McNairy County, Tennessee - Comptroller.TN.gov

For the Year Ended June 30, 2020

McNairy County, Tennessee

ANNUAL FINANCIAL REPORT

McNAIRY COUNTY, TENNESSEE

FOR THE YEAR ENDED JUNE 30, 2020

COMPTROLLER OF THE TREASURY JASON E. MUMPOWER

DIVISION OF LOCAL GOVERNMENT AUDIT JAMES R. ARNETTE

Director

LEE ANN WEST, CPA, CGFM VICKY BARBER, CFE Audit Manager LAUREN LEWIS, CPA

COLBY CAREY MANDY SPENCER, CGFM

AMANDA MARCH, CPA, CFE TWYLA PRATT, CISA Senior Auditor State Auditors

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

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Exhibit Page(s)

Summary of Audit Findings 6

INTRODUCTORY SECTION 7

McNairy County Officials 8

FINANCIAL SECTION 9

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

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

Fund Financial Statements:Governmental Funds:

Balance Sheet C-1 19-20Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position C-2 21Statement of Revenues, Expenditures, and Changes in

Fund Balances C-3 22-25Reconciliation of the Statement of Revenues, Expenditures,

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

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

General Fund C-5 27-30Solid Waste/Sanitation Fund C-6 31-32Highway/Public Works Fund C-7 33

Fiduciary Funds:Statement of Fiduciary Assets and Liabilities D 34

Index and Notes to the Financial Statements 35-98REQUIRED SUPPLEMENTARY INFORMATION: 99

Schedule of Changes in Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Planof TCRS – Primary Government E-1 100

Schedule of Contributions Based on Participation in the Public EmployeePension Plan of TCRS – Primary Government E-2 101

Schedule of Contributions Based on Participation in the TeacherRetirement Plan of TCRS – Discretely Presented McNairyCounty School Department E-3 102

McNAIRY COUNTY, TENNESSEETABLE OF CONTENTS

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Exhibit Page(s)

Schedule of Contributions Based on Participation in the TeacherLegacy Pension Plan of TCRS – Discretely Presented McNairyCounty School Department E-4 103

Schedule of Proportionate Share of the Net Pension Asset in theTeacher Retirement Plan of TCRS – Discretely PresentedMcNairy County School Department E-5 104

Schedule of Proportionate Share of the Net Pension Asset in theTeacher Legacy Pension Plan of TCRS – Discretely PresentedMcNairy County School Department E-6 105

Schedule of Changes in Total OPEB Liability and Related Ratios -Local Education Plan - Discretely Presented McNairy CountySchool Department E-7 106

Schedule of Changes in Total OPEB Liability and Related Ratios -Tennessee Plan - Medicare - Discretely Presented McNairy CountySchool Department E-8 107

Notes to the Required Supplementary Information 108COMBINING AND INDIVIDUAL FUND FINANCIAL

STATEMENTS AND SCHEDULES: 109Nonmajor Governmental Funds: 110-111

Combining Balance Sheet F-1 112-113Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances F-2 114-115Schedules of Revenues, Expenditures, and Changes in Fund

Balances – Actual and Budget:Law Library Fund F-3 116Special Purpose Fund F-4 117Drug Control Fund F-5 118

Major Governmental Fund: 119Schedule of Revenues, Expenditures, and Changes in Fund

Balance – Actual and Budget:General Debt Service Fund G 120

Fiduciary Funds: 121Combining Statement of Fiduciary Assets and Liabilities H-1 122Combining Statement of Changes in Assets and Liabilities –

All Agency Funds H-2 123Component Unit:

Discretely Presented McNairy County School Department: 124Statement of Activities I-1 125Balance Sheet – Governmental Funds I-2 126-127Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position I-3 128Statement of Revenues, Expenditures, and Changes in Fund

Balances – Governmental Funds I-4 129-130Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Fundsto the Statement of Activities I-5 131

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Exhibit Page(s)Schedules of Revenues, Expenditures, and Changes in Fund

Balances – Actual and Budget:General Purpose School Fund I-6 132-133School Federal Projects Fund I-7 134Central Cafeteria Fund I-8 135

Miscellaneous Schedules: 136Schedule of Changes in Long-term Notes, Capital Leases, and Bonds J-1 137Schedule of Long-term Debt Requirements by Year J-2 138Schedule of Transfers – Primary Government and Discretely

Presented McNairy County School Department J-3 139Schedule of Salaries and Official Bonds of Principal Officials –

Primary Government and Discretely Presented McNairyCounty School Department J-4 140

Schedule of Detailed Revenues – All Governmental Fund Types J-5 141-152Schedule of Detailed Revenues – All Governmental Fund Types –

Discretely Presented McNairy County School Department J-6 153-155Schedule of Detailed Expenditures – All Governmental Fund Types J-7 156-170Schedule of Detailed Expenditures – All Governmental Fund Types –

Discretely Presented McNairy County School Department J-8 171-180Schedule of Detailed Receipts, Disbursements, and Change in

Cash Balance – City Agency Fund J-9 181

SINGLE AUDIT SECTION 182

Auditor's Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance With GovernmentAuditing Standards 183-184

Auditor's Report on Compliance for Each Major Federal Program; Reporton Internal Control Over Compliance; and Report on the Schedule ofExpenditures of Federal Awards Required by Uniform Guidance 185-187

Schedule of Expenditures of Federal Awards and State Grants 188-189Summary Schedule of Prior-year Findings 190Schedule of Findings and Questioned CostsManagement's Corrective Action PlanBest Practice

191-193 194-195

196

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Summary of Audit Findings Annual Financial Report

McNairy County, Tennessee For the Year Ended June 30, 2020

Scope

We have audited the basic financial statements of McNairy County as of and for the year ended June 30, 2020.

Results Our report on McNairy County’s financial statements is unmodified. Our audit resulted in one finding and recommendation, which we have reviewed with McNairy County management. The detailed finding, recommendation, and management’s response are included in the Single Audit section of this report.

Findings The following is a summary of the audit finding: OFFICE OF COUNTY MAYOR ♦ The office had purchasing deficiencies.

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INTRODUCTORY SECTION

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McNairy County OfficialsJune 30, 2020

Officials

Larry Smith, County MayorHarvey Neal Smith, Highway CommissionerGreg Martin, Director of SchoolsStanley Mitchell, TrusteeBrandon Moore, Assessor of PropertyRonnie Price, County ClerkByron Maxedon, Circuit and General Sessions Courts ClerkKim Boals, Clerk and MasterBrian Dickey, Register of DeedsGuy Buck, Sheriff

Board of County Commissioners

Larry Smith, County Mayor, Chairman Phillip HollingsworthRichard Ashe Brad HuntKerry Brown Keith JerniganAnthony Carr Michelle KientzPamela Carroll Doug KnightBrenda Cauley Terry McCormickSybil Dancer David McCullarCandice Garrison Jackie PickleAubrey Harris Jimmy RayBrent Holland Ryan SiskJimmy Hollingsworth James Weatherford

Board of Education Audit Committee

Ricky Whitaker, Chairman Mike Smith, ChairmanLynn Baker Wilburn Gene AsheJustin Hawkins Billy BrownDavid Leckner Anthony HensonMolly Moore Troy MooreBrian Rowsey Tommy RossJarrell Stanfield

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FINANCIAL SECTION

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Independent Auditor's Report

McNairy County Mayor and Board of County Commissioners McNairy County, Tennessee To the County Mayor and Board of County Commissioners: Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of McNairy County, Tennessee, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the county’s basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of McNairy County Airport Authority. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the McNairy County Airport Authority, is based solely on the report of the other auditors. We were unable to determine McNairy County Airport Authority’s percentage of the net position of the aggregate discretely presented component units because the McNairy County Emergency Communications District, a component unit requiring discrete presentation, was not included in the county’s financial statements. 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

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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. Opinions In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of McNairy County, Tennessee, as of June 30, 2020, and the respective changes in financial position and the respective budgetary comparison for the General, Solid Waste/Sanitation, and Highway/Public Works funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Accounting principles generally accepted in the United States of America require that the schedule of changes in the county’s net pension liability and related ratios, schedules of county and school contributions, schedules of school’s proportionate share of the net pension liability, and schedules of school’s changes in total OPEB liability and related ration, 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 the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise McNairy County’s basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the McNairy County School Department (a discretely presented component unit), miscellaneous schedules and other information such as the introductory section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is also presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the McNairy County School Department (a discretely presented component unit), schedule of expenditures of federal awards, and miscellaneous schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the McNairy County School Department (a discretely presented component unit), schedule of expenditures of federal awards, and miscellaneous schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 17, 2021, on our consideration of McNairy County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of McNairy County’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering McNairy County’s internal control over financial reporting and compliance. Very truly yours, Jason E. Mumpower Comptroller of the Treasury Nashville, Tennessee February 17, 2021 JEM/sl

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BASIC FINANCIAL STATEMENTS

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Exhibit A

McNairy County, TennesseeStatement of Net PositionJune 30, 2020

ASSETS

Cash $ 838 $ 0 $ 125,566Equity in Pooled Cash and Investments 9,101,416 4,767,599 0Investments 6,125,518 0 0Inventories 0 0 9,743Accounts Receivable 2,592,947 664 0Allowance for Uncollectibles (1,004,374) 0 0Due from Other Governments 540,259 1,112,417 0Due from Primary Government 0 16,632 0Property Taxes Receivable 5,722,618 3,942,457 0Allowance for Uncollectible Property Taxes (569,161) (198,483) 0Prepaid Items 2,621 0 7,981Restricted Assets: Amounts Accumulated for Pension Benefits 0 116,350 0Net Pension Asset - Agent Plan 628,874 754,483 0Net Pension Asset - Teacher Retirement Plan 0 138,595 0Net Pension Asset - Teacher Legacy Pension Plan 0 4,810,522 0Capital Assets: Assets Not Depreciated: Land 1,440,327 1,291,479 91,331 Construction in Progress 0 13,987,914 0 Assets Net of Accumulated Depreciation: Buildings and Improvements 2,782,100 13,382,474 109,565 Infrastructure 4,704,608 0 3,816,730 Other Capital Assets 1,065,029 2,636,041 10,976Total Assets $ 33,133,620 $ 46,759,144 $ 4,171,892

DEFERRED OUTFLOWS OF RESOURCES

Deferred Amount on Refunding $ 19,084 $ 0 $ 0Pension Changes in Experience 67,638 321,106 0Pension Changes in Assumptions 111,669 787,032 0Pension Changes in Proportion 0 82,301 0Pension Contributions after Measurement Date 200,518 2,072,198 0OPEB Changes in Experience 0 1,587,737 0OPEB Changes in Assumptions 0 257,158 0OPEB Changes in Proportion 0 628,568 0OPEB Contributions after Measurement Date 0 176,541 0Total Deferred Outflows of Resources $ 398,909 $ 5,912,641 $ 0

LIABILITIES

Accounts Payable $ 123,288 $ 25,000 $ 0Payroll Deductions Payable 16,839 12,541 0Accrued Interest Payable 85,005 0 0Due to Component Units 16,632 0 0Other Current Liabilities 0 0 19,004Noncurrent Liabilities: Due Within One Year - Debt 1,421,030 0 0 Due Within One Year - Other 200,530 0 0 Due in More Than One Year - Debt 31,346,528 0 0 Due in More Than One Year - Other 651,223 4,705,242 0Total Liabilities $ 33,861,075 $ 4,742,783 $ 19,004

(Continued)

Activities Department

Primary McNairyCountySchool

GovernmentGovernmental

McNairyCountyAirport

Authority

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Exhibit A

McNairy County, TennesseeStatement of Net Position (Cont.)

DEFERRED INFLOWS OF RESOURCES

Deferred Current Property Taxes $ 5,007,662 $ 3,730,127 $ 0Pension Changes in Experience 42,063 3,013,022 0Pension Changes in Investment Earnings 111,407 1,513,978 0Pension Changes in Proportion 0 46,145 0OPEB Changes in Experience 0 184,895 0OPEB Changes in Assumptions 0 893,841 0OPEB Changes in Proportion 0 9,720,866 0Total Deferred Inflows of Resources $ 5,161,132 $ 19,102,874 $ 0

NET POSITION

Net Investment in Capital Assets $ (1,059,434) $ 31,297,908 $ 4,028,602Restricted for: General Government 111,445 0 0 Finance 39,620 0 0 Administration of Justice 73,579 0 0 Public Safety 194,783 0 0 Public Health & Welfare 1,581,576 0 0 Social, Cultural, and Recreational Services 6,947 0 0 Highway/Public Works 6,857,018 0 0 Education 0 244,372 0 Operation of Non-instructional Services 0 1,064,844 0 Capital Outlay 1,049,181 0 0 Debt Service 3,790,142 0 0 Hybrid Retirement Stabilization Funds 0 116,350 0 Pensions 628,874 5,703,600 0Unrestricted (18,763,409) (9,600,946) 124,286

Total Net Position $ (5,489,678) $ 28,826,128 $ 4,152,888

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

Governmental School AirportActivities Department Authority

Primary McNairy McNairyGovernment County County

Component Units

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Exhibit B

McNairy County, TennesseeStatement of ActivitiesFor the Year Ended June 30, 2020

Operating CapitalCharges Grants Grants

for and andFunctions/Programs Expenses Services Contributions Contributions

Primary Government: Governmental Activities: General Government $ 1,753,960 $ 278,504 $ 81,408 $ 20,529 $ (1,373,519) $ 0 $ 0 Finance 771,372 512,110 0 0 (259,262) 0 0 Administration of Justice 780,914 426,876 9,000 0 (345,038) 0 0 Public Safety 2,932,973 304,565 176,326 190,319 (2,261,763) 0 0 Public Health and Welfare 2,018,509 815,523 (80,460) 666,413 (617,033) 0 0 Social, Cultural, and Rec Services 165,465 3,629 0 0 (161,836) 0 0 Agriculture and Natural Resources 196,132 0 18,000 0 (178,132) 0 0 Highways/Public Works 4,822,922 18,164 1,508,779 937,166 (2,358,813) 0 0 Education 7,954,822 0 0 0 (7,954,822) 0 0 Interest on Long-term Debt 1,041,583 0 27,652 0 (1,013,931) 0 0

Total Primary Government $ 22,438,652 $ 2,359,371 $ 1,740,705 $ 1,814,427 $ (16,524,149) $ 0 $ 0

Component Units: McNairy County School Department $ 38,153,248 $ 190,016 $ 4,930,108 $ 8,544,364 $ 0 $ (24,488,760) $ 0 McNairy County Airport Authority 460,680 148,868 80,512 0 0 0 (231,300)

Total Component Units $ 38,613,928 $ 338,884 $ 5,010,620 $ 8,544,364 $ 0 $ (24,488,760) $ (231,300)

(Continued)

Airport

Net (Expense) Revenue and Changes in Net Position

GovernmentalActivities

SchoolDepartment

McNairy

PrimaryProgram Revenues Government Component Units

McNairyCountyTotal

Authority

County

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Exhibit B

McNairy County, TennesseeStatement of Activities (Cont.)

Operating CapitalCharges Grants Grants

for and andFunctions/Programs Expenses Services Contributions Contributions

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 4,333,204 $ 3,854,535 $ 0 Property Taxes Levied for Debt Service 767,732 0 0 Local Option Sales Taxes 341,010 2,160,788 0 Litigation Tax 81,247 0 0 Business Tax 178,912 0 0 Wholesale Beer Tax 20,908 0 0 Other Local Taxes 37,476 0 0 Grants and Contributions Not Restricted to Specific Programs 1,581,822 27,796,152 0 Unrestricted Investment Income 275,295 0 31 Miscellaneous 12,196 88,155 0Total General Revenues $ 7,629,802 $ 33,899,630 $ 31

Change in Net Position $ (8,894,347) $ 9,410,870 $ (231,269)Net Position, July 1, 2019 3,404,669 19,415,258 4,384,157

Net Position, June 30, 2020 $ (5,489,678) $ 28,826,128 $ 4,152,888


Activities DepartmentGovernmental School

McNairyTotal County

Authority

McNairyCountyAirport

PrimaryProgram Revenues Government Component Units

Net (Expense) Revenue and Changes in Net Position

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Exhibit C-1

McNairy County, TennesseeBalance SheetGovernmental FundsJune 30, 2020

OtherSolid Highway / General Govern- Total

Waste / Public Debt mental GovernmentalGeneral Sanitation Works Service Funds Funds

ASSETS

Cash $ 0 $ 0 $ 0 $ 0 $ 838 $ 838Equity in Pooled Cash and Investments 1,156,472 767,662 1,359,420 4,446,395 1,371,467 9,101,416Investments 0 0 6,125,518 0 0 6,125,518Accounts Receivable 3,601 2,586,167 3,179 0 0 2,592,947Allowance for Uncollectibles 0 (1,004,374) 0 0 0 (1,004,374)Due from Other Governments 197,265 18,657 324,337 0 0 540,259Due from Other Funds 1,206 0 0 0 0 1,206Property Taxes Receivable 4,234,977 0 628,982 858,659 0 5,722,618Allowance for Uncollectible Property Taxes (336,295) 0 (182,059) (50,807) 0 (569,161)Prepaid Items 2,621 0 0 0 0 2,621Advances to Other Funds 0 0 0 416,666 0 416,666

Total Assets $ 5,259,847 $ 2,368,112 $ 8,259,377 $ 5,670,913 $ 1,372,305 $ 22,930,554

LIABILITIES

Accounts Payable $ 66,855 $ 54,365 $ 0 $ 0 $ 2,068 $ 123,288Payroll Deductions Payable 13,953 149 2,737 0 0 16,839Due to Other Funds 0 368 0 0 838 1,206Due to Component Units 16,632 0 0 0 0 16,632Advances Payable to Other Funds 83,333 0 333,333 0 0 416,666Total Liabilities $ 180,773 $ 54,882 $ 336,070 $ 0 $ 2,906 $ 574,631


Deferred Current Property Taxes $ 3,828,760 $ 0 $ 377,454 $ 801,448 $ 0 $ 5,007,662

(Continued)

Major FundsNonmajor

Funds

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Exhibit C-1

McNairy County, TennesseeBalance SheetGovernmental Funds (Cont.)

OtherSolid Highway / General Govern- Total

Waste / Public Debt mental GovernmentalGeneral Sanitation Works Service Funds Funds

DEFERRED INFLOWS OF RESOURCES (Cont.)

Deferred Delinquent Property Taxes $ 60,345 $ 0 $ 68,592 $ 4,507 $ 0 $ 133,444Other Deferred/Unavailable Revenue 36,196 1,581,576 116,447 0 0 1,734,219Total Deferred Inflows of Resources $ 3,925,301 $ 1,581,576 $ 562,493 $ 805,955 $ 0 $ 6,875,325

FUND BALANCES

Nonspendable:Advances to Other Funds $ 0 $ 0 $ 0 $ 416,666 $ 0 $ 416,666Prepaid Items 2,621 0 0 0 0 2,621

Restricted:Restricted for General Government 71,001 0 0 0 37,823 108,824Restricted for Finance 39,620 0 0 0 0 39,620Restricted for Administration of Justice 73,579 0 0 0 0 73,579Restricted for Public Safety 86,997 0 0 0 107,786 194,783Restricted for Social, Cultural, and Recreational Services 0 0 0 0 6,947 6,947Restricted for Highways/Public Works 0 0 6,801,627 0 0 6,801,627Restricted for Capital Outlay 0 0 0 0 1,049,181 1,049,181Restricted for Debt Service 0 0 0 3,434,890 0 3,434,890

Committed:Committed for General Government 0 0 0 0 155,080 155,080Committed for Public Health and Welfare 0 731,654 0 0 0 731,654Committed for Agriculture and Natural Resources 0 0 0 0 12,582 12,582Committed for Highways/Public Works 0 0 559,187 0 0 559,187Committed for Debt Service 0 0 0 1,013,402 0 1,013,402Committed for Capital Projects 30,935 0 0 0 0 30,935

Unassigned 849,020 0 0 0 0 849,020Total Fund Balances $ 1,153,773 $ 731,654 $ 7,360,814 $ 4,864,958 $ 1,369,399 $ 15,480,598

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 5,259,847 $ 2,368,112 $ 8,259,377 $ 5,670,913 $ 1,372,305 $ 22,930,554


Major FundsNonmajor

Funds

20

Exhibit C-2

McNairy County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position

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

Total fund balances - balance sheet - governmental funds (Exhibit C-1) $ 15,480,598

(1) Capital assets used in governmental activities are not financialresources and therefore are not reported in the governmental funds. Add: land $ 1,440,327 Add: buildings and improvements net of accumulated depreciation 2,782,100 Add: infrastructure net of accumulated depreciation 4,704,608 Add: other capital assets net of accumulated depreciation 1,065,029 9,992,064

(2) Long-term liabilities are not due and payable in the current periodand therefore are not reported in the governmental funds. Less: notes payable $ (2,147,778) Less: bonds payable (30,167,657) Less: unamortized premium on debt (452,123) Add: deferred amount on refunding 19,084 Less: compensated absences payable (304,919) Less: landfill closure/postclosure care costs (546,834) Less: accrued interest payable (85,005) (33,685,232)

(3) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions will be amortized and recognized as components of pension expense in future years. Add: deferred outflows of resources related to pensions $ 379,825 Less: deferred inflows of resources related to pensions (153,470) 226,355

(4) Net pension assets of the agent plan are not current financialresources and therefore are not reported in the governmental funds. 628,874

(5) Other long-term assets are not available to pay for current period expenditures and therefore are deferred in the governmental funds. 1,867,663

Net position of governmental activities (Exhibit A) $ (5,489,678)


June 30, 2020

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Exhibit C-3

McNairy County, TennesseeStatement of Revenues, Expenditures,

and Changes in Fund BalancesGovernmental FundsFor the Year Ended June 30, 2020

Solid Highway / General EducationWaste / Public Debt Capital

General Sanitation Works Service Projects

RevenuesLocal Taxes $ 4,586,920 $ 0 $ 402,670 $ 788,898 $ 0Licenses and Permits 16,851 0 0 0 0Fines, Forfeitures, and Penalties 111,447 0 0 0 0Charges for Current Services 59,506 873,627 0 0 0Other Local Revenues 46,424 17,138 18,255 240,678 59,817Fees Received From County Officials 886,840 0 0 0 0State of Tennessee 1,031,937 325,629 3,480,531 0 0Federal Government 508,506 0 128,739 0 0Other Governments and Citizens Groups 0 0 24,907 1,124,583 0

Total Revenues $ 7,248,431 $ 1,216,394 $ 4,055,102 $ 2,154,159 $ 59,817

ExpendituresCurrent:

General Government $ 864,341 $ 0 $ 0 $ 0 $ 0Finance 586,955 0 0 0 0Administration of Justice 592,378 0 0 0 0Public Safety 2,444,166 0 0 0 0Public Health and Welfare 225,850 1,250,931 0 0 0Social, Cultural, and Recreational Services 137,113 0 0 0 0Agriculture and Natural Resources 142,673 0 0 0 0Other Operations 1,656,666 34,325 0 0 0Highways 0 27,553 4,586,814 0 0

Debt Service:Principal on Debt 125,744 0 0 1,196,188 0Interest on Debt 7,069 0 0 1,040,093 0Other Debt Service 0 0 0 19,274 0

(Continued)

Major Funds

22

Exhibit C-3


and Changes in Fund BalancesGovernmental Funds (Cont.)

Solid Highway / General EducationWaste / Public Debt Capital

General Sanitation Works Service Projects

Expenditures (Cont.)Capital Projects $ 0 $ 0 $ 0 $ 0 $ 7,954,822

Total Expenditures $ 6,782,955 $ 1,312,809 $ 4,586,814 $ 2,255,555 $ 7,954,822

Excess (Deficiency) of RevenuesOver Expenditures $ 465,476 $ (96,415) $ (531,712) $ (101,396) $ (7,895,005)

Other Financing Sources (Uses)Insurance Recovery $ 14,244 $ 608 $ 28,375 $ 0 $ 0Transfers In 0 0 0 744,607 0Transfers Out (15,000) 0 (744,607) 0 0

Total Other Financing Sources (Uses) $ (756) $ 608 $ (716,232) $ 744,607 $ 0

Net Change in Fund Balances $ 464,720 $ (95,807) $ (1,247,944) $ 643,211 $ (7,895,005)Fund Balance, July 1, 2019 689,053 827,461 8,608,758 4,221,747 7,895,005

Fund Balance, June 30, 2020 $ 1,153,773 $ 731,654 $ 7,360,814 $ 4,864,958 $ 0

(Continued)

Major Funds

23

Exhibit C-3



OtherGovern- Totalmental GovernmentalFunds Funds

RevenuesLocal Taxes $ 1,705 $ 5,780,193Licenses and Permits 0 16,851Fines, Forfeitures, and Penalties 29,571 141,018Charges for Current Services 4,820 937,953Other Local Revenues 125,645 507,957Fees Received From County Officials 0 886,840State of Tennessee 0 4,838,097Federal Government 0 637,245Other Governments and Citizens Groups 0 1,149,490

Total Revenues $ 161,741 $ 14,895,644


General Government $ 77,866 $ 942,207Finance 0 586,955Administration of Justice 3,750 596,128Public Safety 48,573 2,492,739Public Health and Welfare 0 1,476,781Social, Cultural, and Recreational Services 2,639 139,752Agriculture and Natural Resources 11,258 153,931Other Operations 1,374 1,692,365Highways 0 4,614,367

Debt Service:Principal on Debt 0 1,321,932Interest on Debt 0 1,047,162Other Debt Service 0 19,274

(Continued)

Nonmajor Funds

24

Exhibit C-3



OtherGovern- Totalmental GovernmentalFunds Funds

Expenditures (Cont.)Capital Projects $ 192,937 $ 8,147,759

Total Expenditures $ 338,397 $ 23,231,352

Excess (Deficiency) of RevenuesOver Expenditures $ (176,656) $ (8,335,708)

Other Financing Sources (Uses)Insurance Recovery $ 0 $ 43,227Transfers In 15,000 759,607Transfers Out 0 (759,607)

Total Other Financing Sources (Uses) $ 15,000 $ 43,227

Net Change in Fund Balances $ (161,656) $ (8,292,481)Fund Balance, July 1, 2019 1,531,055 23,773,079

Fund Balance, June 30, 2020 $ 1,369,399 $ 15,480,598


Nonmajor Funds

25

Exhibit C-4

McNairy County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesFor the Year Ended June 30, 2020

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

Net change in fund balances - total governmental funds (Exhibit C-3) $ (8,292,481)

(1) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of these assets is allocated over their useful lives and reported as depreciation expense. The difference between capital outlays and depreciation is itemized as follows: Add: capital assets purchased in the current period $ 249,124 Less: current-year depreciation expense (829,636) (580,512)

(2) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Add: deferred delinquent property taxes and other deferred June 30, 2020 $ 1,867,663 Less: deferred delinquent property taxes and other deferred June 30, 2019 (3,246,654) (1,378,991)

(3) The issuance of long-term debt (e.g., bonds, notes, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on netposition. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts aredeferred and amortized in the statement of activities. This amount is the effect of these differences in the treatment of long-term debt and related items. Add: change in premium on debt issuances $ 27,652 Less: change in deferred amount on refunding debt (4,782) Add: principal payments on bonds 922,299 Add: principal payments on notes 273,889 Add: principal payments on capital leases 125,744 1,344,802

(4) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. Change in accrued interest payable $ 5,579 Change in compensated absences payable (20,605) Change in landfill closure/postclosure care costs (63,119) Change in net pension asset 132,806 Change in deferred outflows related to pensions (24,325) Change in deferred inflows related to pensions (17,501) 12,835

Change in net position of governmental activities (Exhibit B) $ (8,894,347)


26

Exhibit C-5

McNairy County, TennesseeStatement of Revenues, Expenditures, and Changes

in Fund Balance - Actual (Budgetary Basis) and BudgetGeneral FundFor the Year Ended June 30, 2020

Actual VarianceRevenues/ with Final

Actual Less: Expenditures Budget -(GAAP Encumbrances (Budgetary PositiveBasis) 7/1/2019 Basis) Original Final (Negative)

RevenuesLocal Taxes $ 4,586,920 $ 0 $ 4,586,920 $ 4,380,693 $ 4,380,693 $ 206,227Licenses and Permits 16,851 0 16,851 16,900 16,900 (49)Fines, Forfeitures, and Penalties 111,447 0 111,447 102,150 102,150 9,297Charges for Current Services 59,506 0 59,506 49,000 49,000 10,506Other Local Revenues 46,424 0 46,424 41,100 41,100 5,324Fees Received From County Officials 886,840 0 886,840 870,000 870,000 16,840State of Tennessee 1,031,937 0 1,031,937 683,552 690,202 341,735Federal Government 508,506 0 508,506 461,700 481,650 26,856

Total Revenues $ 7,248,431 $ 0 $ 7,248,431 $ 6,605,095 $ 6,631,695 $ 616,736

ExpendituresGeneral Government

County Commission $ 46,935 $ (200) $ 46,735 $ 40,148 $ 47,739 $ 1,004Board of Equalization 1,293 0 1,293 2,000 2,000 707Beer Board 58 0 58 250 250 192Budget and Finance Committee 1,860 0 1,860 1,500 1,875 15Other Boards and Committees 1,590 0 1,590 2,000 2,000 410County Mayor/Executive 171,914 0 171,914 172,609 173,792 1,878County Attorney 6,000 0 6,000 6,000 6,000 0Election Commission 155,579 0 155,579 162,356 162,356 6,777Register of Deeds 144,481 0 144,481 144,633 145,243 762County Buildings 334,471 (4,900) 329,571 343,962 363,244 33,673Preservation of Records 160 0 160 1,050 1,050 890

FinanceProperty Assessor's Office 169,477 0 169,477 178,989 178,989 9,512County Trustee's Office 181,119 0 181,119 177,387 182,278 1,159

(Continued)

Budgeted Amounts

27

Exhibit C-5


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



Expenditures (Cont.)Finance (Cont.)

County Clerk's Office $ 236,359 $ 0 $ 236,359 $ 243,205 $ 243,205 $ 6,846Administration of Justice

Circuit Court 200,247 0 200,247 213,253 220,739 20,492General Sessions Court 195,295 0 195,295 216,242 208,756 13,461Chancery Court 147,592 0 147,592 152,349 152,349 4,757Juvenile Court 49,244 0 49,244 51,284 51,284 2,040

Public SafetySheriff's Department 1,508,228 0 1,508,228 1,579,918 1,541,151 32,923Jail 479,547 (406) 479,141 391,751 489,424 10,283Fire Prevention and Control 234,770 (22,365) 212,405 212,900 218,216 5,811Rural Fire Protection 37,115 0 37,115 42,000 42,000 4,885Civil Defense 106,549 0 106,549 112,045 113,545 6,996Inspection and Regulation 6,032 0 6,032 6,032 6,032 0Other Public Safety 71,925 0 71,925 71,925 71,925 0

Public Health and WelfareLocal Health Center 177,420 0 177,420 208,752 208,752 31,332Ambulance/Emergency Medical Services 13,047 0 13,047 12,500 13,047 0Alcohol and Drug Programs 34,288 0 34,288 0 44,240 9,952Other Local Health Services 1,095 0 1,095 1,096 1,096 1

Social, Cultural, and Recreational ServicesLibraries 137,113 0 137,113 145,590 155,203 18,090

Agriculture and Natural ResourcesAgricultural Extension Service 76,610 0 76,610 87,965 87,965 11,355Soil Conservation 66,063 0 66,063 66,063 66,063 0

(Continued)

Budgeted Amounts

28

Exhibit C-5





Expenditures (Cont.)Other Operations

Other Economic and Community Development $ 543,655 $ 0 $ 543,655 $ 323,264 $ 573,264 $ 29,609Airport 64,000 0 64,000 64,000 64,000 0Veterans' Services 31,374 0 31,374 32,400 32,400 1,026Other Charges 151,850 0 151,850 150,000 152,000 150Contributions to Other Agencies 10,399 0 10,399 19,750 19,750 9,351Employee Benefits 828,688 0 828,688 739,025 799,572 (29,116)COVID-19 Grant #2 26,600 0 26,600 0 26,600 0Miscellaneous 100 0 100 6,000 6,000 5,900

Principal on DebtGeneral Government 125,744 0 125,744 60,145 125,744 0

Interest on DebtGeneral Government 7,069 0 7,069 2,862 7,069 0

Total Expenditures $ 6,782,955 $ (27,871) $ 6,755,084 $ 6,445,200 $ 7,008,207 $ 253,123

Excess (Deficiency) of RevenuesOver Expenditures $ 465,476 $ 27,871 $ 493,347 $ 159,895 $ (376,512) $ 869,859

Other Financing Sources (Uses)Insurance Recovery $ 14,244 $ 0 $ 14,244 $ 10,000 $ 10,000 $ 4,244Transfers In 0 0 0 500,000 0 0Transfers Out (15,000) 0 (15,000) (666,667) (166,667) 151,667

Total Other Financing Sources $ (756) $ 0 $ (756) $ (156,667) $ (156,667) $ 155,911

(Continued)

Budgeted Amounts

29

Exhibit C-5





Net Change in Fund Balance $ 464,720 $ 27,871 $ 492,591 $ 3,228 $ (533,179) $ 1,025,770Fund Balance, July 1, 2019 689,053 (27,871) 661,182 1,345,472 1,345,472 (684,290)

Fund Balance, June 30, 2020 $ 1,153,773 $ 0 $ 1,153,773 $ 1,348,700 $ 812,293 $ 341,480


Budgeted Amounts

30

Exhibit C-6


in Fund Balance - Actual (Budgetary Basis) and BudgetSolid Waste/Sanitation FundFor the Year Ended June 30, 2020



RevenuesLocal Taxes $ 0 $ 0 $ 0 $ 1,500 $ 1,500 $ (1,500)Charges for Current Services 873,627 0 873,627 800,000 800,000 73,627Other Local Revenues 17,138 0 17,138 99,000 99,000 (81,862)State of Tennessee 325,629 0 325,629 403,900 403,900 (78,271)Federal Government 0 0 0 4,000 4,000 (4,000)

Total Revenues $ 1,216,394 $ 0 $ 1,216,394 $ 1,308,400 $ 1,308,400 $ (92,006)

ExpendituresPublic Health and Welfare

Sanitation Management $ 1,077,046 $ 0 $ 1,077,046 $ 989,218 $ 1,063,561 $ (13,485)Recycling Center 135,910 (204) 135,706 124,860 137,911 2,205Landfill Operation and Maintenance 37,975 0 37,975 34,920 48,148 10,173

Other OperationsEmployee Benefits 34,325 (40) 34,285 45,550 45,550 11,265

HighwaysLitter and Trash Collection 27,553 (300) 27,253 39,900 39,900 12,647

Total Expenditures $ 1,312,809 $ (544) $ 1,312,265 $ 1,234,448 $ 1,335,070 $ 22,805

Excess (Deficiency) of RevenuesOver Expenditures $ (96,415) $ 544 $ (95,871) $ 73,952 $ (26,670) $ (69,201)

Other Financing Sources (Uses)Insurance Recovery $ 608 $ 0 $ 608 $ 0 $ 0 $ 608

Total Other Financing Sources $ 608 $ 0 $ 608 $ 0 $ 0 $ 608

(Continued)

Budgeted Amounts

31

Exhibit C-6


in Fund Balance - Actual (Budgetary Basis) and BudgetSolid Waste/Sanitation Fund (Cont.)



Net Change in Fund Balance $ (95,807) $ 544 $ (95,263) $ 73,952 $ (26,670) $ (68,593)Fund Balance, July 1, 2019 827,461 (544) 826,917 871,299 871,299 (44,382)

Fund Balance, June 30, 2020 $ 731,654 $ 0 $ 731,654 $ 945,251 $ 844,629 $ (112,975)


Budgeted Amounts

32

Exhibit C-7


in Fund Balance - Actual and BudgetHighway/Public Works FundFor the Year Ended June 30, 2020

Variancewith FinalBudget -Positive

Actual Original Final (Negative)

RevenuesLocal Taxes $ 402,670 $ 375,367 $ 398,899 $ 3,771Other Local Revenues 18,255 42,000 42,000 (23,745)State of Tennessee 3,480,531 2,825,782 2,895,068 585,463Federal Government 128,739 0 166,667 (37,928)Other Governments and Citizens Groups 24,907 25,000 25,000 (93)

Total Revenues $ 4,055,102 $ 3,268,149 $ 3,527,634 $ 527,468

ExpendituresHighways

Administration $ 215,337 $ 208,279 $ 219,435 $ 4,098Highway and Bridge Maintenance 977,466 980,408 1,024,403 46,937Operation and Maintenance of Equipment 405,052 372,166 426,046 20,994Other Charges 118,027 105,556 119,900 1,873Employee Benefits 475,032 462,552 480,233 5,201Capital Outlay 2,395,900 4,389,324 4,372,750 1,976,850

Principal on DebtHighways and Streets 0 485,000 166,667 166,667

Interest on DebtHighways and Streets 0 259,607 0 0

Total Expenditures $ 4,586,814 $ 7,262,892 $ 6,809,434 $ 2,222,620

Excess (Deficiency) of RevenuesOver Expenditures $ (531,712) $ (3,994,743) $ (3,281,800) $ 2,750,088

Other Financing Sources (Uses)Bonds Issued $ 0 $ 4,000,000 $ 4,000,000 $ (4,000,000)Insurance Recovery 28,375 0 22,968 5,407Transfers Out (744,607) 0 (744,607) 0

Total Other Financing Sources $ (716,232) $ 4,000,000 $ 3,278,361 $ (3,994,593)

Net Change in Fund Balance $ (1,247,944) $ 5,257 $ (3,439) $ (1,244,505)Fund Balance, July 1, 2019 8,608,758 947,981 947,981 7,660,777

Fund Balance, June 30, 2020 $ 7,360,814 $ 953,238 $ 944,542 $ 6,416,272


Budgeted Amounts

33

Exhibit D

McNairy County, TennesseeStatement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2020

ASSETS

Cash $ 1,306,584Accounts Receivable 720Due from Other Governments 339,024Cash Shortage 6,235

Total Assets $ 1,652,563

LIABILITIES

Due to Other Taxing Units $ 339,024Due to Litigants, Heirs, and Others 1,313,539

Total Liabilities $ 1,652,563


AgencyFunds

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Note Page(s)

I. Summary of Significant Accounting PoliciesA. Reporting Entity 36B. Government-wide and Fund Financial Statements 37C. Measurement Focus, Basis of Accounting, and Financial

Statement Presentation 38D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and

Net Position/Fund Balance1. Deposits and Investments 402. Receivables and Payables 423. Prepaid Items 434. Restricted Assets 435. Capital Assets 436. Deferred Outflows/Inflows of Resources 447. Compensated Absences 448. Long-term Debt and Long-term Obligations 459. Net Position and Fund Balance 46

E. Pension Plans 47F. Other Postemployment Benefit (OPEB) Plan 48

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

Balance Sheet and the Government-wide Statement of Net Position 48B. Explanation of Certain Differences Between the Governmental Fund

Statement of Revenues, Expenditures, and Changes in Fund Balancesand the Government-wide Statement of Activities 49

III. Stewardship, Compliance, and AccountabilityA. Budgetary Information 49B. Cash Shortages - Prior Years 50C. Expenditures Exceeded Appropriations 50

IV. Detailed Notes on All FundsA. Deposits and Investments 50B. Capital Assets 57C. Construction Commitments 59D. Interfund Receivables, Payables, and Transfers 59E. Long-term Debt 61F. Long-term Obligations 63G. On-Behalf Payments 65H. Short-term Debt 65

V. Other InformationA. Risk Management 65B. Contingent Liabilities 67C. Landfill Closure/Postclosure Care Costs 67D. Jointly Governed Organization 67E. Retirement Commitments

1. Tennessee Consolidated Retirement System (TCRS) 672. Deferred Compensation 84

F. Other Postemployment Benefits (OPEB) 84G. Purchasing Laws 93

VI. Other Notes – Discretely Presented McNairy County AirportAuthority 94

McNAIRY COUNTY, TENNESSEEIndex of Notes to the Financial Statements

35

McNAIRY COUNTY, TENNESSEE NOTES TO THE FINANCIAL STATEMENTS


I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES McNairy County’s financial statements are presented in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments. The following are the more significant accounting policies of McNairy County:

A. Reporting Entity

McNairy County is a public municipal corporation governed by an elected 21-member board. As required by GAAP, these financial statements present McNairy County (the primary government) and its component units. The financial statements of the McNairy County Emergency Communications District, a component unit requiring discrete presentation, were excluded from this report due to materiality calculations; therefore, the effect of the omission did not affect the independent auditor’s opinion thereon. The component units discussed below are included in the county’s reporting entity because of the significance of their operational or financial relationships with the county.

Discretely Presented Component Units – The following entities meet the criteria for discretely presented component units of the county. They are reported in separate columns in the government-wide financial statements to emphasize that they are legally separate from the county. The McNairy County School Department operates the public school system in the county, and the voters of McNairy County elect its board. The school department is fiscally dependent on the county because it may not issue debt, and its budget and property tax levy are subject to the county commission’s approval. The school department’s taxes are levied under the taxing authority of the county and are included as part of the county’s total tax levy. The McNairy County Airport Authority operates the county’s only airport facility, and the McNairy County Commission appoints its governing body and approves its operating budget. The McNairy County Airport Authority is funded primarily through rentals and fuel sales. The McNairy County Emergency Communications District provides a simplified means of securing emergency services through a uniform emergency number for the residents of McNairy County, and the McNairy County Commission appoints its governing body. The district is funded primarily through a service charge levied on telephone services. Before the issuance of most debt instruments, the district must obtain the county commission’s

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approval. The financial statements of the McNairy County Emergency Communications District were not material to the component units’ opinion unit and therefore have been omitted from this report. The McNairy County School Department does not issue separate financial statements from those of the county. Therefore, basic financial statements of the school department are included in this report as listed in the table of contents. Complete financial statements of the McNairy County Airport Authority and the McNairy County Emergency Communications District can be obtained from their administrative offices at the following addresses:

Administrative Offices:

McNairy County Airport Authority 2281 Airport Road Selmer, TN 38375

McNairy County Emergency Communications District 12 Falcon Street Selmer, TN 38375

B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. However, when applicable, interfund services provided and used between functions are not eliminated in the process of consolidation in the Statement of Activities. Governmental activities are normally supported by taxes and intergovernmental revenues. Business-type activities, which rely to a significant extent on fees and charges, are required to be reported separately from governmental activities in government-wide financial statements. However, the primary government of McNairy County does not have any business-type activities to report. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The McNairy County School Department component unit only reports governmental activities in the government-wide financial statements. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function, and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not

37

properly included among program revenues are reported instead as general revenues. McNairy County issues all debt for the discretely presented McNairy County School Department. Net debt issues totaling $7,954,822 were contributed by the county to the school department during the year ended June 30, 2020. Separate financial statements are provided for governmental funds and fiduciary funds. The fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the fiduciary funds financial statements, except for agency funds, which have no measurement focus. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Fund financial statements of McNairy County are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental category. McNairy County has no proprietary funds to report. Separate financial statements are provided for governmental funds and fiduciary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. All other governmental funds are aggregated into a single column on the fund financial statements. The fiduciary funds in total are reported in a single column. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they become both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the county considers revenues other than grants to be available if they are collected within 30 days after year-end. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met and the revenues are

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available. McNairy County considers grants and similar revenues to be available if they are collected within 60 days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Principal and interest on long-term debt are recognized as fund liabilities when due or when amounts have been accumulated in the General Debt Service Fund for payments to be made early in the following year. Property taxes for the period levied, in-lieu-of tax payments, sales taxes, interest, and miscellaneous taxes are all considered to be susceptible to accrual and have been recognized as revenues of the current period. Applicable business taxes, litigation taxes, state-shared excise taxes, fines, forfeitures, and penalties are not susceptible to accrual since they are not measurable (reasonably estimable). All other revenue items are considered to be measurable and available only when the county receives cash. Fiduciary funds financial statements are reported using the economic resources measurement focus, except for agency funds, which have no measurement focus, and the accrual basis of accounting. Revenues are recognized when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. McNairy County reports the following major governmental funds:

General Fund – This is the county’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Solid Waste/Sanitation Fund – This special revenue fund accounts for the county’s garbage collection operations. Residential waste collection charges are the foundational revenues of this fund. Highway Public Works Fund – This special revenue fund accounts for transactions of the county’s highway department. Local and state gasoline/fuel taxes are the foundational revenues of this fund. General Debt Service Fund – This fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. Education Capital Projects Fund – This fund accounts for debt issued by McNairy County that is subsequently contributed to the discretely presented McNairy County School Department for construction and renovation projects.

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Additionally, McNairy County reports the following fund type:

Agency Funds – These funds account for amounts collected in an agency capacity by the constitutional officers and local sales taxes received by the state to be forwarded to the various cities in McNairy County. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. They do, however, use the accrual basis of accounting to recognize receivables and payables.

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

General Purpose School Fund – This fund is the primary operating fund for the school department. It is used to account for general operations of the school department. School Federal Projects Fund – This special revenue fund is used to account for restricted federal revenues, which must be expended on specific education programs. Central Cafeteria Fund – This fund is used to account for and report the proceeds of specific revenue sources that are restricted to expenditures for the operation of non-instructional services. Education Capital Projects Fund – This fund is used to account for the receipt of debt issued by McNairy County and contributed to the school department for building construction.

Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided; (2) operating grants and contributions; and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

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

1. Deposits and Investments

State statutes authorize the government to make direct investments in bonds, notes, or treasury bills of the U.S. government and obligations guaranteed by the U.S. government or any of its agencies; deposit accounts at state and federal chartered banks and savings and loan associations; repurchase agreements; the State Treasurer’s Investment Pool; the State Treasurer’s Intermediate Term Investment Fund; bonds of any state or political subdivision rated A or higher by any nationally recognized rating service; nonconvertible debt securities of

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certain federal government sponsored enterprises; and the county’s own legally issued bonds or notes. The county trustee maintains a cash and internal investment pool that is used by all funds and the discretely presented McNairy County School Department. Each fund’s portion of this pool is displayed on the balance sheets or statements of net position as Equity in Pooled Cash and Investments. Most income from these pooled investments is assigned to the General Debt Service Fund and the primary government’s Education Capital Projects Fund. McNairy County and the school department have adopted a policy of reporting U.S. Treasury obligations, U.S. agency obligations, and repurchase agreements with maturities of one year or less when purchased on the balance sheet at amortized cost. Certificates of deposit are reported at cost. Investments in the State Treasurer’s Investment Pool are reported at amortized cost using a stable net asset value. The primary oversight responsibility for the investments and operations of the State Treasurer’s Investment Pool rests with the Funding Board of the State of Tennessee (Funding Board). The Funding Board has established an investment policy that is administered by the state treasurer. These polices were designed to comply with generally accepted accounting principles. In addition, state statutes require the state treasurer to administer the pool under the same terms and conditions, including collateral requirements, as prescribed for other funds invested by the state treasurer. Compliance with Funding Board polices is audited by the Tennessee Comptroller of the Treasury, Division of State Audit. The latest audit opinion issued by the Division of State Audit concluded that the State Treasurer’s Investment Pool complied with accounting principles generally accepted in the United State of America. Investments in the State Treasurer’s Intermediate Term Investment Fund are reported at amortized cost using a floating net asset value. The primary oversight responsibility for the investments and operations of the State Treasurer’s Intermediate Term Investment Fund rests with the Funding Board of the State of Tennessee (Funding Board). The Funding Board has established an investment policy that is administered by the state treasurer. These polices were designed to comply with generally accepted accounting principles. In addition, state statutes require the state treasurer to administer the pool under the same terms and conditions as prescribed for other funds invested by the state treasurer. Compliance with Funding Board polices is audited by the Tennessee Comptroller of the Treasury, Division of State Audit. The latest audit opinion issued by the Division of State Audit concluded that the State Treasurer’s Intermediate Term Investment Fund complied with accounting principles generally accepted in the United State of America. McNairy County had no investments in the State Treasurer’s Intermediate Term Investment Fund during the year.

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All other investments are reported at fair value.

2. Receivables and Payables Activity between funds for unremitted current collections outstanding at the end of the fiscal year is referred to as due to/from other funds. Advances between funds, as reported in the General Debt Service Fund financial statements, are offset by a nonspendable fund balance classification account to indicate that they are not available for appropriation and are not expendable from available financial resources. Property taxes and solid waste receivables are shown with an allowance for uncollectibles. The solid waste receivables allowance for uncollectibles is based on historical collection data. The allowance for uncollectible property taxes is equal to 4.25 percent of total taxes levied. Property taxes receivable are recognized as of the date an enforceable legal claim to the taxable property arises. This date is January 1 and is referred to as the lien date. However, revenues from property taxes are recognized in the period for which the taxes are levied, which is the ensuing fiscal year. Since the receivable is recognized before the period of revenue recognition, the entire amount of the receivable, less an estimated allowance for uncollectible taxes, is reported as a deferred inflow of resources as of June 30. Property taxes receivable are also reported as of June 30 for the taxes that are levied, collected, and reported as revenue during the current fiscal year. These property taxes receivable are presented on the balance sheet as a deferred inflow of resources to reflect amounts not available as of June 30. Property taxes collected within 30 days of year-end are considered available and accrued. The allowance for uncollectible taxes represents the estimated amount of the receivable that will be filed in court for collection. Delinquent taxes filed in court for collection are not included in taxes receivable since they are neither measurable nor available. Property taxes are levied as of the first Monday in October. Taxes become delinquent and begin accumulating interest and penalty the following March 1. Suit must be filed in Chancery Court between the following February 1 to April 1 for any remaining unpaid taxes. Additional costs attach to delinquent taxes after a court suit has been filed.

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3. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The cost of prepaid items is recorded as an expenditure when consumed rather than when purchased. Prepaids are offset in the nonspendable fund balance account in governmental funds.

4. Restricted Assets

Restricted assets consist of amounts held in a pension stabilization trust by the Tennessee Consolidated Retirement System (TCRS) for the benefit of the discretely presented McNairy County School Department’s Teacher Retirement Plan. The purpose of this trust is to accumulate funds to provide stabilization (smoothing) of retirement costs to the school system in times of fluctuating investment returns and market downturns. These funds are held and invested by TCRS pursuant to an irrevocable agreement and may only be used for the benefit of the McNairy County School Department to fund retirement benefits upon approval of the TCRS Board of Directors. To date, the McNairy County School Department has not withdrawn any funds from the trust to pay pension cost. Trust documents provide that the funds are not subject to the claims of general creditors of the school department.

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

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depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Buildings and Improvements 25 - 40Other Capital Assets 5 - 20Infrastructure: Roads 20 - 50 Bridges 30

6. Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has items that qualify for reporting in this category. Accordingly, the items are reported in the government-wide Statement of Net Position. These items are for the deferred charge on refunding, pension and OPEB changes in experience, pension and OPEB changes in assumptions, pension and OPEB changes in proportionate share of contributions, as well as employer contributions made to the pension and OPEB plans after the measurement date. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has items that qualify for reporting in this category. Accordingly, the items are reported in the government-wide Statement of Net Position and the governmental funds balance sheet. These items are from the following sources: current and delinquent property taxes, pension and OPEB changes in experience, pension changes in investment earnings, pension and OPEB changes in proportion, OPEB changes in assumptions, and various receivables for revenues, which do not meet the availability criteria in governmental funds. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

7. Compensated Absences

It is the county’s policy to permit employees to accumulate up to 160 hours of unused vacation benefits, which will be paid to employees upon separation from service. Additionally, it is the county’s policy to permit

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non-law enforcement personnel of the sheriff’s department to accumulate up to 80 hours of compensatory time and law enforcement personnel to accumulate up to 480 hours of compensatory time which will be paid to employees upon separation of service. There is no liability for accumulated sick leave since McNairy County does not have a policy to pay sick leave when employees separate from service with the government. A liability for vacation pay and compensatory time is reported in governmental funds only if amounts have matured, for example, as a result of employee resignations and retirements. The school department has a formal leave policy; however, the policy does not provide for employees to receive compensation for unused accumulated vacation or sick leave days.

8. Long-term Debt and Long-term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities Statement of Net Position. Debt premiums and discounts are deferred and are amortized over the life of the new debt using the straight-line method. Debt issuance costs are expensed in the period incurred. In refunding transactions, the difference between the reacquisition price and the net carrying amount of the old debt is reported as a deferred outflow of resources or a deferred inflow of resources and recognized as a component of interest expense in a systematic and rational manner over the remaining life of the refunded debt or the life of the new debt issued, whichever is shorter. In the fund financial statements, governmental funds recognize debt premiums and discounts, as well as debt issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Only the matured portion (the portion that has come due for payment) of long-term indebtedness, including bonds payable, is recognized as a liability and expenditure in the governmental fund financial statements. Liabilities and expenditures for other long-term obligations, including compensated absences, landfill closure/postclosure care costs, and other postemployment benefits are recognized to the extent that the liabilities have matured (come due for payment) each period.

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9. Net Position and Fund Balance In the government-wide financial statements, equity is classified as net position and displayed in three components:

a. Net investment in capital assets – Consists of capital assets,

including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

b. Restricted net position – Consists of net position with constraints

placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or (2) law through constitutional provisions or enabling legislation.

c. Unrestricted net position – All other net position that does not meet the definition of restricted or net investment in capital assets.

The government-wide Statement of Net Position reports $14,333,165 of restricted net position, of which $57,819 is restricted by enabling legislation. As of June 30, 2020, McNairy County had $21,575,000 in outstanding debt for capital purposes for the discretely presented McNairy County School Department. This debt is a liability of McNairy County, but the capital assets acquired are reported in the financial statements of the school department. Therefore, McNairy County has incurred a liability significantly decreasing its unrestricted net position with no corresponding increase in the county’s capital assets. It is the county’s policy that restricted amounts would be reduced first followed by unrestricted amounts when expenditures are incurred for purposes for which both restricted and unrestricted fund balance is available. Also, it is the county’s policy that committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of these unrestricted fund balance classifications could be used. In the fund financial statements, governmental funds report fund balance in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in these funds can be spent. These classifications may consist of the following:

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

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

Committed Fund Balance – includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolutions of the county commission, the county’s highest level of decision-making authority and the Board of Education, the school department’s highest level of decision-making authority, and shall remain binding unless removed in the same manner.

Assigned Fund Balance – includes amounts that are constrained by the county’s intent to be used for specific purposes but are neither restricted nor committed (excluding stabilization arrangements). The county commission has by resolution authorized the county’s Budget Committee to make assignments for the general government. The Board of Education makes assignments for the school department.

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

E. Pension Plans

Primary Government

For purposes of measuring the net pension liability, deferred outflows ofresources and deferred inflows of resources related to pensions, and pensionexpense, information about the fiduciary net position of McNairy County’sparticipation in the Public Employee Retirement Plan of the TennesseeConsolidated Retirement System (TCRS), and additions to/deductions fromMcNairy County’s fiduciary net position have been determined on the samebasis as they are reported by the TCRS for the Public Employee RetirementPlan. For this purpose, benefits (including refunds of employee contributions)are recognized when due and payable in accordance with the benefit terms ofthe Public Employee Retirement Plan of TCRS. Investments are reported at fairvalue.

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Discretely Presented McNairy County School Department

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

F. Other Postemployment Benefit (OPEB) Plan


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

II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of certain differences between the governmental fund

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

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B. Explanation of certain differences between the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the government-wide Statement of Activities Primary Government Exhibit C-4 includes explanations of the nature of individual elements of items required to reconcile the net change in fund balances – total governmental funds with the changes in net position of governmental activities reported in the government-wide Statement of Activities. Discretely Presented McNairy County School Department Exhibit I-5 includes explanations of the nature of individual elements of items required to reconcile the net change in fund balances – total governmental funds with the change in net position of governmental activities reported in the government-wide Statement of Activities.

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for all governmental funds except the Constitutional Officers - Fees Fund (special revenue fund), which is not budgeted, and the capital projects funds, which adopt project length budgets. All annual appropriations lapse at fiscal year-end. The county is required by state statute to adopt annual budgets. Annual budgets are prepared on the basis in which current available funds must be sufficient to meet current expenditures. Expenditures and encumbrances may not legally exceed appropriations authorized by the county commission and any authorized revisions. Unencumbered appropriations lapse at the end of each fiscal year. The budgetary level of control is at the major category level established by the County Uniform Chart of Accounts, as prescribed by the Comptroller of the Treasury of the State of Tennessee. Major categories are at the department level (examples of General Fund major categories: County Commission, Board of Equalization, Beer Board, Budget and Finance Committee, etc.). Management may make revisions within major categories, but only the county commission may transfer appropriations between major categories. During the year, several supplementary appropriations were necessary. The county's budgetary basis of accounting is consistent with GAAP, except instances in which encumbrances are treated as budgeted expenditures. The difference between the budgetary basis and the GAAP basis is presented on the face of each budgetary schedule.

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B. Cash Shortages – Prior Years

The audit of McNairy County for the 2007-08 year reported a cash shortage of $13,528 in the Office of Circuit Court Clerk. A former office employee admitted taking the funds and has restored the $13,528 in missing funds to the office. On June 20, 2008, the former employee pled guilty in Circuit Court to official misconduct, was sentenced to two years in state prison, granted probation immediately, and ordered to pay $4,405 for restitution to the county for audit expenses. As of June 30, 2020, uncollected restitution for audit expenses totaled $3,390. The audit of McNairy County for the 2011-12 year reported a cash shortage of $9,782 in the Office of Sheriff. A former employee admitted taking the funds, and on February 14, 2013, was found guilty of theft of property and official misconduct and ordered to pay restitution and court costs. As of June 30, 2020, the uncollected cash shortage totaled $6,235.

C. Expenditures Exceeded Appropriations

Expenditures exceeded appropriations approved by the county commission in certain major appropriation categories (the legal level of control) of the following funds: Primary Government: General:

Other Operations - Employee Benefits $ 29,116 Solid Waste/Sanitation:

Public Health and Welfare - Sanitation Management 13,485

Expenditures that exceed appropriations are a violation of state statutes. These expenditures in excess of appropriations were funded by available fund balance.

IV. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments

McNairy County and the McNairy County School Department participate in an internal cash and investment pool through the Office of Trustee. The county trustee is the treasurer of the county and in this capacity is responsible for receiving, disbursing, and investing most county funds. Each fund’s portion of this pool is displayed on the balance sheets or statements of net position as Equity in Pooled Cash and Investments. Cash reflected on the balance sheets or statements of net position represents non-pooled amounts held separately by individual funds.

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Deposits Legal Provisions. All deposits with financial institutions must be secured by one of two methods. One method involves financial institutions that participate in the bank collateral pool administered by the state treasurer. Participating banks determine the aggregate balance of their public fund accounts for the State of Tennessee and its political subdivisions. The amount of collateral required to secure these public deposits must equal at least 105 percent of the average daily balance of public deposits held. Collateral securities required to be pledged by the participating banks to protect their public fund accounts are pledged to the state treasurer on behalf of the bank collateral pool. The securities pledged to protect these accounts are pledged in the aggregate rather than against each account. The members of the pool may be required by agreement to pay an assessment to cover any deficiency. Under this additional assessment agreement, public fund accounts covered by the pool are considered to be insured for purposes of credit risk disclosure. For deposits with financial institutions that do not participate in the bank collateral pool, state statutes require that all deposits be collateralized with collateral whose market value is equal to 105 percent of the uninsured amount of the deposits. The collateral must be placed by the depository bank in an escrow account in a second bank for the benefit of the county. Investments Legal Provisions. Counties are authorized to make direct investments in bonds, notes, or treasury bills of the U.S. government and obligations guaranteed by the U.S. government or any of its agencies; deposits at state and federal chartered banks and savings and loan associations; bonds of any state or political subdivision rated A or higher by any nationally recognized rating service; nonconvertible debt securities of certain federal government sponsored enterprises; and the county’s own legally issued bonds or notes. These investments may not have a maturity greater than two years. The county may make investments with longer maturities if various restrictions set out in state law are followed. Counties are also authorized to make investments in the State Treasurer’s Investment Pool, the State Treasurer’s Intermediate Term Investment Fund, and in repurchase agreements. The primary oversight responsibility for the investments and operations of the State Treasurer’s Investment Pool rests with the Funding Board of the State of Tennessee (Funding Board). The Funding Board has established an investment policy that is administered by the state treasurer. Investments in the State Treasurer’s Investment Pool are reported both by the pool and the county at amortized cost using a stable net asset value. The primary oversight responsibility for the investments and operations of the Intermediate Term Investment Fund rests with the Funding Board of the State of Tennessee (Funding Board). The Funding Board has established an investment policy that is administered by the state treasurer. Investments in the Intermediate Term Investment Fund are reported both by the pool and the county at

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amortized cost using a floating net asset value. Repurchase agreements must be approved by the state Comptroller’s Office and executed in accordance with procedures established by the State Funding Board. Securities purchased under a repurchase agreement must be obligations of the U.S. government or obligations guaranteed by the U.S. government or any of its agencies. When repurchase agreements are executed, the purchase of the securities must be priced at least two percent below the fair value of the securities on the day of purchase. Investment Balances. As of June 30, 2020, McNairy County had the following investments carried at fair value within the fair value hierarchy established by generally accepted accounting principles. Nonpooled investments represent amounts held in the Highway/Public Works Fund.

FairInvestments Maturities Value

U.S. Treasury Bills 7-16-20 to 9-17-20 $ 6,125,518

Total $ 6,125,518

NONPOOLED INVESTMENTS

Fair Value

MeasurementUsing

QuotedPrices inActive

Markets for Identical

Fair Value AssetsInvestment by Fair Value Level 6-30-20 (Level 1)

U.S. Treasury Bills $ 6,125,518 $ 6,125,518

Total $ 6,125,518 $ 6,125,518

Fair value investments classified at Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Fair value investments classified as Level 2 of the fair value hierarchy are valued using the active market rates for the underlying securities. Fair value investments classified as Level 3 of the fair value hierarchy are valued using non-observable inputs. Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. State statutes limit the maturities of certain investments as previously disclosed. McNairy County

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does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State statutes limit the ratings of certain investments as previously explained. McNairy County has no investment policy that would further limit its investment choices. As of June 30, 2020, McNairy County’s investments in the U.S. Treasury Bills was unrated.

TCRS Stabilization Trust

Legal Provisions. The McNairy County School Department is a member of the Tennessee Consolidated Retirement System (TCRS) Stabilization Reserve Trust. The school department has placed funds into the irrevocable trust as authorized by statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of the trust. Funds of trust members are held and invested in the name of the trust for the benefit of each member. Each member’s funds are restricted for the payment of retirement benefits of that member’s employees. Trust funds are not subject to the claims of general creditors of the school department. The trust is authorized to make investments as directed by the TCRS Board of Trustees. The McNairy County School Department may not impose any restrictions on investments placed by the trust on their behalf. Investment Balances. Assets of the TCRS, including the Stabilization Reserve Trust, are invested in the Tennessee Retiree Group Trust (TRGT). The TRGT is not registered with the Securities and Exchange Commission (SEC) as an investment company. The State of Tennessee has not obtained a credit quality rating for the TRGT from a nationally recognized credit ratings agency. The fair value of investment positions in the TRGT is determined daily based on the fair value of the pool’s underlying portfolio. Furthermore, TCRS had not obtained or provided any legally binding guarantees to support the value of participant shares during the fiscal year. There are no restrictions on the sale or redemption of shares. Investments are reported at fair value. Securities traded on a national exchange are valued at the last reported sales price. Investment income consists of realized and unrealized appreciation (depreciation) in the fair value of investments and interest and dividend income. Interest income is recognized when earned. Securities and securities transactions are recorded in the financial statements on a trade-date basis. The fair value of assets of the TRGT held at June 30, 2020, represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Assets held are categorized for fair value measurement within

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the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the asset and give the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

• Level 1 - Unadjusted quoted prices for identical assets or liabilities in active markets that can be accessed at the measurement date. • Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; assets or liabilities that have a bid-ask spread price in an inactive dealer market, brokered market and principal-to-principal market; and Level 1 assets or liabilities that are adjusted. • Level 3 - Valuations derived from valuation techniques in which significant inputs are unobservable. Investments where fair value is measured using the Net Asset Value (“NAV”) per share have no readily determinable fair value and have been determined to be calculated consistent with FASB principles for investment companies. Where inputs used in the measurement of fair value fall into different levels of the hierarchy, fair value of the instrument in its entirety is categorized based on the lowest level input that is significant to the valuation. This assessment requires professional judgement and as such management of the TRGT developed a fair value committee that worked in conjunction with the plan’s custodian and investment professionals to make these valuations. All assets held were valued individually and aggregated into classes to be represented in the table below.

Short-term securities generally include investments in money market-type securities reported at cost plus accrued interest. Equity and equity derivative securities classified in Level 1 are valued using last reported sales prices quoted in active markets that can be accessed at the measurement date. Equity and equity derivative securities classified in Level 2 are securities whose values are derived daily from associated traded securities. Equity securities classified in Level 3 are valued with last trade data having limited trading volume. U.S. Treasury Bills, Bonds, Notes and Futures classified in Level 1 are valued using last reported sales prices quoted in active markets that can be accessed at the measurement date. Debt and debt derivative securities classified in Level 2 are valued using a bid-ask spread price from multiple independent brokers, dealers, or market principals, which are known to be actively involved in the market. Level 3 debt securities are valued using proprietary

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information, a single pricing source, or other unobservable inputs related to similar assets or liabilities. Real estate investments classified in Level 3 are valued using the last valuations provided by external investment advisors or independent external appraisers. Generally, all direct real estate investments are appraised by a qualified independent appraiser(s) with the professional designation of Member of the Appraisal Institute (“MAI”), or its equivalent, every three (3) years beginning from the acquisition date of the property. The appraisals are performed using generally accepted valuation approaches applicable to the property type. Investments in private mutual funds, traditional private equity funds, strategic lending funds and real estate funds that report using GAAP, the fair value, as well as the unfunded commitments, were determined using the prior quarter’s NAV, as reported by the fund managers, plus the current cash flows. These assets were then categorized by investment strategy. In instances where the fund investment reported using non-GAAP standards, the investment was valued using the same method, but was classified in Level 3.

At June 30, 2020, the McNairy County School Department had the following investments held by the trust on its behalf.

WeightedAverageMaturity Fair

Investment (days) Maturities ValueInvestments at Fair Value: U.S. Equity N/A N/A $ 36,069 Developed Market International Equity N/A N/A 16,289 Emerging Market International Equity N/A N/A 4,654 U.S. Fixed Income N/A N/A 23,270 Real Estate N/A N/A 11,635 Short-term Securities N/A N/A 1,163 NAV - Private Equity and Strategic Lending N/A N/A 23,270

Total $ 116,350

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QuotedPrices in

Active SignificantMarkets for Other Significant

Identical Observable UnobservableFair Value Assets Inputs Inputs

Investment by Fair Value Level 6-30-20 (Level 1) (Level 2) (Level 3) NAV

U.S. Equity $ 36,069 $ 36,069 $ 0 $ 0 $ 0Developed Market International Equity 16,289 16,289 0 0 0Emerging Market International Equity 4,654 4,654 0 0 0U.S. Fixed Income 23,270 0 23,270 0 0Real Estate 11,635 0 0 11,635 0Short-term Securities 1,163 0 1,163 0 0Private Equity and Strategic Lending 23,270 0 0 0 23,270

Total $ 116,350 $ 57,012 $ 24,433 $ 11,635 $ 23,270

Fair Value Measurements Using

Risks and Uncertainties. The trust’s investments include various types of investment funds, which in turn invest in any combination of stock, bonds and other investments exposed to various risks, such as interest rate, credit, and market risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported for trust investments. Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The McNairy County School Department does not have the ability to limit trust investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The McNairy County School Department does not have the ability to limit the credit ratings of individual investments made by the trust. Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of the county’s investment in a single issuer. McNairy County School Department places no limit on the amount the county may invest in one issuer. Custodial Credit Risk. Custodial credit risk for investments is the risk that, in the event of a failure of the counterparty to a transaction, the county will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Pursuant to the trust agreement,

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investments are held in the name of the trust for the benefit of the McNairy County School Department to pay retirement benefits of the school department employees. For further information concerning the school department’s investments with the TCRS Stabilization Reserve Trust, audited financial statements of the Tennessee Consolidated Retirement System may be obtained at https://comptroller.tn.gov/content/dam/cot/sa/advanced-search/disclaimer/2020/ag19091.pdf.

B. Capital Assets Capital assets activity for the year ended June 30, 2020, was as follows: Primary Government Governmental Activities:

Balance Balance7-1-19 Increases Decreases 6-30-20

Capital Assets Not Depreciated: Land $ 1,440,327 $ 0 $ 0 $ 1,440,327

Total Capital Assets Not Depreciated $ 1,440,327 $ 0 $ 0 $ 1,440,327

Capital Assets Depreciated: Buildings and Improvements $ 10,976,631 $ 0 $ 0 $ 10,976,631 Infrastructure 7,055,073 106,644 0 7,161,717Other Capital Assets 6,793,497 142,480 29,639 6,906,338

Total Capital Assets Depreciated $ 24,825,201 $ 249,124 $ 29,639 $ 25,044,686

Less Accumulated Depreciation For: Buildings and Improvements $ 7,964,440 $ 230,091 $ 0 $ 8,194,531 Infrastructure 2,150,727 306,382 0 2,457,109Other Capital Assets 5,577,785 293,163 29,639 5,841,309

Total Accumulated Depreciation $ 15,692,952 $ 829,636 $ 29,639 $ 16,492,949

Total Capital Assets Depreciated, Net $ 9,132,249 $ (580,512) $ 0 $ 8,551,737

Governmental Activities Capital Assets, Net $ 10,572,576 $ (580,512) $ 0 $ 9,992,064

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

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https://comptroller.tn.gov/content/dam/cot/sa/advanced-search/disclaimer/2020/ag19091.pdf

https://comptroller.tn.gov/content/dam/cot/sa/advanced-search/disclaimer/2020/ag19091.pdf

Governmental Activities:

General Government $ 182,318 Finance 13,536 Administration of Justice 5,087 Public Safety 131,092 Public Health and Welfare 51,852 Highway/Public Works 445,751

Total Depreciation Expense - Governmental Activities $ 829,636 Discretely Presented McNairy County School Department Governmental Activities:

Balance Balance7-1-19 Increases Decreases 6-30-20

Capital Assets Not Depreciated:Land $ 1,291,479 $ 0 $ 0 $ 1,291,479Construction in Progress 10,667,370 7,361,249 4,040,705 13,987,914Total Capital Assets Not Depreciated $ 11,958,849 $ 7,361,249 $ 4,040,705 $ 15,279,393

Capital Assets Depreciated:Buildings and Improvements $ 28,119,117 $ 4,836,474 $ 0 $ 32,955,591Other Capital Assets 8,648,852 910,068 151,474 9,407,446Total Capital Assets Depreciated $ 36,767,969 $ 5,746,542 $ 151,474 $ 42,363,037

Less Accumulated Depreciation For:Buildings and Improvements $ 19,006,026 $ 567,091 $ 0 $ 19,573,117Other Capital Assets 6,484,942 437,937 151,474 6,771,405Total Accumulated Depreciation $ 25,490,968 $ 1,005,028 $ 151,474 $ 26,344,522

Total Capital Assets Depreciated, Net $ 11,277,001 $ 4,741,514 $ 0 $ 16,018,515

Governmental Activities Capital Assets, Net $ 23,235,850 $ 12,102,763 $ 4,040,705 $ 31,297,908

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

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Governmental Activities:

Instruction $ 627,609 Support Services 310,484 Operation of Non-instructional Services 66,935 Total Depreciation Expense - Governmental Activities $ 1,005,028

C. Construction Commitments

At June 30, 2020, the discretely presented school department’s Education Capital Projects Fund had uncompleted construction contracts of $1,074,281 for school construction. Funding has been received for these future expenditures.

D. Interfund Receivables, Payables, and Transfers

The composition of interfund balances as of June 30, 2020, was as follows: Due to/from Other Funds: Receivable Fund Payable Fund Amount

Primary Government: General Solid Waste/Sanitation $ 368 " Nonmajor governmental 838

Discretely Presented School Department: General Purpose School School Federal Projects 490,903

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

Receivable Fund Payable Fund Amount

General Debt Service General $ 83,333 " Highway/Public Works 333,333 The balance of $83,333 due to the General Debt Service Fund from the General Fund resulted from an advance to the General Fund to finance the acquisition of property to be used for the health department and other county services. The balance of $333,333 due to the General Debt Service Fund from the

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Highway/Public Works Fund resulted from an advance to the Highway/Public Works Fund to fund repairs due to flooding and other road damages. Due to/from Primary Government and Component Unit:

Receivable Fund Payable Fund Amount

Component Unit: School Department: Primary Government: General Purpose School General $ 16,632

Interfund Transfers: Interfund transfers for the year ended June 30, 2020, consisted of the following amounts:

Primary Government

GeneralDebt Nonmajor

Service GovernmentalTransfers Out Fund Funds Purpose

General Fund $ 0 $ 15,000 OperationsHighway/Public Works Fund 744,607 0 Debt retirement

Total $ 744,607 $ 15,000

Transfers In


General EducationPurpose CapitalSchool Projects

Transfer Out Fund Fund Purpose

General Purpose Fund $ 0 $ 354,594 Capital outlaySchool Federal Projects Fund 74,396 0 Indirect costsTotal $ 74,396 $ 354,594

Transfers In

Transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and to use unrestricted revenues collected in the General Fund to finance

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various programs accounted for in other funds in accordance with budgetary authorizations.

E. Long-term Debt Primary Government General Obligation Bonds and Notes General Obligation Bonds - McNairy County issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities for the primary government and the discretely presented school department. In addition, general obligation bonds have been issued to refund other general obligation bonds. General obligation bonds are direct obligations and pledge the full faith, credit, and taxing authority of the government. General obligation bonds were issued for original terms of up to 29 years. Repayment terms are generally structured with increasing amounts of principal maturing as interest requirements decrease over the term of the debt. The bonds included in long-term debt as of June 30, 2020, will be retired from the General Debt Service Fund. Direct Borrowing and Direct Placements – McNairy County issues capital outlay notes to fund capital facilities and other capital outlay purchases, such as equipment. Capital outlay notes are direct obligations and pledge the full faith, credit, and taxing authority of the government. Capital outlay notes outstanding were issued for original terms of up to 12 years. Repayment terms are generally structured with increasing amounts of principal maturing as interest requirements decrease over the term of the debt. All notes included in long-term debt as of June 30, 2020, will be retired from the General Debt Service Fund. General obligation bonds and capital outlay notes outstanding as of June 30, 2020, for governmental activities are as follows:

OriginalInterest Final Amount Balance

Type Rate Maturity of Issue 6-30-20

General Obligation Bonds 2 to 5% 6-1-47 $ 29,312,750 $ 27,422,657 General Obligation Bonds - Refunding 2 to 3.5 6-1-46 3,455,000 2,745,000 Direct Borrowing and Direct Placement: Capital Outlay Notes 0 to 3.67 6-1-30 3,145,000 2,147,778 The annual requirements to amortize all general obligation bonds and notes outstanding as of June 30, 2020, including interest payments, are presented in the following tables:

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Year EndingJune 30 Principal Interest Total

2021 $ 1,147,140 $ 966,418 $ 2,113,5582022 1,085,517 925,643 2,011,1602023 1,075,000 886,669 1,961,6692024 1,120,000 848,620 1,968,6202025 1,160,000 807,996 1,967,9962026-2030 6,335,000 3,391,079 9,726,0792031-2035 6,580,000 2,513,833 9,093,8332036-2040 4,440,000 1,677,839 6,117,8392041-2045 5,220,000 885,588 6,105,5882046-2047 2,005,000 96,770 2,101,770

Total $ 30,167,657 $ 13,000,455 $ 43,168,112

Bonds

Year EndingJune 30 Principal Interest Total

2021 $ 273,890 $ 45,349 $ 319,2392022 267,778 40,133 307,9112023 267,778 35,115 302,8932024 267,778 30,098 297,8762025 267,777 25,081 292,8582026-2030 802,777 57,315 860,092

Total $ 2,147,778 $ 233,091 $ 2,380,869

Notes - Direct Placement

There is $4,864,958 available in the General Debt Service Fund to service long-term debt. Bonded debt per capita totaled $1,157, based on the 2010 federal census. Total debt per capita, including bonds, notes, and unamortized debt premiums, totaled $1,257, based on the 2010 federal census. The school department is currently contributing funds to service some of the debt issued on its behalf by the primary government as noted in the table below.

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OutstandingDescription of Debt 6-30-20

Bonds Payable Contributions from the General Purpose School Fund General Obligation School Bonds, Series 2017 $ 6,100,000 General Obligation School Bonds, Series 2018 15,475,000

Total $ 21,575,000

Changes in Long-term Debt Long-term debt activity for the year ended June 30, 2020, was as follows:

CapitalGovernmental Activities: Notes - Leases -

Direct Direct Bonds Placement Placement

Balance, July 1, 2019 $ 31,089,956 $ 2,421,667 $ 125,744Reductions (922,299) (273,889) (125,744)

Balance, June 30, 2020 $ 30,167,657 $ 2,147,778 $ 0

Balance Due Within One Year $ 1,147,140 $ 273,890 $ 0

Analysis of Noncurrent Liabilities for Debt Presented on Exhibit A: Total Noncurrent Liabilities - Debt, June 30, 2020 $ 32,315,435 Less: Balance Due Within One Year - Debt (1,421,030) Add: Unamortized Premium on Debt 452,123

Noncurrent Liabilities - Due in More Than One Year - Debt - Exhibit A $ 31,346,528

F. Long-term Obligations

Changes in Long-term Obligations Long-term obligations activity for the year ended June 30, 2020, was as follows:

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LandfillClosure/

PostclosureCompensated Care

Absences Costs

Balance, July 1, 2019 $ 284,314 $ 483,715Additions 206,047 83,415Reductions (185,442) (20,296)

Balance, June 30, 2020 $ 304,919 $ 546,834

Balance Due Within One Year $ 180,234 $ 20,296

Analysis of Other Noncurrent Liabilities Presented on Exhibit A: Total Other Noncurrent Liabilities, June 30, 2020 $ 851,753 Less: Balance Due Within One Year - Other (200,530)

Noncurrent Liabilities - Due in More Than One Year - Other -Exhibit A $ 651,223

Compensated absences will be paid from the employing funds, primarily the General and Highway/Public Works funds. Landfill closure/postclosure care costs will be paid from the Solid Waste/Sanitation Fund. Discretely Presented McNairy County School Department Changes in Long-term Obligations Long-term obligations activity for the year ended June 30, 2020, was as follows: Governmental Activities:

Balance, July 1, 2019 $ 3,887,015Additions 1,332,447Reductions (514,220)

Balance, June 30, 2020 $ 4,705,242

Balance Due Within One Year $ 0

Net OPEBLiability

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Analysis of Other Noncurrent Liabilities Presented on Exhibit A:

Total Other Noncurrent Liabilities, June 30, 2020 $ 4,705,242 Less: Balance Due Within One Year - Other 0

Other Noncurrent Liabilities - Due in More Than One Year - Exhibit A $ 4,705,242

The net OPEB liability will be paid from the employing funds, primarily the General Purpose School and School Federal Projects funds.

G. On-Behalf Payments – Discretely Presented McNairy County School

Department The State of Tennessee pays health insurance premiums for retired teachers on-behalf of the McNairy County School Department. These payments are made by the state to the Local Education Group Insurance Plan and the Medicare Supplement Plan. Both plans are administered by the State of Tennessee and reported in the state’s Comprehensive Annual Financial Report. Payments by the state to the Local Education Group Insurance Plan and the Medicare Supplement Plan for the year ended June 30, 2020, totaled $87,194 and $47,761, respectively. The school department has recognized these on-behalf payments as revenues and expenditures in the General Purpose School Fund.

H. Short-term Debt

During the year, McNairy County borrowed $500,000 from the General Debt Service Fund to provide temporary operating funds for the General Fund. This loan was retired prior to June 30, 2020, as required by state statutes, and therefore has not been reflected in the financial statements of this report. Short-term debt activity for the year ended June 30, 2020, was as follows:

Balance Balance7-1-19 Issued Paid 6-30-20

Tax Anticipation Notes $ 0 $ 500,000 $ (500,000) $ 0

V. OTHER INFORMATION

A. Risk Management

Primary Government McNairy County is exposed to various risks related to general liability, property, and casualty losses. The county participates in the Local Government

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Property and Casualty Fund (LGPCF), which is a public entity risk pool established by the Tennessee County Services Association, an association of member counties. The county pays an annual premium to the LGPCF for its general liability, property, and casualty insurance coverage. The creation of the LGPCF provides for it to be self-sustaining through member premiums. The LGPCF reinsures through commercial insurance companies for claims exceeding $100,000 for each insured event. McNairy County participates in the Local Government Workers’ Compensation Fund (LGWCF), a public entity risk pool established under the provisions of Section 29-20-401, Tennessee Code Annotated (TCA), by the Tennessee County Services Association to provide a program of workers’ compensation coverage to employees of local governments. The county pays an annual premium to the LGWCF for its workers’ compensation insurance coverage. The LGWCF is to be self-sustaining through member premiums. The LGWCF reinsures through commercial insurance companies for claims exceeding $300,000. The employees of McNairy County are provided health insurance through the purchase of commercial insurance. Retirees are not allowed to continue coverage. Settled claims have not exceeded commercial insurance coverage in any of the past three fiscal years. Discretely Presented McNairy County School Department Liability, Property, Casualty, and Workers’ Compensation Insurance The school department participates in the Tennessee Risk Management Trust (TN-RMT), which is a public entity risk pool created under the auspices of the Tennessee Governmental Tort Liability Act to provide governmental insurance coverage. The school department pays an annual premium to the TN-RMT for its general liability, property, casualty and workers’ compensation insurance coverage. The creation of the TN-RMT provides for it to be self-sustaining through member premiums. Employee Health Insurance The school department participates in the Local Education Group Insurance Fund (LEGIF), a public entity risk pool established to provide a program of health insurance coverage for employees of local education agencies. In accordance with Section 8-27-301, TCA, all local education agencies are eligible to participate. The LEGIF is included in the Comprehensive Annual Financial Report of the State of Tennessee, but the state does not retain any risk for losses by this fund. Section 8-27-303, TCA, provides for the LEGIF to be self-sustaining through member premiums.

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B. Contingent Liabilities

The attorneys for the county and the school department advised of several pending lawsuits involving McNairy County. However, they estimate that any potential claims not covered by insurance resulting from such litigation should not materially affect the county or the school department’s financial statements.

C. Landfill Closure/Postclosure Care Costs

McNairy County has active permits on file with the state Department of Environment and Conservation for a sanitary landfill and a demolition landfill. The county has provided financial assurances for estimated postclosure liabilities as required by the State of Tennessee. These financial assurances are on file with the Department of Environment and Conservation. State and federal laws and regulations require the county to place a final cover on its sanitary landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the county reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. McNairy County closed its sanitary landfill in 1998. The $546,834 reported as postclosure care liability at June 30, 2020, represents amounts based on what it would cost to perform all postclosure care in 2020. Actual costs may be higher due to inflation, changes in technology, or changes in regulations.

D. Jointly Governed Organization

The West Tennessee Railroad Authority (WTRA) was created by Gibson County in conjunction with the counties of Chester, Madison, McNairy, and Weakley. The WTRA’s board includes the mayors of Chester, Gibson, Madison, McNairy, and Weakley counties, and one at-large member from each of these areas. However, the counties do not have any ongoing financial interest or responsibility for the entity.

E. Retirement Commitments 1. Tennessee Consolidated Retirement System (TCRS)

Primary Government General Information About the Pension Plan Plan Description. Employees of McNairy County and non-certified employees of the discretely presented McNairy County School Department are provided a defined benefit pension plan through the

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Public Employee Retirement Plan, an agent multiple-employer pension plan administered by the TCRS. The primary government employees comprised 45.46 percent and the non-certified employees of the discretely presented school department comprised 54.54 percent of the plan based on contribution data. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly available financial report that can be obtained at https://treasury.tn.gov/Retirement/Boards-and-Governance/Reporting-and-Investment-Policies.

Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. The chief legislative body may adopt the benefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. Reduced benefits for early retirement are available to vested members at age 55. Members vest with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Employees Covered by Benefit Terms. At the measurement date of June 30, 2019, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 158Inactive Employees Entitled to But Not Yet Receiving Benefits 419Active Employees 337

Total 914

Contributions. Contributions for employees are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly. Employees contribute five percent of salary. McNairy County makes employer contributions at the rate set

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https://treasury.tn.gov/Retirement/Boards-and-Governance/Reporting-and-Investment-Policies


by the Board of Trustees as determined by an actuarial valuation. For the year ended June 30, 2020, the employer contribution for McNairy County was $452,340 based on a rate of 5.25 percent of covered payroll. By law, employer contributions are required to be paid. The TCRS may intercept McNairy County’s state shared taxes if required employer contributions are not remitted. The employer’s actuarially determined contributions (ADC) and member contributions are expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Net Pension Liability (Asset) McNairy County’s net pension liability (asset) was measured as of June 30, 2019, and the total pension liability (asset) used to calculate net pension liability (asset) was determined by an actuarial valuation as of that date. Actuarial Assumptions. The total pension liability as of the June 30, 2019, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.5%Salary Increases Graded Salary Ranges from 8.72%

to 3.44% Based on Age, Including Inflation, Averaging 4%

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

Mortality rates were based on actual experience including an adjustment for some anticipated improvement. The actuarial assumptions used in the June 30, 2019, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2012, through June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2016, actuarial experience study. A blend of future capital market projections and historical market returns was used in a building-block method in which a best-estimate of expected future real rates of return (expected returns, net of pension plan investments expense and inflation) is developed for each major asset class. These best-estimates are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset

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

PercentageLong-termExpected PercentageReal Rate Target

Asset Class of Return Allocations

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

Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.25 percent based on a blending of the factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current rate and that contributions from McNairy County will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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Changes in the Net Pension Liability (Asset)

Total Plan Net PensionPension Fiduciary LiabilityLiability Net Position (Asset)

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

Balance, July 1, 2018 $ 18,758,892 $ 19,912,539 $ (1,153,647)

Changes for the Year: Service Cost $ 588,963 $ 0 $ 588,963 Interest 1,371,882 0 1,371,882 Differences Between Expected and Actual Experience 51,407 0 51,407 Contributions-Employer 0 406,188 (406,188) Contributions-Employees 0 386,844 (386,844) Net Investment Income 0 1,479,399 (1,479,399) Benefit Payments, Including Refunds of Employee Contributions (850,688) (850,688) 0 Administrative Expense 0 (30,469) 30,469Net Changes $ 1,161,564 $ 1,391,274 $ (229,710)

Balance, June 30, 2019 $ 19,920,456 $ 21,303,813 $ (1,383,357)

Increase (Decrease)

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

Plan NetTotal Fiduciary Pension

Pension Net LiabilityLiability Position (Asset)

Primary Government 45.46% $ 9,055,839 $ 9,684,713 $ (628,874)

School Department 54.54% 10,864,617 11,619,100 (754,483)

Total $ 19,920,456 $ 21,303,813 $ (1,383,357)

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

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Current1% Discount 1%

Decrease Rate IncreaseMcNairy County 6.25% 7.25% 8.25%

Net Pension Liability (Asset) $ 922,653 $ (1,383,357) $ (3,317,415)

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources to Pensions Pension Expense. For the year ended June 30, 2020, McNairy County recognized pension expense of $316,662. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2020, McNairy County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred DeferredOutflows Inflows

of of Resources Resources

Difference Between Expected and Actual Experience $ 148,785 $ 92,528Net Difference Between Projected and Actual Earnings on Pension Plan Investments 0 245,066Changes in Assumptions 245,642 0Contributions Subsequent to the Measurement Date of June 30, 2019 (1) 452,340 N/A

Total $ 846,767 $ 337,594

(1) The amount shown above for “Contributions Subsequent to

the Measurement Date of June 30, 2019,” will be recognized as a reduction (increase) to net pension liability (asset) in the following measurement period.

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

Deferred DeferredOutflows of Inflows ofResources Resources

Primary Government $ 379,825 $ 153,470

School Department 466,942 184,124

Total $ 846,767 $ 337,594

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

Year EndingJune 30 Amount

2021 $ 58,7872022 (1,843)2023 (2,604)2024 2,4932025 0Thereafter 0

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

Discretely Presented McNairy County School Department Non-certified Employees General Information About the Pension Plan Plan Description. As noted above under the primary government, employees of McNairy County and non-certified employees of the discretely presented McNairy County School Department are provided a defined benefit pension plan through the Public Employee Retirement Plan, an agent multiple-employer pension plan administered by the TCRS. The primary government employees comprised 45.46 percent and the non-certified employees of the discretely presented school department comprised 54.54 percent of the plan based on contribution data.

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Certified Employees Teacher Retirement Plan General Information About the Pension Plan Plan Description. Teachers of the McNairy County School Department with membership in the TCRS before July 1, 2014, are provided with pensions through the Teacher Legacy Pension Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The Teacher Legacy Pension Plan is closed to new membership. Teachers with membership in the TCRS after June 30, 2014, are provided with pensions through a legally separate plan referred to as the Teacher Retirement Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of all employer pension plans in the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly available financial report that can be obtained at https://treasury.tn.gov/Retirement/Boards-and-Governance/Reporting-and-Investment-Policies. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. Members are eligible to retire with an unreduced benefit at age 65 with five years of service credit or pursuant to the rule of 90 in which the member’s age and service credit total 90. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. A reduced early retirement benefit is available to vested members at age 60 or pursuant to the rule of 80. Members are vested with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. Members who leave employment may withdraw their employee

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contributions, plus any accumulated interest. Under the Teacher Retirement Plan, benefit terms and conditions, including COLA, can be adjusted on a prospective basis. Moreover, there are defined cost controls and unfunded liability controls that provide for the adjustment of benefit terms and conditions on an automatic basis. Contributions. Contributions for teachers are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly or by automatic cost controls set out in law. Teachers are required to contribute five percent of their salary to the plan. The Local Education Agencies (LEAs) make employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. Per the statutory provisions governing TCRS, the employer contribution rate cannot be less than four percent, except in years when the maximum funded level, approved by the TCRS Board of Trustees, is reached. By law, employer contributions for the Teacher Retirement Plan are required to be paid. The TCRS may intercept the state shared taxes of the sponsoring governmental entity of the LEA if the required employer contributions are not remitted. Employer contributions for the year ended June 30, 2020, to the Teacher Retirement Plan were $64,315 which is 2.03 percent of covered payroll. In addition, employer contributions of $57,004, which is 1.8 percent of covered payroll were made to the Pension Stabilization Reserve Trust Fund to fund future pension costs. The employer rate, when combined with member contributions and the stabilization reserve trust funds, is expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Pension Liabilities (Assets). At June 30, 2020, the school department reported a liability (asset) of ($138,595) for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of June 30, 2019, and the total pension liability (asset) used to calculate the net pension liability (asset) was determined by an actuarial valuation as of that date. The school department’s proportion of the net pension liability (asset) was based on the school department’s share of contributions to the pension plan relative to the contributions of all participating LEAs. At the measurement date of June 30, 2019, the school department’s proportion was .245525 percent. The proportion as of June 30, 2018, was .229951 percent. Pension Expense. For the year ended June 30, 2020, the school department recognized pension expense of $43,695.

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Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2020, the school department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



Difference Between Expected and Actual Experience $ 5,747 $ 24,195Net Difference Between Projected and Actual Earnings on Pension Plan Investments 0 5,860Changes in Assumptions 4,816 0Changes in Proportion of Net Pension Liability (Asset) 13,351 11,930LEA's Contributions Subsequent to the Measurement Date of June 30, 2019 64,315 N/A

Total $ 88,229 $ 41,985

The school department’s employer contributions of $64,315 reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as an increase of net pension asset in the year ending June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2021 $ (2,738)2022 (3,635)2023 (1,991)2024 (1,153)2025 (915)Thereafter (7,639)

In the table above, positive amounts will increase pension expense, while negative amounts will decrease pension expense. Actuarial Assumptions. The total pension liability in the June 30, 2019, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

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Cost of Living Adjustment 2.25%

Mortality rates are based on actual experience including an adjustment for some anticipated improvement. The actuarial assumptions used in the June 30, 2019, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2012, through June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2016, actuarial experience study. A blend of future capital market projections and historical market returns was used in a building-block method in which a best-estimate of expected future real rates of return (expected returns, net of pension plan investments expense and inflation) is developed for each major asset class. These best-estimates are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation of 2.5 percent. The best-estimates of geometric real rates of return and the TCRS investment policy target asset allocation for each major asset class are summarized in the following table:

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Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.25 percent based on a blending of the factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current rate and that contributions from all the LEAs will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the school department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.25 percent, as well as what the school department’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is one percentage point lower (6.25 percent) or one percentage point higher (8.25 percent) than the current rate:

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School Department's Current Proportionate Share of 1% Discount 1% the Net Pension Decrease Rate Increase Liability (Asset) 6.25% 7.25% 8.25%

Net Pension Liability (Asset) $ 43,912 $ (138,595) $ (273,503)

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

Teacher Legacy Pension Plan General Information About the Pension Plan Plan Description. Teachers of the McNairy County School Department with membership in the TCRS before July 1, 2014, are provided with pensions through the Teacher Legacy Pension Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The Teacher Legacy Pension Plan closed to new membership on June 30, 2014, but will continue providing benefits to existing members and retirees. Beginning July 1, 2014, the Teacher Retirement Plan became effective for teachers employed by LEAs after June 30, 2014. The Teacher Retirement Plan is a separate cost-sharing, multiple-employer defined benefit plan. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of all employer pension plans in the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly available financial report that can be obtained at https://treasury.tn.gov/Retirement/Boards-and-Governance/Reporting-and-Investment-Policies. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. Members of the Teacher Legacy Pension Plan are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. A reduced early retirement benefit is available to vested members at age 55. Members are vested with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of

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death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half and one percent. A member who leaves employment may withdraw their employee contributions, plus any accumulated interest. Under the Teacher Legacy Pension Plan, benefit terms and conditions, including COLAs can be adjusted on a prospective basis. Moreover, there are defined cost controls and unfunded liability controls that provide for the adjustment of benefit terms and conditions on an automatic basis. Contributions. Contributions for teachers are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly. Teachers are required to contribute five percent of their salaries. The Local Education Agencies (LEAs) make employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. By law, employer contributions for the Teacher Legacy Pension Plan are required to be paid. The TCRS may intercept the state shared taxes of the sponsoring governmental entity of the LEA if the required employer contributions are not remitted. Employer contributions by the McNairy County School Department for the year ended June 30, 2020, to the Teacher Legacy Pension Plan were $1,756,061, which is 10.63 percent of covered payroll. The employer rate, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Pension Liability (Assets). At June 30, 2020, the school department reported a liability (asset) of ($4,810,522) for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability (asset) was determined by an actuarial valuation as of that date. The school department’s proportion of the net pension liability (asset) was based on the school department’s long-term share of contributions to the pension plan relative to the contributions of all participating LEAs. At the measurement date of June 30, 2019, the school department’s proportion was .467868 percent. The proportion measured at June 30, 2018, was .44839 percent.

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Pension Expense. For the year ended June 30, 2020, the school department recognized pension expense of $646,423. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2020, the school department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



Difference Between Expected and Actual Experience $ 234,212 $ 2,938,362Changes in Assumptions 648,243 0Net Difference Between Projected and Actual Earnings on Pension Plan Investments 0 1,374,459Changes in Proportion of Net Pension Liability (Asset) 68,950 34,215LEA's Contributions Subsequent to the Measurement Date of June 30, 2019 1,756,061 N/A

Total $ 2,707,466 $ 4,347,036

The school department’s employer contributions of $1,756,061 reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as a decrease in net pension liability in the year ending June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2021 $ (977,099)2022 (1,351,442)2023 (607,694)2024 (459,396)2025 0Thereafter 0

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

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Actuarial Assumptions. The total pension liability in the June 30, 2019, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:




Cost of Living Adjustment 2.25%

Mortality rates are based on actual experience including an adjustment for some anticipated improvement. The actuarial assumptions used in the June 30, 2019, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2012, through June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2016, actuarial experience study. A blend of future capital market projections and historical market returns was used in a building-block method in which a best-estimate of expected future real rates of return (expected returns, net of pension plan investments expense and inflation) is developed for each major asset class. These best-estimates are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation of 2.5 percent. The best-estimates of geometric real rates of return and the TCRS investment policy target asset allocation for each major asset class are summarized in the following table:

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Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.25 percent based on a blending of the factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.25 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current rate and that contributions from all the LEAs will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the school department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.25 percent, as well as what the school department’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is one percentage point lower (6.25 percent) or one percentage point higher (8.25 percent) than the current rate:

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School Department's Current Proportionate Share of 1% Discount 1% the Net Pension Decrease Rate Increase Liability (Asset) 6.25% 7.25% 8.25%

Net Pension Liability (Asset) $ 9,836,127 $ (4,810,522) $ (16,461,525)

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

2. Deferred Compensation

Teachers hired after July 1, 2014, by the school department are required to participate in a hybrid pension plan consisting of a defined benefit portion, which is detailed in the pensions footnote above and is managed by the Tennessee Consolidated Retirement System, and a defined contribution portion which is placed into the state’s 401(k) plan and is managed by the employee. The defined contribution portion of the plan requires that the school department contribute five percent of each teacher’s salary into their deferred compensation plan. In addition, teachers are required to contribute two percent of their salaries into this deferred compensation plan, unless they opt out of the employee portion. During the year, the school department contributed $158,411 and teachers contributed $52,555 to this deferred compensation pension plan.

F. Other Postemployment Benefits (OPEB)

The discretely presented McNairy County School Department provides OPEB benefits to its retirees through the state administered public entity risk pools. For reporting purposes, the plans are considered single employer defined benefit OPEB plans based on criteria in Statement No. 75 of the Governmental Accounting Standards Board (GASB). The plans are funded on a pay-as-you-go basis and there are no assets accumulating in a trust that meets the criteria of paragraph 4 of GASB Statement No. 75. OPEB Provided through State Administered Public Entity Risk Pools The school department provides healthcare benefits to its employees under the Local Education Plan (LEP) until they reach Medicare eligibility. The certified retirees of the McNairy County School Department may then join the Tennessee Plan – Medicare (TNM), which provides supplemental medical insurance for retirees with Medicare.

The school department’s total OPEB liability was measured as of June 30, 2019, and was determined by an actuarial valuation as of that date.

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Actuarial Assumptions and Other Inputs. The total OPEB liability in the June 30, 2019, actuarial valuation of each plan was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:

Actuarial Cost Method Entry Age NormalInflation 2.2%Salary Increases Salary increases used in the July 1, 2018,

TCRS actuarial valuation; 3.44%to 8.72%, including inflation

Discount Rate 3.51%Healthcare Cost Trend Rates Based on the Getzen Model, with trend

starting at 6.03% for pre-65 retireesin the 2019 calendar year, andgradually decreasing over a 10-year periodto an ultimate trend rate of 4.5%.

Retirees Share of Benefit Related Cost Discussed below

The discount rate was 3.51 percent, based on an average rating of AA/Aa as shown the Bond Buyer 20-Year Municipal GO AA index closest to but not later than the measurement date. Mortality rates were based on the results of a statewide experience study undertaken on behalf of the Tennessee Consolidated Retirement System (TCRS). These mortality rates were used in the July 1, 2018, actuarial valuation of the TCRS.

Unless noted otherwise, the actuarial demographic assumptions used in the June 30, 2019, valuations were the same as those employed in the July 1, 2018, Pension Actuarial Valuation of the Tennessee Consolidated Retirement System (TCRS). These assumptions were developed by TCRS based on the results of an actuarial experience study for the period July 1, 2012 - June 30, 2016. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. Mortality tables are used to measure the probabilities of participants dying before and after retirement. The mortality rates employed in this valuation are taken from the RP-2014 Healthy Participant Mortality Table for Annuitants for non-disabled post-retirement mortality, with mortality improvement projected to all future years using Scale MP-2016. Post-retirement tables are Blue Collar and adjusted with a 2 percent load for males and a -3 percent load for females. Mortality rates for impaired lives are the same as those used by TCRS and are taken from a gender distinct table published in the IRS Ruling 96-7 for disabled lives with a 10 percent load.

Changes in Assumptions. The discount rate changed from 3.62 percent as of the beginning of the measurement period to 3.51 percent as of the measurement date of June 30, 2019. This change in assumption increased the total OPEB liability. Other changes in assumptions include adjustments to initial per

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capita costs and health trend rates. The trend rate applicable to the 2020 plan year was revised from 6.75 percent to 6.03 percent

Closed Local Education (LEP) OPEB Plan - Discretely Presented McNairy County School Department

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

Benefits Provided. The McNairy County School Department offers the LEP to provide health insurance coverage to eligible pre-65 retirees, support staff, and disabled participants of local education agencies. Retirees are required to discontinue coverage under the LEP upon obtaining Medicare eligibility. Insurance coverage is the only postemployment benefit provided to retirees. An insurance committee created in accordance with TCA 8-27-301 establishes and amends the benefit terms of the LEP. All members have the option of choosing between the premier preferred provider organization (PPO), standard PPO, limited PPO or the wellness health savings consumer-driven health plan (CDHP) for healthcare benefits. Retired plan members of the LEP receive the same plan benefits as active employees at a blended premium rate that considers the cost of all participants. This creates an implicit subsidy for retirees. Participating employers determine their own policy related to direct subsidies provided for retiree premiums. During the year, McNairy County provided direct subsidies of $162 to $1,302 per month toward the cost of the insurance plan selected by the retiree. The state, as a governmental non-employer contributing entity, provides a direct subsidy for eligible retirees’ premiums based on years of service. Therefore, retirees with 30 or more years of service will receive 45 percent; 20 but less than 30 years, 35 percent; and less than 20 years, 25 percent of the scheduled premium. No subsidy is provided for enrollees of the health savings CDHP.

Employees Covered by Benefit Terms

At the measurement date of June 30, 2019, the following employees were covered by the benefit terms:

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Inactive Employees or Beneficiaries Currently Receiving Benefits 20Inactive Employees Entitled to But Not Yet Receiving Benefits 0Active Employees 445

Total 465

A state insurance committee, created in accordance with Section 8-27-301, TCA, establishes the required payments to the LEP by member employers and employees through the blended premiums established for active and retired employees. Claims liabilities of the plan are periodically computed using actuarial and statistical techniques to establish premium rates. Administrative costs are allocated to plan participants. Employers contribute towards employee costs based on their own developed policies. During the current reporting period, the school department paid $154,738 to the LEP for OPEB benefits as they came due.

Changes in the Collective Total OPEB Liability

McNairy County State ofSchool Department TN Total OPEB

66.834% 33.166% Liability

Balance July 1, 2018 $ 3,698,867 $ 1,872,521 $ 5,571,388Changes for the Year: Service Cost $ 205,357 $ 101,909 $ 307,266 Interest 139,044 69,001 208,045 Changes in Benefit Terms 379,879 188,515 568,394 Difference between Expected and Actuarial Experience 81,627 40,507 122,134 Changes in Proportion 24,698 (24,698) 0 Changes in Assumption and Other Inputs (315,845) (156,738) (472,583)

Benefit Payments (177,420) (88,045) (265,465)Net Changes $ 337,340 $ 130,451 $ 467,791

Balance June 30, 2019 $ 4,036,207 $ 2,002,972 $ 6,039,179

Share of Collective Liability

The McNairy County School Department has a special funding situation related to benefits paid by the State of Tennessee for its eligible retired employees participating in the LEP. The McNairy County School Department's proportionate share of the collective total OPEB liability was based on a projection of the employers’ long-term share of benefit payments to the OPEB

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plan relative to the projected share of benefit payments of all participating employers and nonemployer contributing entities, actuarially determined. The school department recognized $434,066 in revenue for subsidies provided by nonemployer contributing entities for benefits paid by the LEP for school department retirees.

During the year, the McNairy County School Department’s proportionate share of the collective OPEB liability was 66.834 percent and the State of Tennessee’s share was 33.166 percent.

OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2020, the school department recognized OPEB expense of $1,283,843, including the state’s share of the expense. At June 30, 2020, the school department reported deferred outflows of resources and deferred inflows of resources related to its proportionate share of OPEB from the following sources:



Difference Between Expected and Actual Experience $ 1,587,737 $ 0Changes of Assumptions/Inputs 98,361 488,431Changes in Proportion and Differences Between Amounts Paid as Benefits Came Due and Proportionate Share Amounts Paid by the Employee and Nonemployer Contributors As Benefits Came Due 7,631 79,669Benefits Paid After the Measurement Date of June 30, 2019 154,738 0

Total $ 1,848,467 $ 568,100

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

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Year Ending SchoolJune 30 Department

2021 $ 125,4972022 125,4972023 125,4972024 125,4972025 125,497Thereafter 498,144

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

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

Discount Rate Current1% Discount 1%

Decrease Rate Increase2.51% 3.51% 4.51%

Proportionate Share of the Collective Total OPEB Liability $ 4,359,243 $ 4,036,207 $ 3,729,658

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

Healthcare Cost Trend Rate

1% Current 1%Decrease Rates Increase

5.03 to 3.5% 6.03 to 4.5% 7.03 to 5.5%

Proportionate Share of the Collective Total OPEB Liability $ 3,567,646 $ 4,036,207 $ 4,591,865

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Closed Tennessee Plan – Medicare (Discretely Presented School Department)

Plan Description. Employees of the McNairy County School Department, who were hired prior to July 1, 2015, are provided with post-65 retiree health insurance benefits through the closed Tennessee Plan - Medicare (TNM) administered by the Tennessee Department of Finance and Administration. All eligible post-65 retired teachers and disability participants of local education agencies, who choose coverage, participate in the TNM. The TNM also includes eligible retirees of the state, certain component units of the state, and certain local governmental entities. This plan is closed to the employees of all participating employers that were hired on or after July 1, 2015. The school department’s total OPEB liability for the TNM Plan was measured as of June 30, 2019, and was determined by an actuarial valuation as of that date.

Benefits Provided. The state offers the TNM to help fill most of the coverage gaps created by Medicare for eligible post-65 retired teachers and disabled participants of local education agencies. Insurance coverage is the only postemployment benefit provided to retirees. The TNM does not include pharmacy. In accordance with Section 8-27-209, TCA, benefits of the TNM are established and amended by cooperation of insurance committees created by Sections 8-27-201, 8-27-301 and 8-27-701, TCA. Retirees and disabled employees of the state, component units, local education agencies, and certain local governments who have reached the age of 65, are Medicare eligible and also receive a benefit from the Tennessee Consolidated Retirement System may participate in this plan. All plan members receive the same plan benefits at the same premium rates. Participating employers determine their own policy related to subsidizing the retiree premiums. The McNairy County School Department provides a subsidy of $88 per month for retirees with 30 or more years of service, retirees with 20-29 years of service receive $101, and retirees with 10-19 years of service receive $113 to $138. The state, as a governmental nonemployer contributing entity, contributes to the premiums of eligible retirees of local education agencies based on years of service. The State of Tennessee provides a subsidy of $50 per month for retirees with 30 or more years of service, retirees with 20-29 years of service receive $37.50, and retirees with 15-19 years of service receive $25.

Employees Covered by Benefit Terms

At the measurement date of June 30, 2019, the following employees were covered by the benefit terms:

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Inactive Employees or Beneficiaries Currently Receiving Benefits 97Inactive Employees Entitled to But Not Yet Receiving Benefits 34Active Employees 335

Total 466

In accordance with Section 8-27-209, TCA, the state insurance committees established by Sections 8-27-201, 8-27-301 and 8-27-701, TCA, determine the required payments to the plan by member employers and employees. Claims liabilities of the plan are periodically computed using actuarial and statistical techniques to establish premium rates. Administrative costs are allocated to plan participants. Employers contribute towards employee costs based on their own developed policies. For the fiscal year ended June 30, 2020, the school department paid $21,803 to the TNM for OPEB benefits as they came due. Changes in the Collective Total OPEB Liability

McNairy County State ofSchool Department TN Total OPEB

33.155% 66.845% Liability

Balance July 1, 2018 $ 188,148 $ 1,273,446 $ 1,461,594Changes for the Year: Service Cost $ 7,579 $ 15,279 $ 22,858 Interest 17,441 35,164 52,605 Difference between Expected and Actuarial Experience (35) (71) (106) Change in Proportion 296,449 (296,449) 0 Changes in Assumption and Other Inputs 180,373 363,650 544,023

Benefit Payments (20,920) (42,177) (63,097)Net Changes $ 480,887 $ 75,396 $ 556,283

Balance June 30, 2019 $ 669,035 $ 1,348,842 $ 2,017,877

Share of Collective Liability

The McNairy County School Department has a special funding situation related to benefits paid by the State of Tennessee for its eligible retirees participating in the TNM. The McNairy County School Department's proportionate share of the collective total OPEB liability was based on a projection of the employers long-term share of benefit payments to the OPEB plan relative to the projected share of benefit payments of all participating employers and nonemployer contributing entities, actuarially determined. The

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school department recognized $1,390,514 in revenue for subsidies provided by nonemployer contributing entities for benefits paid by the TMN for school department retirees.

During the year, the McNairy County School Department’s proportionate share of the collective OPEB liability was 33.155 percent and the State of Tennessee’s share was 66.845 percent. OPEB Expense (Negative OPEB Expense) and Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2020, the school department recognized negative OPEB expense of ($158,043) including the state’s share of the OPEB expense.

At June 30, 2020, the school department reported deferred outflows of resources and deferred inflows of resources related to its proportionate share of OPEB from the following sources:



Difference Between Expected and Actual Experience $ 0 $ 184,895Changes of Assumptions/Inputs 158,797 405,410Changes in Proportions 620,937 9,641,197Benefits Paid After the Measurement Date of June 30, 2019 21,803 0

Total $ 801,537 $ 10,231,502

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

Year Ending SchoolJune 30 Department

2021 $ (1,573,577)2022 (1,573,577)2023 (1,573,577)2024 (1,573,577)2025 (1,573,577)Thereafter (1,583,882)

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

Sensitivity of Proportionate Share of the Collective Total OPEB Liability to Changes in the Discount Rate. The following presents the school department’s proportionate share of the collective total OPEB liability related to the TNM, as well as what the proportionate share of the collective total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate. Discount Rate Current

1% Discount 1%Decrease Rate Increase

2.51% 3.51% 4.51%

Proportionate Share of the Collective Total OPEB Liability $ 744,171 $ 669,035 $ 582,967

Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rate. The premium subsidies provided to retirees in the TNM plan are assumed to remain unchanged for the entire projection period, therefore trend rates are not applicable to the plan calculations.

G. Purchasing Laws Office of County Mayor Chapter 171, Private Acts of 1990, provides for the county mayor to serve as purchasing agent for McNairy County and to award all contracts for purchases for all departments, excluding purchases made from county highway or county education funds. Purchasing procedures for the County Mayor’s Office are governed by the County Purchasing Law of 1983, Sections 5-14-201 through 5-14-206, Tennessee Code Annotated (TCA), which provide for purchases exceeding $10,000 to be made after public advertisement and solicitation of competitive bids. Office of Highway Commissioner Section 54-7-113, TCA, (Uniform Road Law), governs purchasing procedures for the highway department. This statute requires all purchases exceeding $10,000 to be made on the basis of publicly advertised competitive bids. Office of Director of Schools Purchasing procedures for the discretely presented McNairy County School Department are governed by purchasing laws applicable to schools as set forth in Section 49-2-203, TCA, which provides for the county Board of Education,

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through its executive committee (director of schools and chairman of the Board of Education), to make all purchases. This statute also requires that competitive bids be solicited through newspaper advertisement on all purchases estimated to exceed $10,000.

VI. OTHER NOTES – DISCRETELY PRESENTED McNAIRY COUNTY AIRPORT

AUTHORITY A. General Information

1. GASB Conformity

The McNairy County Airport Authority complies with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. The accounting and reporting framework and the more significant accounting policies are discussed in subsequent subsections of this note.

2. Financial Reporting Entity

The authority is a component unit of McNairy County, Tennessee, and is governed by a board of directors appointed by the county government. The authority is responsible for financing, developing, and operating McNairy County’s public airport. The McNairy County Commission approves the operating budget of the authority and has provided regular operating subsidies to the authority in the past.

3. Fund Accounting

The accounts of the authority are organized on the basis of funds. The operations of funds are accounted for with a separate set of self-balancing accounts that comprise their assets, liabilities, fund equity, revenues, and expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The accounts in the financial statements in this report fall under one broad category as follows: Proprietary Funds Enterprise Funds − Enterprise funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses

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incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

B. Summary of Significant Accounting Policies

1. Basis of Accounting

Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized when earned, and expenses are recognized when incurred. The authority has defined nonoperating revenues to be revenues that are not generated from daily operations. Capital contributions are nonoperating revenues.

2. Capital Assets

All capital assets of the authority are recorded at original cost. Expenses that materially increase values or capacities, or extend useful lives of these assets, are capitalized while expenses for maintenance and repairs are charged to operations as incurred. Gains and losses from the sale of capital assets are reflected in operations, and the asset accounts and related allowances for depreciation are reduced. These depreciable capital assets are being depreciated over various estimated useful lives on a straight-line basis. Any interest incurred in preparing or acquiring a capital asset for use is included in its cost. The authority has not adopted a capitalization threshold policy.

3. Cash Equivalents Cash and cash equivalents include demand deposit accounts. Restricted cash consists of deposits held in an escrow account to fund the authority’s local matching requirement for the ongoing authority grant projects and deposits in other local bank accounts for the retainage due on several projects.

4. Inventory Inventory consists of fuel. Cost is determined using the first-in first-out method.

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C. Cash and Investments

In accordance with state law, all uninsured deposits of municipal funds in financial institutions must be secured with acceptable collateral valued at the lower of market or par. Acceptable collateral includes certain U.S. government or government agency securities, certain State of Tennessee or political subdivision debt obligations, or surety bonds. As required by 12 U.S.C.A., Section 1823(e), all financial institutions pledging collateral to the authority must have a written collateral agreement approved by the board of directors or loan committee.

The authority’s investment policies are governed by state statute. Permissible

investments include direct obligations of the U.S. government and agency securities, certificates of deposit, and savings accounts. Collateral is required for demand deposits, certificates of deposit, and repurchase agreements at 105 percent of all amounts not covered by federal deposit insurance.

Custodial Credit Risk. Custodial credit risk is the risk that in the event of a bank failure, the authority’s deposits may not be returned to it. The authority requires any bank deposits to be insured by the Federal Deposit Insurance Corporation (FDIC), and any deposit in excess of FDIC coverage shall be collateralized by acceptable securities pledged for said purpose and an agreement between the bank of deposit and the authority shall be executed. As of June 30, 2020, the authority’s bank balances were not exposed to custodial credit risk because they were insured and collateralized.

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D. Capital Assets

Capital assets activity for the year ended June 30, 2020, was as follows:

Balance BalanceDescription 7-1-19 Increases Decreases 6-30-20

Capital Assets Not Depreciated: Land $ 91,331 $ 0 $ 0 $ 91,331 Construction in Progress 232,932 1,184 234,116 0

Total Capital Assets Not Depreciated $ 324,263 $ 1,184 $ 234,116 $ 91,331

Capital Assets Depreciated: Airport $ 6,473,565 $ 234,116 $ 0 $ 6,707,681 Building 196,238 0 0 196,238 Equipment 231,759 0 0 231,759 Vehicles 29,400 0 0 29,400

Total Capital Assets Depreciated $ 6,930,962 $ 234,116 $ 0 $ 7,165,078

Less Accumulated Depreciation For: Airport $ 2,642,607 $ 248,344 $ 0 $ 2,890,951 Building 81,767 4,906 0 86,673 Equipment 221,638 2,481 0 224,119 Vehicles 21,684 4,380 0 26,064

Total Accumulated Depreciation $ 2,967,696 $ 260,111 $ 0 $ 3,227,807

Total Capital Assets, Net $ 4,287,529 $ (24,811) $ 234,116 $ 4,028,602

E. Risk Management

The authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Settled claims have not exceeded this commercial coverage in any of the past three years.

F. Net Position Flow Assumption

Sometimes the authority will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the financial statements, a flow assumption must be made about the order in which resources are considered applied. It is the authority’s policy to consider restricted net position to have been depleted before unrestricted net position is applied.

97

Net position is displayed in three components:

1. Net investment in capital assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvements of those assets.

2. Restricted net position – Consists of net position with

constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or (2) law through constitutional provisions or enabling legislation.

3. Unrestricted net position – All other net position that does not

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

G. Unearned Revenues – Rent

The hospital prepaid hangar rent for 15 years to aid in construction of a new hangar. The authority has recorded the appropriate amount as unearned rent and is recognizing the rent revenue as it is earned.

98

REQUIRED SUPPLEMENTARY INFORMATION

99

Exhibit E-1

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

2014 2015 2016 2017 2018 2019

Total Pension Liability (Asset)Service Cost $ 517,696 $ 523,449 $ 562,697 $ 581,519 $ 589,490 $ 588,963Interest 999,235 1,059,743 1,136,026 1,193,154 1,279,976 1,371,882Differences Between Actual and Expected Experience (236,568) (106,163) (374,167) 18,203 167,299 51,407Changes of Assumptions 0 0 0 614,108 0 0Benefit Payments, Including Refunds of Employee Contributions (472,435) (486,255) (512,088) (651,243) (686,441) (850,688)Net Change in Total Pension Liability (Asset) $ 807,928 $ 990,774 $ 812,468 $ 1,755,741 $ 1,350,324 $ 1,161,564Total Pension Liability (Asset), Beginning 13,041,657 13,849,585 14,840,359 15,652,827 17,408,568 18,758,892

Total Pension Liability (Asset), Ending (a) $ 13,849,585 $ 14,840,359 $ 15,652,827 $ 17,408,568 $ 18,758,892 $ 19,920,456

Plan Fiduciary Net PositionContributions - Employer $ 380,365 $ 397,514 $ 403,328 $ 412,547 $ 408,406 $ 406,188Contributions - Employee 372,182 378,560 384,121 392,901 388,955 386,844Net Investment Income 2,103,796 463,324 418,276 1,857,916 1,523,206 1,479,399Benefit Payments, Including Refunds of Employee Contributions (472,435) (486,255) (512,088) (651,243) (686,441) (850,688)Administrative Expense (13,617) (19,003) (27,777) (30,723) (33,442) (30,469)Other 0 0 1,337 240 0 0Net Change in Plan Fiduciary Net Position $ 2,370,291 $ 734,140 $ 667,197 $ 1,981,638 $ 1,600,684 $ 1,391,274Plan Fiduciary Net Position, Beginning 12,558,589 14,928,880 15,663,020 16,330,217 18,311,855 19,912,539

Plan Fiduciary Net Position, Ending (b) $ 14,928,880 $ 15,663,020 $ 16,330,217 $ 18,311,855 $ 19,912,539 $ 21,303,813

Net Pension Liability (Asset), Ending (a - b) $ (1,079,295) $ (822,661) $ (677,390) $ (903,287) $ (1,153,647) $ (1,383,357)

Plan Fiduciary Net Position as a Percentage of Total Pension Liability 107.79% 105.54% 104.33% 105.19% 106.15% 106.94%Covered Payroll $ 7,443,631 $ 7,571,687 $ 7,684,750 $ 7,858,977 $ 7,779,168 $ 7,736,918Net Pension Liability (Asset) as a Percentage of Covered Payroll (14.50)% (10.86)% (8.81)% (11.49)% (14.83)% (17.88)%

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

Note: The agent plan is a single plan reported under one account with the Tennessee Consolidated Retirement System. This plan coversemployees of the primary government and non-certified employees of the discretely presented school department.

100

Exhibit E-2

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

2014 2015 2016 2017 2018 2019 2020

Actuarially Determined Contribution $ 380,365 $ 397,514 $ 403,328 $ 213,764 $ 231,819 $ 230,560 $ 272,794Less Contributions in Relation to the Actuarially Determined Contribution (380,365) (397,514) (403,328) (412,547) (408,406) (406,188) (452,340)

Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ (198,783) $ (176,587) $ (175,628) $ (179,546)

Covered Payroll $ 7,443,631 $ 7,571,687 $ 7,684,750 $ 7,858,977 $ 7,779,168 $ 7,736,918 $ 8,632,721

Contributions as a Percentage of Covered Payroll 5.11% 5.25% 5.25% 5.25% 5.25% 5.25% 5.25%


Note: The agent plan is a single plan reported under one account with the Tennessee Consolidated Retirement System. This plan coversemployees of the primary government and non-certified employees of the discretely presented school department.

101

Exhibit E-3

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

2015 2016 2017 2018 2019 2020

Contractually Required Contribution $ 24,876 $ 39,880 $ 74,511 $ 80,380 $ 50,404 $ 64,315Less Contributions in Relation to the Contractually Required Contribution (24,876) (39,880) (74,511) (80,380) (50,404) (64,315)

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

Covered Payroll $ 621,907 $ 997,001 $ 1,862,766 $ 2,009,496 $ 2,598,118 $ 3,168,226

Contributions as a Percentage of Covered Payroll 4.00% 4.00% 4.00% 4.00% 1.94% 2.03%


102

Exhibit E-4

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

2014 2015 2016 2017 2018 2019 2020

Contractually Required Contribution $ 1,495,882 $ 1,449,291 $ 1,459,059 $ 1,414,531 $ 1,425,666 $ 1,640,994 $ 1,756,061Less Contributions in Relation to the Contractually Required Contribution (1,495,882) (1,449,291) (1,459,059) (1,414,531) (1,425,666) (1,640,994) (1,756,061)

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

Covered Payroll $ 16,845,522 $ 16,031,992 $ 16,140,062 $ 15,647,497 $ 15,701,163 $ 15,688,241 $ 16,527,414

Contributions as a Percentage of Covered Payroll 8.88% 9.04% 9.04% 9.04% 9.08% 10.46% 10.63%


103

Exhibit E-5

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

2015 2016 2017 2018 2019

School Department's Proportion of the Net Pension Liability (Asset) 0.293138% 0.226590% 0.283812% 0.229951% 0.245525%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (12,041) $ (23,589) $ (74,880) $ (104,289) $ (138,595)

Covered Payroll $ 621,907 $ 997,001 $ 1,862,766 $ 2,009,496 $ 2,598,118

School Department's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll (1.94)% (2.37)% (4.02)% (5.19)% (5.33)%

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 127.46% 121.88% 126.81% 126.97% 123.07%


104

Exhibit E-6

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

2014 2015 2016 2017 2018 2019

School Department's Proportion of the Net Pension Liability (Asset) 0.429186% 0.428261% 0.447117% 0.442650% 0.448390% 0.467868%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (69,741) $ 175,431 $ 2,794,236 $ (144,827) $ (1,577,848) $ (4,810,522)

Covered Payroll $ 16,845,522 $ 16,031,992 $ 16,140,062 $ 15,647,497 $ 15,701,163 $ 15,688,241

School Department's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll (.414002)% 1.94253% 17.31% (0.93)% (10.05)% (30.66)%

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 100.08% 99.81% 97.14% 100.14% 101.49% 104.28%


105

Exhibit E-7

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

2017 2018 2019Total OPEB LiabilityService Cost $ 569,825 $ 527,746 $ 307,266 Interest 270,661 330,540 208,045 Changes in Benefit Terms 0 (6,822,040) 568,394Differences Between Actual and Expected Experience 0 2,787,329 122,134Changes in Assumptions or Other Inputs (429,330) 181,006 (472,583) Benefit Payments (326,393) (380,546) (265,465) Net Change in Total OPEB Liability $ 84,763 $ (3,375,965) $ 467,791 Total OPEB Liability, Beginning 8,862,590 8,947,353 5,571,388

Total OPEB Liability, Ending $ 8,947,353 $ 5,571,388 $ 6,039,179

Nonemployer Contributing Entity Proportionate Share of the Total OPEB Liability $ 2,878,632 $ 1,872,521 $ 2,002,972 Employer Proportionate Share of the Total OPEB Liability 6,068,721 3,698,867 4,036,207

Covered Employee Payroll $ 20,095,095 $ 19,865,769 $ 21,321,986 Net OPEB Liability as a Percentage of Covered Employee Payroll 30.20% 18.62% 18.93%

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

Note 2: Changes in assumptions. (a) The following are the discount rates used in each period:

2016 2.92% 2017 3.56% 2018 3.62% 2019 3.51%

(b) The assumed initial trend rate applicable to plan years was revised as follows: For the 2019 plan year - from 5.4% to 6.75% For the 2020 plan year - from 6.75% to 6.03%

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

106

Exhibit E-8

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

2017 2018 2019Total OPEB LiabilityService Cost $ 1,354,436 $ 1,096,992 $ 22,858 Interest 485,516 576,911 52,605 Changes in Benefit Terms 0 (14,467,321) 0Differences Between Actual and Expected Experience 0 (740,374) (106)Changes in Assumptions or Other Inputs (1,821,928) (19,867) 544,023 Benefit Payments (178,700) (186,235) (63,097) Net Change in Total OPEB Liability $ (160,676) $ (13,739,894) $ 556,283 Total OPEB Liability, Beginning 15,362,164 15,201,488 1,461,594

Total OPEB Liability, Ending $ 15,201,488 $ 1,461,594 $ 2,017,877

Nonemployer Contributing Entity Proportionate Share of the Total OPEB Liability $ 1,575,953 $ 1,273,446 $ 1,348,842 Employer Proportionate Share of the Total OPEB Liability 13,625,535 188,148 669,035

Covered Employee Payroll $ 20,095,095 $ 19,865,769 $ 21,321,986 Net OPEB Liability as a Percentage of Covered Employee Payroll 67.81% 0.95% 3.14%

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

Note 2: Changes in assumptions. (a) The following are the discount rates used in each period:

2016 2.92% 2017 3.56% 2018 3.62% 2019 3.51%

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

107

McNAIRY COUNTY, TENNESSEE NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION


TENNESSEE CONSOLIDATED RETIREMENT SYSTEM Valuation Date: Actuarially determined contribution rates for fiscal year 2020 were calculated based on the June 30, 2018, actuarial valuation. Methods and assumptions used to determine contribution rates: Actuarial Cost Method Entry Age NormalAmortization Method Level Dollar, Closed (Not to Exceed 20 Years)Remaining Amortization Period Varies by YearAsset Valuation 10-Year Smoothed Within a 20%

Corridor to Market ValueInflation 2.5%Salary Increases Graded Salary Ranges from 8.72% to

3.44% Based on Age, Including Inflation Averaging 4%

Investment Rate of Return 7.25%, Net of Investment Expense, Including Inflation

Retirement Age Pattern of Retirement Determined by Experience Study

Mortality Customized Table Based on Actual Experience Including an Adjustment for Some Anticipated Improvement

Cost of Living Adjustments 2.25% Changes of assumptions. In 2017, the following assumptions were changed: decreased inflation rate from 3 percent to 2.5 percent; decreased the investment rate of return from 7.5 percent to 7.25 percent; decreased the cost-of-living adjustment from 2.5 percent to 2.25 percent; decreased salary growth graded ranges from an average of 4.25 percent to an average of 4 percent; and modified mortality assumptions.

108

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

109

Nonmajor Governmental Funds

Special Revenue Funds ________________________________________

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

________________________________________ Law Library Fund – The Law Library Fund is used to account for a special tax levied by private act on litigation. Proceeds of the tax must be expended for the benefit of the county’s law library. Special Purpose Fund – The Special Purpose Fund is used to account for transactions of a higher education center. Drug Control Fund – The Drug Control Fund is used to account for revenues received from drug-related fines, forfeitures, and seizures. Constitutional Officers - Fees Fund – The Constitutional Officers - Fees Fund is used to account for operating expenses paid directly from the fee and commission accounts of the trustee, clerks, register of deeds, and sheriff.

Capital Projects Funds ________________________________________

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

________________________________________

General Capital Projects Fund – The General Capital Projects Fund is used to account for general capital expenditures of the county.

110

Community Development/Industrial Park Fund – The Community Development/Industrial Park Fund is used to account for the transactions of the Cypress Creek Watershed.

111

Exhibit F-1

McNairy County, TennesseeCombining Balance SheetNonmajor Governmental FundsJune 30, 2020

Constitu -tional General

Law Special Drug Officers - CapitalLibrary Purpose Control Fees Total Projects

ASSETS

Cash $ 0 $ 0 $ 0 $ 838 $ 838 $ 0Equity in Pooled Cash and Investments 6,947 194,971 107,786 0 309,704 1,049,181

Total Assets $ 6,947 $ 194,971 $ 107,786 $ 838 $ 310,542 $ 1,049,181

LIABILITIES

Accounts Payable $ 0 $ 2,068 $ 0 $ 0 $ 2,068 $ 0Due to Other Funds 0 0 0 838 838 0Total Liabilities $ 0 $ 2,068 $ 0 $ 838 $ 2,906 $ 0

FUND BALANCES

Restricted:Restricted for General Government $ 0 $ 37,823 $ 0 $ 0 $ 37,823 $ 0Restricted for Public Safety 0 0 107,786 0 107,786 0Restricted for Social, Cultural, and Recreational Services 6,947 0 0 0 6,947 0Restricted for Capital Outlay 0 0 0 0 0 1,049,181

Committed:Committed for General Government 0 155,080 0 0 155,080 0Committed for Agriculture and Natural Resources 0 0 0 0 0 0

Total Fund Balances $ 6,947 $ 192,903 $ 107,786 $ 0 $ 307,636 $ 1,049,181

Total Liabilities and Fund Balances $ 6,947 $ 194,971 $ 107,786 $ 838 $ 310,542 $ 1,049,181

(Continued)

Special Revenue Funds

Capital Projects Funds

112

Exhibit F-1

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

Community TotalDevelopment/ Nonmajor

Industrial GovernmentalPark Total Funds

ASSETS

Cash $ 0 $ 0 $ 838Equity in Pooled Cash and Investments 12,582 1,061,763 1,371,467

Total Assets $ 12,582 $ 1,061,763 $ 1,372,305

LIABILITIES

Accounts Payable $ 0 $ 0 $ 2,068Due to Other Funds 0 0 838Total Liabilities $ 0 $ 0 $ 2,906

FUND BALANCES

Restricted:Restricted for General Government $ 0 $ 0 $ 37,823Restricted for Public Safety 0 0 107,786Restricted for Social, Cultural, and Recreational Services 0 0 6,947Restricted for Capital Outlay 0 1,049,181 1,049,181

Committed:Committed for General Government 0 0 155,080Committed for Agriculture and Natural Resources 12,582 12,582 12,582

Total Fund Balances $ 12,582 $ 1,061,763 $ 1,369,399

Total Liabilities and Fund Balances $ 12,582 $ 1,061,763 $ 1,372,305

Capital Projects Funds (Cont.)

113

Exhibit F-2

McNairy County, TennesseeCombining Statement of Revenues, Expenditures,

and Changes in Fund BalancesNonmajor Governmental FundsFor the Year Ended June 30, 2020

Constitu -tional General

Law Special Drug Officers - CapitalLibrary Purpose Control Fees Total Projects

RevenuesLocal Taxes $ 1,705 $ 0 $ 0 $ 0 $ 1,705 $ 0Fines, Forfeitures, and Penalties 0 0 29,571 0 29,571 0Charges for Current Services 1,070 0 0 3,750 4,820 0Other Local Revenues 0 125,645 0 0 125,645 0

Total Revenues $ 2,775 $ 125,645 $ 29,571 $ 3,750 $ 161,741 $ 0


General Government $ 0 $ 77,866 $ 0 $ 0 $ 77,866 $ 0Administration of Justice 0 0 0 3,750 3,750 0Public Safety 0 0 48,573 0 48,573 0Social, Cultural, and Recreational Services 2,639 0 0 0 2,639 0Agriculture and Natural Resources 0 0 0 0 0 0Other Operations 0 1,374 0 0 1,374 0

Capital Projects 0 0 0 0 0 192,937Total Expenditures $ 2,639 $ 79,240 $ 48,573 $ 3,750 $ 134,202 $ 192,937

Excess (Deficiency) of RevenuesOver Expenditures $ 136 $ 46,405 $ (19,002) $ 0 $ 27,539 $ (192,937)

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

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

Net Change in Fund Balances $ 136 $ 46,405 $ (19,002) $ 0 $ 27,539 $ (192,937)Fund Balance, July 1, 2019 6,811 146,498 126,788 0 280,097 1,242,118

Fund Balance, June 30, 2020 $ 6,947 $ 192,903 $ 107,786 $ 0 $ 307,636 $ 1,049,181

(Continued)


Capital Projects Funds

114

Exhibit F-2

McNairy County, TennesseeCombining Statement of Revenues, Expenditures,

and Changes in Fund BalancesNonmajor Governmental Funds (Cont.)

Community TotalDevelopment/ Nonmajor

Industrial GovernmentalPark Total Funds

RevenuesLocal Taxes $ 0 $ 0 $ 1,705Fines, Forfeitures, and Penalties 0 0 29,571Charges for Current Services 0 0 4,820Other Local Revenues 0 0 125,645

Total Revenues $ 0 $ 0 $ 161,741


General Government $ 0 $ 0 $ 77,866Administration of Justice 0 0 3,750Public Safety 0 0 48,573Social, Cultural, and Recreational Services 0 0 2,639Agriculture and Natural Resources 11,258 11,258 11,258Other Operations 0 0 1,374

Capital Projects 0 192,937 192,937Total Expenditures $ 11,258 $ 204,195 $ 338,397

Excess (Deficiency) of RevenuesOver Expenditures $ (11,258) $ (204,195) $ (176,656)

Other Financing Sources (Uses)Transfers In $ 15,000 $ 15,000 $ 15,000

Total Other Financing Sources (Uses) $ 15,000 $ 15,000 $ 15,000

Net Change in Fund Balances $ 3,742 $ (189,195) $ (161,656)Fund Balance, July 1, 2019 8,840 1,250,958 1,531,055

Fund Balance, June 30, 2020 $ 12,582 $ 1,061,763 $ 1,369,399

Capital Projects Funds (Cont.)

115

Exhibit F-3

McNairy County, TennesseeSchedule of Revenues, Expenditures, and Changes

in Fund Balance - Actual and BudgetLaw Library FundFor the Year Ended June 30, 2020



RevenuesLocal Taxes $ 1,705 $ 2,000 $ 2,000 $ (295)Charges for Current Services 1,070 1,400 1,400 (330)

Total Revenues $ 2,775 $ 3,400 $ 3,400 $ (625)

ExpendituresSocial, Cultural, and Recreational Services

Libraries $ 2,639 $ 3,400 $ 3,400 $ 761Total Expenditures $ 2,639 $ 3,400 $ 3,400 $ 761

Excess (Deficiency) of RevenuesOver Expenditures $ 136 $ 0 $ 0 $ 136

Net Change in Fund Balance $ 136 $ 0 $ 0 $ 136Fund Balance, July 1, 2019 6,811 7,848 7,848 (1,037)

Fund Balance, June 30, 2020 $ 6,947 $ 7,848 $ 7,848 $ (901)

Budgeted Amounts

116

Exhibit F-4


in Fund Balance - Actual and BudgetSpecial Purpose FundFor the Year Ended June 30, 2020



RevenuesOther Local Revenues $ 125,645 $ 125,645 $ 125,645 $ 0

Total Revenues $ 125,645 $ 125,645 $ 125,645 $ 0

ExpendituresGeneral Government

Other Facilities $ 77,866 $ 100,323 $ 100,323 $ 22,457Other Operations

Employee Benefits 1,374 1,475 1,475 101Total Expenditures $ 79,240 $ 101,798 $ 101,798 $ 22,558

Excess (Deficiency) of RevenuesOver Expenditures $ 46,405 $ 23,847 $ 23,847 $ 22,558

Net Change in Fund Balance $ 46,405 $ 23,847 $ 23,847 $ 22,558Fund Balance, July 1, 2019 146,498 119,142 119,142 27,356

Fund Balance, June 30, 2020 $ 192,903 $ 142,989 $ 142,989 $ 49,914

Budgeted Amounts

117

Exhibit F-5


in Fund Balance - Actual and BudgetDrug Control FundFor the Year Ended June 30, 2020



RevenuesFines, Forfeitures, and Penalties $ 29,571 $ 52,000 $ 52,000 $ (22,429)Other Local Revenues 0 15,000 15,000 (15,000)

Total Revenues $ 29,571 $ 67,000 $ 67,000 $ (37,429)

ExpendituresPublic Safety

Drug Enforcement $ 48,573 $ 44,000 $ 49,995 $ 1,422Total Expenditures $ 48,573 $ 44,000 $ 49,995 $ 1,422

Excess (Deficiency) of RevenuesOver Expenditures $ (19,002) $ 23,000 $ 17,005 $ (36,007)

Net Change in Fund Balance $ (19,002) $ 23,000 $ 17,005 $ (36,007)Fund Balance, July 1, 2019 126,788 124,823 124,823 1,965

Fund Balance, June 30, 2020 $ 107,786 $ 147,823 $ 141,828 $ (34,042)

Budgeted Amounts

118

Major Governmental Fund

General Debt Service Fund ________________________________________

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

________________________________________

119

Exhibit G


in Fund Balance - Actual and BudgetGeneral Debt Service FundFor the Year Ended June 30, 2020



RevenuesLocal Taxes $ 788,898 $ 802,297 $ 802,297 $ (13,399)Other Local Revenues 240,678 105,200 105,200 135,478Other Governments and Citizens Groups 1,124,583 0 1,124,583 0

Total Revenues $ 2,154,159 $ 907,497 $ 2,032,080 $ 122,079

ExpendituresPrincipal on Debt

General Government $ 311,188 $ 331,807 $ 313,739 $ 2,551Highways and Streets 485,000 0 485,000 0Education 400,000 400,000 400,000 0

Interest on DebtGeneral Government 55,903 56,055 55,905 2Highways and Streets 259,607 0 259,608 1Education 724,583 724,583 724,583 0

Other Debt ServiceGeneral Government 17,774 1,060 17,834 60Highways and Streets 500 0 500 0Education 1,000 0 1,000 0

Total Expenditures $ 2,255,555 $ 1,513,505 $ 2,258,169 $ 2,614

Excess (Deficiency) of RevenuesOver Expenditures $ (101,396) $ (606,008) $ (226,089) $ 124,693

Other Financing Sources (Uses)Transfers In $ 744,607 $ 1,791,249 $ 911,274 $ (166,667)Transfers Out 0 (500,000) 0 0

Total Other Financing Sources $ 744,607 $ 1,291,249 $ 911,274 $ (166,667)

Net Change in Fund Balance $ 643,211 $ 685,241 $ 685,185 $ (41,974)Fund Balance, July 1, 2019 4,221,747 3,452,300 3,452,300 769,447

Fund Balance, June 30, 2020 $ 4,864,958 $ 4,137,541 $ 4,137,485 $ 727,473

Budgeted Amounts

120

Fiduciary Funds ________________________________________

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

________________________________________ Cities - Sales Tax Fund – The Cities - Sales Tax Fund is used to account for the second half of the sales tax revenues collected inside incorporated cities of the county. These revenues are received by the county from the State of Tennessee and forwarded to the various cities on a monthly basis. Constitutional Officers - Agency Fund – The Constitutional Officers - Agency Fund is used to account for amounts collected in an agency capacity by the county clerk, circuit and general sessions courts clerk, clerk and master, register of deeds, and sheriff. Such collections include amounts due the state, cities, other county funds, litigants, heirs, and others.

121

Exhibit H-1

McNairy County, TennesseeCombining Statement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2020

Constitu -Cities - tionalSales Officers -Tax Agency Total

ASSETS

Cash $ 0 $ 1,306,584 $ 1,306,584Accounts Receivable 0 720 720Due from Other Governments 339,024 0 339,024Cash Shortage 0 6,235 6,235

Total Assets $ 339,024 $ 1,313,539 $ 1,652,563

LIABILITIES

Due to Other Taxing Units $ 339,024 $ 0 $ 339,024Due to Litigants, Heirs, and Others 0 1,313,539 1,313,539

Total Liabilities $ 339,024 $ 1,313,539 $ 1,652,563

Agency Funds

122

Exhibit H-2

McNairy County, TennesseeCombining Statement of Changes in Assets and Liabilities - All Agency FundsFor the Year Ended June 30, 2020

Beginning EndingBalance Additions Deductions Balance

Cities - Sales Tax FundAssets Equity in Pooled Cash and Investments $ 0 $ 1,785,709 $ 1,785,709 $ 0 Due from Other Governments 300,844 339,024 300,844 339,024

Total Assets $ 300,844 $ 2,124,733 $ 2,086,553 $ 339,024

Liabilities Due to Other Taxing Units $ 300,844 $ 2,124,733 $ 2,086,553 $ 339,024

Total Liabilities $ 300,844 $ 2,124,733 $ 2,086,553 $ 339,024

Constitutional Officers - Agency FundAssets Cash $ 982,672 $ 5,539,011 $ 5,215,099 $ 1,306,584 Accounts Receivable 217 720 217 720 Cash Shortage 6,235 0 0 6,235

Total Assets $ 989,124 $ 5,539,731 $ 5,215,316 $ 1,313,539

Liabilities Due to Litigants, Heirs, and Others $ 989,124 $ 5,539,731 $ 5,215,316 $ 1,313,539

Total Liabilities $ 989,124 $ 5,539,731 $ 5,215,316 $ 1,313,539

Totals - All Agency FundsAssets Cash $ 982,672 $ 5,539,011 $ 5,215,099 $ 1,306,584 Equity in Pooled Cash and Investments 0 1,785,709 1,785,709 0 Accounts Receivable 217 720 217 720 Due from Other Governments 300,844 339,024 300,844 339,024 Cash Shortage 6,235 0 0 6,235

Total Assets $ 1,289,968 $ 7,664,464 $ 7,301,869 $ 1,652,563

Liabilities Due to Other Taxing Units $ 300,844 $ 2,124,733 $ 2,086,553 $ 339,024 Due to Litigants, Heirs, and Others 989,124 5,539,731 5,215,316 1,313,539

Total Liabilities $ 1,289,968 $ 7,664,464 $ 7,301,869 $ 1,652,563

123

McNairy County School Department _________________________________________

This section presents combining and individual fund financial statements for the McNairy County School Department, a discretely presented component unit. The school department uses a General Fund, two Special Revenue Funds, and one Capital Projects Fund.

_________________________________________ General Purpose School Fund – The General Purpose School Fund is used to account for general operations of the school department. School Federal Projects Fund – The School Federal Projects Fund is used to account for restricted federal revenues, which must be expended on specific education programs. Central Cafeteria Fund – The Central Cafeteria Fund is used to account for the cafeteria operations in each of the schools. Education Capital Projects Fund – The Education Capital Projects Fund is used to account for building construction and renovations of the school department.

124

Exhibit I-1

McNairy County, TennesseeStatement of ActivitiesDiscretely Presented McNairy County School DepartmentFor the Year Ended June 30, 2020

Net (Expense) Revenue andChanges in

Operating Capital Net PositionCharges Grants Grants Total

for and and GovernmentalFunctions/Programs Expenses Services Contributions Contributions Activities

Governmental Activities: Instruction $ 23,902,747 $ 138,826 $ 1,591,140 $ 4,846,243 $ (17,326,538) Support Services 9,708,498 41,157 474,992 2,504,898 (6,687,451) Operation of Non-instructional Services 4,542,003 10,033 2,863,976 1,193,223 (474,771)

Total Governmental Activities $ 38,153,248 $ 190,016 $ 4,930,108 $ 8,544,364 $ (24,488,760)

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 3,854,535 Local Option Sales Taxes 2,160,788 Grants and Contributions Not Restricted to Specific Programs 27,796,152 Miscellaneous 88,155

Total General Revenues $ 33,899,630

Change in Net Position $ 9,410,870Net Position, July 1, 2019 19,415,258

Net Position, June 30, 2020 $ 28,826,128

Program Revenues

125

Exhibit I-2

McNairy County, TennesseeBalance Sheet - Governmental FundsDiscretely Presented McNairy County School DepartmentJune 30, 2020

General School TotalPurpose Federal Central GovernmentalSchool Projects Cafeteria Funds

ASSETS

Equity in Pooled Cash and Investments $ 3,054,522 $ 635,692 $ 1,077,385 $ 4,767,599Accounts Receivable 664 0 0 664Due from Other Governments 1,029,548 82,869 0 1,112,417Due from Other Funds 490,903 0 0 490,903Due from Primary Government 16,632 0 0 16,632Property Taxes Receivable 3,942,457 0 0 3,942,457Allowance for Uncollectible Property Taxes (198,483) 0 0 (198,483)Restricted Assets 116,350 0 0 116,350

Total Assets $ 8,452,593 $ 718,561 $ 1,077,385 $ 10,248,539

LIABILITIES

Accounts Payable $ 25,000 $ 0 $ 0 $ 25,000Payroll Deductions Payable 0 0 12,541 12,541Due to Other Funds 0 490,903 0 490,903Total Liabilities $ 25,000 $ 490,903 $ 12,541 $ 528,444


Deferred Current Property Taxes $ 3,730,127 $ 0 $ 0 $ 3,730,127Deferred Delinquent Property Taxes 4,331 0 0 4,331Other Deferred/Unavailable Revenue 209,383 0 0 209,383Total Deferred Inflows of Resources $ 3,943,841 $ 0 $ 0 $ 3,943,841

(Continued)

Major Funds

126

Exhibit I-2

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

General School TotalPurpose Federal Central GovernmentalSchool Projects Cafeteria Funds

FUND BALANCES

Restricted:Restricted for Education $ 51,714 $ 192,658 $ 0 $ 244,372Restricted for Operation of Non-instructional Services 0 0 1,064,844 1,064,844Restricted for Hybrid Retirement Stabilization Funds 116,350 0 0 116,350

Committed:Committed for Education 15,033 0 0 15,033

Assigned:Assigned for Education 0 35,000 0 35,000

Unassigned 4,300,655 0 0 4,300,655Total Fund Balances $ 4,483,752 $ 227,658 $ 1,064,844 $ 5,776,254

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 8,452,593 $ 718,561 $ 1,077,385 $ 10,248,539

Major Funds

127

Exhibit I-3

McNairy County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to the Statement of Net PositionDiscretely Presented McNairy County School Department

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

Total fund balances - balance sheet - governmental funds (Exhibit I-2) $ 5,776,254

(1) Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Add: land $ 1,291,479 Add: construction in progress 13,987,914 Add: buildings and improvements net of accumulated depreciation 13,382,474 Add: other capital assets net of accumulated depreciation 2,636,041 31,297,908

(2) Long-term liabilities are not due and payable in the current periodand therefore are not reported in the governmental funds. Less: net OPEB liability (4,705,242)

(3) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions and OPEB will be amortized andrecognized as components of pension and OPEB expense in future years. Add: deferred outflows of resources related to pensions $ 3,262,637 Less: deferred inflows of resources related to pensions (4,573,145) Add: deferred outflows of resources related to OPEB 2,650,004 Less: deferred inflows of resources related to OPEB (10,799,602) (9,460,106)

(4) Net pension assets are not current financial resources and thereforeare not reported in governmental funds. Add: net pension asset - agent plan $ 754,483 Add: net pension asset - teacher retirement plan 138,595 Add: net pension asset - teacher legacy pension plan 4,810,522 5,703,600

(5) Other long-term assets are not available to pay for current period expenditures and therefore are deferred in the governmental funds. 213,714

Net position of governmental activities (Exhibit A) $ 28,826,128

June 30, 2020

128

Exhibit I-4


and Changes in Fund Balances - Governmental Funds

Discretely Presented McNairy County School DepartmentFor the Year Ended June 30, 2020

General School Education TotalPurpose Federal Central Capital GovernmentalSchool Projects Cafeteria Projects Funds

RevenuesLocal Taxes $ 6,115,359 $ 0 $ 0 $ 0 $ 6,115,359Licenses and Permits 1,282 0 0 0 1,282Charges for Current Services 37,273 0 125,159 0 162,432Other Local Revenues 151,340 0 18,344 0 169,684State of Tennessee 27,604,184 0 22,620 0 27,626,804Federal Government 353,757 3,194,267 1,998,463 0 5,546,487Other Governments and Citizens Groups 0 0 0 7,954,822 7,954,822

Total Revenues $ 34,263,195 $ 3,194,267 $ 2,164,586 $ 7,954,822 $ 47,576,870


Instruction $ 22,012,515 $ 2,050,628 $ 0 $ 0 $ 24,063,143Support Services 8,781,059 673,716 0 0 9,454,775Operation of Non-Instructional Services 508,082 421,250 2,281,399 0 3,210,731Capital Outlay 189,020 0 0 9,641,726 9,830,746

Debt Service:Other Debt Service 1,124,583 0 0 0 1,124,583

Capital Projects 658,633 0 0 0 658,633Total Expenditures $ 33,273,892 $ 3,145,594 $ 2,281,399 $ 9,641,726 $ 48,342,611

Excess (Deficiency) of RevenuesOver Expenditures $ 989,303 $ 48,673 $ (116,813) $ (1,686,904) $ (765,741)

(Continued)

Major Funds

129

Exhibit I-4


and Changes in Fund Balances - Governmental Funds

Discretely Presented McNairy County School Department (Cont.)

General School Education TotalPurpose Federal Central Capital GovernmentalSchool Projects Cafeteria Projects Funds

Other Financing Sources (Uses)Insurance Recovery $ 147,251 $ 0 $ 0 $ 0 $ 147,251Transfers In 74,396 0 0 354,594 428,990Transfers Out (354,594) (74,396) 0 0 (428,990)

Total Other Financing Sources (Uses) $ (132,947) $ (74,396) $ 0 $ 354,594 $ 147,251

Net Change in Fund Balances $ 856,356 $ (25,723) $ (116,813) $ (1,332,310) $ (618,490)Fund Balance, July 1, 2019 3,627,396 253,381 1,181,657 1,332,310 6,394,744

Fund Balance, June 30, 2020 $ 4,483,752 $ 227,658 $ 1,064,844 $ 0 $ 5,776,254

Major Funds

130

Exhibit I-5

McNairy County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesDiscretely Presented McNairy County School DepartmentFor the Year Ended June 30, 2020

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

Net change in fund balances - total governmental funds (Exhibit I-4) $ (618,490)

(1) Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of these assets is allocated over their useful lives and reported as depreciation expense. The difference between capital outlays and depreciation is itemized as follows: Add: capital assets purchased in the current period $ 8,998,086 Less: current-year depreciation expense (1,005,028) 7,993,058

(2) The net effect of various miscellaneous transactions involving capital assets(sales, trade-ins, and donations) is to increase net position. Add: assets donated and capitalized 69,000

(3) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Add: deferred delinquent property taxes and other deferred June 30, 2020 $ 213,714 Less: deferred delinquent property taxes and other deferred June 30, 2019 (295,466) (81,752)

(4) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. Change in net OPEB liability $ (818,227) Change in deferred outflows related to OPEB 679,776 Change in deferred inflows related to OPEB 1,009,811 Change in net pension asset - agent plan 96,904 Change in net pension asset - teacher retirement plan 34,306 Change in net pension asset - teacher legacy pension plan 3,232,674 Change in deferred outflows related to pensions (318,991) Change in deferred inflows related to pensions (1,867,199) 2,049,054

Change in net position of governmental activities (Exhibit B) $ 9,410,870

131

Exhibit I-6


in Fund Balance - Actual and BudgetDiscretely Presented McNairy County School DepartmentGeneral Purpose School FundFor the Year Ended June 30, 2020



RevenuesLocal Taxes $ 6,115,359 $ 6,090,000 $ 6,090,000 $ 25,359Licenses and Permits 1,282 2,000 2,000 (718)Charges for Current Services 37,273 33,000 41,700 (4,427)Other Local Revenues 151,340 44,600 137,095 14,245State of Tennessee 27,604,184 26,762,275 27,604,453 (269)Federal Government 353,757 0 23,990 329,767

Total Revenues $ 34,263,195 $ 32,931,875 $ 33,899,238 $ 363,957

ExpendituresInstruction

Regular Instruction Program $ 18,787,225 $ 18,690,079 $ 18,894,468 $ 107,243Special Education Program 2,262,723 2,393,949 2,263,006 283Career and Technical Education Program 932,934 969,613 940,523 7,589Adult Education Program 29,633 29,911 29,611 (22)

Support ServicesAttendance 88,408 87,933 88,713 305Health Services 476,712 290,671 478,072 1,360Other Student Support 622,452 556,392 622,892 440Regular Instruction Program 750,574 721,876 777,306 26,732Special Education Program 305,768 300,377 310,457 4,689Career and Technical Education Program 42,494 44,512 44,512 2,018Technology 424,489 455,597 424,490 1Other Programs 134,955 0 134,955 0Board of Education 436,872 506,725 439,975 3,103Director of Schools 183,613 180,489 189,376 5,763Office of the Principal 1,214,966 1,190,879 1,220,879 5,913Fiscal Services 159,884 157,569 161,569 1,685Operation of Plant 2,106,171 2,178,578 2,136,378 30,207Maintenance of Plant 392,875 687,770 591,000 198,125Transportation 1,440,826 1,684,596 1,446,355 5,529

Operation of Non-Instructional ServicesEarly Childhood Education 508,082 543,375 514,848 6,766

Capital OutlayRegular Capital Outlay 189,020 0 189,020 0

Other Debt ServiceEducation 1,124,583 1,216,755 1,124,583 0

Capital ProjectsEducation Capital Projects 658,633 0 663,892 5,259


Excess (Deficiency) of RevenuesOver Expenditures $ 989,303 $ 44,229 $ 212,358 $ 776,945

Other Financing Sources (Uses)Insurance Recovery $ 147,251 $ 0 $ 147,251 $ 0Transfers In 74,396 0 10,000 64,396Transfers Out (354,594) 0 (354,594) 0

Total Other Financing Sources $ (132,947) $ 0 $ (197,343) $ 64,396

(Continued)

Budgeted Amounts

132

Exhibit I-6


in Fund Balance - Actual and BudgetDiscretely Presented McNairy County School DepartmentGeneral Purpose School Fund (Cont.)



Net Change in Fund Balance $ 856,356 $ 44,229 $ 15,015 $ 841,341Fund Balance, July 1, 2019 3,627,396 1,400,997 1,400,997 2,226,399

Fund Balance, June 30, 2020 $ 4,483,752 $ 1,445,226 $ 1,416,012 $ 3,067,740

Budgeted Amounts

133

Exhibit I-7


in Fund Balance - Actual and BudgetDiscretely Presented McNairy County School DepartmentSchool Federal Projects FundFor the Year Ended June 30, 2020



RevenuesState of Tennessee $ 0 $ 265,876 $ 0 $ 0Federal Government 3,194,267 3,254,823 3,551,452 (357,185)

Total Revenues $ 3,194,267 $ 3,520,699 $ 3,551,452 $ (357,185)

ExpendituresInstruction

Regular Instruction Program $ 1,198,283 $ 1,342,478 $ 1,282,919 $ 84,636Special Education Program 619,745 659,734 658,734 38,989Career and Technical Education Program 173,166 178,788 187,136 13,970COVID-19 Expenditures 59,434 0 59,434 0

Support ServicesOther Student Support 73,308 86,161 80,501 7,193Regular Instruction Program 355,352 393,994 400,804 45,452Special Education Program 157,160 177,390 180,314 23,154Career and Technical Education Program 912 3,600 912 0Technology 12,835 13,000 13,000 165Transportation 74,149 91,485 89,485 15,336

Operation of Non-Instructional ServicesCommunity Services 421,250 496,640 520,349 99,099


Excess (Deficiency) of RevenuesOver Expenditures $ 48,673 $ 77,429 $ 77,864 $ (29,191)

Other Financing Sources (Uses)Transfers Out $ (74,396) $ (77,429) $ (77,864) $ 3,468

Total Other Financing Sources $ (74,396) $ (77,429) $ (77,864) $ 3,468

Net Change in Fund Balance $ (25,723) $ 0 $ 0 $ (25,723)Fund Balance, July 1, 2019 253,381 253,381 253,381 0

Fund Balance, June 30, 2020 $ 227,658 $ 253,381 $ 253,381 $ (25,723)

Budgeted Amounts

134

Exhibit I-8


in Fund Balance - Actual and BudgetDiscretely Presented McNairy County School DepartmentCentral Cafeteria FundFor the Year Ended June 30, 2020



RevenuesCharges for Current Services $ 125,159 $ 264,000 $ 264,000 $ (138,841)Other Local Revenues 18,344 19,000 19,000 (656)State of Tennessee 22,620 22,000 22,000 620Federal Government 1,998,463 2,241,000 2,395,345 (396,882)

Total Revenues $ 2,164,586 $ 2,546,000 $ 2,700,345 $ (535,759)

ExpendituresOperation of Non-Instructional Services

Food Service $ 2,281,399 $ 2,546,000 $ 2,711,005 $ 429,606Total Expenditures $ 2,281,399 $ 2,546,000 $ 2,711,005 $ 429,606

Excess (Deficiency) of RevenuesOver Expenditures $ (116,813) $ 0 $ (10,660) $ (106,153)

Net Change in Fund Balance $ (116,813) $ 0 $ (10,660) $ (106,153)Fund Balance, July 1, 2019 1,181,657 1,282,607 1,282,607 (100,950)

Fund Balance, June 30, 2020 $ 1,064,844 $ 1,282,607 $ 1,271,947 $ (207,103)

Budgeted Amounts

135

MISCELLANEOUS SCHEDULES

136

Exhibit J-1

McNairy County, TennesseeSchedule of Changes in Long-term Notes, Capital Leases, and BondsFor the Year Ended June 30, 2020

Paid and/orOriginal Date Last MaturedAmount Interest of Maturity Outstanding During Outstanding

Description of Indebtedness of Issue Rate Issue Date 7-1-19 Period 6-30-20

NOTES PAYABLE Payable through General Debt Service Fund 911 Building and Storage $ 55,000 3.25 % 4-13-12 4-13-21 $ 12,223 $ 6,111 $ 6,112 County Office Building 1,500,000 0 1-27-15 3-1-27 1,000,000 125,000 875,000 County Building Renovations and Repairs 340,000 3.08 4-13-17 4-13-26 264,444 37,778 226,666 Jail Expansion 1,250,000 3.67 4-20-18 6-1-30 1,145,000 105,000 1,040,000

Total Notes Payable $ 2,421,667 $ 273,889 $ 2,147,778

CAPITAL LEASES Payable through General Fund Sheriff's Department Cars 167,982 4.75 10-6-17 11-10-19 $ 56,226 $ 56,226 $ 0 Clean Energy Lighting Project 176,382 4.746 12-1-17 6-1-20 60,145 60,145 0 Sheriff's Department Car 28,002 4.75 12-28-17 1-10-20 9,373 9,373 0

Total Capital Leases $ 125,744 $ 125,744 $ 0

BONDS PAYABLE Payable through General Debt Service Fund USDA Rural Development Bonds 217,750 4.75 5-1-02 5-1-22 $ 46,970 $ 15,138 $ 31,832 USDA Rural Development Bonds 325,000 4.75 6-21-02 6-21-22 67,986 22,161 45,825 General Obligation School Bonds, Series 2017 7,750,000 2 to 3.5 6-9-17 6-1-46 6,500,000 400,000 6,100,000 General Obligation School Bonds, Series 2018 15,475,000 3 to 5 3-1-18 6-1-47 15,475,000 0 15,475,000 General Obligation Bonds, Series 2019 9,000,000 2.5 to 3 5-30-19 6-1-34 9,000,000 485,000 8,515,000

Total Bonds Payable $ 31,089,956 $ 922,299 $ 30,167,657

137

Exhibit J-2

McNairy County, TennesseeSchedule of Long-term Debt Requirements by Year

YearEndingJune 30 Principal Interest Total

2021 $ 273,890 $ 45,349 $ 319,2392022 267,778 40,133 307,9112023 267,778 35,115 302,8932024 267,778 30,098 297,8762025 267,777 25,081 292,8582026 267,777 20,064 287,8412027 230,000 15,047 245,0472028 105,000 11,194 116,1942029 100,000 7,340 107,3402030 100,000 3,670 103,670

Total $ 2,147,778 $ 233,091 $ 2,380,869

YearEndingJune 30 Principal Interest Total

2021 $ 1,147,140 $ 966,418 $ 2,113,5582022 1,085,517 925,643 2,011,1602023 1,075,000 886,669 1,961,6692024 1,120,000 848,620 1,968,6202025 1,160,000 807,996 1,967,9962026 2,570,000 774,095 3,344,0952027 790,000 684,725 1,474,7252028 805,000 665,545 1,470,5452029 825,000 644,262 1,469,2622030 1,345,000 622,452 1,967,4522031 1,380,000 584,627 1,964,6272032 1,420,000 545,812 1,965,8122033 1,465,000 505,765 1,970,7652034 1,510,000 461,815 1,971,8152035 805,000 415,814 1,220,8142036 835,000 390,946 1,225,9462037 860,000 364,793 1,224,7932038 885,000 337,087 1,222,0872039 915,000 307,700 1,222,7002040 945,000 277,313 1,222,3132041 975,000 245,419 1,220,4192042 1,005,000 212,512 1,217,5122043 1,045,000 178,594 1,223,5942044 1,080,000 142,950 1,222,9502045 1,115,000 106,113 1,221,1132046 1,155,000 68,082 1,223,0822047 850,000 28,688 878,688

Total $ 30,167,657 $ 13,000,455 $ 43,168,112

Notes

Bonds

138

Exhibit J-3

McNairy County, TennesseeSchedule of TransfersPrimary Government and Discretely Presented McNairy County School DepartmentFor the Year Ended June 30, 2020

From Fund To Fund Purpose Amount

PRIMARY GOVERNMENT

General Community Development/Industrial Park Operations $ 15,000Highway/Public Works General Debt Service Debt retirement 744,607

Total Transfers Primary Government $ 759,607

DISCRETELY PRESENTED MCNAIRY COUNTY SCHOOL DEPARTMENT

General Purpose School Education Capital Projects Capital outlay $ 354,594School Federal Projects General Purpose School Indirect costs 74,396

Total Transfers Discretely Presented McNairy County School Department $ 428,990

139

Exhibit J-4

McNairy County, TennesseeSchedule of Salaries and Official Bonds of Principal OfficialsPrimary Government and Discretely Presented McNairy County School DepartmentFor the Year Ended June 30, 2020

SalaryPaid

During Official Authorization for Salary Period Bond Surety

County Mayor Section 8-24-102, TCA $ 90,055 $ 100,000 Ohio Casualty Insurance CompanyHighway Commissioner Section 8-24-102, TCA 85,768 100,000 Western Surety CompanyDirector of Schools State Board of Education and 103,850 (1) 400,000 Tennessee Risk Management Trust

County Board of EducationTrustee Section 8-24-102, TCA 77,971 1,014,057 Ohio Casualty Insurance CompanyAssessor of Property Section 8-24-102, TCA 77,971 100,000 "County Clerk Section 8-24-102, TCA 77,971 100,000 "Circuit and General Sessions Courts Clerk Section 8-24-102, TCA 77,971 100,000 Western Surety CompanyClerk and Master Section 8-24-102, TCA 77,971 (2) 115,000 Ohio Casualty Insurance Company

and Chancery Court JudgeRegister of Deeds Section 8-24-102, TCA 77,971 100,000 "Sheriff Section 8-24-102, TCA 85,768 (3) 100,000 "

Employee Dishonesty Coverage: County Employees 400,000 Local Government Property and Casualty Fund School Department Employees 400,000 Tennessee Risk Management Trust

(1) Includes a chief executive officer training supplement of $1,000 and leadership stipend of $1,000.(2) Does not include special commissioner fees of $3,750.(3) Does not include a law enforcement training supplement of $800.

140

Exhibit J-5

McNairy County, TennesseeSchedule of Detailed Revenues -

All Governmental Fund TypesFor the Year Ended June 30, 2020

Constitu -Solid tional

Law Waste / Special Drug Officers -General Library Sanitation Purpose Control Fees

Local TaxesCounty Property Taxes

Current Property Tax $ 3,679,405 $ 0 $ 0 $ 0 $ 0 $ 0Trustee's Collections - Prior Year 129,616 0 0 0 0 0Circuit Clerk/Clerk and Master Collections - Prior Years 129,580 0 0 0 0 0Interest and Penalty 21,984 0 0 0 0 0Payments in-Lieu-of Taxes - Other 3,281 0 0 0 0 0

County Local Option TaxesLocal Option Sales Tax 329,786 0 0 0 0 0Litigation Tax - General 79,542 0 0 0 0 0Litigation Tax - Special Purpose 0 1,705 0 0 0 0Business Tax 12,025 0 0 0 0 0Mineral Severance Tax 0 0 0 0 0 0

Statutory Local TaxesBank Excise Tax 13,906 0 0 0 0 0Wholesale Beer Tax 20,908 0 0 0 0 0

City Local Option TaxesBusiness Tax 166,887 0 0 0 0 0

Total Local Taxes $ 4,586,920 $ 1,705 $ 0 $ 0 $ 0 $ 0

Licenses and PermitsLicenses

Cable TV Franchise $ 16,043 $ 0 $ 0 $ 0 $ 0 $ 0Permits

Beer Permits 808 0 0 0 0 0Total Licenses and Permits $ 16,851 $ 0 $ 0 $ 0 $ 0 $ 0

(Continued)


141

Exhibit J-5


All Governmental Fund Types (Cont.)



Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 12,849 $ 0 $ 0 $ 0 $ 0 $ 0Officers Costs 10,186 0 0 0 0 0Drug Control Fines 1,130 0 0 0 7,125 0Drug Court Fees 3,088 0 0 0 0 0Jail Fees 1,431 0 0 0 0 0Data Entry Fee - Circuit Court 1,222 0 0 0 0 0Victims Assistance Assessments 5,290 0 0 0 0 0

Criminal CourtDUI Treatment Fines 710 0 0 0 0 0

General Sessions CourtFines 10,627 0 0 0 0 0Fines for Littering 48 0 0 0 0 0Officers Costs 13,943 0 0 0 1,273 0Game and Fish Fines 45 0 0 0 0 0Drug Control Fines 0 0 0 0 12,873 0Drug Court Fees 7,204 0 0 0 0 0Jail Fees 16,160 0 0 0 0 0DUI Treatment Fines 2,161 0 0 0 0 0Data Entry Fee - General Sessions Court 8,817 0 0 0 0 0Courtroom Security Fee 17 0 0 0 0 0Victims Assistance Assessments 11,772 0 0 0 0 0

Juvenile CourtFines 471 0 0 0 0 0

Chancery CourtData Entry Fee - Chancery Court 4,276 0 0 0 0 0

(Continued)


142

Exhibit J-5





Fines, Forfeitures, and Penalties (Cont.)Other Fines, Forfeitures, and Penalties

Proceeds from Confiscated Property $ 0 $ 0 $ 0 $ 0 $ 8,300 $ 0Total Fines, Forfeitures, and Penalties $ 111,447 $ 0 $ 0 $ 0 $ 29,571 $ 0

Charges for Current ServicesGeneral Service Charges

Residential Waste Collection Charge $ 0 $ 0 $ 866,833 $ 0 $ 0 $ 0Tipping Fees 0 0 6,794 0 0 0

FeesLibrary Fees 2,559 1,070 0 0 0 0Telephone Commissions 28,450 0 0 0 0 0Constitutional Officers' Fees and Commissions 0 0 0 0 0 3,750Data Processing Fee - Register 7,680 0 0 0 0 0Data Processing Fee - Sheriff 1,747 0 0 0 0 0Sexual Offender Registration Fee - Sheriff 4,685 0 0 0 0 0Data Processing Fee - County Clerk 6,122 0 0 0 0 0Vehicle Insurance Coverage and Reinstatement Fees 660 0 0 0 0 0

Education ChargesOther Charges for Services 7,603 0 0 0 0 0

Total Charges for Current Services $ 59,506 $ 1,070 $ 873,627 $ 0 $ 0 $ 3,750

Other Local RevenuesRecurring Items

Investment Income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0Lease/Rentals 11,200 0 0 125,645 0 0Sale of Materials and Supplies 0 0 2,742 0 0 0

(Continued)


143

Exhibit J-5





Other Local Revenues (Cont.)Recurring Items (Cont.)

Commissary Sales $ 9,119 $ 0 $ 0 $ 0 $ 0 $ 0Sale of Gasoline 0 0 0 0 0 0Sale of Recycled Materials 0 0 14,396 0 0 0Miscellaneous Refunds 12,105 0 0 0 0 0

Nonrecurring ItemsContributions and Gifts 13,500 0 0 0 0 0

Other Local RevenuesOther Local Revenues 500 0 0 0 0 0

Total Other Local Revenues $ 46,424 $ 0 $ 17,138 $ 125,645 $ 0 $ 0

Fees Received From County OfficialsExcess Fees

Juvenile Court Clerk $ 5,266 $ 0 $ 0 $ 0 $ 0 $ 0Fees In-Lieu-of Salary

County Clerk 212,285 0 0 0 0 0Circuit Court Clerk 55,304 0 0 0 0 0General Sessions Court Clerk 136,012 0 0 0 0 0Clerk and Master 93,826 0 0 0 0 0Register 91,978 0 0 0 0 0Sheriff 2,152 0 0 0 0 0Trustee 290,017 0 0 0 0 0

Total Fees Received From County Officials $ 886,840 $ 0 $ 0 $ 0 $ 0 $ 0

(Continued)


144

Exhibit J-5





State of TennesseeGeneral Government Grants

Juvenile Services Program $ 9,000 $ 0 $ 0 $ 0 $ 0 $ 0Health and Welfare Grants

Health Department Programs 413,879 0 0 0 0 0Public Works Grants

State Aid Program 0 0 0 0 0 0Litter Program 0 0 30,131 0 0 0

Other State RevenuesIncome Tax 17,319 0 0 0 0 0Beer Tax 18,175 0 0 0 0 0Vehicle Certificate of Title Fees 3,000 0 0 0 0 0Alcoholic Beverage Tax 81,130 0 0 0 0 0State Revenue Sharing - T.V.A. 0 0 282,110 0 0 0State Revenue Sharing - Telecommunications 39,770 0 0 0 0 0Contracted Prisoner Boarding 216,099 0 0 0 0 0Gasoline and Motor Fuel Tax 0 0 0 0 0 0Petroleum Special Tax 0 0 0 0 0 0Other State Grants 181,393 0 0 0 0 0Other State Revenues 52,172 0 13,388 0 0 0

Total State of Tennessee $ 1,031,937 $ 0 $ 325,629 $ 0 $ 0 $ 0

Federal GovernmentFederal Through State

Community Development $ 426,976 $ 0 $ 0 $ 0 $ 0 $ 0Civil Defense Reimbursement 61,580 0 0 0 0 0Disaster Relief 0 0 0 0 0 0

(Continued)


145

Exhibit J-5





Federal Government (Cont.)Federal Through State (Cont.)

COVID-19 Grant #2 $ 19,950 $ 0 $ 0 $ 0 $ 0 $ 0Total Federal Government $ 508,506 $ 0 $ 0 $ 0 $ 0 $ 0

Other Governments and Citizens GroupsOther Governments

Paving and Maintenance $ 0 $ 0 $ 0 $ 0 $ 0 $ 0Contributions 0 0 0 0 0 0

Total Other Governments and Citizens Groups $ 0 $ 0 $ 0 $ 0 $ 0 $ 0

Total $ 7,248,431 $ 2,775 $ 1,216,394 $ 125,645 $ 29,571 $ 3,750

(Continued)


146

Exhibit J-5



Highway / General EducationPublic Debt CapitalWorks Service Projects Total


Current Property Tax $ 337,038 $ 728,662 $ 0 $ 4,745,105Trustee's Collections - Prior Year 13,089 26,392 0 169,097Circuit Clerk/Clerk and Master Collections - Prior Years 11,035 26,443 0 167,058Interest and Penalty 1,989 4,615 0 28,588Payments in-Lieu-of Taxes - Other 0 0 0 3,281

County Local Option TaxesLocal Option Sales Tax 0 0 0 329,786Litigation Tax - General 0 0 0 79,542Litigation Tax - Special Purpose 0 0 0 1,705Business Tax 0 0 0 12,025Mineral Severance Tax 37,476 0 0 37,476

Statutory Local TaxesBank Excise Tax 2,043 2,786 0 18,735Wholesale Beer Tax 0 0 0 20,908

City Local Option TaxesBusiness Tax 0 0 0 166,887

Total Local Taxes $ 402,670 $ 788,898 $ 0 $ 5,780,193


Cable TV Franchise $ 0 $ 0 $ 0 $ 16,043Permits

Beer Permits 0 0 0 808Total Licenses and Permits $ 0 $ 0 $ 0 $ 16,851

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

147

Exhibit J-5




Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 0 $ 0 $ 0 $ 12,849Officers Costs 0 0 0 10,186Drug Control Fines 0 0 0 8,255Drug Court Fees 0 0 0 3,088Jail Fees 0 0 0 1,431Data Entry Fee - Circuit Court 0 0 0 1,222Victims Assistance Assessments 0 0 0 5,290

Criminal CourtDUI Treatment Fines 0 0 0 710

General Sessions CourtFines 0 0 0 10,627Fines for Littering 0 0 0 48Officers Costs 0 0 0 15,216Game and Fish Fines 0 0 0 45Drug Control Fines 0 0 0 12,873Drug Court Fees 0 0 0 7,204Jail Fees 0 0 0 16,160DUI Treatment Fines 0 0 0 2,161Data Entry Fee - General Sessions Court 0 0 0 8,817Courtroom Security Fee 0 0 0 17Victims Assistance Assessments 0 0 0 11,772

Juvenile CourtFines 0 0 0 471

Chancery CourtData Entry Fee - Chancery Court 0 0 0 4,276

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

148

Exhibit J-5




Fines, Forfeitures, and Penalties (Cont.)Other Fines, Forfeitures, and Penalties

Proceeds from Confiscated Property $ 0 $ 0 $ 0 $ 8,300Total Fines, Forfeitures, and Penalties $ 0 $ 0 $ 0 $ 141,018

Charges for Current ServicesGeneral Service Charges

Residential Waste Collection Charge $ 0 $ 0 $ 0 $ 866,833Tipping Fees 0 0 0 6,794

FeesLibrary Fees 0 0 0 3,629Telephone Commissions 0 0 0 28,450Constitutional Officers' Fees and Commissions 0 0 0 3,750Data Processing Fee - Register 0 0 0 7,680Data Processing Fee - Sheriff 0 0 0 1,747Sexual Offender Registration Fee - Sheriff 0 0 0 4,685Data Processing Fee - County Clerk 0 0 0 6,122Vehicle Insurance Coverage and Reinstatement Fees 0 0 0 660

Education ChargesOther Charges for Services 0 0 0 7,603

Total Charges for Current Services $ 0 $ 0 $ 0 $ 937,953


Investment Income $ 0 $ 215,478 $ 59,817 $ 275,295Lease/Rentals 0 25,200 0 162,045Sale of Materials and Supplies 7,148 0 0 9,890

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

149

Exhibit J-5




Other Local Revenues (Cont.)Recurring Items (Cont.)

Commissary Sales $ 0 $ 0 $ 0 $ 9,119Sale of Gasoline 11,016 0 0 11,016Sale of Recycled Materials 0 0 0 14,396Miscellaneous Refunds 91 0 0 12,196

Nonrecurring ItemsContributions and Gifts 0 0 0 13,500

Other Local RevenuesOther Local Revenues 0 0 0 500

Total Other Local Revenues $ 18,255 $ 240,678 $ 59,817 $ 507,957

Fees Received From County OfficialsExcess Fees

Juvenile Court Clerk $ 0 $ 0 $ 0 $ 5,266Fees In-Lieu-of Salary

County Clerk 0 0 0 212,285Circuit Court Clerk 0 0 0 55,304General Sessions Court Clerk 0 0 0 136,012Clerk and Master 0 0 0 93,826Register 0 0 0 91,978Sheriff 0 0 0 2,152Trustee 0 0 0 290,017

Total Fees Received From County Officials $ 0 $ 0 $ 0 $ 886,840

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

150

Exhibit J-5





Juvenile Services Program $ 0 $ 0 $ 0 $ 9,000Health and Welfare Grants

Health Department Programs 0 0 0 413,879Public Works Grants

State Aid Program 937,166 0 0 937,166Litter Program 0 0 0 30,131

Other State RevenuesIncome Tax 0 0 0 17,319Beer Tax 0 0 0 18,175Vehicle Certificate of Title Fees 0 0 0 3,000Alcoholic Beverage Tax 0 0 0 81,130State Revenue Sharing - T.V.A. 0 0 0 282,110State Revenue Sharing - Telecommunications 0 0 0 39,770Contracted Prisoner Boarding 0 0 0 216,099Gasoline and Motor Fuel Tax 2,526,119 0 0 2,526,119Petroleum Special Tax 17,246 0 0 17,246Other State Grants 0 0 0 181,393Other State Revenues 0 0 0 65,560

Total State of Tennessee $ 3,480,531 $ 0 $ 0 $ 4,838,097


Community Development $ 0 $ 0 $ 0 $ 426,976Civil Defense Reimbursement 0 0 0 61,580Disaster Relief 128,739 0 0 128,739

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

151

Exhibit J-5




Federal Government (Cont.)Federal Through State (Cont.)

COVID-19 Grant #2 $ 0 $ 0 $ 0 $ 19,950Total Federal Government $ 128,739 $ 0 $ 0 $ 637,245


Paving and Maintenance $ 24,907 $ 0 $ 0 $ 24,907Contributions 0 1,124,583 0 1,124,583

Total Other Governments and Citizens Groups $ 24,907 $ 1,124,583 $ 0 $ 1,149,490

Total $ 4,055,102 $ 2,154,159 $ 59,817 $ 14,895,644

Special Revenue

FundDebt Service

FundCapital

Projects Fund

152

Exhibit J-6


All Governmental Fund TypesDiscretely Presented McNairy County School DepartmentFor the Year Ended June 30, 2020

General School EducationPurpose Federal Central CapitalSchool Projects Cafeteria Projects Total


Current Property Tax $ 3,655,589 $ 0 $ 0 $ 0 $ 3,655,589Trustee's Collections - Prior Year 143,413 0 0 0 143,413Circuit Clerk/Clerk and Master Collections - Prior Years 142,896 0 0 0 142,896Interest and Penalty 23,163 0 0 0 23,163

County Local Option TaxesLocal Option Sales Tax 2,126,707 0 0 0 2,126,707

Statutory Local TaxesBank Excise Tax 23,591 0 0 0 23,591

Total Local Taxes $ 6,115,359 $ 0 $ 0 $ 0 $ 6,115,359


Marriage Licenses $ 1,282 $ 0 $ 0 $ 0 $ 1,282Total Licenses and Permits $ 1,282 $ 0 $ 0 $ 0 $ 1,282

Charges for Current ServicesEducation Charges

Tuition - Other $ 23,700 $ 0 $ 0 $ 0 $ 23,700Lunch Payments - Adults 0 0 32,697 0 32,697A la Carte Sales 0 0 82,429 0 82,429Receipts from Individual Schools 13,573 0 0 0 13,573Other Charges for Services 0 0 10,033 0 10,033

Total Charges for Current Services $ 37,273 $ 0 $ 125,159 $ 0 $ 162,432(Continued)

Special Revenue FundsCapital

Projects Fund

153

Exhibit J-6


All Governmental Fund TypesDiscretely Presented McNairy County School Department (Cont.)



Investment Income $ 3,651 $ 0 $ 11,546 $ 0 $ 15,197Lease/Rentals 27,584 0 0 0 27,584Miscellaneous Refunds 0 0 6,798 0 6,798

Nonrecurring ItemsContributions and Gifts 19,748 0 0 0 19,748

Other Local RevenuesOther Local Revenues 100,357 0 0 0 100,357

Total Other Local Revenues $ 151,340 $ 0 $ 18,344 $ 0 $ 169,684


On-behalf Contributions for OPEB $ 134,955 $ 0 $ 0 $ 0 $ 134,955State Education Funds

Basic Education Program 24,867,000 0 0 0 24,867,000Basic Education Program - IEA 373,837 0 0 0 373,837Early Childhood Education 509,308 0 0 0 509,308School Food Service 0 0 22,620 0 22,620Energy Efficient School Initiative 516,192 0 0 0 516,192Driver Education 19,165 0 0 0 19,165Other State Education Funds 155,470 0 0 0 155,470Career Ladder Program 74,562 0 0 0 74,562

Other State RevenuesState Revenue Sharing - T.V.A. 523,918 0 0 0 523,918Other State Grants 171,126 0 0 0 171,126

(Continued)


Projects Fund

154

Exhibit J-6




State of Tennessee (Cont.)Other State Revenues (Cont.)

Other State Revenues $ 258,651 $ 0 $ 0 $ 0 $ 258,651Total State of Tennessee $ 27,604,184 $ 0 $ 22,620 $ 0 $ 27,626,804


USDA School Lunch Program $ 0 $ 0 $ 1,135,037 $ 0 $ 1,135,037USDA - Commodities 0 0 154,345 0 154,345Breakfast 0 0 615,820 0 615,820USDA - Other 0 0 68,261 0 68,261Vocational Education - Basic Grants to States 0 75,888 0 0 75,888Other Vocational 0 31,030 0 0 31,030Title I Grants to Local Education Agencies 0 1,477,468 0 0 1,477,468Special Education - Grants to States 23,990 871,824 0 0 895,814Special Education Preschool Grants 0 25,710 0 0 25,710Safe and Drug-free Schools - State Grants 0 31,701 0 0 31,701Rural Education 0 76,510 0 0 76,510Eisenhower Professional Development State Grants 0 43,578 0 0 43,578COVID-19 Grant #1 6,545 59,434 0 0 65,979Other Federal through State 323,222 501,124 25,000 0 849,346

Total Federal Government $ 353,757 $ 3,194,267 $ 1,998,463 $ 0 $ 5,546,487


Contributions $ 0 $ 0 $ 0 $ 7,954,822 $ 7,954,822Total Other Governments and Citizens Groups $ 0 $ 0 $ 0 $ 7,954,822 $ 7,954,822

Total $ 34,263,195 $ 3,194,267 $ 2,164,586 $ 7,954,822 $ 47,576,870


Projects Fund

155

Exhibit J-7

McNairy County, TennesseeSchedule of Detailed Expenditures -

All Governmental Fund TypesFor the Year Ended June 30, 2020

General FundGeneral Government

County CommissionBoard and Committee Members Fees $ 7,530Accounting Services 9,812Audit Services 9,909Dues and Memberships 3,090Legal Services 14,125Periodicals 2,469

Total County Commission $ 46,935

Board of EqualizationBoard and Committee Members Fees $ 1,293

Total Board of Equalization 1,293

Beer BoardPeriodicals $ 58

Total Beer Board 58

Budget and Finance CommitteeBoard and Committee Members Fees $ 1,860

Total Budget and Finance Committee 1,860

Other Boards and CommitteesBoard and Committee Members Fees $ 1,590

Total Other Boards and Committees 1,590

County Mayor/ExecutiveCounty Official/Administrative Officer $ 90,055Accountants/Bookkeepers 26,496Secretary(ies) 20,918Communication 3,270Dues and Memberships 1,850Maintenance Agreements 1,434Postal Charges 1,130Printing, Stationery, and Forms 1,152Travel 711Other Contracted Services 16,808Office Supplies 1,453Software 5,900Other Charges 737

Total County Mayor/Executive 171,914

County AttorneyCounty Official/Administrative Officer $ 6,000

Total County Attorney 6,000

Election CommissionCounty Official/Administrative Officer $ 70,174Other Salaries and Wages 18,288

(Continued)

156

Exhibit J-7



General Fund (Cont.)General Government (Cont.)

Election Commission (Cont.)Election Commission $ 5,720Election Workers 12,235In-service Training 286Communication 3,572Dues and Memberships 70Legal Notices, Recording, and Court Costs 1,502Maintenance Agreements 4,205Maintenance and Repair Services - Equipment 6,178Postal Charges 1,737Printing, Stationery, and Forms 5,729Rentals 808Travel 438Other Contracted Services 8,160Office Supplies 3,815Software 7,925Liability Insurance 1,808Office Equipment 2,929

Total Election Commission $ 155,579

Register of DeedsCounty Official/Administrative Officer $ 77,971Deputy(ies) 28,736Secretary(ies) 24,143In-service Training 300Communication 1,377Data Processing Services 8,204Dues and Memberships 921Maintenance Agreements 568Postal Charges 218Printing, Stationery, and Forms 837Travel 706Office Supplies 500

Total Register of Deeds 144,481

County BuildingsCustodial Personnel $ 20,247Maintenance Personnel 12,000Maintenance and Repair Services - Buildings 62,996Maintenance and Repair Services - Office Equipment 5,354Maintenance and Repair Services - Vehicles 387Pest Control 1,645Custodial Supplies 2,569Electricity 108,413Gasoline 1,921Natural Gas 18,251Water and Sewer 23,762Other Supplies and Materials 2,598

(Continued)

157

Exhibit J-7



General Fund (Cont.)General Government (Cont.)

County Buildings (Cont.)Building and Contents Insurance $ 69,361Other Charges 4,967

Total County Buildings $ 334,471

Preservation of RecordsPostal Charges $ 5Other Supplies and Materials 155

Total Preservation of Records 160

FinanceProperty Assessor's Office

County Official/Administrative Officer $ 77,971Deputy(ies) 56,831Part-time Personnel 6,204In-service Training 160Communication 866Contracts with Private Agencies 7,237Data Processing Services 14,113Dues and Memberships 1,750Maintenance Agreements 1,174Maintenance and Repair Services - Equipment 233Maintenance and Repair Services - Vehicles 750Postal Charges 651Printing, Stationery, and Forms 96Travel 189Gasoline 699Office Supplies 553

Total Property Assessor's Office 169,477

County Trustee's OfficeCounty Official/Administrative Officer $ 77,971Deputy(ies) 28,737Clerical Personnel 23,798Part-time Personnel 9,180Communication 866Data Processing Services 13,302Dues and Memberships 966Maintenance Agreements 676Postal Charges 5,272Printing, Stationery, and Forms 6,544Travel 741Office Supplies 559Periodicals 460Data Processing Equipment 10,924Office Equipment 1,123

Total County Trustee's Office 181,119

(Continued)

158

Exhibit J-7



General Fund (Cont.)Finance (Cont.)

County Clerk's OfficeCounty Official/Administrative Officer $ 77,971Deputy(ies) 27,924Secretary(ies) 24,170Clerical Personnel 72,107Communication 2,952Data Processing Services 4,800Dues and Memberships 731Maintenance Agreements 1,160Postal Charges 5,188Printing, Stationery, and Forms 3,716Travel 1,015Data Processing Equipment 14,625

Total County Clerk's Office $ 236,359

Administration of JusticeCircuit Court

County Official/Administrative Officer $ 77,971Deputy(ies) 66,101Jury and Witness Expense 4,846Other Per Diem and Fees 2,023Communication 3,184Contracts with Government Agencies 16,063Dues and Memberships 726Maintenance Agreements 1,772Postal Charges 3,342Printing, Stationery, and Forms 1,019Travel 523Office Supplies 2,466Periodicals 102Other Charges 1,151Data Processing Equipment 18,958

Total Circuit Court 200,247

General Sessions CourtJudge(s) $ 117,904Deputy(ies) 26,794Accountants/Bookkeepers 22,346Secretary(ies) 20,318Other Per Diem and Fees 425Communication 55Contracts with Government Agencies 4,628Travel 1,303Other Charges 1,522

Total General Sessions Court 195,295

Chancery CourtCounty Official/Administrative Officer $ 77,971

(Continued)

159

Exhibit J-7



General Fund (Cont.)Administration of Justice (Cont.)

Chancery Court (Cont.)Deputy(ies) $ 24,657Clerical Personnel 20,792Communication 866Data Processing Services 9,360Dues and Memberships 826Maintenance Agreements 1,434Postal Charges 6,375Printing, Stationery, and Forms 381Travel 706Office Supplies 1,104Periodicals 88Premiums on Corporate Surety Bonds 599Office Equipment 2,433

Total Chancery Court $ 147,592

Juvenile CourtYouth Service Officer(s) $ 34,634Clerical Personnel 8,827Communication 548Maintenance Agreements 4,150Travel 285Office Supplies 169Other Charges 532Office Equipment 99

Total Juvenile Court 49,244

Public SafetySheriff's Department

County Official/Administrative Officer $ 85,768Deputy(ies) 518,322Accountants/Bookkeepers 26,562Salary Supplements 40,927Guards 429,524Secretary(ies) 24,149Part-time Personnel 30,052Overtime Pay 5,949In-service Training 20,913Communication 31,512Dues and Memberships 2,229Maintenance Agreements 888Maintenance and Repair Services - Equipment 80Maintenance and Repair Services - Vehicles 32,430Postal Charges 2,959Printing, Stationery, and Forms 636Towing Services 2,340Travel 768Gasoline 76,501

(Continued)

160

Exhibit J-7



General Fund (Cont.)Public Safety (Cont.)

Sheriff's Department (Cont.)Office Supplies $ 1,934Tires and Tubes 9,466Uniforms 10,292Other Supplies and Materials 8,920Vehicle and Equipment Insurance 73,691Workers' Compensation Insurance 55,764Data Processing Equipment 6,286Law Enforcement Equipment 7,920Motor Vehicles 794Office Equipment 164Other Equipment 488

Total Sheriff's Department $ 1,508,228

JailCustodial Personnel $ 30,264In-service Training 1,688Maintenance Agreements 2,649Maintenance and Repair Services - Buildings 79,006Maintenance and Repair Services - Equipment 4,012Medical and Dental Services 184,341Pest Control 1,890Travel 155Custodial Supplies 23,330Food Supplies 126,196Law Enforcement Supplies 10,000Office Supplies 1,583Prisoners Clothing 9,278Other Supplies and Materials 3,106Law Enforcement Equipment 2,049

Total Jail 479,547

Fire Prevention and ControlSupervisor/Director $ 50,000Salary Supplements 120Laborers 4,425In-service Training 4,020Communication 560Maintenance and Repair Services - Buildings 26Maintenance and Repair Services - Equipment 11,911Maintenance and Repair Services - Vehicles 20,980Postal Charges 1Towing Services 240Electricity 17,062Gasoline 4,654Office Supplies 1,478Tires and Tubes 2,078Other Supplies and Materials 2,556

(Continued)

161

Exhibit J-7



General Fund (Cont.)Public Safety (Cont.)

Fire Prevention and Control (Cont.)Liability Insurance $ 39,655Workers' Compensation Insurance 17,250Other Charges 22,365Other Equipment 35,389

Total Fire Prevention and Control $ 234,770

Rural Fire ProtectionContracts with Government Agencies $ 37,115

Total Rural Fire Protection 37,115

Civil DefenseSupervisor/Director $ 53,045In-service Training 1,120Communication 1,342Dues and Memberships 175Maintenance Agreements 432Maintenance and Repair Services - Equipment 18Maintenance and Repair Services - Vehicles 618Postal Charges 5Travel 702Gasoline 411Office Supplies 466Uniforms 391Other Supplies and Materials 1,338Other Charges 29,880Motor Vehicles 13,500Other Equipment 3,106

Total Civil Defense 106,549

Inspection and RegulationSupervisor/Director $ 6,032

Total Inspection and Regulation 6,032

Other Public SafetyContracts with Other Public Agencies $ 71,925

Total Other Public Safety 71,925

Public Health and WelfareLocal Health Center

Social Workers $ 40,112Clerical Personnel 42,500Custodial Personnel 12,000Communication 4,504Contracts with Government Agencies 39,837Maintenance and Repair Services - Buildings 8,639Maintenance and Repair Services - Equipment 188Pest Control 300

(Continued)

162

Exhibit J-7



General Fund (Cont.)Public Health and Welfare (Cont.)

Local Health Center (Cont.)Travel $ 3,317Other Contracted Services 450Custodial Supplies 195Drugs and Medical Supplies 353Electricity 14,497Natural Gas 5,143Office Supplies 2,631Water and Sewer 2,754

Total Local Health Center $ 177,420

Ambulance/Emergency Medical ServicesContracts with Other Public Agencies $ 13,047

Total Ambulance/Emergency Medical Services 13,047

Alcohol and Drug ProgramsSupervisor/Director $ 16,003In-service Training 2,225Other Supplies and Materials 9,328Other Charges 6,732

Total Alcohol and Drug Programs 34,288

Other Local Health ServicesOther Supplies and Materials $ 1,095

Total Other Local Health Services 1,095

Social, Cultural, and Recreational ServicesLibraries

County Official/Administrative Officer $ 25,326Custodial Personnel 1,500Other Salaries and Wages 54,211Communication 2,707Maintenance and Repair Services - Buildings 567Pest Control 285Postal Charges 60Travel 609Custodial Supplies 305Electricity 6,338Natural Gas 1,383Office Supplies 3,304Water and Sewer 1,883Other Supplies and Materials 22,934Data Processing Equipment 15,701

Total Libraries 137,113

Agriculture and Natural ResourcesAgricultural Extension Service

Salary Supplements $ 68,329

(Continued)

163

Exhibit J-7



General Fund (Cont.)Agriculture and Natural Resources (Cont.)

Agricultural Extension Service (Cont.)Maintenance Agreements $ 1,935Other Contracted Services 4,221Other Supplies and Materials 77Office Equipment 2,048

Total Agricultural Extension Service $ 76,610

Soil ConservationCounty Official/Administrative Officer $ 38,688Secretary(ies) 26,575Contributions 800

Total Soil Conservation 66,063

Other OperationsOther Economic and Community Development

Contracts with Other Public Agencies $ 72,442Contracts for Development Costs 470,117Other Charges 1,096

Total Other Economic and Community Development 543,655

AirportOther Charges $ 64,000

Total Airport 64,000

Veterans' ServicesSupervisor/Director $ 26,893Communication 433Postal Charges 141Travel 2,785Office Supplies 629Periodicals 493

Total Veterans' Services 31,374

Other ChargesLiability Insurance $ 64,500Trustee's Commission 87,350

Total Other Charges 151,850

Contributions to Other AgenciesContributions $ 10,399

Total Contributions to Other Agencies 10,399

Employee BenefitsLongevity Pay $ 7,935Social Security 188,981Pensions 141,548Life Insurance 13,066Medical Insurance 432,911

(Continued)

164

Exhibit J-7



General Fund (Cont.)Other Operations (Cont.)

Employee Benefits (Cont.)Employer Medicare $ 43,650Workers' Compensation Insurance 597

Total Employee Benefits $ 828,688

COVID-19 Grant #2Other Charges $ 26,600

Total COVID-19 Grant #2 26,600

MiscellaneousOther Charges $ 100

Total Miscellaneous 100

Principal on DebtGeneral Government

Principal on Capital Leases $ 125,744Total General Government 125,744

Interest on DebtGeneral Government

Interest on Capital Leases $ 7,069Total General Government 7,069

Total General Fund $ 6,782,955

Law Library FundSocial, Cultural, and Recreational Services

LibrariesClerical Personnel $ 1,650Library Books/Media 978Trustee's Commission 11

Total Libraries $ 2,639

Total Law Library Fund 2,639

Solid Waste/Sanitation FundPublic Health and Welfare

Sanitation ManagementSupervisor/Director $ 44,662Data Processing Personnel 37,076Overtime Pay 429Board and Committee Members Fees 1,050Advertising 255Communication 1,805Contracts with Private Agencies 911,695Dues and Memberships 270Legal Services 11,089Maintenance and Repair Services - Buildings 514

(Continued)

165

Exhibit J-7



Solid Waste/Sanitation Fund (Cont.)Public Health and Welfare (Cont.)

Sanitation Management (Cont.)Postal Charges $ 20,349Travel 1,948Other Contracted Services 7,845Office Supplies 1,313Other Supplies and Materials 1,816Refunds 2,000Trustee's Commission 2,821Vehicle and Equipment Insurance 9,061Data Processing Equipment 20,970Other Equipment 78

Total Sanitation Management $ 1,077,046

Recycling CenterLaborers $ 84,859Part-time Personnel 21,520Overtime Pay 118Advertising 795Maintenance and Repair Services - Buildings 3,288Maintenance and Repair Services - Equipment 2,542Maintenance and Repair Services - Vehicles 4,861Travel 200Electricity 2,643Gasoline 3,458Office Supplies 193Propane Gas 458Small Tools 2,105Tires and Tubes 1,063Uniforms 348Water and Sewer 280Other Supplies and Materials 3,326Other Charges 3,853

Total Recycling Center 135,910

Landfill Operation and MaintenanceEvaluation and Testing $ 20,296Maintenance and Repair Services - Equipment 16,478Electricity 395Fertilizer, Lime, and Seed 650Water and Sewer 156

Total Landfill Operation and Maintenance 37,975

Other OperationsEmployee Benefits

Longevity Pay $ 490Social Security 12,473Pensions 8,461Life Insurance 889

(Continued)

166

Exhibit J-7



Solid Waste/Sanitation Fund (Cont.)Other Operations (Cont.)

Employee Benefits (Cont.)Medical Insurance $ 8,595Employer Medicare 2,917Workers' Compensation Insurance 500

Total Employee Benefits $ 34,325

HighwaysLitter and Trash Collection

Part-time Personnel $ 12,099Maintenance and Repair Services - Vehicles 218Travel 249Gasoline 349Instructional Supplies and Materials 9,560Other Supplies and Materials 5,078

Total Litter and Trash Collection 27,553

Total Solid Waste/Sanitation Fund $ 1,312,809

Special Purpose FundGeneral Government

Other FacilitiesCustodial Personnel $ 10,653Communication 1,465Maintenance and Repair Services - Buildings 2,611Pest Control 270Other Contracted Services 2,430Custodial Supplies 2,231Electricity 17,173Gasoline 224Natural Gas 2,093Water and Sewer 3,475Building and Contents Insurance 5,999Other Charges 29,242

Total Other Facilities $ 77,866

Other OperationsEmployee Benefits

Social Security $ 660Pensions 560Employer Medicare 154

Total Employee Benefits 1,374

Total Special Purpose Fund 79,240

Drug Control FundPublic Safety

Drug EnforcementConfidential Drug Enforcement Payments $ 11,000

(Continued)

167

Exhibit J-7



Drug Control Fund (Cont.)Public Safety (Cont.)

Drug Enforcement (Cont.)Veterinary Services $ 1,082Other Supplies and Materials 10,788Motor Vehicles 24,980Other Equipment 723

Total Drug Enforcement $ 48,573

Total Drug Control Fund $ 48,573

Constitutional Officers - Fees FundAdministration of Justice

Chancery CourtSpecial Commissioner Fees $ 3,750

Total Chancery Court $ 3,750

Total Constitutional Officers - Fees Fund 3,750

Highway/Public Works FundHighways

AdministrationCounty Official/Administrative Officer $ 85,768Accountants/Bookkeepers 37,536Clerical Personnel 26,071Board and Committee Members Fees 555Communication 7,883Dues and Memberships 3,592Maintenance and Repair Services - Buildings 19,319Postal Charges 320Printing, Stationery, and Forms 2,584Electricity 11,301Office Supplies 1,365Water and Sewer 425Office Equipment 18,618

Total Administration $ 215,337

Highway and Bridge MaintenanceForemen $ 39,385Equipment Operators 344,451Truck Drivers 182,758Laborers 165,723Other Contracted Services 14,161Concrete 642Crushed Stone 152,223Pipe - Metal 25,809Road Signs 2,442Chemicals 49,872

Total Highway and Bridge Maintenance 977,466

(Continued)

168

Exhibit J-7



Highway/Public Works Fund (Cont.)Highways (Cont.)

Operation and Maintenance of EquipmentMechanic(s) $ 82,797Diesel Fuel 105,007Equipment and Machinery Parts 145,143Garage Supplies 12,350Gasoline 23,722Lubricants 11,708Propane Gas 247Tires and Tubes 22,181Uniforms 1,897

Total Operation and Maintenance of Equipment $ 405,052

Other ChargesOther Contracted Services $ 6,953Building and Contents Insurance 11,414Trustee's Commission 33,627Vehicle and Equipment Insurance 66,033

Total Other Charges 118,027

Employee BenefitsSocial Security $ 72,349Pensions 50,631Employee and Dependent Insurance 253,427Unemployment Compensation 7,420Workers' Compensation Insurance 91,205

Total Employee Benefits 475,032

Capital OutlayBridge Construction $ 38,674Highway Construction 2,252,098Highway Equipment 105,128

Total Capital Outlay 2,395,900

Total Highway/Public Works Fund $ 4,586,814

General Debt Service FundPrincipal on Debt

General GovernmentPrincipal on Bonds $ 37,299Principal on Notes 273,889

Total General Government $ 311,188

Highways and StreetsPrincipal on Bonds $ 485,000

Total Highways and Streets 485,000

EducationPrincipal on Bonds $ 400,000

Total Education 400,000(Continued)

169

Exhibit J-7



General Debt Service Fund (Cont.)Interest on Debt

General GovernmentInterest on Bonds $ 5,340Interest on Notes 50,563

Total General Government $ 55,903

Highways and StreetsInterest on Bonds $ 259,607

Total Highways and Streets 259,607

EducationInterest on Bonds $ 724,583

Total Education 724,583

Other Debt ServiceGeneral Government

Trustee's Commission $ 17,774Total General Government 17,774

Highways and StreetsOther Debt Service $ 500

Total Highways and Streets 500

EducationOther Debt Service $ 1,000

Total Education 1,000

Total General Debt Service Fund $ 2,255,555

General Capital Projects FundCapital Projects

Other General Government ProjectsMaintenance and Repair Services - Buildings $ 192,937

Total Other General Government Projects $ 192,937

Total General Capital Projects Fund 192,937

Community Development/Industrial Park FundAgriculture and Natural Resources

Other Agriculture and Natural ResourcesOther Charges $ 11,258

Total Other Agriculture and Natural Resources $ 11,258

Total Community Development/Industrial Park Fund 11,258

Education Capital Projects FundCapital Projects

Education Capital ProjectsContributions $ 7,954,822

Total Education Capital Projects $ 7,954,822

Total Education Capital Projects Fund 7,954,822Total Governmental Funds - Primary Government $ 23,231,352

170

Exhibit J-8


All Governmental Fund TypesDiscretely Presented McNairy County School DepartmentFor the Year Ended June 30, 2020

General Purpose School FundInstruction

Regular Instruction ProgramTeachers $ 13,367,315Career Ladder Program 71,998Educational Assistants 289,994Certified Substitute Teachers 40,835Non-certified Substitute Teachers 97,295Social Security 773,748Pensions 1,327,688Medical Insurance 1,950,178Dental Insurance 120,000Unemployment Compensation 5,254Employer Medicare 183,223Travel 15,594Other Contracted Services 3,000Instructional Supplies and Materials 204,757Textbooks - Bound 93,411Other Charges 4,640Regular Instruction Equipment 37,094Special Education Equipment 64,068Other Equipment 137,133

Total Regular Instruction Program $ 18,787,225

Special Education ProgramTeachers $ 1,208,642Career Ladder Program 7,000Clerical Personnel 101,280Educational Assistants 160,996Certified Substitute Teachers 1,015Non-certified Substitute Teachers 8,265Social Security 83,977Pensions 139,916Medical Insurance 452,042Dental Insurance 9,032Employer Medicare 23,149Contracts with Other Public Agencies 3,971Contracts with Private Agencies 1,831Evaluation and Testing 4,984Other Contracted Services 24,702Instructional Supplies and Materials 1,008Other Supplies and Materials 5,635Special Education Equipment 25,278

Total Special Education Program 2,262,723

Career and Technical Education ProgramTeachers $ 682,534Career Ladder Program 2,000Certified Substitute Teachers 910

(Continued)

171

Exhibit J-8



General Purpose School Fund (Cont.)Instruction (Cont.)

Career and Technical Education Program (Cont.)Non-certified Substitute Teachers $ 1,363Social Security 38,904Pensions 69,475Medical Insurance 94,916Employer Medicare 9,098Travel 2,558Instructional Supplies and Materials 26,526Vocational Instruction Equipment 4,650

Total Career and Technical Education Program $ 932,934

Adult Education ProgramTeachers $ 28,000Employer Medicare 406Communication 297Other Supplies and Materials 930

Total Adult Education Program 29,633

Support ServicesAttendance

Supervisor/Director $ 64,109Social Security 3,558Pensions 6,815Medical Insurance 11,300Employer Medicare 832Travel 1,794

Total Attendance 88,408

Health ServicesSupervisor/Director $ 7,677Other Salaries and Wages 187,937Social Security 10,038Pensions 10,056Medical Insurance 58,000Employer Medicare 2,403Communication 763Travel 241Contracts for Substitute Teachers - Non-certified 6,202Other Supplies and Materials 34,475In Service/Staff Development 4,758Other Charges 154,162

Total Health Services 476,712

Other Student SupportGuidance Personnel $ 406,153Social Security 24,902Pensions 42,013

(Continued)

172

Exhibit J-8



General Purpose School Fund (Cont.)Support Services (Cont.)

Other Student Support (Cont.)Medical Insurance $ 62,000Employer Medicare 5,424Evaluation and Testing 81,960

Total Other Student Support $ 622,452

Regular Instruction ProgramSupervisor/Director $ 78,526Career Ladder Program 2,000Librarians 359,288Materials Supervisor 10,080Secretary(ies) 28,050Social Security 26,414Pensions 51,224Medical Insurance 78,350Employer Medicare 7,581Travel 4,843Other Contracted Services 95,484Library Books/Media 7,048Other Charges 1,686

Total Regular Instruction Program 750,574

Special Education ProgramSupervisor/Director $ 67,975Psychological Personnel 59,223Secretary(ies) 28,050Other Salaries and Wages 54,219Social Security 13,200Pensions 17,635Medical Insurance 36,500Dental Insurance 975Employer Medicare 3,087Communication 1,260Postal Charges 340Other Contracted Services 12,436Other Supplies and Materials 5,714In Service/Staff Development 5,154

Total Special Education Program 305,768

Career and Technical Education ProgramSupervisor/Director $ 41,903Employer Medicare 591

Total Career and Technical Education Program 42,494

TechnologySupervisor/Director $ 67,975Computer Programmer(s) 77,500

(Continued)

173

Exhibit J-8




Technology (Cont.)Instructional Computer Personnel $ 120,000Social Security 17,685Pensions 18,477Medical Insurance 67,354Employer Medicare 4,136Internet Connectivity 51,362

Total Technology $ 424,489

Other ProgramsOn-behalf Payments to OPEB $ 134,955

Total Other Programs 134,955

Board of EducationBoard and Committee Members Fees $ 4,950Social Security 307Employer Medicare 72Audit Services 19,000Dues and Memberships 17,000Legal Services 16,000Travel 9,741Other Contracted Services 3,802Trustee's Commission 165,000Workers' Compensation Insurance 201,000

Total Board of Education 436,872

Director of SchoolsCounty Official/Administrative Officer $ 101,850Secretary(ies) 35,925Social Security 8,312Pensions 12,713Medical Insurance 8,000Employer Medicare 1,944Communication 3,481Travel 2,648Office Supplies 6,002Other Charges 2,738

Total Director of Schools 183,613

Office of the PrincipalPrincipals $ 628,296Career Ladder Program 8,000Secretary(ies) 298,287Social Security 56,451Pensions 80,730Medical Insurance 130,000Employer Medicare 13,202

Total Office of the Principal 1,214,966(Continued)

174

Exhibit J-8




Fiscal ServicesAccountants/Bookkeepers $ 74,100Secretary(ies) 28,050Social Security 6,535Pensions 5,087Medical Insurance 8,500Employer Medicare 1,528Other Contracted Services 36,084

Total Fiscal Services $ 159,884

Operation of PlantCustodial Personnel $ 523,198Social Security 34,582Pensions 29,453Medical Insurance 110,000Employer Medicare 8,135Communication 46,996Custodial Supplies 82,143Electricity 661,076Natural Gas 168,903Water and Sewer 141,410Building and Contents Insurance 300,275

Total Operation of Plant 2,106,171

Maintenance of PlantMaintenance Personnel $ 109,263Social Security 7,500Pensions 7,000Medical Insurance 12,000Employer Medicare 1,483Maintenance and Repair Services - Buildings 153,793Maintenance and Repair Services - Equipment 28,775Maintenance and Repair Services - Vehicles 17Other Contracted Services 583Other Supplies and Materials 64,322Other Charges 8,139

Total Maintenance of Plant 392,875

TransportationSupervisor/Director $ 46,350Mechanic(s) 78,211Bus Drivers 526,693Clerical Personnel 32,400Other Salaries and Wages 85,000Social Security 46,900Pensions 39,600Medical Insurance 30,000

(Continued)

175

Exhibit J-8




Transportation (Cont.)Employer Medicare $ 11,181Communication 1,168Maintenance and Repair Services - Vehicles 199,333Medical and Dental Services 5,248Diesel Fuel 125,986Gasoline 50,359Lubricants 10,993Tires and Tubes 38,586Other Supplies and Materials 4,958Other Charges 994Transportation Equipment 106,866

Total Transportation $ 1,440,826

Operation of Non-Instructional ServicesEarly Childhood Education

Supervisor/Director $ 7,500Teachers 212,096Clerical Personnel 7,500Educational Assistants 66,402Other Salaries and Wages 55,875Certified Substitute Teachers 1,266Non-certified Substitute Teachers 3,516Social Security 18,087Pensions 31,181Medical Insurance 75,490Dental Insurance 1,452Employer Medicare 4,230Communication 894Maintenance and Repair Services - Equipment 1,724Travel 861Other Supplies and Materials 20,008

Total Early Childhood Education 508,082

Capital OutlayRegular Capital Outlay

Building Improvements $ 175,387Other Capital Outlay 13,633

Total Regular Capital Outlay 189,020

Other Debt ServiceEducation

Contributions $ 1,124,583Total Education 1,124,583

(Continued)

176

Exhibit J-8



General Purpose School Fund (Cont.)Capital Projects

Education Capital ProjectsBuilding Improvements $ 658,633

Total Education Capital Projects $ 658,633

Total General Purpose School Fund $ 33,273,892

School Federal Projects FundInstruction

Regular Instruction ProgramTeachers $ 712,685Educational Assistants 41,023Certified Substitute Teachers 828Non-certified Substitute Teachers 3,567Social Security 42,470Pensions 78,366Medical Insurance 105,691Dental Insurance 4,570Employer Medicare 10,014Other Contracted Services 597Instructional Supplies and Materials 124,407Software 18,000Regular Instruction Equipment 56,065

Total Regular Instruction Program $ 1,198,283

Special Education ProgramEducational Assistants $ 449,615Social Security 24,565Pensions 24,360Employer Medicare 5,744Contracts with Private Agencies 112,455Instructional Supplies and Materials 303Other Supplies and Materials 1,229Other Charges 90Special Education Equipment 1,384


Career and Technical Education ProgramMaintenance and Repair Services - Equipment $ 204Instructional Supplies and Materials 9,992Other Supplies and Materials 1,030Vocational Instruction Equipment 161,940

Total Career and Technical Education Program 173,166

COVID-19 ExpendituresRegular Instruction Equipment $ 59,434

Total COVID-19 Expenditures 59,434

(Continued)

177

Exhibit J-8



School Federal Projects Fund (Cont.)Support Services

Other Student SupportSocial Workers $ 42,900Social Security 2,532Pensions 2,252Employer Medicare 592Travel 4,317Other Supplies and Materials 3,692In Service/Staff Development 3,523Other Charges 13,500

Total Other Student Support $ 73,308

Regular Instruction ProgramSupervisor/Director $ 68,000Secretary(ies) 22,500Part-time Personnel 27,266Other Salaries and Wages 104,212Social Security 11,162Pensions 19,648Medical Insurance 20,037Dental Insurance 511Employer Medicare 3,006Operating Lease Payments 561Postal Charges 28Other Contracted Services 7,113Library Books/Media 7,780Other Supplies and Materials 874In Service/Staff Development 62,654

Total Regular Instruction Program 355,352

Special Education ProgramOther Contracted Services $ 151,497Other Supplies and Materials 2,850In Service/Staff Development 2,813


Career and Technical Education ProgramIn Service/Staff Development $ 912

Total Career and Technical Education Program 912

TechnologySoftware $ 12,835

Total Technology 12,835

TransportationBus Drivers $ 24,489Other Salaries and Wages 41,468Social Security 4,071

(Continued)

178

Exhibit J-8



School Federal Projects Fund (Cont.)Support Services (Cont.)

Transportation (Cont.)Pensions $ 3,098Employer Medicare 953Other Charges 70

Total Transportation $ 74,149

Operation of Non-Instructional ServicesCommunity Services

Supervisor/Director $ 2,205Teachers 233,512Clerical Personnel 30,600Educational Assistants 44,881Social Security 17,964Pensions 25,731Medical Insurance 5,742Employer Medicare 4,355Travel 8,195Other Contracted Services 10,033Instructional Supplies and Materials 6,265Other Supplies and Materials 26,963In Service/Staff Development 861Other Charges 3,943

Total Community Services 421,250

Total School Federal Projects Fund $ 3,145,594

Central Cafeteria FundOperation of Non-Instructional Services

Food ServiceSupervisor/Director $ 39,765Accountants/Bookkeepers 26,303Clerical Personnel 17,175Cafeteria Personnel 647,074Maintenance Personnel 42,265Other Salaries and Wages 18,016Social Security 41,928Pensions 38,339Medical Insurance 202,429Employer Medicare 9,806Maintenance and Repair Services - Equipment 19,682Transportation - Other than Students 13,774Travel 451Other Contracted Services 38,471Food Supplies 832,878Office Supplies 1,981Uniforms 7,100USDA - Commodities 154,345

(Continued)

179

Exhibit J-8



Central Cafeteria Fund (Cont.)Operation of Non-Instructional Services (Cont.)

Food Service (Cont.)Other Supplies and Materials $ 69,784Refund to Applicant for Criminal Investigation 914Other Charges 2,256Food Service Equipment 56,663

Total Food Service $ 2,281,399

Total Central Cafeteria Fund $ 2,281,399

Education Capital Projects FundCapital Outlay

Regular Capital OutlayOther Capital Outlay $ 9,641,726

Total Regular Capital Outlay $ 9,641,726

Total Education Capital Projects Fund 9,641,726

Total Governmental Funds - McNairy County School Department $ 48,342,611

180

Exhibit J-9McNairy County, TennesseeSchedule of Detailed Receipts, Disbursements, and Change in Cash Balance - City Agency FundFor the Year Ended June 30, 2020

Cash Receipts Local Option Sales Tax $ 1,785,709Total Cash Receipts $ 1,785,709

Cash Disbursements Remittance of Revenues Collected $ 1,767,852 Trustee's Commission 17,857Total Cash Disbursements $ 1,785,709

Excess of Cash Receipts Over (Under) Cash Disbursements $ 0Cash Balance, July 1, 2019 0

Cash Balance, June 30, 2020 $ 0

Cities -Sales Tax

Fund

181

SINGLE AUDIT SECTION

182

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in

Accordance With Government Auditing Standards

Independent Auditor’s Report McNairy County Mayor and Board of County Commissioners McNairy County, Tennessee To the County Mayor and Board of County Commissioners: We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of McNairy County, Tennessee, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise McNairy County’s basic financial statements as listed in the table of contents, and have issued our report thereon dated February 17, 2021. Our report includes a reference to other auditors who audited the financial statements of the McNairy County Airport Authority, as described in our report on McNairy County’s financial statements. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered McNairy County’s internal control over financial reporting (internal control) as a basis for designing 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 McNairy County’s internal control. Accordingly, we do not express an opinion on the effectiveness of McNairy County’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

183

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs, that we consider to be a significant deficiency: 2020-001(B). Compliance and Other Matters As part of obtaining reasonable assurance about whether McNairy County’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and is described in the accompanying Schedule of Findings and Questioned Costs as item: 2020-001(A). McNairy County’s Responses to the Findings McNairy County’s responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. McNairy County’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering McNairy County’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Very truly yours, Jason E. Mumpower Comptroller of the Treasury Nashville, Tennessee February 17, 2021 JEM/sl

184

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of

Federal Awards Required by the Uniform Guidance

Independent Auditor’s Report

McNairy County Mayor and Board of County Commissioners McNairy County, Tennessee To the County Mayor and Board of County Commissioners: Report on Compliance for Each Major Federal Program We have audited McNairy County’s compliance with the types of compliance requirements

described in the OMB Compliance Supplement that could have a direct and material effect on each of McNairy County’s major federal programs for the year ended June 30, 2020. McNairy County’s major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs.

Management's Responsibility Management is responsible for compliance with the federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of McNairy County’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about McNairy County’s compliance with those

185

requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of McNairy County’s compliance. Opinion on Each Major Federal Program In our opinion, McNairy County complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2020. Report on Internal Control Over Compliance Management of McNairy County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered McNairy County’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of McNairy County’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

186

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of McNairy County, Tennessee, as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise McNairy County’s basic financial statements. We issued our report thereon dated February 17, 2021, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Very truly yours, Jason E. Mumpower Comptroller of the Treasury Nashville, Tennessee February 17, 2021 JEM/sl

187

McNairy County, Tennessee, and the McNairy County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2) (6) (7)For the Year Ended June 30, 2020

Federal Pass-throughFederal/Pass-through Agency/State CFDA Entity IdentifyingGrantor Program Title Number Number Expenditures

U.S. Department of Agriculture: Passed-through State Department of Education: Child Nutrition Cluster: (3) School Breakfast Program 10.553 N/A $ 529,763 (5) COVID 19 - School Breakfast Program 10.553 86,057 (5) National School Lunch Program 10.555 N/A 998,075 (5) COVID 19 - National School Lunch Program 10.555 136,962 (5) Summer Food Service Program for Children 10.559 N/A 68,261 Child Nutrition Discretionary Grants Limited Availability 10.579 FAIN 185TN350N8103 25,000 Passed-through State Department of Agriculture: Child Nutrition Cluster: (3) National School Lunch Program (Commodities - Noncash Assistance) 10.555 N/A 154,345 (5) Passed-through State Department of Health: Special Supplemental Nutrition Program for Women, Infants, and Children 10.557 GG-20-63360-00 9,814Total U.S. Department of Agriculture $ 2,008,277

U.S. Department of Housing and Urban Development: Passed-through State Department of Economic and Community Development: Community Development Block Grants/State's Program 14.228 (4) $ 347,728 Home Investment Partnerships Program 14.239 (4) 664Total U.S. Department of Housing and Urban Development $ 348,392

U.S. Department of Justice: Passed-through State Commission on Children and Youth: Juvenile Justice and Delinquency Prevention - Allocation to States 16.540 (4) $ 9,000Total U.S. Department of Justice $ 9,000

U.S. Department of Labor: Passed-through State Department of Labor and Workforce Development: COVID 19 - Unemployment Insurance 17.225 (4) $ 6,545Total U.S. Department of Labor $ 6,545

U.S. Department of Education: Passed-through State Department of Education: Title I Grants to Local Educational Agencies 84.010 N/A $ 1,374,672 Special Education Cluster: (3) Special Education - Grants to States 84.027 N/A 936,305 (5) COVID 19 - Special Education-Grants to States 84.027 N/A 9,941 (5) Special Education - Preschool Grants 84.173 N/A 30,997 Career and Technical Education - Basic Grants to States 84.048 N/A 181,918 Safe and Drug-Free Schools and Communities - State Grants 84.186 N/A 49,858 Twenty-first Century Community Learning Centers 84.287 N/A 306,470 Gaining Early Awareness and Readiness for Undergraduate Programs 84.334 N/A 116,271 Rural Education 84.358 N/A 72,521 Supporting Effective Instruction State Grants 84.367 N/A 105,594 COVID 19 - Education Stabilization Fund 84.425 N/A 59,434Total U.S. Department of Education $ 3,243,981

U.S. Election Assistance Commission: Passed-through Tennessee Secretary of State: Help America Vote Act Requirements Payments 90.401 (4) $ 1,820 COVID 19 - 2020 Supplemental Election Security Grants 90.404 (4) 13,695Total U.S. Election Assistance Commission $ 15,515

U.S. Department of Health and Human Services: Passed-through State Department of Health: Family Planning Service 93.217 GG-20-63360-00 $ 2,115 Maternal and Child Health Services Block Grant to States 93.994 GG-20-63360-00 6,028Total U.S. Department of Health and Human Services $ 8,143

(Continued)

188

McNairy County, Tennessee, and the McNairy County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2) (6) (7) (Cont.)

Federal Pass-throughFederal/Pass-through Agency/State CFDA Entity IdentifyingGrantor Program Title Number Number Expenditures

U.S. Department of Homeland Security: Passed-through State Department of Military: Emergency Management Performance Grants 97.042 (4) $ 61,580 Disaster Grants - Public Assistance (Presidentially Declared Disasters) 97.036 (4) 128,739 Hazard Mitigation Grant Program 97.039 HMGP 5159-0002 323,222 Assistance to Fire Fighters Grant 97.044 (4) 31,356Total U.S. Department of Homeland Security $ 544,897

Total Expenditures of Federal Awards $ 6,184,750

ContractNumber

State Grants Litter Program - State Department of Transportation N/A (4) $ 30,131 Family Preservation and Support Services - State Department of Education N/A (4) 27,245 Early Childhood Education - State Department of Education N/A (4) 509,308 Safe Schools Act - State Department of Education N/A (4) 95,867 Coordinated School Health - State Department of Education N/A (4) 92,887 Building Strong Brains - State Department of Education N/A N/A 25,000 Diabetes Initiative Services - State Department of Health N/A Z19195681 150,000 High Schools That Work - State Department of Education N/A (4) 83,171 CTE Equipment Grant - State Department of Education N/A (4) 1,126 Early Postsecondary Expansion Grant - State Department of Education N/A (4) 20,000 Energy Grant - State Department of Education N/A (4) 516,192 Tennessee Certified Recovery Court Program - State Department of Mental Health and Substance Abuse Services N/A (4) 39,258 Local Health Grant - State Department of Health N/A GG-20-63360-00 127,237 Special Needs Contract - State Department of Health N/A GG-18-58495-00 268,685 2019 Assistance for Hospital Closure Grant - State Department of Economic and Community Development N/A (4) 50,000 Tourism Enhancement Grant - State Department of Economic and Community Development N/A 33007-11467 10,899 Asset Enhancement Grant - State Department of Economic and Community Development N/A 33007-12815 8,967

Total State Grants $ 2,055,973

CFDA = Catalog of Federal Domestic AssistanceN/A = Not Applicable

(1) Presented in conformity with generally accepted accounting principles using the modified accrual basis of accounting.(2) McNairy County elected not to use the 10% de minimis cost rate permitted in the Uniform Guidance.(3) Child Nutrition Cluster total $1,973,463; Special Education Cluster total $977,243.(4) Information not available.(5) Total for CFDA No. 10.553 is $615,820; Total for CFDA No. 10.555 is $1,289,382; Total for CFDA No. 84.027 is $946,246.(6) For the year ended June 30, 2020, McNairy County received donated PPE valued at $30,916 ($23,187 federal and $7,729 state) from the State Department of Military. These donations were unaudited.(7) There were no ($0) amounts passed through to subrecipients.

189

McNairy County, TennesseeSummary Schedule of Prior-year FindingsFor the Year Ended June 30, 2020

Fiscal Page Finding CFDAYear Number Number Number

OFFICE OF COUNTY MAYOR

2019 196 2019-001 The solid waste department had operating N/Adeficiencies.

OFFICES OF COUNTY MAYOR AND SHERIFF

2019 197 2019-002 The sheriff's department had deficiencies in N/Athe administration of payroll.

OFFICE OF DIRECTOR OF SCHOOLS

2019 198 2019-003 Competitive bids were not solicited for N/Aflooring updates and floor trough replacements.

2019 199 2019-004 The purchasing software used by the central N/Aoffice did not have adequate duplicationcontrols.

2019 199 2019-005 Documents could be generated from the N/Asoftware test environment without beingmarked as invalid.

OFFICE OF TRUSTEE

2019 200 2019-006 The office did not review its software audit logs. N/A

OFFICE OF COUNTY CLERK

2019 200 2019-007 Users processed transactions utilizing the N/Asame username.

OFFICE OF SHERIFF

2019 201 2019-008 The office had accounting deficiencies. N/A

There were no prior-year federal award findings to report.

Title of Finding Current Status

Government Auditing Standards require auditors to report the status of uncorrected findings from prior audits. Inaddition, OMB's Uniform Guidance requires auditees to report the status of all prior-year findings whethercorrected or not. Presented below are financial statement findings along with their current status from the AnnualFinancial Report for McNairy County, Tennessee, for the year ended June 30, 2020.

Prior-year Financial Statement Findings

Corrected

Prior-year Federal Awards Findings

Corrected

Corrected

Corrected

Corrected

Corrected

Corrected

Corrected

190

Financial Statements:

1. Our report on the financial statements of McNairy County is unmodified.

2. Internal Control Over Financial Reporting:

* Material weakness identified? NO

* Significant deficiency identified? YES

3. Noncompliance material to the financial statements noted? NO

Federal Awards:

4. Internal Control Over Major Federal Programs:

* Material weakness identified? NO

* Significant deficiency identified? NONE REPORTED

5. Type of report auditor issued on compliance for major programs. UNMODIFIED

6. Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? NO

7. Identification of Major Federal Programs:

* CFDA Number: 84.010 Title I Grants to Local Educational Agencies

* CFDA Numbers: 84.027 and 84.173 Special Education Cluster: Special Education - Grants to State and SpecialEducation - Preschool Grants

8. Dollar threshold used to distinguish between Type A and Type B Programs. $750,000

9. Auditee qualified as low-risk auditee? YES

McNAIRY COUNTY, TENNESSEE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS


PART I, SUMMARY OF AUDITOR'S RESULTS

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PART II, FINDINGS RELATING TO THE FINANCIAL STATEMENTS

A finding and recommendation, as a result of our audit, are presented below. We reviewed this finding and recommendation with management to provide an opportunity for their response. A written response for the finding is paraphrased and presented following the finding and recommendation. Management’s corrective action plan, whether related to the financial statements or federal awards, are presented separately in the Management’s Corrective Action Plan in the Single Audit Section of this report. Findings relating specifically to the audit of federal awards, if any, are separately presented under Part III, Findings and Questioned Costs for Federal Awards. OFFICE OF COUNTY MAYOR FINDING 2020-001 THE OFFICE HAD PURCHASING DEFICIENCIES

(A. – Noncompliance Under Government Auditing Standards; B. – Internal Control – Significant Deficiency Under Government Auditing Standards)

As part of our audit procedures for determining whether the purchasing process was operating as designed, we selected a sample of 43 disbursements totaling $193,306 from a population of 2,379 vendor checks totaling $6,498,746. Our examination revealed the following deficiencies, which are the result of a lack of management oversight and a failure to comply with state statutes.

A. Competitive bids were not solicited for the purchase of inmate food totaling $130,165. Purchasing procedures for the County Mayor’s Office are governed by Sections 5-14-201 through 5-14-206, Tennessee Code Annotated, which provide for purchases exceeding $10,000 to be made after public advertisement and solicitation of competitive bids. The failure to solicit competitive bids could result in the county paying more than the most competitive price.

B. In 14 instances, invoices were paid without documentation that goods had been

received and/or services rendered. This practice weakens controls over the purchasing process and increases the risk of paying for something that was never received.

RECOMMENDATION Competitive bids should be solicited for purchases exceeding $10,000 as required by state statute. The office should maintain documentation that goods have been received or services have been rendered before invoices are paid. MANAGEMENT’S RESPONSE – COUNTY MAYOR We concur with the finding.

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PART III, FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS

There were no findings and questioned costs related to federal awards for the year ended June 30, 2020.

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FindingNumber

OFFICE OF COUNTY MAYOR

2020-001 The office had purchasing deficiencies. 195

We reviewed the financial statement and federal award findings and recommendations with management toprovide an opportunity for their response as required by the auditee requirements within Title 2 U.S. Code ofFederal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements forFederal Awards (Uniform Guidance). Management’s corrective action plans for all financial statement findings and federal award findings are presented in this section and have been indexed below. The corrective action plans wereprepared by management and have been presented as they were submitted.

McNairy County, TennesseeManagement's Corrective Action Plan


Title of FindingCorrective Action

Plan Page Number

194

LARRY SMITH

MAYOR

McNAIRY COUNTY, TENNESSEE FINDING 2020-001 THE OFFICE HAD PURCHASING DEFICIENCIES Response and Corrective Action Plan Prepared by:

Larry Smith, County Mayor Person Responsible for Implementing the Corrective Action:

Larry Smith, County Mayor Anticipated Completion Date of Corrective Action:

March 1, 2021 Repeat Finding:

No Planned Corrective Action:

The Mayor and County Commission will approve bids for all purchases that exceed $10,000. The mayor and bookkeeping staff will ensure that all purchases have adequate documentation of receipt of goods and/or services.

S�nature � 11./4 ,J M

170 West Court Ave., Suite 201, Selmer, TN 38375 • Ph: 731.645.3472/Cell Ph: 731.610.6346 • [email protected]

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BEST PRACTICE Accounting literature describes a best practice as a recommended policy, procedure, or technique that aids management in improving financial performance. Historically, a best practice has consistently shown superior results over conventional methods. The Division of Local Government Audit strongly believes that the item noted below is a best practice that should be adopted by the governing body as a means of significantly improving accountability and the quality of services provided to the citizens of McNairy County.

MCNAIRY COUNTY SHOULD ADOPT A CENTRAL SYSTEM OF ACCOUNTING, BUDGETING, AND PURCHASING

McNairy County does not have a central system of accounting, budgeting, and purchasing. Sound business practices dictate that establishing a central system would significantly improve internal controls over the accounting, budgeting, and purchasing processes. The absence of a central system of accounting, budgeting, and purchasing has been a management decision by the county commission resulting in decentralization and some duplication of effort. We recommend the adoption of the County Financial Management System of 1981 or a private act, which would provide for a central system of accounting, budgeting, and purchasing covering all county departments.

196