside Sources 162-010-0295 Highway Funds 162-010-0300 Investments 162-010-0310 Public Contracts and Purchasing 162-010-0315 State School Fund 162-010-0316 Public Charter Schools 162-010-0320 Other Comments and Disclosures 162-010-0330 Extensions of Time to Deliver Audit Reports Instances of Non - Compliance Identified None Noted Not Applicable None Noted None Noted Not Applicable Not Applicable None Noted None Noted Not Applicable Not Applicable Not Applicable Not Applicable The District was in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162- 010-0000 through 162-010-0330 of the Minimum Standards for Audits of Oregon Municipal Corporations. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District's internal control over financial reporting. 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 over financial reporting 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 financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not yet been identified. This report is intended solely for the information and use of the Deschutes County Commissioners and management of Deschutes County 9-1-1 County Service District and the Oregon Secretary of State and is not intended to be and should not be used by anyone other than these parties. For Eide Bailly LLP Boise Idaho November 18, 2019 47