THE METROPOLITAN GOVERNMENT OF LYNCHBURG MOORE COUNTY ...comptroller.tn.gov/repository/CA/2017/FY17MooreAFR.pdf · LYNCHBURG, MOORE COUNTY, TENNESSEE ... Christy Millsaps, Circuit,

ANNUAL FINANCIAL REPORT

THE METROPOLITAN GOVERNMENT OF LYNCHBURG, MOORE COUNTY,

TENNESSEE FOR THE YEAR ENDED JUNE 30, 2017

DIVISION OF LOCAL GOVERNMENT AUDIT

ANNUAL FINANCIAL REPORT

THE METROPOLITAN GOVERNMENT OF LYNCHBURG, MOORE COUNTY, TENNESSEE

FOR THE YEAR ENDED JUNE 30, 2017

COMPTROLLER OF THE TREASURY JUSTIN P. WILSON

DIVISION OF LOCAL GOVERNMENT AUDIT JAMES R. ARNETTE

Director

JEFF BAILEY, CPA, CGFM, CFE Audit Manager

SHERRIE GILL, CFE KENT WHITE, CPA, CGFM, CFE JENI PALADENI, CISA Auditor 4 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

Metropolitan Government Officials 8

FINANCIAL SECTION 9

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

Government-wide Financial Statements:Statement of Net Position A 15-17Statement of Activities B 18-19

Fund Financial Statements:Governmental Funds:

Balance Sheet C-1 20-21Reconciliation of the Balance Sheet of Governmental Funds

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

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

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

Statements of Revenues, Expenditures, and Changes in FundBalances – Actual and Budget:

General Fund C-5 26-27Highway/Public Works Fund C-6 28

Proprietary Fund:Statement of Net Position D-1 29Statement of Revenues, Expenses, and Changes in Net Position D-2 30Statement of Cash Flows D-3 31-32

Fiduciary Fund:Statement of Fiduciary Assets and Liabilities E 33

Index and Notes to the Financial Statements 34-90REQUIRED SUPPLEMENTARY INFORMATION: 91

Schedule of Changes in Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Planof TCRS – Primary Government F-1 92

Schedule of Changes in Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Planof TCRS – Discretely Presented Metropolitan School Department - F-2 93Non-Certified Employees

Schedule of Contributions Based on Participation in the Public EmployeePension Plan of TCRS – Primary Government F-3 94

Schedule of Contributions Based on Participation in the Public EmployeePension Plan of TCRS – Discretely Presented MetropolitanSchool Department - Non-Certified Employees F-4 95

THE METROPOLITAN GOVERNMENT OF

TABLE OF CONTENTSLYNCHBURG, MOORE COUNTY, TENNESSEE

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Exhibit Page(s)

Schedule of Contributions Based on Participation in the TeacherRetirement Plan of TCRS – Discretely Presented MetropolitanSchool Department F-5 96

Schedule of Contributions Based on Participation in the TeacherLegacy Pension Plan of TCRS – Discretely Presented MetropolitanSchool Department F-6 97

Schedule of Proportionate Share of the Net Pension Asset in theTeacher Pension Plan of TCRS – Discretely PresentedMetropolitan School Department F-7 98

Schedule of Proportionate Share of the Net Pension Asset in theTeacher Legacy Pension Plan of TCRS – Discretely PresentedMetropolitan School Department F-8 99

Schedule of Funding Progress – Other Postemployment BenefitsPlan – Discretely Presented Metropolitan School Department F-9 100

Notes to the Required Supplementary Information 101COMBINING AND INDIVIDUAL FUND FINANCIAL

STATEMENTS AND SCHEDULES: 102Nonmajor Governmental Funds: 103

Combining Balance Sheet G-1 104-105Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances G-2 106-107Schedules of Revenues, Expenditures, and Changes in Fund

Balances – Actual and Budget:Urban Services Fund G-3 108Solid Waste/Sanitation Fund G-4 109Drug Control Fund G-5 110

Major Governmental Fund: 111Schedule of Revenues, Expenditures, and Changes in Fund

Balance – Actual and Budget:General Debt Service Fund H 112

Fiduciary Fund: 113Statement of Changes in Assets and Liabilities –

Agency Fund I 114Component Unit:

Discretely Presented Metropolitan School Department: 115Statement of Activities J-1 116Balance Sheet – Governmental Funds J-2 117Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position J-3 118Statement of Revenues, Expenditures, and Changes in Fund

Balances – Governmental Funds J-4 119Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Fundsto the Statement of Activities J-5 120

Combining Balance Sheet – Nonmajor Governmental Funds J-6 121Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances – Nonmajor Governmental Funds J-7 122Schedules of Revenues, Expenditures, and Changes in Fund

Balances – Actual and Budget:General Purpose School Fund J-8 123School Federal Projects Fund J-9 124Central Cafeteria Fund J-10 125

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Exhibit Page(s)

Miscellaneous Schedules: 126Schedule of Changes in Long-term Notes and Other Loans K-1 127Schedule of Long-term Debt Requirements by Year K-2 128Schedule of Salaries and Official Bonds of Principal Officials –

Primary Government and Discretely Presented MetropolitanSchool Department K-3 129

Schedule of Detailed Revenues – All Governmental Fund Types K-4 130-141Schedule of Detailed Revenues – All Governmental Fund Types –

Discretely Presented Metropolitan School Department K-5 142-144Schedule of Detailed Expenditures – All Governmental Fund Types K-6 145-158Schedule of Detailed Expenditures – All Governmental Fund Types –

Discretely Presented Metropolitan School Department K-7 159-166

STATUTORY SECTION Table 167

Demographic and Economic Information:Schedule of Water and Sewer Rates and Customers 1 168Schedule of Unaccounted for Water 2 169-170

SINGLE AUDIT SECTION 171

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 172-173

Auditor's Report on Compliance for Each Major Federal Program;Report on Internal Control Over Compliance; and Report on theSchedule of Expenditures of Federal Awards Required byUniform Guidance 174-176

Schedule of Expenditures of Federal Awards and State Grants 177-178Summary Schedule of Prior-year Findings 179Schedule of Findings and Questioned Costs 180-184Management's Corrective Action Plan 185-189Best Practices 190

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Summary of Audit FindingsAnnual Financial Report

Metropolitan Government of Lynchburg, Moore County, Tennessee For the Year Ended June 30, 2017

Scope

We have audited the basic financial statements of the Metropolitan Government of Lynchburg, Moore County as of and for the year ended June 30, 2017.

Results

Our report on the metropolitan government’s financial statements is unmodified.

Our audit resulted in four findings and recommendations, which we have reviewed with the metropolitan government’s management. Detailed findings and recommendations are included in the Single Audit section of this report.

Findings

The following are summaries of the audit findings:

OFFICE OF METROPOLITAN MAYOR

♦ Competitive bids were not solicited for the purchase of food and healthcare forinmates.

♦ General Fund appropriations exceeded estimated available funding.

OFFICE OF HIGHWAY SUPERINTENDENT

♦ The Highway/Public Works Fund required material audit adjustments for properfinancial statement presentation.

OFFICE OF CIRCUIT, GENERAL SESSIONS, AND JUVENILE COURTS CLERK

♦ Duties were not segregated adequately.

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INTRODUCTORY SECTION

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Metropolitan Lynchburg, Moore County OfficialsJune 30, 2017

Officials

Sloan Stewart, Metropolitan MayorMilton Ferrell, Highway SuperintendentChad Moorehead, Director of SchoolsLynn Harrison, TrusteeDarin Harrison, Assessor of PropertyNancy Hatfield, Metropolitan ClerkChristy Millsaps, Circuit, General Sessions, and Juvenile Courts ClerkTammy Roberts, Clerk and MasterPam Wells, Register of DeedsMark Logan, Sheriff

Metropolitan Council

Marty Copeland, ChairmanAmy Cashion Wayne RhotonDarrell Richards Gordon MillsapsTommy Brown Shawn AdamsWayne Hawkins Sandy LewisPatrick Maynard Glenn SearcyArvis Bobo Denning HarderDavid Boyce Keith Huffer

Board of Education

Ronnie Smith, ChairmanJammie Cashion Lorrie McKenzieEd Cashion Chris Roberts

Audit Committee

Gordon Millsaps, ChairmanSandy Lewis Shawn AdamsPartrick Maynard Denning HarderRebecca Gold-Johnson

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FINANCIAL SECTION

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Independent Auditor's Report

Metropolitan Mayor and Metropolitan Council Lynchburg, Moore County, Tennessee

To the Metropolitan Mayor and Metropolitan Council:

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Metropolitan Government of Lynchburg, Moore County, Tennessee, as of and for the year ended June 30, 2017, 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 the Metropolitan Lynchburg – Moore County Water and Sewer Department, which represent 100 percent of the assets, net position, and revenues of the business-type activities and is also a major fund. 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 Metropolitan Lynchburg – Moore County Water and Sewer Department, is based solely on the report of the other auditors. 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.

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

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

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 business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Metropolitan Government of Lynchburg, Moore County, Tennessee, as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund 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, schedule of county contributions, schedule of school’s proportionate share of the net pension liability, and schedule of funding progress - other postemployment benefit(s) plan(s), on pages 92-101 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

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of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Supplementary and Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the metropolitan government’s basic financial statements. The introductory section, 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 Metropolitan School Department (a discretely presented component unit), and miscellaneous schedules 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 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 also 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 Metropolitan School Department (a discretely presented component unit), miscellaneous schedules, and schedule of expenditures of federal awards 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 by us. In our opinion, based on our audit and the procedures performed as described above, 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 Metropolitan School Department (a discretely presented component unit), miscellaneous schedules, and schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole.

The introductory 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.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 13, 2017, on our consideration of metropolitan government’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws,

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regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the metropolitan government’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 metropolitan government’s internal control over financial reporting and compliance.

Very truly yours,

Justin P. Wilson Comptroller of the Treasury Nashville, Tennessee

December 13, 2017

JPW/yu

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BASIC FINANCIAL STATEMENTS

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Exhibit A

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Net PositionJune 30, 2017

Business- MetropolitanGovernmental type School

Activities Activities Total Department

Cash and Cash Equivalents $ 275 $ 716,599 $ 716,874 $ 39,920Equity in Pooled Cash and Investments 3,833,410 0 3,833,410 1,770,860Inventories 0 89,152 89,152 6,046Accounts Receivable 245,314 110,642 355,956 0Allowance for Uncollectibles (24,738) (2,092) (26,830) 0Prepaid Items 0 1,645 1,645 0Other Receivables 0 94,742 94,742 0Due from Other Governments 642,448 0 642,448 118,236Unbilled Charges for Services 0 76,859 76,859 0Net Pension Asset - Agent Plan 12,376 0 12,376 0Net Pension Asset - Teacher Retirement Plan 0 0 0 8,568Property Taxes Receivable 3,605,713 0 3,605,713 2,933,823Allowance for Uncollectible Property Taxes (84,049) 0 (84,049) (68,648)Restricted Assets: Customer Deposits 0 520 520 0Capital Assets: Assets Not Depreciated: Land 393,779 92,459 486,238 39,342 Construction in Progress 337,650 185,800 523,450 86,288 Assets Net of Accumulated Depreciation: Buildings and Improvements 3,012,988 0 3,012,988 11,094,453 Other Capital Assets 1,467,621 14,185,026 15,652,647 668,018 Infrastructure 2,959,409 0 2,959,409 0Total Assets $ 16,402,196 $ 15,551,352 $ 31,953,548 $ 16,696,906

(Continued)

Component Primary Government Unit

ASSETS

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Exhibit A

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Net Position (Cont.)



Pension Changes in Contributions after Measurement Date $ 0 $ 0 $ 0 $ 359,985Pension Changes in Experience 4,034 0 4,034 27,924Pension Changes in Investment Earnings 50,287 0 50,287 841,619Pension Changes in Proportionate Share of NPL 64,426 0 64,426 39,478Total Deferred Outflows of Resources $ 118,747 $ 0 $ 118,747 $ 1,269,006

Accounts Payable $ 20,371 $ 169,312 $ 189,683 $ 11,781Accrued Payroll 9,802 17,187 26,989 0Payroll Deductions Payable 16,041 0 16,041 320,529Contracts Payable 402,008 0 402,008 67,328Accrued Interest Payable 0 7,592 7,592 0Other Current Liabilities 0 140,946 140,946 0Accrued Leave - Current 0 20,648 20,648 0Noncurrent Liabilities: Due Within One Year 448,744 217,511 666,255 18,983 Due in More Than One Year 7,866,595 6,818,353 14,684,948 1,354,061Total Liabilities $ 8,763,561 $ 7,391,549 $ 16,155,110 $ 1,772,682

DEFERRED INFLOWS OF RESOURCES

Deferred Current Property Taxes $ 3,475,574 $ 0 $ 3,475,574 $ 2,828,035Pension Changes in Experience 102,215 0 102,215 840,986Pension Changes in Proportionate Share of NPL 0 0 0 21,772Total Deferred Inflows of Resources $ 3,577,789 $ 0 $ 3,577,789 $ 3,690,793

(Continued)

LIABILITIES

DEFERRED OUTFLOWS OF RESOURCES

Primary Government Component Units

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Exhibit A

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Net Position (Cont.)



Net Investment in Capital Assets $ 6,872,330 $ 7,427,421 $ 14,299,751 $ 11,888,101Restricted for: Administration of Justice 28,036 0 28,036 0 Public Safety 76,892 0 76,892 0 Public Health and Welfare 138,768 0 138,768 0 Debt Service 150,684 0 150,684 0 Highway/Public Works 643,400 0 643,400 0 Pensions 12,376 0 12,376 8,568 Other Operations 6,086 0 6,086 0 Education 0 0 0 146,888 Other Purposes 11,842 11,925 23,767 0 Capital Projects 127,268 0 127,268 0Unrestricted (3,888,089) 720,457 (3,167,632) 458,880

Total Net Position $ 4,179,593 $ 8,159,803 $ 12,339,396 $ 12,502,437

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

Primary Government Component Units

NET POSITION

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Exhibit B

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of ActivitiesFor the Year Ended June 30, 2017

Operating Capital MetropolitanCharges for Grants and Grants and Governmental Business-type School

Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Department

Primary Government: Governmental Activities: General Government $ 988,960 $ 51,796 $ 7,507 $ 250,000 $ (679,657) $ 0 $ (679,657) $ 0 Finance 327,376 247,068 0 0 (80,308) 0 (80,308) 0 Administration of Justice 289,485 86,941 14,910 0 (187,634) 0 (187,634) 0 Public Safety 1,845,011 132,130 147,250 0 (1,565,631) 0 (1,565,631) 0 Public Health and Welfare 1,127,619 439,647 147,802 0 (540,170) 0 (540,170) 0 Social, Cultural, and Recreational Services 171,232 10,440 30,664 62,220 (67,908) 0 (67,908) 0 Agriculture and Natural Resources 95,629 0 3,750 250 (91,629) 0 (91,629) 0 Highways/Public Works 1,222,284 0 1,286,972 590,439 655,127 0 655,127 0 Interest on Long-term Debt 51,345 0 0 0 (51,345) 0 (51,345) 0 Education 105,519 0 0 0 (105,519) 0 (105,519) 0Total Governmental Activities $ 6,224,460 $ 968,022 $ 1,638,855 $ 902,909 $ (2,714,674) $ 0 $ (2,714,674) $ 0

Business-type Activities: Water and Sewer Department $ 2,239,014 $ 1,837,447 $ 903,579 $ 0 $ 0 $ 502,012 $ 502,012 $ 0 Total Business-type Activities $ 2,239,014 $ 1,837,447 $ 903,579 $ 0 $ 0 $ 502,012 $ 502,012 $ 0

Total Primary Government $ 8,463,474 $ 2,805,469 $ 2,542,434 $ 902,909 $ (2,714,674) $ 502,012 $ (2,212,662) $ 0

Component Unit: Metropolitan School Department $ 9,191,811 $ 254,523 $ 779,476 $ 30,909 $ 0 $ 0 $ 0 $ (8,126,903)

(Continued)

Primary Government

Net (Expense) Revenue and Changes in Net PositionComponent

Program Revenues Unit

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Exhibit B

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Activities (Cont.)

Operating Capital MetropolitanCharges for Grants and Grants and Governmental Business-type School

Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Department

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 2,958,797 $ 0 $ 2,958,797 $ 3,054,601 Property Taxes Levied for Debt Service 795,339 0 795,339 0 Local Option Sales Tax 487,698 0 487,698 446,952 Wholesale Beer Tax 82,060 0 82,060 0 Business Tax 40,410 0 40,410 0 Litigation Tax - Jail, Workhouse, & Courthouse 23,316 0 23,316 0 Litigation Tax - General 18,249 0 18,249 0 Other Local Taxes 10,428 0 10,428 575 Grants and Contributions Not Restricted to Specific Programs 747,405 0 747,405 4,950,803 Unrestricted Investment Income 30,599 1,007 31,606 239 Miscellaneous 93,341 0 93,341 52,792 Gain on Sale of Capital Assets 4,122 0 4,122 4,540Total General Revenues $ 5,291,764 $ 1,007 $ 5,292,771 $ 8,510,502

Change in Net Position $ 2,577,090 $ 503,019 $ 3,080,109 $ 383,599Net Position, July 1, 2016 1,602,503 7,656,784 9,259,287 12,118,838

Net Position, June 30, 2017 $ 4,179,593 $ 8,159,803 $ 12,339,396 $ 12,502,437


Net (Expense) Revenue and Changes in Net PositionComponent

Program Revenues UnitPrimary Government

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Exhibit C-1

The Metropolitan Government of Lynchburg, Moore County, TennesseeBalance SheetGovernmental FundsJune 30, 2017

OtherHighway / General Govern- Total

Public Debt mental GovernmentalGeneral Works Service Funds Funds

ASSETS

Cash $ 275 $ 0 $ 0 $ 0 $ 275Equity in Pooled Cash and Investments 1,335,833 472,050 1,456,879 568,648 3,833,410Accounts Receivable 160,525 0 33,369 51,420 245,314Allowance for Uncollectibles (24,738) 0 0 0 (24,738)Due from Other Governments 53,232 535,751 47,831 5,634 642,448Property Taxes Receivable 2,393,435 36,981 764,273 411,024 3,605,713Allowance for Uncollectible Property Taxes (56,416) (865) (17,555) (9,213) (84,049)

Total Assets $ 3,862,146 $ 1,043,917 $ 2,284,797 $ 1,027,513 $ 8,218,373

LIABILITIES

Accounts Payable $ 0 $ 20,371 $ 0 $ 0 $ 20,371Accrued Payroll 0 9,802 0 0 9,802Payroll Deductions Payable 6,140 9,901 0 0 16,041Contracts Payable 0 293,753 0 108,255 402,008Total Liabilities $ 6,140 $ 333,827 $ 0 $ 108,255 $ 448,222


Deferred Current Property Taxes $ 2,305,205 $ 35,648 $ 736,715 $ 398,006 $ 3,475,574Deferred Delinquent Property Taxes 30,658 451 9,318 3,696 44,123Other Deferred/Unavailable Revenue 109,362 145,273 24,425 26,793 305,853Total Deferred Inflows of Resources $ 2,445,225 $ 181,372 $ 770,458 $ 428,495 $ 3,825,550

(Continued)

Nonmajor Funds

Major Funds

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Exhibit C-1

The Metropolitan Government of Lynchburg, Moore County, TennesseeBalance SheetGovernmental Funds (Cont.)



FUND BALANCES

Restricted:Restricted for Administration of Justice $ 28,036 $ 0 $ 0 $ 0 $ 28,036Restricted for Public Safety 5,831 0 0 71,061 76,892Restricted for Public Health and Welfare 36,524 0 0 76,774 113,298Restricted for Other Operations 6,086 0 0 0 6,086Restricted for Highways/Public Works 0 528,718 0 0 528,718Restricted for Debt Service 0 0 126,259 0 126,259Restricted for Capital Projects 0 0 0 126,697 126,697Restricted for Other Purposes 0 0 0 11,723 11,723

Committed:Committed for General Government 438,131 0 0 0 438,131Committed for Public Health and Welfare 0 0 0 204,508 204,508Committed for Social, Cultural, and Recreational Services 1,500 0 0 0 1,500Committed for Debt Service 0 0 1,388,080 0 1,388,080

Assigned:Assigned for Administration of Justice 1,278 0 0 0 1,278Assigned for Public Safety 25,967 0 0 0 25,967

Unassigned 867,428 0 0 0 867,428Total Fund Balances $ 1,410,781 $ 528,718 $ 1,514,339 $ 490,763 $ 3,944,601

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 3,862,146 $ 1,043,917 $ 2,284,797 $ 1,027,513 $ 8,218,373


Nonmajor Funds

Major Funds

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Exhibit C-2

The Metropolitan Government of Lynchburg, Moore County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to the Statement of Net PositionJune 30, 2017

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

Total fund balances - balance sheet - governmental funds (Exhibit C-1) $ 3,944,601

(1) Capital assets used in governmental activities are not financial resources and therefore are not reported inthe governmental funds. Add: land $ 393,779 Add: construction in progress 337,650 Add: buildings and improvements net of accumulated depreciation 3,012,988 Add: other capital assets net of accumulated depreciation 1,467,621 Add: infrastructure net of accumulated depreciation 2,959,409 8,171,447

(2) Long-term liabilities are not due and payable in the currentperiod and therefore are not reported in the governmental funds. Less: other loans payable $ (8,205,980) Less: compensated absences payable (109,359) (8,315,339)

(3) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions will be amortized andrecognized as components of pension expense in future years. Add: deferred outflows of resources related to pensions $ 118,747 Less: deferred inflows of resources related to pensions (102,215) 16,532

(4) Net pension assets of the agent plan are not current financialresources and therefore are not reported in the governmental funds. 12,376

(5) Other long-term assets are not available to pay forcurrent-period expenditures and therefore are deferredin the governmental funds. 349,976

Net position of governmental activities (Exhibit A) $ 4,179,593


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Exhibit C-3

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Revenues, Expenditures,

and Changes in Fund BalancesGovernmental FundsFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 3,266,042 $ 50,460 $ 1,431,229 $ 309,813 $ 5,057,544Licenses and Permits 15,053 0 0 3,108 18,161Fines, Forfeitures, and Penalties 24,433 0 0 9,450 33,883Charges for Current Services 169,155 0 0 213,044 382,199Other Local Revenues 70,470 3,279 0 40,903 114,652Fees Received From County Officials 332,023 0 0 0 332,023State of Tennessee 677,106 1,862,174 0 33,212 2,572,492Federal Government 55,798 0 0 0 55,798Other Governments and Citizens Groups 90,702 0 0 0 90,702

Total Revenues $ 4,700,782 $ 1,915,913 $ 1,431,229 $ 609,530 $ 8,657,454

ExpendituresCurrent:

General Government $ 568,955 $ 0 $ 0 $ 19,381 $ 588,336Finance 259,630 0 0 0 259,630Administration of Justice 241,997 0 0 136 242,133Public Safety 1,630,173 0 0 5,092 1,635,265Public Health and Welfare 509,763 0 0 711,737 1,221,500Social, Cultural, and Recreational Services 204,133 0 0 0 204,133Agriculture and Natural Resources 79,301 0 0 0 79,301Other Operations 982,058 0 0 0 982,058Highways 0 1,761,743 0 0 1,761,743

Debt Service:Principal on Debt 0 0 1,991,000 0 1,991,000Interest on Debt 0 0 125,519 0 125,519Other Debt Service 0 0 82,015 0 82,015

(Continued)

Major FundsNonmajor

Funds

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Exhibit C-3

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Revenues, Expenditures,

and Changes in Fund BalancesGovernmental Funds (Cont.)



Expenditures (Cont.)Capital Projects $ 0 $ 0 $ 0 $ 255,482 $ 255,482

Total Expenditures $ 4,476,010 $ 1,761,743 $ 2,198,534 $ 991,828 $ 9,428,115

Excess (Deficiency) of RevenuesOver Expenditures $ 224,772 $ 154,170 $ (767,305) $ (382,298) $ (770,661)

Net Change in Fund Balances $ 224,772 $ 154,170 $ (767,305) $ (382,298) $ (770,661)Fund Balance, July 1, 2016 1,186,009 374,548 2,281,644 873,061 4,715,262

Fund Balance, June 30, 2017 $ 1,410,781 $ 528,718 $ 1,514,339 $ 490,763 $ 3,944,601


Major FundsNonmajor

Funds

24

Exhibit C-4

The Metropolitan Government of Lynchburg, Moore County, TennesseeReconciliation of the Statement of Revenues, Expenditures, andChanges in Fund Balances of Governmental Funds to theStatement of Activities

For the Year Ended June 30, 2017

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) $ (770,661)

(1) Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of these assets is allocatedover their useful lives and reported as depreciation expense. Thedifference between capital outlays and depreciation is itemized asfollows:

Add: capital assets purchased in the current period $ 1,668,211Less: current-year depreciation expense (557,519) 1,110,692

(2)

71,874

(3) Revenues in the statement of activities that do not provide currentfinancial resources are not reported in the funds. Add: deferred delinquent property taxes and other deferred June 30, 2017 $ 349,976 Less: deferred delinquent property taxes and other deferred June 30, 2016 (277,754) 72,222

(4) The issuance of long-term debt (e.g., bonds, notes, other loans, leases) providescurrent financial resources to governmental funds, while the repaymentof the principal of long-term debt consumes the current financialresources of governmental funds. Neither transaction, however, hasany effect on net position. Also, governmental funds report the effectof premiums, discounts, and similar items when debt isfirst issued, whereas these amounts are deferred and amortized in thestatement of activities. This amount is the net effect of these differencesin the treatment of long-term debt and related items:

Add: principal payments on notes $ 1,600,000Add: principal payments on other loans 391,000 1,991,000

(5) Some expenses reported in the statement of activities do not requirethe use of current financial resources and therefore are not reportedas expenditures in the governmental funds.

Change in accrued interest payable $ 20,000Change in net pension asset (23,238)Change in deferred outflows of resources related to pensions 52,423Change in deferred inflows of resources related to pensions 47,970Change in compensated absences payable 4,808 101,963

Change in net position of governmental activities (Exhibit B) $ 2,577,090


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

25

Exhibit C-5

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Revenues, Expenditures, and Changes

in Fund Balance - Actual and BudgetGeneral FundFor the Year Ended June 30, 2017

Variancewith FinalBudget -Positive

Actual Original Final (Negative)

RevenuesLocal Taxes $ 3,266,042 $ 2,813,000 $ 2,968,000 $ 298,042Licenses and Permits 15,053 15,000 15,000 53Fines, Forfeitures, and Penalties 24,433 19,425 19,425 5,008Charges for Current Services 169,155 142,850 142,850 26,305Other Local Revenues 70,470 41,450 44,405 26,065Fees Received From County Officials 332,023 274,500 274,500 57,523State of Tennessee 677,106 491,200 679,386 (2,280)Federal Government 55,798 7,500 44,439 11,359Other Governments and Citizens Groups 90,702 56,855 155,738 (65,036)

Total Revenues $ 4,700,782 $ 3,861,780 $ 4,343,743 $ 357,039

ExpendituresGeneral Government

County Commission $ 170,713 $ 165,500 $ 172,275 $ 1,562County Mayor/Executive 130,589 131,746 131,746 1,157County Attorney 7,491 7,791 7,491 0Election Commission 89,721 95,399 95,399 5,678Register of Deeds 64,339 66,897 66,897 2,558Planning 7,630 12,433 9,421 1,791County Buildings 87,305 85,220 94,745 7,440Preservation of Records 11,167 11,534 13,254 2,087

FinancePurchasing 30,650 32,700 32,600 1,950Property Assessor's Office 74,010 75,615 75,686 1,676County Trustee's Office 70,920 71,213 71,213 293County Clerk's Office 84,050 86,286 86,286 2,236

Administration of JusticeCircuit Court 82,120 91,831 91,831 9,711General Sessions Court 70,781 71,411 71,411 630Chancery Court 64,509 68,022 68,022 3,513Juvenile Court 9,525 9,075 10,475 950Judicial Commissioners 15,062 16,162 16,162 1,100

Public SafetySheriff's Department 890,390 915,395 1,025,177 134,787Special Patrols 2,918 4,000 4,000 1,082Administration of the Sexual Offender Registry 2,204 1,394 2,994 790Jail 439,009 510,994 544,129 105,120Commissary 637 2,550 2,550 1,913Fire Prevention and Control 236,514 113,950 244,914 8,400Other Emergency Management 58,501 34,082 65,274 6,773

Public Health and WelfareLocal Health Center 127,148 141,974 151,974 24,826Rabies and Animal Control 5,999 5,000 6,012 13Ambulance/Emergency Medical Services 372,586 376,686 387,674 15,088Alcohol and Drug Programs 1,530 400 1,531 1Regional Mental Health Center 2,500 2,500 2,500 0

Social, Cultural, and Recreational ServicesSenior Citizens Assistance 8,500 8,500 8,500 0

(Continued)

Budgeted Amounts

26

Exhibit C-5


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



Expenditures (Cont.)Social, Cultural, and Recreational Services (Cont.)

Libraries $ 116,076 $ 110,731 $ 119,320 $ 3,244Parks and Fair Boards 79,557 74,834 84,834 5,277

Agriculture and Natural ResourcesAgricultural Extension Service 68,658 75,030 76,027 7,369Forest Service 350 350 350 0Soil Conservation 10,293 5,813 10,293 0

Other OperationsTourism 108,641 5,750 109,300 659Other Economic and Community Development 245,000 0 245,000 0Veterans' Services 1,882 2,382 2,382 500Other Charges 7,419 0 7,419 0Employee Benefits 619,116 758,100 770,071 150,955

Total Expenditures $ 4,476,010 $ 4,249,250 $ 4,987,139 $ 511,129

Excess (Deficiency) of RevenuesOver Expenditures $ 224,772 $ (387,470) $ (643,396) $ 868,168

Other Financing Sources (Uses)Transfers In $ 0 $ 30,000 $ 0 $ 0

Total Other Financing Sources $ 0 $ 30,000 $ 0 $ 0

Net Change in Fund Balance $ 224,772 $ (357,470) $ (643,396) $ 868,168Fund Balance, July 1, 2016 1,186,009 620,833 620,833 565,176

Fund Balance, June 30, 2017 $ 1,410,781 $ 263,363 $ (22,563) $ 1,433,344


Budgeted Amounts

27

Exhibit C-6


in Fund Balance - Actual and BudgetHighway/Public Works FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 50,460 $ 47,420 $ 47,420 $ 3,040Other Local Revenues 3,279 2,500 2,500 779State of Tennessee 1,862,174 1,743,220 2,167,105 (304,931)

Total Revenues $ 1,915,913 $ 1,793,140 $ 2,217,025 $ (301,112)

ExpendituresHighways

Administration $ 200,694 $ 206,737 $ 206,737 $ 6,043Highway and Bridge Maintenance 555,214 741,515 741,515 186,301Operation and Maintenance of Equipment 124,325 172,360 172,360 48,035Other Charges 32,071 53,700 53,700 21,629Employee Benefits 22,875 41,000 41,000 18,125Capital Outlay 826,564 720,000 1,143,885 317,321



Net Change in Fund Balance $ 154,170 $ (142,172) $ (142,172) $ 296,342Fund Balance, July 1, 2016 374,548 756,357 374,549 (1)

Fund Balance, June 30, 2017 $ 528,718 $ 614,185 $ 232,377 $ 296,341


Budgeted Amounts

28

Exhibit D-1

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Net PositionProprietary FundJune 30, 2017

MajorEnterprise

FundWater

andSewer

Department

ASSETS

Current Assets:Cash and Cash Equivalents $ 716,599Inventories 89,152Accounts Receivable 110,642Allowance for Uncollectibles (2,092)Prepaid Items 1,645Other Receivables 94,742Unbilled Charges for Services 76,859

Total Current Assets $ 1,087,547

Noncurrent Assets:Restricted Assets:Customer Deposits $ 520

Capital Assets:Assets Not Depreciated:Land 92,459Construction in Progress 185,800Assets Net of Accumulated Depreciation:Utility Plant in Service 14,185,026

Total Noncurrent Assets $ 14,463,805Total Assets $ 15,551,352

LIABILITIES

Current Liabilities:Accounts Payable $ 282,747Accrued Payroll 17,187Accrued Leave 20,648Accrued Interest Payable 7,592Current Portion of Long-term Liabilities 217,511Deferred Fees 3,504Customer Deposits 24,007

Total Current Liabilities $ 573,196

Noncurrent Liabilities:Due in More Than One Year $ 6,818,353

Total Noncurrent Liabilities $ 6,818,353Total Liabilities $ 7,391,549

NET POSITION

Net Investment in Capital Assets $ 7,427,421Restricted for Other Purposes 11,925Unrestricted 720,457

Total Net Position $ 8,159,803


29

Exhibit D-2

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Revenues, Expenses, and Changes in Net PositionProprietary FundFor the Year Ended June 30, 2017

Operating Revenues Charges for Current Services $ 1,837,447Total Operating Revenues $ 1,837,447

Operating Expenses Public Health and Welfare $ 1,320,876 Depreciation 492,585Total Operating Expenses $ 1,813,461Operating Income (Loss) $ 23,986

Nonoperating Revenues (Expenses) Investment Income $ 1,007 Interest Expense (187,562) Loss on Disposal of Capital Assets (237,991)Total Nonoperating Revenues (Expenses) $ (424,546)

Income (Loss) Before Contributions, Grants, and Transfers $ (400,560)Tap Fees in Excess of Costs 8,717Contributions 14,226Grants 880,636

Change in Net Position $ 503,019Net Position, July 1, 2016 7,656,784

Net Position, June 30, 2017 $ 8,159,803


Department

Major Enterprise

FundWaterand

Sewer

30

Exhibit D-3

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Cash FlowsProprietary FundFor the Year Ended June 30, 2017

Cash Flows from Operating Activities Receipts from Customers and Users $ 1,833,310 Payments to Suppliers (662,264) Payments to Employees (654,087)Net Cash Provided By (Used In) Operating Activities $ 516,959

Cash Flows from Capital and Related Financing Activities Purchases of Capital Assets $ (2,642,637) Loan Proceeds 1,752,246 Contributions, Grants, and Transfers in Aid of Construction 810,370 Principal Payments on Long-term Debt (199,201) Interest Payments on Long-term Debt (193,580)Net Cash Provided By (Used In) Capital and Related Financing Activities $ (472,802)

Cash Flows from Investing Activities Proceeds from Certificates of Deposit $ 1,915 Investment Income 1,007Net Cash Provided By (Used In) Investing Activities $ 2,922

Increase (Decrease) in Cash $ 47,079Cash, July 1, 2016 669,520

Cash, June 30, 2017 $ 716,599

(Continued)

DepartmentSewer

MajorEnterprise

FundWaterand

31

Exhibit D-3

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Cash FlowsProprietary Fund (Cont.)

Reconciliation of Net Operating Income (Loss) to Net Cash Provided By (Used In) Operating ActivitiesOperating Income (Loss) $ 23,986Adjustments to Reconcile Net Operating Income (Loss) to Net Cash Provided By (Used In) Operating Activities: Depreciation and Amortization Expense 492,585 Changes in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (31,769) (Increase) Decrease in Other Assets 10,386 (Increase) Decrease in Other Accrued Revenue 7,384 (Increase) Decrease in Inventories (10,335) Increase (Decrease) in Accounts Payable 20,987 Increase (Decrease) in Accrued Wages and Payroll 3,205 Increase (Decrease) in Accrued Vacation Pay 2,725 Increase (Decrease) in Customer Deposits and Deferred Fees (2,195)

Net Cash Provided By (Used In) Operating Activities $ 516,959

Schedule of Capital Activities That Did Not Result in Cash Payments Purchase of Capital Assets on Account $ 236,181


SewerDepartment

MajorEnterprise

FundWaterand

32

Exhibit E

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Fiduciary Assets and LiabilitiesFiduciary FundJune 30, 2017

ASSETS

Cash $ 16,936

Total Assets $ 16,936

LIABILITIES

Due to Litigants, Heirs, and Others $ 16,936

Total Liabilities $ 16,936


AgencyFund

33

Note Page(s)

I. Summary of Significant Accounting PoliciesA. Reporting Entity 35B. Government-wide and Fund Financial Statements 36C. Measurement Focus, Basis of Accounting, and Financial

Statement Presentation 37D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and

Net Position/Fund Balance1. Deposits and Investments 392. Receivables and Payables 403. Inventories 414. Capital Assets 415. Deferred Outflows/Inflows of Resources 416. Compensated Absences 427. Long-term Obligations 438. Net Position and Fund Balance 439. Minimum Fund Balance Policy 45

E. Pension Plans 45II. Reconciliation of Government-wide and Fund Financial Statements

A. Explanation of Certain Differences Between the Governmental FundBalance Sheet and the Government-wide Statement of Net Position 46

B. Explanation of Certain Differences Between the Governmental FundStatement of Revenues, Expenditures, and Changes in Fund Balancesand the Government-wide Statement of Activities 46

III. Stewardship, Compliance, and AccountabilityA. Budgetary Information 46B. Appropriations Exceeded Estimated Available Funding 47

IV. Detailed Notes on All FundsA. Deposits and Investments 47B. Capital Assets 49C. Long-term Obligations 51D. On-Behalf Payments 54

V. Other InformationA. Risk Management 54B. Accounting Changes 55C. Contingent Liabilities 56D. Joint Ventures 56E. Retirement Commitments 57F. Other Postemployment Benefits (OPEB) 79G. Purchasing Law 82

VI. Other Notes - Water and Sewer Department (Enterprise Fund) 83


Index of Notes to the Financial StatementsLYNCHBURG, MOORE COUNTY, TENNESSEE

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35


NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2017

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Metropolitan Government of Lynchburg, Moore 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 the metropolitan government:

A. Reporting Entity

The Metropolitan Government of Lynchburg, Moore County, is a public municipal corporation governed by an elected 15-member Metropolitan Council. As required by GAAP, these financial statements present the metropolitan government (the primary government) and its component units. The financial statements of the Moore County Emergency Communications District, a component unit requiring discrete presentation, were excluded from this report due to materiality calculations; therefore, the effect of its omission did not affect the independent auditor’s opinion thereon. The component units discussed below are included in the metropolitan government’s reporting entity because of the significance of their operational or financial relationships with the metropolitan government.

Discretely Presented Component Units – The following entities meet the criteria for discretely presented component units of the metropolitan government. They are reported in separate columns in the government-wide financial statements to emphasize that they are legally separate from the metropolitan government.

The Metropolitan School Department operates the public school system in the county, and the voters of Moore County elect its board. The School Department is fiscally dependent on the metropolitan government because it may not issue debt, and its budget and property tax levy are subject to the metropolitan council’s approval. The School Department’s taxes are levied under the taxing authority of the metropolitan government and are included as part of the metropolitan government’s total tax levy.

The Moore County Emergency Communications District provides a simplified means of securing emergency services through a uniform emergency number for the residents of Moore County, and the metropolitan council appoints its governing body. The district is funded primarily through a service charge levied on telephone services. Before the issuance of most debt instruments,

36

the district must obtain the metropolitan council’s approval. The financial statements of the Moore County Emergency Communications District were not material to the component units’ opinion unit and therefore have been omitted from this report. The School Department does not issue separate financial statements from those of the metropolitan government. 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 Moore County Emergency Communications District can be obtained from its administrative office at the following address:

Administrative Office: Moore County Emergency Communications District 1333 Main Street Lynchburg, TN 37352

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. 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. The primary government has one business-type activity to report, the Metropolitan Lynchburg – Moore County Water and Sewer Department. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The Metropolitan School Department component unit only reports governmental activities in the government-wide financial statements. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. The Metropolitan Government of Lynchburg, Moore County issues all debt for the discretely presented Metropolitan School Department. There were no debt issues contributed by the metropolitan government to the School Department during the year ended June 30, 2017.

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Separate financial statements are provided for governmental funds, the proprietary fund, and the fiduciary fund. The fiduciary fund is excluded from the government-wide financial statements. Major individual governmental funds and the major enterprise fund are reported as separate columns in the fund financial statements.

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

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and 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 the metropolitan government are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues, and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. The metropolitan government only reports one proprietary fund, the Metropolitan Lynchburg – Moore County Water and Sewer Department Fund, an enterprise fund. Separate financial statements are provided for governmental funds, the proprietary fund, and the fiduciary fund. Major individual governmental funds and the major enterprise fund 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 fund is 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 metropolitan government 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 available. The metropolitan government 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

38

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 metropolitan government receives cash.

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

General Fund – This is the metropolitan government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Highway/Public Works Fund – This special revenue fund accounts for transactions of the metropolitan government’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.

The metropolitan government reports the following major proprietary fund:

Water and Sewer Department Fund – This fund accounts for water and sewer services provided by the metropolitan government.

Additionally, the metropolitan government reports the following fund types:

Agency Fund – This fund accounts for amounts collected in an agency capacity by the constitutional officers. Agency funds are custodial in nature (assets equal liabilities) and do not involve

39

measurement of results of operations. They do, however, use the accrual basis of accounting to recognize receivables and payables.

Capital Projects Fund – The General Capital Projects fund accounts for resources accumulated to be used for the acquisition, construction, and/or renovation projects of the metropolitan government.

The discretely presented Metropolitan School Department reports the following major governmental fund:

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.

Additionally, the Metropolitan School Department reports the following fund type:

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

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; 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 metropolitan government’s own legally issued bonds or notes. The metropolitan trustee maintains a cash and internal investment pool that is used by all funds (excluding the Water and Sewer Fund, enterprise fund) and the discretely presented Metropolitan 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

40

assigned to the General Fund. The metropolitan government and the School Department have adopted a policy of reporting U.S. Treasury obligations, U.S. agency obligations, and repurchase agreements with maturities of one year or less when purchased on the balance sheet at amortized cost. Certificates of deposit are reported at cost. Investments in the State Treasurer’s Investment Pool are reported at amortized cost using a stable net asset value. State statutes require the state treasurer to administer the pool under the same terms and conditions, including collateral requirements, as prescribed for other funds invested by the state treasurer. All other investments are reported at fair value. No investments required to be reported at fair value were held at the balance sheet date.

2. Receivables and Payables All ambulance and property taxes receivables are shown with allowances for uncollectibles. Ambulance receivables allowances for uncollectibles are based on historical collection data. The allowance for uncollectible property taxes is equal to 0.3 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. Inventories

Inventories of the School Department are recorded at cost, determined on the first-in, first-out method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. Inventories are offset in the nonspendable fund balance account in governmental funds.

4. Capital Assets

Governmental funds do not capitalize the cost of capital outlays; these funds report capital outlays as expenditures upon acquisition. Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, and similar items acquired after July 1, 2003), are reported in the governmental and business-type columns 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 ($25,000 for infrastructure) and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, equipment, and infrastructure of the primary government (excluding the Water and Sewer Fund, enterprise fund) and the discretely presented School Department are depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Buildings and Improvements 20 - 50Other Capital Assets 5 - 15Infrastructure: Roads 10 - 15 Bridges 40

5. Deferred Outflows/Inflows of Resources

In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources,

42

represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has items that qualify for reporting in this category. Accordingly, the items are reported in the government-wide Statement of Net Position and the governmental funds balance sheet. These items are for pension changes in experience, changes in investment earnings, changes in proportionate share of net pension asset, and employer contributions made to the pension plan after the measurement date. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents 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: deferred current property taxes, pension changes in experience, and changes in proportionate share of net pension asset. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

6. Compensated Absences

Primary Government

It is the metropolitan government’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for unpaid accumulated sick leave since the metropolitan government does not have a policy to pay any amounts when employees separate from service with the government. All vacation pay is accrued when incurred for the metropolitan government. A liability for vacation pay is reported in governmental funds only if amounts have matured, for example, as a result of employee resignations and retirements. Discretely Presented Metropolitan School Department The general policy of the School Department for all professional personnel (teachers) permits the unlimited accumulation of unused sick leave days. The granting of sick leave for professional personnel has no guaranteed payment attached and therefore requires no accrual or recording. Noncertified personnel of the School Department earn varying amounts of annual and sick leave days. The School Department will only pay for accumulated sick leave balances in excess of 30 days that have accrued during the current year. Sick leave may only be paid in December or June. Therefore, no liability for

43

accrued sick leave exists. A liability for annual leave is reported in governmental funds only if amounts have matured, for example, as a result of employee resignations and retirements.

7. Long-term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities Statement of Net Position. Debt premiums and discounts are deferred and amortized over the life of the new debt 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 notes 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 and other postemployment benefits, are recognized to the extent that the liabilities have matured (come due for payment) each period.

8. Net Position and Fund Balance

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

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

b. Restricted net position – Consists of net position with constraints placed on the use either by (1) external groups such as creditors,

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grantors, contributors, or laws or regulations of other governments or (2) law through constitutional provisions or enabling legislation.

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

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

As of June 30, 2017, the metropolitan government had $6,906,863 in outstanding debt for capital purposes for the discretely presented Metropolitan School Department. This debt is a liability of the metropolitan government, but the capital assets acquired are reported in the financial statements of the School Department. Therefore, the metropolitan government has incurred a liability significantly decreasing its unrestricted net position with no corresponding increase in the metropolitan government’s capital assets. It is the metropolitan government’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 metropolitan government’s policy that committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of these unrestricted fund balance classifications could be used. In the fund financial statements, governmental funds report fund balance in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in these funds can be spent. These classifications may consist of the following:

Nonspendable Fund Balance – includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted Fund Balance – includes amounts that have constraints placed on the use of the resources that are either (a) externally imposed by creditors, grantors, contributors or laws and regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation.

Committed Fund Balance – includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolutions of the metropolitan council, 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.

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Assigned Fund Balance – includes amounts that are constrained by the metropolitan government’s intent to be used for specific purposes, but are neither restricted nor committed (excluding stabilization arrangements). The metropolitan council has by resolution authorized the 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 has not been restricted, committed, or assigned to specific purposes within the General and General Purpose School funds.

9. Minimum Fund Balance Policy

To provide management with appropriate guidelines and direction to assist in making sound decisions related to managing the fund balance of certain governmental funds, the following minimum fund balance policy exists and consists of the sum of committed, assigned, and unassigned fund balance: General Fund – five percent of current-year appropriations. General Debt Service Fund – the county will typically have at least 75 percent of budgeted annual expenditures as fund balance.

E. Pension Plans

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

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension

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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.

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 Metropolitan School Department Exhibit J-3 includes explanations of the nature of individual elements of items required to reconcile the balance sheet of governmental funds with the government-wide Statement of Net Position.

B. Explanation of certain differences between the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the government-wide Statement of Activities

Primary Government Exhibit C-4 includes explanations of the nature of individual elements of items required to reconcile the net change in fund balances – total governmental funds with the change in net position of governmental activities reported in the government-wide Statement of Activities. Discretely Presented Metropolitan School Department Exhibit J-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

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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 metropolitan government 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 metropolitan council and any authorized revisions. Unencumbered appropriations lapse at the end of each fiscal year. The budgetary level of control is at the major category level established by the County Uniform Chart of Accounts, as prescribed by the Comptroller of the Treasury of the State of Tennessee. Major categories are at the department level (examples of General Fund major categories: County Commission, County Mayor/Executive, County Attorney, Election Commission, etc.). Management may make revisions within major categories, but only the metropolitan council may transfer appropriations between major categories. During the year, several supplementary appropriations were necessary. The metropolitan government'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 GAAP basis is presented on the face of each budgetary schedule.

B. Appropriations Exceeded Estimated Available Funding

The budget and subsequent amendments approved by the metropolitan council for the General Fund resulted in appropriations exceeding estimated available funding by $22,563.

IV. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments

The metropolitan government (excluding the Water and Sewer Fund, enterprise fund) and the Metropolitan School Department participate in an internal cash and investment pool through the Office of Trustee. The metropolitan trustee is the treasurer of the metropolitan government and in this capacity is responsible for receiving, disbursing, and investing most metropolitan government funds. Each fund's portion of this pool is displayed on the balance sheets or statements of net position as Equity in Pooled Cash and Investments. Cash reflected on the balance sheets or statements of net position represents nonpooled amounts held separately by individual funds.

Deposits Legal Provisions. All deposits with financial institutions must be secured by one of two methods. One method involves financial institutions that

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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 metropolitan government. 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 metropolitan government’s own legally issued bonds or notes. These investments may not have a maturity greater than two years. The metropolitan government may make investments with longer maturities if various restrictions set out in state law are followed. Counties are also authorized to make investments in the State Treasurer’s Investment Pool and in repurchase agreements. Repurchase agreements must be approved by the state Comptroller’s Office and executed in accordance with procedures established by the State Funding Board. Securities purchased under a repurchase agreement must be obligations of the U.S. government or obligations guaranteed by the U.S. government or any of its agencies. When repurchase agreements are executed, the purchase of the securities must be priced at least two percent below the fair value of the securities on the day of purchase. The metropolitan government had no pooled and nonpooled investments as of June 30, 2017.

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B. Capital Assets

Capital assets activity for the year ended June 30, 2017, was as follows:

Primary Government

Governmental Activities:

Balance Balance7-1-16 Increases Decreases 6-30-17

Capital Assets Not Depreciated:Land $ 393,779 $ 0 $ 0 $ 393,779Construction in Progress 1,708,000 350,586 (1,720,936) 337,650Total Capital Assets Not Depreciated $ 2,101,779 $ 350,586 $ (1,720,936) $ 731,429

Capital Assets Depreciated:Buildings and Improvements $ 2,403,839 $ 1,858,827 $ 0 $ 4,262,666Other Capital Assets 4,156,640 773,490 (46,765) 4,883,365Infrastructure 3,939,218 478,118 0 4,417,336Total Capital Assets Depreciated $ 10,499,697 $ 3,110,435 $ (46,765) $ 13,563,367

Less Accumulated Depreciation For:Buildings and Improvements $ 1,188,262 $ 61,416 $ 0 $ 1,249,678Other Capital Assets 3,397,098 65,411 (46,765) 3,415,744Infrastructure 1,027,235 430,692 0 1,457,927Total Accumulated Depreciation $ 5,612,595 $ 557,519 $ (46,765) $ 6,123,349

Total Capital Assets Depreciated, Net $ 4,887,102 $ 2,552,916 $ 0 $ 7,440,018

Governmental Activities Capital Assets, Net $ 6,988,881 $ 2,903,502 $ (1,720,936) $ 8,171,447

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

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General Government $ 14,613 Administration of Justice 4,968 Public Safety 108,648 Public Health and Welfare 69,032 Social, Cultural, and Recreational Services 63,647 Highway/Public Works 296,611 Total Depreciation Expense - Governmental Activities $ 557,519

Discretely Presented Metropolitan School Department Governmental Activities:

Balance Balance7-1-16 Increases Decreases 6-30-17

Capital Assets Not Depreciated:Land $ 39,342 $ 0 $ 0 $ 39,342Construction in Progress 209,950 104,638 (228,300) 86,288Total Capital Assets Not Depreciated $ 249,292 $ 104,638 $ (228,300) $ 125,630

Capital Assets Depreciated:Buildings and Improvements $ 19,854,937 $ 267,043 $ 0 $ 20,121,980Other Capital Assets 1,420,548 97,756 (52,970) 1,465,334Total Capital Assets Depreciated $ 21,275,485 $ 364,799 $ (52,970) $ 21,587,314

Less Accumulated Depreciation For:Buildings and Improvements $ 8,601,329 $ 426,198 $ 0 $ 9,027,527Other Capital Assets 778,019 72,267 (52,970) 797,316Total Accumulated Depreciation $ 9,379,348 $ 498,465 $ (52,970) $ 9,824,843

Total Capital Assets Depreciated, Net $ 11,896,137 $ (133,666) $ 0 $ 11,762,471

Governmental Activities Capital Assets, Net $ 12,145,429 $ (29,028) $ (228,300) $ 11,888,101

Depreciation expense was charged to functions of the School Department as follows:

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Instruction $ 394,250Support Services 104,215

Total Depreciation Expense - Governmental Activities $ 498,465

C. Long-term Obligations

Primary Government Other Loans The metropolitan government issues other loans to provide funds for the construction of major capital facilities for the primary government and the discretely presented School Department. Other loans are direct obligations and pledge the full faith and credit of the government. The other loans outstanding were issued for original terms of up to 28 years. Repayment terms are generally structured with increasing amounts of principal maturing as interest requirements decrease over the term of the debt. The other loans included in long-term debt as of June 30, 2017, will be retired from the General Debt Service Fund. Other loans outstanding as of June 30, 2017, for governmental activities are as follows:

OriginalInterest Final Amount Balance

Type Rate Maturity of Issue 6-30-17

Other Loans variable % 5-25-35 $ 11,271,980 $ 8,205,980

During the 2007-08 year, the metropolitan government entered into two loan agreements with the Montgomery County Public Building Authority. Under these loan agreements, the authority loaned $8,300,000 and $2,971,980 to the metropolitan government for various capital projects. These loans are repayable at interest rates that are tax-exempt variable rates determined by the remarketing agent daily or weekly, depending on the particular program. In addition, the metropolitan government pays various other fees (trustee, letter of credit, and debt remarketing) in connection with these loans. At June 30, 2017, the variable interest rate was .85 percent, and other fees totaled approximately .53 percent (letter of credit), .07 percent (remarketing), and $85 per month (trustee) for the $8,300,000 loan. At June 30, 2017, the variable interest rate was .81 percent, and other fees totaled approximately .5 percent (letter of credit), .07 percent month (remarketing), and $85 per month (trustee) for the $2,971,980 loan.

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The annual requirements to amortize other loans outstanding as of June 30, 2017, including interest payments and other loan fees, are presented in the following table: Year EndingJune 30 Principal Interest Other Fees Total

2018 $ 405,000 $ 68,826 $ 50,838 $ 524,6642019 421,000 65,449 48,443 534,8922020 435,000 61,939 45,955 542,8942021 451,000 58,313 43,384 552,6972022 469,000 54,554 40,718 564,2722023-2027 2,609,000 211,318 160,019 2,980,3372028-2032 2,111,980 106,789 81,743 2,300,5122033-2035 1,304,000 22,369 18,833 1,345,202

Total $ 8,205,980 $ 649,557 $ 489,933 $ 9,345,470

Other Loans

There is $1,514,339 available in the General Debt Service Fund to service long-term debt. Debt per capita totaled $1,290, based on the 2010 federal census. Changes in Long-term Obligations Long-term obligations activity for the year ended June 30, 2017, was as follows:


OtherNote Loans

Balance, July 1, 2016 $ 1,600,000 $ 8,596,980Additions 0 0Reductions (1,600,000) (391,000)

Balance, June 30, 2017 $ 0 $ 8,205,980

Balance Due Within One Year $ 0 $ 405,000

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Compensated Absences

Balance, July 1, 2016 $ 114,167Additions 129,148Reductions (133,956)

Balance, June 30, 2017 $ 109,359

Balance Due Within One Year $ 43,744

Analysis of Noncurrent Liabilities Presented on Exhibit A:

Total Noncurrent Liabilities, June 30, 2017 $ 8,315,339Less: Balance Due Within One Year (448,744)

Noncurrent Liabilities - Due in More Than One Year - Exhibit A $ 7,866,595

Compensated absences will be paid from the employing funds, primarily the General and Highway/Public Works funds. Discretely Presented Metropolitan School Department

Changes in Long-term Obligations Long-term obligations activity for the School Department for the year ended June 30, 2017, was as follows: Governmental Activities: Other

Compensated PostemploymentAbsences Benefits

Balance, July 1, 2016 $ 19,728 $ 677,847Additions 17,989 158,898Reductions (18,734) (131,408)

Balance, June 30, 2017 $ 18,983 $ 705,337

Balance Due Within One Year $ 18,983 $ 0

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Governmental Activities: Net Pension Net PensionLiability - Liability -

Agent Plan* Legacy Plan

Balance, July 1, 2016 $ (166,269) $ 41,935Additions 291,557 1,649,351Reductions (120,386) (1,047,464)

Balance, June 30, 2017 $ 4,902 $ 643,822

Balance Due Within One Year $ 0 $ 0

*The Agent Plan had a Net Pension Asset balance on July 1, 2016. Analysis of Noncurrent Liabilities Presented on Exhibit A:

Total Noncurrent Liabilities, June 30, 2017 $ 1,373,044Less: Balance Due Within One Year (18,983)

Noncurrent Liabilities - Due in More Than One Year - Exhibit A $ 1,354,061

Compensated absences and other postemployment benefits will be paid from the employing funds, primarily the General Purpose School and School Federal Projects funds.

D. On-Behalf Payments The State of Tennessee pays health insurance premiums for retired teachers on-behalf of the Metropolitan School Department. These payments are made by the state to the Local Education Group Insurance Plan and the Medicare Supplement Plan. Both of these 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, 2017, were $32,516 and $8,100, respectively. The School Department has recognized these on-behalf payments as revenues and expenditures in the General Purpose School Fund.

V. OTHER INFORMATION A. Risk Management

The metropolitan government and the discretely presented Metropolitan School Department participate 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 metropolitan government and the School

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Department pay 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 metropolitan government continues to carry commercial insurance for risks associated with the employees’ health insurance plan. Retirees do not participate in this plan. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. The discretely presented Metropolitan 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, Tennessee Code Annotated (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.

B. Accounting Changes Provisions of Governmental Accounting Standards Board (GASB) Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans; Statement No. 77, Tax Abatement Disclosures; Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans; Statement No. 80, Blending Requirements for Certain Component Units; and Statement No. 82, Pension Issues an amendment of GASB Statements No. 67, No. 68, and No. 73, became effective for the year ended June 30, 2017. GASB Statement No. 74, establishes accounting and reporting requirements for postemployment benefits other than pensions (other postemployment benefits or OPEB), which are included in the general purpose external financial reports of state and local governmental OPEB plans. This statement replaces GASB Statements No. 43 and No. 57. It also includes requirements for defined contribution OPEB plans that replace the requirements in Statements No. 25, No. 43, and No. 50. The scope of this statement includes OPEB plans, both defined benefit and defined contribution, administered through trusts meeting the necessary criteria as well as reporting assets accumulated through OPEB plans that are not administered through trusts that meet the specified criteria. GASB Statement No. 77, establishes reporting requirements for tax abatements. This standard requires the disclosure of information about the

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nature and magnitude of tax abatement agreements entered into by state and local governments that reduce the government’s tax revenues. GASB Statement No. 78, amends Statement No. 68 to exclude certain pensions provided to employees of state or local governments through a cost-sharing multiple-employer pension plans that are not state or local plans and meet specific other criteria. This statement establishes recognition, measurement, and reporting criteria for these plans. GASB Statement No. 80, amends the blending requirements of paragraph 53 of Statement No. 14. This standard adds additional blending criterion, which requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. GASB Statement No. 82 amends Statements No. 67, No. 68, and No. 73. This standard establishes covered payroll as the payroll on which contributions to a pension plan are based in the Required Supplementary Information. In addition, this standard clarifies that employer paid member contributions should be considered plan member contributions for purposes of applying Statement No. 67, and employee contributions for the purposes of applying Statement No. 68. This standard further states that an employer’s expense and expenditures for employer paid member contributions should be recognized in the period for which the contribution is assessed and classified in the same manner that the employer classifies similar compensation other than pensions (for example, as salaries and wages or as fringe benefits).

C. Contingent Liabilities The metropolitan government is involved in several pending lawsuits. The county attorney estimates that the potential claims against the county not covered by insurance resulting from such litigation would not materially affect the county’s financial statements.

D. Joint Ventures

The Seventeenth Judicial District Drug Task Force (DTF) is a joint venture formed by an interlocal agreement between the district attorney general of the Seventeenth Judicial District, Marshall, Lincoln, Moore, and Bedford counties, and various cities within these counties. The purpose of the DTF is to provide multi-jurisdictional law enforcement to promote the investigation and prosecution of drug-related activities. Funds for the operations of the DTF come primarily from federal grants, drug fines, and the forfeiture of drug-related assets to the DTF. The DTF is overseen by the district attorney general and is governed by a board of directors, including the district attorney general, sheriffs, and police chiefs of participating law enforcement agencies within the judicial district. The metropolitan government did not contribute to the DTF for the year ended June 30, 2017.

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The Interlocal Solid Waste Authority was formed by joint resolution of the counties of Bedford, Franklin, Moore, and Lincoln and the municipalities of Tullahoma and Fayetteville to develop a solid waste regional plan. Each participating County Commission or City Council appointed the authority’s board for varying terms of office. The metropolitan government made no contribution to the Interlocal Solid Waste Authority for the year ended June 30, 2017. The metropolitan government does not retain an equity interest in any of the above-noted joint ventures. Complete financial statements for the Seventeenth Judicial District Drug Task Force and the Interlocal Solid Waste Authority can be obtained from their administrative offices at the following addresses:

Administrative Offices:

Office of District Attorney General Seventeenth Judicial District Drug Task Force P.O. Box 878 Fayetteville, TN 37334 Interlocal Solid Waste Authority c/o City of Tullahoma P.O. Box 807 Tullahoma, TN 37388

E. Retirement Commitments

1. Tennessee Consolidated Retirement System (TCRS)

Primary Government General Information About the Pension Plan Plan Description. Certain employees of the metropolitan government are provided a defined benefit pension plan through the Public Employee Retirement Plan, an agent 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 the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly available financial report that can be obtained at www.treasury.tn.gov/tcrs.

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Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. The chief legislative body may adopt the benefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. Reduced benefits for early retirement are available to vested members at age 55. Members vest with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. A member who leaves employment may withdraw their employee contributions plus any accumulated interest. Employees Covered by Benefit Terms. At the measurement date of June 30, 2016, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 4Inactive Employees Entitled to But Not Yet Receiving Benefits 3Active Employees 10

Total 17

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 their salary. The metropolitan government makes employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. For the year ended June 30, 2017, the employer contributions for the metropolitan government were $64,426 based on a rate of 10.44 percent of covered payroll. By law, employer

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contributions are required to be paid. The TCRS may intercept the metropolitan government’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) The metropolitan government’s net pension liability (asset) was measured as of June 30, 2016, 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, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 3%Salary Increases Graded Salary Ranges from 8.97%

to 3.71% Based on Age, IncludingInflation, Averaging 4.25%

Investment Rate of Return 7.5%, Net of Pension PlanInvestment Expenses, IncludingInflation

Cost of Living Adjustment 2.5%

Mortality rates were based on actual experience from the June 30, 2012, actuarial experience study, adjusted for some of the expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2016, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008, through June 30, 2012. 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, 2012, actuarial experience study by considering the following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plan

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investment expense and inflation) are developed for each major asset class. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established the long-term expected rate of return by weighting the expected future real rate of return by the target asset allocation percentage and by adding inflation of three percent. The target allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the following table:

PercentageLong-termExpected PercentageReal Rate Target

Asset Class of Return Allocations

U.S. Equity 6.46 % 33 %Developed Market International Equity 6.26 17Emerging Market International Equity 6.40 5Private Equity and Strategic Lending 4.61 8U.S. Fixed Income 0.98 29Real Estate 4.73 7Short-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 7.5 percent based on a blending of the three factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.5 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 the metropolitan government 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 NetPension Fiduciary PensionLiability Net Position Liability

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

Balance, July 1, 2015 $ 1,394,610 $ 1,430,224 $ (35,614)

Changes for the year: Service Cost $ 45,961 $ 0 $ 45,961 Interest 105,928 0 105,928 Differences Between Expected and Actual Experience (984) 0 (984) Contributions-Employer 0 60,945 (60,945) Contributions-Employees 0 29,189 (29,189) Net Investment Income 0 38,281 (38,281) Benefit Payments, Including Refunds of Employee Contributions (56,403) (56,403) 0 Administrative Expense 0 (748) 748 Other Changes 0 0 0Net Changes $ 94,502 $ 71,264 $ 23,238

Balance, June 30, 2016 $ 1,489,112 $ 1,501,488 $ (12,376)

Increase (Decrease)

Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the net pension liability (asset) of the metropolitan government calculated using the discount rate of 7.5 percent, as well as what the net pension liability (asset) would be if it was calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%) than the current rate:

Current1% Discount 1%

Decrease Rate Increase6.5% 7.5% 8.5%

Net Pension Liability $ 178,495 $ (12,376) $ (173,487)

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Pension Expense (Income) and Deferred Outflows of Resources and Deferred Inflows of Resources to Pensions Negative Pension Expense. For the year ended June 30, 2017, the metropolitan government recognized negative pension expense of $12,729. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2017, the metropolitan government 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 $ 4,034 $ 102,215Net Difference Between Projected and Actual Earnings on Pension Plan Investments 50,287 0Contributions Subsequent to the Measurement Date of June 30, 2016 (1) 64,426 N/A

Total $ 118,747 $ 102,215

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

Measurement Date of June 30, 2016,” will be recognized as a reduction (increase) to net pension liability (asset) in the following measurement period.

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

2018 $ (27,673)2019 (27,673)2020 (6,394)2021 13,8482022 0Thereafter 0

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

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Discretely Presented Metropolitan Government School Department Non-certified Employees General Information About the Pension Plan Plan Description. Non-certified employees of the discretely presented metropolitan government 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 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 www.treasury.tn.gov/tcrs. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. The chief legislative body may adopt the benefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. Reduced benefits for early retirement are available to vested members at age 55. Members vest with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. A member who leaves employment may withdraw their employee contributions plus any accumulated interest.

http://www.treasury.tn.gov/tcrs

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Employees Covered by Benefit Terms. At the measurement date of June 30, 2016, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 32Inactive Employees Entitled to But Not Yet Receiving Benefits 55Active Employees 58

Total 145

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 their salary. The metropolitan government School Department makes employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. For the year ended June 30, 2017, the employer contributions for the metropolitan government were $27,462 based on a rate of 2.23 percent of covered payroll. By law, employer contributions are required to be paid. The TCRS may intercept the metropolitan government School Department’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) The metropolitan government School Department’s net pension liability (asset) was measured as of June 30, 2016, 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, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

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Mortality rates were based on actual experience from the June 30, 2012, actuarial experience study, adjusted for some of the expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2016, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008, through June 30, 2012. 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, 2012, actuarial experience study by considering the following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established the long-term expected rate of return by weighting the expected future real rate of return by the target asset allocation percentage and by adding inflation of three percent. The target allocation and best estimate of arithmetic real rates of return 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 7.5 percent based on a blending of the three factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.5 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 the metropolitan government School Department 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 NetPension Fiduciary PensionLiability Net Position Liability

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

Balance, July 1, 2015 $ 3,489,102 $ 3,655,371 $ (166,269)

Changes for the year: Service Cost $ 110,147 $ 0 $ 110,147 Interest 264,200 0 264,200 Differences Between Expected and Actual Experience (28,157) 0 (28,157) Contributions-Employer 0 25,635 (25,635) Contributions-Employees 0 57,478 (57,478) Net Investment Income 0 96,230 (96,230) Benefit Payments, Including Refunds of Employee Contributions (153,168) (153,168) 0 Administrative Expense 0 (4,324) 4,324 Other Changes 0 0 0Net Changes $ 193,022 $ 21,851 $ 171,171

Balance, June 30, 2016 $ 3,682,124 $ 3,677,222 $ 4,902

Increase (Decrease)

Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the net pension liability (asset) of the metropolitan government School Department calculated using the discount rate of 7.5 percent, as well as what the net pension liability (asset) would be if it was calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%) than the current rate:

Current1% Discount 1%

Decrease Rate Increase6.5% 7.5% 8.5%

Net Pension Liability $ 467,127 $ 4,902 $ (381,876)

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Pension Expense (Income) and Deferred Outflows of Resources and Deferred Inflows of Resources to Pensions Pension Expense. For the year ended June 30, 2017, the metropolitan government School Department recognized pension expense of $36,953. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2017, the metropolitan government 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 $ 0 $ 60,543Net Difference Between Projected and Actual Earnings on Pension Plan Investments 121,380 0Contributions Subsequent to the Measurement Date of June 30, 2016 (1) 27,462 N/A

Total $ 148,842 $ 60,543

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

Measurement Date of June 30, 2016,” will be recognized as a reduction (increase) to net pension liability (asset) in the following measurement period.

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:


2018 $ (12,876)2019 (12,876)2020 57,1982021 29,3962022 0Thereafter 0

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

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Certified Employees Teacher Retirement Plan General Information About the Pension Plan Plan Description. Teachers of the metropolitan government 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 www.treasury.tn.gov/tcrs. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. Members are eligible to retire with an unreduced benefit at age 65 with five years of service credit or pursuant to the rule of 90 in which the member’s age and service credit total 90. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. A reduced early retirement benefit is available to vested members at age 60 or pursuant to the rule of 80. Members are vested with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. Members who leave employment may withdraw their employee contributions, plus any accumulated interest. Under the Teacher Retirement Plan,

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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, 2017, to the Teacher Retirement Plan were $12,820, which is four percent of covered payroll. The employer rate, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Pension Liabilities (Assets). At June 30, 2017, the metropolitan government School Department reported an asset of $8,568 for its proportionate share of the net pension asset. The net pension asset was measured as of June 30, 2016, and the total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of that date. The metropolitan government School Department’s proportion of the net pension asset was based on the metropolitan government 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, 2016, the metropolitan government School Department’s proportion was .082307 percent. The proportion measured as of June 30, 2015, was .047317 percent. Pension Expense. For the year ended June 30, 2017, the metropolitan government School Department recognized pension expense of $7,092. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2017, the metropolitan government School Department reported deferred outflows of resources related to pensions from the following sources:

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Difference Between Expected and Actual Experience $ 830 $ 988Net Difference Between Projected and Actual Earnings on Pension Plan Investments 1,403 0Changes in Proportion of Net Pension Liability (Asset) 0 981LEA's Contributions Subsequent to the Measurement Date of June 30, 2016 12,820 N/A

Total $ 15,053 $ 1,969

The metropolitan government School Department’s employer contributions of $12,820, reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as an increase of net pension liability (asset) in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2018 $ 2652019 2652020 2652021 1982022 (102)Thereafter (627)

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, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

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Mortality rates are customized based on the June 30, 2012, actuarial experience study and some included adjustment for expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2016, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008, through June 30, 2012. 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, 2012, actuarial experience study by considering the following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established the long-term expected rate of return by weighting the expected future real rate of return by the target asset allocation percentage and by adding inflation of three percent. The target allocation and best estimates of arithmetic real rates of return 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 7.5 percent based on a blending of the three factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.5 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 metropolitan government School Department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.5 percent, as well as what the metropolitan government School Department’s proportionate share of the net pension liability (asset) would be if it was calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%) 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) 6.5% 7.5% 8.5%

Net Pension Liability $ 4,046 $ (8,568) $ (17,863)

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

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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 metropolitan government School Department for the year ended June 30, 2017, to the Teacher Legacy Pension Plan were $319,703, which is 9.04 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, 2017, the metropolitan government School Department reported a liability of $643,822 for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability (asset) was determined by an actuarial valuation as of that date. The metropolitan government School Department’s proportion of the net pension liability (asset) was based on the metropolitan government 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, 2016, the metropolitan government School Department’s proportion was .103021 percent. The proportion measured at June 30, 2015, was .102373 percent.

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Pension Expense. For the year ended June 30, 2017, the metropolitan government School Department recognized pension expense of $80,300. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2017, the metropolitan government 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 $ 27,094 $ 779,455Net Difference Between Projected and Actual Earnings on Pension Plan Investments 718,836 0Changes in Proportion of Net Pension Liability (Asset) 39,478 20,791LEA's Contributions Subsequent to the Measurement Date of June 30, 2016 319,703 N/A

Total $ 1,105,111 $ 800,246

The metropolitan government School Department’s employer contributions of $319,703 reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as an increase in net pension asset in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2018 $ (116,043)2019 (116,043)2020 228,7822021 38,2782022 (49,811)Thereafter 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, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:





Mortality rates are customized based on the June 30, 2012, actuarial experience study and some included adjustments for expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2016, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008, through June 30, 2012. 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, 2012, actuarial experience study by considering the following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established the long-term expected rate of return by weighting the expected future real rate of return by the target asset allocation percentage and by adding inflation of three percent. The target allocation and best estimates of arithmetic real rates of return 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 7.5 percent based on a blending of the three factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.5 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 metropolitan government School Department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.5 percent, as well as what the metropolitan government School Department’s proportionate share of the net pension liability (asset) would be if it was calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%) 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) 6.5% 7.5% 8.5%

Net Pension Liability $ 3,535,338 $ 643,822 $ (1,751,379)

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

The metropolitan government offers its employees a deferred compensation plan established pursuant to IRC Section 457. The metropolitan government contributes 2.38 percent of the costs of administering and funding this program. All other costs of administering and funding this program are the responsibility of plan participants. The Section 457 plan assets remain the property of the contributing employees and are not presented in the accompanying financial statements. IRC Section 457 establishes participation, contribution, and withdrawal provisions for the plan.

F. Other Postemployment Benefits (OPEB)

Plan Description The Metropolitan School Department participates in the state-administered Local Education Group Insurance Plan for healthcare benefits. For accounting purposes, the plan is an agent multiple-employer defined benefit OPEB plan. Benefits are established and amended by an insurance committee created by Section 8-27-302, Tennessee Code Annotated (TCA). Prior to reaching the age of 65, all members have the option of choosing between the standard or partnership preferred provider organization (PPO) plan for healthcare benefits. Subsequent to age 65, members who are also in the state’s retirement system may participate in a state-administered Medicare Supplement Plan that does not include pharmacy. The plans are reported in the State of Tennessee Comprehensive Annual Financial Report (CAFR). The CAFR is available on the state’s website at https://www.tn.gov/finance/fa/fa-accounting-financial/fa-accfin-cafr.html. Funding Policy The premium requirements of plan members are established and may be amended by the insurance committee. The plan is self-insured and financed on a pay-as-you-go basis with the risk shared equally among the participants. Claims liabilities of the plan are periodically computed using actuarial and statistical techniques to establish premium rates. The employers in each plan

https://www.tn.gov/finance/fa/fa-accounting-financial/fa-accfin-cafr.html

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develop a contribution policy in terms of subsidizing active employees or retired employees’ premiums since the committee is not prescriptive on that issue. The state does not provide a subsidy for local government participants; however, the state does provides a partial subsidy to Local Education Agency pre-65 teachers and a full subsidy based on years of service for post-65 members in the Medicare Supplement Plan. The School Department recognized expenditures of $131,408 for postemployment health care during the year ended June 30, 2017. Annual OPEB Cost and Net OPEB Obligation

LocalEducation

GroupInsurance

Plan

ARC $ 159,000Interest on the NOPEBO 25,419Adjustment to the ARC (25,521)Annual OPEB cost $ 158,898Amount of contribution (131,408)Increase/decrease in NOPEBO $ 27,490Net OPEB obligation, 7-1-16 677,847

Net OPEB obligation, 6-30-17 $ 705,337

PercentageFiscal Annual of Annual Net OPEBYear OPEB OPEB Cost Obligation

Ended Plan Cost Contributed at Year End

6-30-15 Local Education Group $ 138,606 72% $ 627,1046-30-16 " 153,905 67 677,8476-30-17 " 158,898 83 705,337

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Funded Status and Funding Progress

The funded status of the plan as of July 1, 2015, was as follows:

(dollars in thousands) LocalEducation

GroupInsurance

Plan

Actuarial valuation date 7-1-15Actuarial accrued liability (AAL) $ 1,496Actuarial value of plan assets $ 0Unfunded actuarial accrued liability (UAAL) $ 1,496Actuarial value of assets as a % of the AAL 0%Covered payroll (active plan members) $ 4,835UAAL as a % of covered payroll 31% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future, and actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Actuarial Methods and Assumptions Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. In the July 1, 2015, actuarial valuation for the Local Education Plan, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 3.75 percent investment rate of return (net of administrative expenses) and an annual health care cost trend rate of six percent in fiscal year 2017, and then be reduced by decrements to an ultimate rate of 4.645 percent by fiscal 2050. Both rates include a 2.5 percent inflation assumption. The unfunded actuarial accrued liability is being amortized as a level percentage of payroll on a closed basis over a 35-year period beginning with July 1, 2007. Payroll is assumed to grow at a rate of three percent.

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G. Purchasing Law The metropolitan government follows the Metropolitan Charter, which provides for all purchases and contracts for goods or services to be made through a consolidated Metropolitan Purchasing Department. The charter further provides for the metropolitan mayor to manage/conduct the Metropolitan Purchasing Department according to the procedures adopted by the metropolitan council. The Metropolitan Council is required by the charter to establish a three-member oversight committee to oversee the activity of the Metropolitan Purchasing Department. The metropolitan council has not created a consolidated Metropolitan Purchasing Department. However, effective June 21, 1999, (amended October 18, 2004) the council adopted the following purchasing procedures to be administered by the metropolitan mayor assisted by the director of schools and the highway superintendent: 1. Purchase orders are required for all purchases estimated to exceed

$500. 2. Purchase orders shall be approved by the metropolitan mayor for the

general metropolitan government, the director of schools for the School Department, and the highway superintendent for the Highway Department.

3. Evidence of receiving goods or services should be noted on all invoices

prior to payment.

4. The metropolitan council set the bid requirements for the Office of Metropolitan Mayor to follow the general statutes of the County Purchasing Law of 1983, Sections 5-14-201 through 5-14-206, Tennessee Code Annotated (TCA), which provide for competitive bids on all purchases exceeding $10,000.

5. The metropolitan council set the bid requirements for the Office of

Highway Superintendent to follow the general statutes of the County Purchasing Law of 1983, Sections 5-14-201 through 5-14-206, TCA, and the Uniform Road Law, Section 54-7-113, TCA, which provide for purchases exceeding $10,000 to be made after public advertisement and solicitation of competitive bids.

6. The metropolitan council set the bid requirements for the Office of

Director of Schools to follow the general statutes applicable to schools as set forth in Section 49-2-203, TCA, which provides for the Board of Education, 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 exceeding $10,000.

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VI. OTHER NOTES – WATER AND SEWER DEPARTMENT (ENTERPRISE FUND)

A. General The financial statements include the accounts of the Metropolitan Lynchburg – Moore County Water and Sewer Department, which is owned by Metropolitan Lynchburg – Moore County, Tennessee, (the primary government) and governed by the Metropolitan Council and a Utility Board composed of members of the council. The department does not represent a separate legal entity separate and apart from the primary government.

B. Summary of Significant Accounting Policies

The accounting policies of the department conform to generally accepted accounting principles as applicable to enterprise funds. The following is a summary of significant policies:

Measurement Focus and Basis of Accounting – These financial statements have been prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The department accrues the unbilled revenue from the dates of the most recent meter readings to the balance sheet date.

Utility Plant and Depreciation – Utility plant in service is reported at cost and includes improvements, with a cost in excess of $3,000 that significantly adds to the utility plant or extends useful lives. Cost of maintenance and repairs are charged to expense, as are tap connection costs. Depreciation is calculated by the straight-line method to allocate the cost of the assets over their estimated useful lives using guidelines set forth by the Utility Review Board. The estimated useful lives are as follows:

Assets Years

Structures 20 - 50Utility Plant Other Than Structure and Equipment 25 - 50Equipment 5 - 10

Allowance for Uncollectible Accounts – The department provides an allowance for uncollectible accounts equal to estimated losses that will be incurred in collection of all receivables. The estimated losses are based on historical collection experience and a review of the current status of the outstanding receivables.

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Inventories – Inventories are stated at cost, first-in, first-out method. Compensated Absences – The costs of vacation pay granted to employees are recorded as expenditures when earned. Cash Equivalents – For purposes of the Statement of Cash Flows, the department considers all highly liquid investments (including restricted assets) purchased with an original maturity of three months or less to be cash equivalents. Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Capitalized Interest – Net interest cost incurred on borrowed funds during the period of construction of capital assets is capitalized as a component of the cost of acquiring those assets.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the department are charges to customers for sales and services. The department also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for proprietary funds include the cost of sales and services, administrative and maintenance expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. As a general rule, when both restricted and unrestricted resources are available for use, it is the department’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied.

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C. Utility Plant Additions and Retirements

Business-type Activities:Balance Balance7-1-16 Additions Deductions 6-30-17

Capital Assets Not Depreciated or Amortized: Land and Land Rights $ 92,459 $ 0 $ 0 $ 92,459 Construction in Progress 1,186,027 2,405,022 (3,405,249) 185,800Total Capital Assets Not Depreciated or Amortized $ 1,278,486 $ 2,405,022 $ (3,405,249) $ 278,259

Other Capital Assets: General $ 346,016 $ 0 $ 0 $ 346,016 Water 13,842,742 74,217 0 13,916,959 Sewer 2,625,864 3,339,953 (791,182) 5,174,635 Maintenance 142,855 0 0 142,855 Acquistion Adjustment 301,099 0 0 301,099 Utility Plant $ 17,258,576 $ 3,414,170 $ (791,182) $ 19,881,564

Less Accumulated Depreciation/ Amortization for: General $ 196,596 $ 15,292 $ 0 $ 211,888 Water 4,076,251 388,730 0 4,464,981 Sewer 1,235,131 68,402 (553,191) 750,342 Maintenance 119,202 5,106 0 124,308 Acquistion Adjustment 129,964 15,055 0 145,019Total Accumulated Depreciation/ Amortization $ 5,757,144 $ 492,585 $ (553,191) $ 5,696,538

Other Capital Assets, Net $ 11,501,432 $ 2,921,585 $ (237,991) $ 14,185,026

Business-type Activities Capital Assets, Net $ 12,779,918 $ 5,326,607 $ (3,643,240) $ 14,463,285

D. Cash and Restricted Funds

The following is a summary of cash and restricted funds at June 30, 2017:

CashEquivalents

Cash for General Use $ 591,239Restricted for Asset Maintenance 11,925Restricted for construction 113,435

Total $ 716,599

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The department has also designated $503,573 to be used to fund capital asset replacements. Legal Provisions: All deposits with financial institutions must be secured by one of two methods depending on whether the financial institution participates 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 department. Types of Investments Authorized: State statutes authorize the entity 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; bonds of any state or political subdivision rated A or higher by any nationally recognized rating service; the metropolitan government’s own legally issued bonds or notes; the State Treasurer’s Investment Pool; and repurchase agreements. The entity has no policy that would further limit its investments.

E. Revenue Bonds

A summary of revenue bond transactions for the year ended June 30, 2017, includes the following:

87

Revenue BondBonds Anticipation Notes

Balance, July 1, 2016 $ 3,593,034 $ 258,460Additions 1,921,000 1,177,540Reductions (87,697) (1,436,000)

5,426,337 0

Less current maturities (103,464) 0

Balance, June 30, 2017, Less $ 5,322,873 $ 0 current maturities

Details of water and sewer revenue bonds are as follows: Series 1997 Water Revenue and Tax Bonds, 4.875%, payable $1,459 per month including principal and interest with final maturity in 2036 $ 207,543Series 2001 Water Revenue and Tax Bonds, 4.75 payable $1,012 per month including principal and interest with final maturity in 2040 167,004Series 2006 Water Revenue and Tax Bonds, 4.25%, payable $4,652 per month including principal and interest with final maturity in 2045 903,387Series 2008 Water Revenue and Tax Bonds, 4.12%, payable $8,700 per month including principal and interest with final maturity in 2046 1,740,344Series 2008 Water Revenue and Tax Bonds, 4.625%, payable $2,606 per month including principal and interest with final maturity in 2047 505,232Series 2014 Sewer Revenue and Tax Bonds, 2.25%, payable $4,696 per month including principal and interest with final maturity in 2054 1,419,837Series 2014 Sewer Revenue and Tax Bonds, 2.25%, payable $1,586 per month including principal and interest with final maturity in 2055 482,989

Total $ 5,426,336

The bonds are payable from and secured primarily by a pledge of the net revenues of the department; in the event such revenues are insufficient, the bonds are further secured by the taxing power of the Metropolitan Government. The annual requirements to amortize principal and interest for all revenue bonds as of June 30, 2017, are as follows:

88

Year Principal Interest

2018 $ 103,464 $ 192,9842019 107,316 189,1322020 111,324 185,1242021 115,492 180,9562022 119,827 176,6212023-2027 670,541 811,6992028-2032 805,368 676,8722033-2037 941,911 506,7222038-2042 1,043,021 321,4122043-2047 900,890 125,4472048-2052 337,983 38,9372053-2055 171,143 4,720

Total $ 5,428,280 $ 3,410,626

Under provisions of the bond agreements, the department is required to establish and maintain various funds as follows:

Revenue Fund – All revenues are to be deposited in this fund and shall be disbursed for the establishment of the other required funds.

Operation and Maintenance Fund – The money transferred from the revenue fund is to be deposited to this fund for payment of current expenses. The maximum balance of this fund shall not exceed one-fourth of the amount budgeted for current expenses for the fiscal year.

As required by provisions of the bond agreements, the beginning and ending year balances of the required funds are as follows:

Balance Balance6-30-17 6-30-16

Revenue $ 515,494 $ 556,600Operation and Maintenance 35,801 1,915Short-lived Asset Maintenance 11,925 0

Principal and interest payments for these revenue bonds as a percentage of pledged revenue totaled 14 percent for the year.

F. Notes Payable

Metropolitan Lynchburg, Moore County, Tennessee, (the primary government) has borrowed funds under the State of Tennessee’s revolving loan program for the department’s construction projects. The principal and interest payments required under the terms of the loans, which are secured by the department’s revenues and has a stated interest rates of 2.95 percent and zero percent, respectively, are as follows:

89

Year Principal Interest Principal

2018 $ 48,419 $ 11,029 $ 65,6282019 49,867 9,581 65,6282020 51,358 8,090 65,6282021 52,893 6,555 65,6282022 54,475 4,973 65,6282023-2027 135,877 5,199 328,1402028-2032 0 0 328,1402033-2035 0 0 232,218

Total $ 392,889 $ 45,427 $ 1,216,638

Principal and interest payments, as a percentage of pledged revenue, totaled three percent for the year for these loans. Notes payable activity for the year ended June 30, 2017, is as follows:

Balance Balance 7-1-16 Draws Repayments 6-30-17

$ 1,631,325 $ 89,706 $ (111,504) $ 1,609,527

The department incurred $195,050 in interest costs during the current year, of which $7,488 was capitalized.

G. Risk Management

The department is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets, errors and omissions; injuries to employees; and natural disasters. The department obtains insurance coverage covering the above risks of loss through a public risk entity pool, Tennessee Risk Management Trust (TRMT), which is a public entity risk pool created under the auspices of the Tennessee Governmental Tort Liability Act to provide governmental insurance coverage. The creation of the TRMT provides for it to be self-sustaining through member premiums. Settled claims in the past three years have not exceeded the coverage.

H. Income Taxes

As a governmental entity, the department is exempt from federal, state and local income taxes.

90

I. Significant Concentrations

The department operates principally to distribute water to residents of MooreCounty, Tennessee. The department grants credit to its customers, which atJune 30, 2017, totaled $110,642. Deposits from these customers, totaling$24,007 at June 30, 2017, are held as security for these accounts receivable.

Water and sewer revenues from the Jack Daniels Distillery account forapproximately 24 percent of the department’s total water and sewerrevenues.

J. Environmental Contingency

The department’s facilities and operations are subject to a wide range ofenvironmental protection laws related to the use and disposal of hazardousmaterials. As a result, there is the possibility that environmental conditionsmay arise, which would require the department to incur clean-up costs. As inprior years, management continues its efforts to comply, and to determinecompliance with all applicable environmental protection laws and does notbelieve such costs, if any, would materially affect the department’s financialposition or its future cash flows.

K. Sewer System Improvements

The department was awarded loan/grant funding from United StatesDepartment of Agriculture – Rural Development in the amount of $2,935,000.The loan portion of the award is $1,921,000, with an interest rate of 2.75percent and a term of 38 years, and the grant portion is $1,014,000. Draws ofthis funding totaled $2,686,000 as of June 30, 2017, with $249,000 of grantmoney remaining to be drawn.

In October 2015, the utility board awarded a contract for the project to J.Cumby Construction, Inc. The amount of the amended contract is$3,104,460, of which $3,010,975 had been incurred as of June 30, 2017.

L. Deferred Compensation

The department offers its employees a deferred compensation planestablished pursuant to IRC Section 457. The department contributes up to2.38 percent of employee compensation to fund the plan. All other costs ofadministering and funding the plan are the responsibility of planparticipants. The Section 457 plan assets remain the property of thecontributing employees and are not presented in the accompanying financialstatements. IRC Section 457 establishes participation, contribution, andwithdrawal provisions for the plan.

REQUIRED SUPPLEMENTARY INFORMATION

91

Exhibit F-1

The Metropolitan Government of Lynchbury, Moore 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 Ending June 30

2014 2015 2016

Total Pension LiabilityService Cost $ 43,773 $ 45,336 $ 45,961Interest 104,800 111,497 105,928Changes in Benefit Terms 0 0 0Differences Between Actual and Expected Experience 8,069 (169,046) (984)Changes in Assumptions 0 0 0Benefit Payments, Including Refunds of Employee Contributions (68,860) (68,943) (56,403)Net Change in Total Pension Liability $ 87,782 $ (81,156) $ 94,502Total Pension Liability, Beginning 1,387,984 1,475,766 1,394,610

Total Pension Liability, Ending (a) $ 1,475,766 $ 1,394,610 $ 1,489,112

Plan Fiduciary Net PositionContributions - Employer $ 54,991 $ 57,406 $ 60,945Contributions - Employee 26,286 27,494 29,189Net Investment Income 194,294 42,397 38,281Benefit Payments, Including Refunds of Employee Contributions (68,860) (68,943) (56,403)Administrative Expense (384) (457) (748)Net Change in Plan Fiduciary Net Position $ 206,327 $ 57,897 $ 71,264Plan Fiduciary Net Position, Beginning 1,166,000 1,372,327 1,430,224

Plan Fiduciary Net Position, Ending (b) $ 1,372,327 $ 1,430,224 $ 1,501,488

Net Pension Liability (Asset), Ending (a - b) $ 103,439 $ (35,614) $ (12,376)

Plan Fiduciary Net Position as a Percentage of Total Pension Liability 92.99% 102.55% 100.83%Covered Payroll $ 525,725 $ 549,868 $ 583,769Net Pension Liability (Asset) as a Percentage of Covered Payroll 19.68% 6.48% (2.12%)

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

92

Exhibit F-2

The Metropolitan Government of Lynchbury, Moore County, TennesseeSchedule of Changes in Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Plan of TCRSDiscretely Presented Metropolitan School Department - Non-Certified EmployeesFor the Fiscal Year Ending June 30

2014 2015 2016

Total Pension LiabilityService Cost $ 89,333 $ 95,048 $ 110,147Interest 240,127 249,499 264,200Changes in Benefit Terms 0 0 0Differences Between Actual and Expected Experience (66,797) (18,827) (28,157)Changes in Assumptions 0 0 0Benefit Payments, Including Refunds of Employee Contributions (150,417) (136,435) (153,168)Net Change in Total Pension Liability $ 112,246 $ 189,285 $ 193,022Total Pension Liability, Beginning 3,187,571 3,299,817 3,489,102

Total Pension Liability, Ending (a) $ 3,299,817 $ 3,489,102 $ 3,682,124

Plan Fiduciary Net PositionContributions - Employer $ 30,992 $ 25,086 $ 25,635Contributions - Employee 55,743 56,246 57,478Net Investment Income 517,468 110,225 96,230Benefit Payments, Including Refunds of Employee Contributions (150,417) (136,435) (153,168)Administrative Expense (2,135) (2,893) (4,324)Net Change in Plan Fiduciary Net Position $ 451,651 $ 52,229 $ 21,851Plan Fiduciary Net Position, Beginning 3,151,491 3,603,142 3,655,371

Plan Fiduciary Net Position, Ending (b) $ 3,603,142 $ 3,655,371 $ 3,677,222

Net Pension Liability (Asset), Ending (a - b) $ (303,325) $ (166,269) $ 4,902

Plan Fiduciary Net Position as a Percentage of Total Pension Liability 109.19% 104.77% 99.87%Covered Payroll $ 1,114,845 $ 1,124,926 $ 1,149,541Net Pension Liability (Asset) as a Percentage of Covered Payroll 27.21% 14.78% 0.43%


93

Exhibit F-3

The Metropolitan Government of Lynchburg, Moore 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

Contractually Determined Contribution $ 54,991 $ 57,406 $ 60,945 $ 64,426Less Contributions in Relation to the Contractually Determined Contribution (54,991) (57,406) (60,945) (64,426)Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 525,725 $ 549,868 $ 583,769 $ 617,107

Contributions as a Percentage of Covered Payroll 10.46% 10.44% 10.44% 10.44%


94

Exhibit F-4

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Contributions Based on Participation in the Public Employee Pension Plan of TCRSDiscretely Presented Metropolitan School Department - Non-Certified EmployeesFor the Fiscal Year Ended June 30

2014 2015 2016 2017

Contractually Determined Contribution $ 30,992 $ 25,086 $ 25,635 $ 27,462Less Contributions in Relation to the Contractually Determined Contribution (30,992) (25,086) (25,635) (27,462)Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 1,114,845 $ 1,124,926 $ 1,149,541 $ 1,231,478



95

Exhibit F-5

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Contributions Based on Participation in the Teacher Retirement Plan of TCRSDiscretely Presented Metropolitan School DepartmentFor the Fiscal Year Ended June 30

2015 2016 2017

Contractually Required Contribution $ 4,015 $ 14,486 $ 12,820Less Contributions in Relation to the Contractually Required Contribution (4,015) (14,486) (12,820)Contribution Deficiency (Excess) $ 0 $ 0 $ 0

Covered Payroll $ 100,386 $ 362,154 $ 147,872

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


96

Exhibit F-6

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Contributions Based on Participation in the Teacher Legacy Pension Plan of TCRSDiscretely Presented Metropolitan School DepartmentFor the Fiscal Year Ended June 30

2014 2015 2016 2017

Contractually Required Contribution $ 342,727 $ 346,443 $ 336,183 $ 319,703Less Contributions in Relation to the Contractually Required Contribution (342,727) (346,443) (336,183) (319,703)Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 3,859,535 $ 3,832,343 $ 3,718,842 $ 3,894,005



97

Exhibit F-7

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Proportionate Share of the Net Pension Liability (Asset)

in the Teacher Pension Plan of TCRSDiscretely Presented Metropolitan School DepartmentFor the Fiscal Year Ended June 30 *

2016 2017

School Department's Proportion of the Net Pension Liability/Asset 0.048314% 0.082307%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (1,944) $ (8,568)

Covered Payroll $ 100,386 $ 362,154

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

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

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


98

Exhibit F-8

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

2015 2016 2017

School Department's Proportion of the Net Pension Liability/Asset 0.098332% 0.102373% 0.103021%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (15,979) $ 41,935 $ 643,822

Covered Payroll $ 3,859,537 $ 3,832,343 $ 3,718,842

School Department's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll 0.414002% 1.094252% 17.310000%

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

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


99

Exhibit F-9

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Funding Progress – Other Postemployment Benefits PlanDiscretely Presented Metropolitan School DepartmentJune 30, 2017

(Dollar amounts in thousands)

ActuarialAccrued Liability

(AAL)Actuarial Projected Unfunded

Actuarial Value of Unit AAL Covered Valuation Assets Credit (UAAL) Payroll

Plan Date (a) (b) (b)-(a) (c)

Local Education Group 7-1-11 $ 0 $ 1,137 $ 1,137 0 % $ 4,809 24 %" 7-1-13 0 1,352 1,352 0 4,814 28" 7-1-15 0 1,496 1,496 0 4,835 31

FundedRatio(a/b)

UAAL as a Percentage

((b-a)/c)

of CoveredPayroll

100


NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2017

TENNESSEE CONSOLIDATED RETIREMENT SYSTEM

Valuation Date: Actuarially determined contribution rates for 2017 were calculated based on the July 1, 2015, actuarial valuation.

Methods and assumptions used to determine contribution rates:

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

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

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

Including InflationRetirement Age Pattern of Retirement Determined by

Experience StudyMortality Customized Table Based on Actual

Experience Including an Adjustment for Some Anticipated Improvement

Cost of Living Adjustments 2.5%

101

COMBINING AND INDIVIDUAL FUNDFINANCIAL STATEMENTS AND SCHEDULES

102

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.

________________________________________

Urban Services Fund – The Urban Services Fund represents financial activity for the Urban Services District. Solid Waste/Sanitation Fund – The Solid Waste/Sanitation Fund is used to account for household garbage pick-up and the convenience center operations. 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 Fund

________________________________________

Capital Projects Funds are used to account for financial resources to be used in the acquisition or construction of major capital projects.

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

103

Exhibit G-1

The Metropolitan Government of Lynchburg, Moore County, TennesseeCombining Balance SheetNonmajor Governmental FundsJune 30, 2017

TotalSolid General Nonmajor

Urban Waste / Drug Capital GovernmentalServices Sanitation Control Total Projects Funds

ASSETS

Equity in Pooled Cash and Investments $ 11,747 $ 257,544 $ 64,423 $ 333,714 $ 234,934 $ 568,648Accounts Receivable 0 44,782 6,638 51,420 0 51,420Due from Other Governments 0 5,634 0 5,634 0 5,634Property Taxes Receivable 6,133 246,540 0 252,673 158,351 411,024Allowance for Uncollectible Property Taxes (154) (5,769) 0 (5,923) (3,290) (9,213)

Total Assets $ 17,726 $ 548,731 $ 71,061 $ 637,518 $ 389,995 $ 1,027,513

LIABILITIES

Contracts Payable $ 0 $ 0 $ 0 $ 0 $ 108,255 $ 108,255Total Liabilities $ 0 $ 0 $ 0 $ 0 $ 108,255 $ 108,255


Deferred Current Property Taxes $ 5,884 $ 237,650 $ 0 $ 243,534 $ 154,472 $ 398,006Deferred Delinquent Property Taxes 119 3,006 0 3,125 571 3,696Other Deferred/Unavailable Revenue 0 26,793 0 26,793 0 26,793Total Deferred Inflows of Resources $ 6,003 $ 267,449 $ 0 $ 273,452 $ 155,043 $ 428,495

FUND BALANCES

Restricted:Restricted for Public Safety $ 0 $ 0 $ 71,061 $ 71,061 $ 0 $ 71,061

(Continued)

Special Revenue FundsCapital

Projects Fund

104

Exhibit G-1

The Metropolitan Government of Lynchburg, Moore County, TennesseeCombining Balance SheetNonmajor Governmental Funds (Cont.)

TotalSolid General Nonmajor

Urban Waste / Drug Capital GovernmentalServices Sanitation Control Total Projects Funds

FUND BALANCES (Cont.)

Restricted (Cont.):Restricted for Public Health and Welfare $ 0 $ 76,774 $ 0 $ 76,774 $ 0 $ 76,774Restricted for Capital Projects 0 0 0 0 126,697 126,697Restricted for Other Purposes 11,723 0 0 11,723 0 11,723

Committed:Committed for Public Health and Welfare 0 204,508 0 204,508 0 204,508

Total Fund Balances $ 11,723 $ 281,282 $ 71,061 $ 364,066 $ 126,697 $ 490,763

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 17,726 $ 548,731 $ 71,061 $ 637,518 $ 389,995 $ 1,027,513

Special Revenue FundsCapital

Projects Fund

105

Exhibit G-2

The Metropolitan Government of Lynchburg, Moore County, TennesseeCombining Statement of Revenues, Expenditures,

and Changes in Fund BalancesNonmajor Governmental FundsFor the Year Ended June 30, 2017

Constitu -Solid tional

Urban Waste / Drug Officers -Services Sanitation Control Fees Total

RevenuesLocal Taxes $ 11,921 $ 256,459 $ 0 $ 0 $ 268,380Licenses and Permits 3,108 0 0 0 3,108Fines, Forfeitures, and Penalties 0 0 9,450 0 9,450Charges for Current Services 0 212,908 0 136 213,044Other Local Revenues 0 40,903 0 0 40,903State of Tennessee 0 33,212 0 0 33,212

Total Revenues $ 15,029 $ 543,482 $ 9,450 $ 136 $ 568,097


General Government $ 19,381 $ 0 $ 0 $ 0 $ 19,381Administration of Justice 0 0 0 136 136Public Safety 0 0 5,092 0 5,092Public Health and Welfare 0 711,737 0 0 711,737

Capital Projects 0 0 0 0 0Total Expenditures $ 19,381 $ 711,737 $ 5,092 $ 136 $ 736,346

Excess (Deficiency) of RevenuesOver Expenditures $ (4,352) $ (168,255) $ 4,358 $ 0 $ (168,249)

Net Change in Fund Balances $ (4,352) $ (168,255) $ 4,358 $ 0 $ (168,249)Fund Balance, July 1, 2016 16,075 449,537 66,703 0 532,315

Fund Balance, June 30, 2017 $ 11,723 $ 281,282 $ 71,061 $ 0 $ 364,066

(Continued)

Special Revenue Funds

106

Exhibit G-2

The Metropolitan Government of Lynchburg, Moore County, TennesseeCombining Statement of Revenues, Expenditures,

and Changes in Fund BalancesNonmajor Governmental Funds (Cont.)

TotalGeneral NonmajorCapital GovernmentalProjects Funds

RevenuesLocal Taxes $ 41,433 $ 309,813Licenses and Permits 0 3,108Fines, Forfeitures, and Penalties 0 9,450Charges for Current Services 0 213,044Other Local Revenues 0 40,903State of Tennessee 0 33,212

Total Revenues $ 41,433 $ 609,530


General Government $ 0 $ 19,381Administration of Justice 0 136Public Safety 0 5,092Public Health and Welfare 0 711,737

Capital Projects 255,482 255,482Total Expenditures $ 255,482 $ 991,828

Excess (Deficiency) of RevenuesOver Expenditures $ (214,049) $ (382,298)

Net Change in Fund Balances $ (214,049) $ (382,298)Fund Balance, July 1, 2016 340,746 873,061

Fund Balance, June 30, 2017 $ 126,697 $ 490,763

Capital Projects Fund

107

Exhibit G-3

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Revenues, Expenditures, and Changes

in Fund Balance - Actual and BudgetUrban Services FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 11,921 $ 11,850 $ 11,850 $ 71Licenses and Permits 3,108 3,000 3,000 108

Total Revenues $ 15,029 $ 14,850 $ 14,850 $ 179

ExpendituresGeneral Government

Other General Administration $ 19,381 $ 21,700 $ 21,700 $ 2,319Total Expenditures $ 19,381 $ 21,700 $ 21,700 $ 2,319

Excess (Deficiency) of RevenuesOver Expenditures $ (4,352) $ (6,850) $ (6,850) $ 2,498

Net Change in Fund Balance $ (4,352) $ (6,850) $ (6,850) $ 2,498Fund Balance, July 1, 2016 16,075 11,940 11,940 4,135


Budgeted Amounts

108

Exhibit G-4


in Fund Balance - Actual and BudgetSolid Waste/Sanitation FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 256,459 $ 236,050 $ 236,050 $ 20,409Charges for Current Services 212,908 190,000 190,000 22,908Other Local Revenues 40,903 25,000 25,000 15,903State of Tennessee 33,212 33,700 33,700 (488)

Total Revenues $ 543,482 $ 484,750 $ 484,750 $ 58,732

ExpendituresPublic Health and Welfare

Waste Pickup $ 31,986 $ 33,700 $ 33,700 $ 1,714Recycling Center 679,751 455,308 715,702 35,951

Total Expenditures $ 711,737 $ 489,008 $ 749,402 $ 37,665

Excess (Deficiency) of RevenuesOver Expenditures $ (168,255) $ (4,258) $ (264,652) $ 96,397

Net Change in Fund Balance $ (168,255) $ (4,258) $ (264,652) $ 96,397Fund Balance, July 1, 2016 449,537 428,279 428,279 21,258


Budgeted Amounts

109

Exhibit G-5


in Fund Balance - Actual and BudgetDrug Control FundFor the Year Ended June 30, 2017



RevenuesFines, Forfeitures, and Penalties $ 9,450 $ 7,300 $ 7,300 $ 2,150

Total Revenues $ 9,450 $ 7,300 $ 7,300 $ 2,150

ExpendituresPublic Safety

Drug Enforcement $ 5,092 $ 15,750 $ 15,750 $ 10,658Total Expenditures $ 5,092 $ 15,750 $ 15,750 $ 10,658


Net Change in Fund Balance $ 4,358 $ (8,450) $ (8,450) $ 12,808Fund Balance, July 1, 2016 66,703 50,832 50,832 15,871


Budgeted Amounts

110

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.

________________________________________

111

Exhibit H


in Fund Balance - Actual and BudgetGeneral Debt Service FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 1,431,229 $ 1,197,100 $ 1,197,100 $ 234,129

Total Revenues $ 1,431,229 $ 1,197,100 $ 1,197,100 $ 234,129

ExpendituresPrincipal on Debt

General Government $ 1,691,120 $ 224,453 $ 1,691,120 $ 0Education 299,880 299,880 299,880 0

Interest on DebtGeneral Government 66,931 107,405 119,018 52,087Education 58,588 324,720 324,720 266,132

Other Debt ServiceGeneral Government 30,670 31,500 31,500 830Education 51,345 60,000 60,000 8,655


Excess (Deficiency) of RevenuesOver Expenditures $ (767,305) $ 149,142 $ (1,329,138) $ 561,833

Net Change in Fund Balance $ (767,305) $ 149,142 $ (1,329,138) $ 561,833Fund Balance, July 1, 2016 2,281,644 1,808,792 1,808,792 472,852

Fund Balance, June 30, 2017 $ 1,514,339 $ 1,957,934 $ 479,654 $ 1,034,685

Budgeted Amounts

112

Fiduciary Fund____________________________________

Agency Funds are used to account for assets held by the metropolitan government 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.

____________________________________

Constitutional Officers - Agency Fund – The Constitutional Officers - Agency Fund is used to account for amounts collected in an agency capacity by the metropolitan clerk; circuit, general sessions, and juvenile courts clerk; clerk and master; register of deeds; and sheriff. Such collections include amounts due the state, cities, other metropolitan funds, litigants, heirs, and others.

113

Exhibit I

The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Changes in Assets and Liabilities - Agency FundFor the Year Ended June 30, 2017

Beginning EndingBalance Additions Deductions Balance

Constitutional Officers - Agency Fund Assets Cash $ 25,257 $ 1,233,621 $ 1,241,942 $ 16,936

Total Assets $ 25,257 $ 1,233,621 $ 1,241,942 $ 16,936

Liabilities Due to Litigants, Heirs, and Others $ 25,257 $ 1,233,621 $ 1,241,942 $ 16,936

Total Liabilities $ 25,257 $ 1,233,621 $ 1,241,942 $ 16,936

114

Metropolitan School Department ________________________________________

This section presents combining and individual fund financial statements for the Metropolitan 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.

115

Exhibit J-1The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of ActivitiesDiscretely Presented Metropolitan School DepartmentFor the Year Ended June 30, 2017

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 $ 5,070,120 $ 12,200 $ 278,770 0 $ (4,779,150) Support Services 3,528,998 13,858 130,167 30,909 (3,354,064) Operation of Non-instructional Services 592,693 228,465 370,539 0 6,311

Total Governmental Activities $ 9,191,811 $ 254,523 $ 779,476 30,909 $ (8,126,903)

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 3,054,601 Local Option Sales Tax 446,952 Other Local Taxes 575 Grants and Contributions Not Restricted to Specific Programs 4,950,803 Unrestricted Investment Income 239 Miscellaneous 52,792 Gain on Sale of Capital Assets 4,540Total General Revenues $ 8,510,502

Change in Net Position $ 383,599Net Position, July 1, 2016 12,118,838

Net Position, June 30, 2017 $ 12,502,437

Program Revenues

116

Exhibit J-2

The Metropolitan Government of Lynchburg, Moore County, TennesseeBalance Sheet - Governmental FundsDiscretely Presented Metropolitan School Department June 30, 2017

OtherGeneral Govern- TotalPurpose mental GovernmentalSchool Funds Funds

ASSETS

Cash $ 0 $ 39,920 $ 39,920Equity in Pooled Cash and Investments 1,631,851 139,009 1,770,860Inventories 0 6,046 6,046Due from Other Governments 107,735 10,501 118,236Property Taxes Receivable 2,933,823 0 2,933,823Allowance for Uncollectible Property Taxes (68,648) 0 (68,648)

Total Assets $ 4,604,761 $ 195,476 $ 4,800,237

LIABILITIES

Accounts Payable $ 3,588 $ 8,193 $ 11,781Payroll Deductions Payable 292,910 27,619 320,529Contracts Payable 67,328 0 67,328Total Liabilities $ 363,826 $ 35,812 $ 399,638


Deferred Current Property Taxes $ 2,828,035 $ 0 $ 2,828,035Deferred Delinquent Property Taxes 35,767 0 35,767Total Deferred Inflows of Resources $ 2,863,802 $ 0 $ 2,863,802

FUND BALANCES

Nonspendable:Inventory $ 0 $ 6,046 $ 6,046

Restricted:Restricted for Education 7,224 133,618 140,842

Committed:Committed for Education 540,800 20,000 560,800

Unassigned 829,109 0 829,109Total Fund Balances $ 1,377,133 $ 159,664 $ 1,536,797

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 4,604,761 $ 195,476 $ 4,800,237

Nonmajor Funds

Major Fund

117

Exhibit J-3

The Metropolitan Government of Lynchburg, Moore County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to

the Statement of Net PositionDiscretely Presented Metropolitan School DepartmentJune 30, 2017

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

Total fund balances - balance sheet - governmental funds (Exhibit J-2) $ 1,536,797

(1) Capital assets used in governmental activities are notfinancial resources and therefore are not reported inthe governmental funds.

Add: land $ 39,342 Add: contruction in progress 86,288Add: buildings and improvements net of accumulated depreciation 11,094,453 Add: other capital assets net of accumulated depreciation 668,018 11,888,101

(2) Long-term liabilities are not due and payablein the current period and therefore are not reportedin the governmental funds. Less: other postemployment benefits liability $ (705,337) Less: net pension liability - agent pension plan (4,902) Less: net pension liability - teacher legacy pension plan (643,822) Less: compensated absences payable (18,983) (1,373,044)

(3) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions will be amortized andrecognized as components of pension expense in future years. Add: deferred outflows of resources related to pensions $ 1,269,006 Less: deferred inflows of resources related to pensions (862,758) 406,248

(4) Net pension assets of the teacher retirement plan are not current financial resources and are therefore not reported inthe governmental funds. 8,568

(5) Other long-term assets are not available to pay for current-period expenditures and therefore are deferred in the governmental funds. 35,767

Net position of governmental activities (Exhibit A) $ 12,502,437

118

Exhibit J-4The Metropolitan Government of Lynchburg, Moore County, TennesseeStatement of Revenues, Expenditures,

and Changes in Fund Balances -Governmental Funds

Discretely Presented Metropolitan School DepartmentFor the Year Ended June 30, 2017

OtherGeneral Govern- TotalPurpose mental GovernmentalSchool Funds Funds

RevenuesLocal Taxes $ 3,538,731 $ 0 $ 3,538,731Licenses and Permits 589 0 589Charges for Current Services 47,740 188,440 236,180Other Local Revenues 56,340 1,231 57,571State of Tennessee 5,009,970 4,485 5,014,455Federal Government 0 733,578 733,578Other Governments and Citizens Groups 30,909 0 30,909

Total Revenues $ 8,684,279 $ 927,734 $ 9,612,013


Instruction $ 4,425,876 $ 365,066 $ 4,790,942Support Services 3,504,911 88,272 3,593,183Operation of Non-Instructional Services 129,602 466,743 596,345Capital Outlay 162,454 0 162,454

Total Expenditures $ 8,222,843 $ 920,081 $ 9,142,924

Excess (Deficiency) of RevenuesOver Expenditures $ 461,436 $ 7,653 $ 469,089

Net Change in Fund Balances $ 461,436 $ 7,653 $ 469,089Fund Balance, July 1, 2016 915,697 152,011 1,067,708

Fund Balance, June 30, 2017 $ 1,377,133 $ 159,664 $ 1,536,797

Nonmajor Funds

Major Fund

119

Exhibit J-5

The Metropolitan Government of Lynchburg, Moore County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and

Changes in Fund Balances of Governmental Funds to theStatement of Activities

Discretely Presented Metropolitan School DepartmentFor the Year Ended June 30, 2017

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

Net change in fund balances - total governmental funds (Exhibit J-4) $ 469,089

(1) Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of these assets is allocatedover their useful lives and reported as depreciation expense. Thedifference between capital outlays and depreciation is itemized asfollows:

Add: capital assets purchased in the current period $ 241,137Less: current-year depreciation expense (498,465) (257,328)

(2) Revenues in the statement of activities that do not provide currentfinancial resources are not reported as revenues in the funds.

Add: deferred delinquent property taxes and other deferred June 30, 2017 $ 35,767Less: deferred delinquent property taxes and other deferred June 30, 2016 (72,370) (36,603)

(3) Some expenses reported in the statement of activities do not requirethe use of current financial resources and therefore are not reportedas expenditures in the governmental funds.

Change in other postemployment benefits liability $ (27,490)Change in net pension liability - agent pension plan (171,171)Change in net pension asset - teacher retirement pension plan 6,624Change in net pension liability - teacher legacy pension plan (601,887)Change in deferred outflows of resources related to pensions 815,417Change in deferred inflows of resources related to pensions 186,203Change in compensated absences payable 745 208,441

Change in net position of governmental activities (Exhibit B) $ 383,599

120

Exhibit J-6The Metropolitan Government of Lynchburg, Moore County, TennesseeCombining Balance Sheet - Nonmajor Governmental FundsDiscretely Presented Metropolitan School DepartmentJune 30, 2017

TotalSchool NonmajorFederal Central GovernmentalProjects Cafeteria Funds

ASSETS

Cash $ 0 $ 39,920 $ 39,920Equity in Pooled Cash and Investments 39,481 99,528 139,009Inventories 0 6,046 6,046Due from Other Governments 10,501 0 10,501

Total Assets $ 49,982 $ 145,494 $ 195,476

LIABILITIES

Accounts Payable $ 8,193 $ 0 $ 8,193Payroll Deductions Payable 14,378 13,241 27,619Total Liabilities $ 22,571 $ 13,241 $ 35,812

FUND BALANCES

Nonspendable:Inventory $ 0 $ 6,046 $ 6,046

Restricted:Restricted for Education 7,411 126,207 133,618

Committed:Committed for Education 20,000 0 20,000

Total Fund Balances $ 27,411 $ 132,253 $ 159,664

Total Liabilities and Fund Balances $ 49,982 $ 145,494 $ 195,476


121

Exhibit J-7The Metropolitan Government of Lynchburg, Moore County, TennesseeCombining Statement of Revenues, Expenditures,

and Changes in Fund Balances - Nonmajor Governmental Funds

Discretely Presented Metropolitan School Department For the Year Ended June 30, 2017

TotalSchool Nonmajor

Federal Central GovernmentalProjects Cafeteria Funds

RevenuesCharges for Current Services $ 0 $ 188,440 $ 188,440Other Local Revenues 0 1,231 1,231State of Tennessee 0 4,485 4,485Federal Government 460,036 273,542 733,578

Total Revenues $ 460,036 $ 467,698 $ 927,734


Instruction $ 365,066 $ 0 $ 365,066Support Services 88,272 0 88,272Operation of Non-Instructional Services 0 466,743 466,743

Total Expenditures $ 453,338 $ 466,743 $ 920,081

Excess (Deficiency) of RevenuesOver Expenditures $ 6,698 $ 955 $ 7,653

Net Change in Fund Balances $ 6,698 $ 955 $ 7,653Fund Balance, July 1, 2016 20,713 131,298 152,011

Fund Balance, June 30, 2017 $ 27,411 $ 132,253 $ 159,664


122

Exhibit J-8


in Fund Balance - Actual and BudgetDiscretely Presented Metropolitan School Department General Purpose School FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 3,538,731 $ 3,203,275 $ 3,392,008 $ 146,723Licenses and Permits 589 600 600 (11)Charges for Current Services 47,740 35,500 44,316 3,424Other Local Revenues 56,340 41,185 56,103 237State of Tennessee 5,009,970 4,912,620 5,043,802 (33,832)Other Governments and Citizens Groups 30,909 0 30,909 0

Total Revenues $ 8,684,279 $ 8,193,180 $ 8,567,738 $ 116,541

ExpendituresInstruction

Regular Instruction Program $ 3,555,824 $ 3,726,469 $ 3,681,900 $ 126,076Alternative Instruction Program 67,078 67,658 67,335 257Special Education Program 491,316 498,632 492,936 1,620Career and Technical Education Program 311,658 345,101 326,611 14,953

Support ServicesAttendance 9,124 9,221 9,221 97Health Services 60,231 59,330 62,255 2,024Other Student Support 331,222 394,282 368,842 37,620Regular Instruction Program 395,814 448,077 403,847 8,033Special Education Program 62,518 59,772 62,657 139Career and Technical Education Program 36,497 36,947 37,313 816Technology 0 0 13,000 13,000Other Programs 40,616 0 40,616 0Board of Education 251,020 237,910 251,020 0Director of Schools 234,713 210,815 237,396 2,683Office of the Principal 644,865 636,348 658,320 13,455Fiscal Services 106,013 107,515 106,656 643Operation of Plant 666,969 692,120 685,409 18,440Maintenance of Plant 185,881 184,356 201,095 15,214Transportation 479,428 490,031 494,483 15,055

Operation of Non-Instructional ServicesCommunity Services 30,025 33,316 33,176 3,151Early Childhood Education 99,577 108,083 107,781 8,204

Capital OutlayRegular Capital Outlay 162,454 120,000 385,000 222,546



Net Change in Fund Balance $ 461,436 $ (272,803) $ (159,131) $ 620,567Fund Balance, July 1, 2016 915,697 522,206 915,697 0

Fund Balance, June 30, 2017 $ 1,377,133 $ 249,403 $ 756,566 $ 620,567

Budgeted Amounts

123

Exhibit J-9


in Fund Balance - Actual and BudgetDiscretely Presented Metropolitan School DepartmentSchool Federal Projects FundFor the Year Ended June 30, 2017



RevenuesFederal Government $ 460,036 $ 480,832 $ 552,111 $ (92,075)

Total Revenues $ 460,036 $ 480,832 $ 552,111 $ (92,075)

ExpendituresInstruction

Regular Instruction Program $ 143,640 $ 167,037 $ 200,017 $ 56,377Special Education Program 209,951 211,320 218,373 8,422Career and Technical Education Program 11,475 8,809 11,475 0

Support ServicesHealth Services 16,414 15,468 16,518 104Other Student Support 12,050 5,652 13,854 1,804Regular Instruction Program 50,876 46,845 66,301 15,425Special Education Program 2,365 16,792 16,872 14,507Career and Technical Education Program 470 679 471 1Transportation 6,097 8,230 8,230 2,133

Total Expenditures $ 453,338 $ 480,832 $ 552,111 $ 98,773

Excess (Deficiency) of RevenuesOver Expenditures $ 6,698 $ 0 $ 0 $ 6,698

Net Change in Fund Balance $ 6,698 $ 0 $ 0 $ 6,698Fund Balance, July 1, 2016 20,713 20,713 20,713 0


Budgeted Amounts

124

Exhibit J-10


in Fund Balance - Actual and BudgetDiscretely Presented Metropolitan School Department Central Cafeteria FundFor the Year Ended June 30, 2017



RevenuesCharges for Current Services $ 188,440 $ 266,000 $ 266,000 $ (77,560)Other Local Revenues 1,231 400 400 831State of Tennessee 4,485 5,500 5,500 (1,015)Federal Government 273,542 247,000 247,000 26,542

Total Revenues $ 467,698 $ 518,900 $ 518,900 $ (51,202)

ExpendituresOperation of Non-Instructional Services

Food Service $ 466,743 $ 538,370 $ 538,370 $ 71,627Total Expenditures $ 466,743 $ 538,370 $ 538,370 $ 71,627

Excess (Deficiency) of RevenuesOver Expenditures $ 955 $ (19,470) $ (19,470) $ 20,425

Net Change in Fund Balance $ 955 $ (19,470) $ (19,470) $ 20,425Fund Balance, July 1, 2016 131,298 122,302 122,302 8,996


Budgeted Amounts

125

MISCELLANEOUS SCHEDULES

126

Exhibit K-1

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Changes in Long-term Notes and Other LoansFor the Year Ended June 30, 2017

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

Description of Indebtedness of Issue Rate Issue Date 7-1-16 Period Period 6-30-17

NOTES PAYABLE

Payable through General Debt Service Fund Jail Expansion $ 1,600,000 2.75 % 1-11-16 4-25-17 $ 1,600,000 $ 0 $ 1,600,000 $ 0

Total Notes Payable $ 1,600,000 $ 0 $ 1,600,000 $ 0

OTHER LOANS PAYABLE

Payable through General Debt Service Fund School Construction 8,300,000 Variable 7-17-07 5-25-35 $ 6,522,000 $ 0 $ 255,000 $ 6,267,000 School Construction/Public Water 2,971,980 Variable 6-9-08 5-25-28 2,074,980 0 136,000 1,938,980

Total Other Loans Payable $ 8,596,980 $ 0 $ 391,000 $ 8,205,980

127

Exhibit K-2

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Long-term Debt Requirements by Year

YearEndingJune 30 Principal Interest Other Fees Total

2018 $ 405,000 $ 68,826 $ 50,838 $ 524,6642019 421,000 65,449 48,443 534,8922020 435,000 61,939 45,955 542,8942021 451,000 58,313 43,384 552,6972022 469,000 54,554 40,718 564,2722023 485,000 50,646 37,947 573,5932024 503,000 46,605 35,082 584,6872025 521,000 42,415 32,111 595,5262026 540,000 38,075 29,034 607,1092027 560,000 33,577 25,845 619,4222028 552,980 28,914 22,454 604,3482029 372,000 24,303 18,249 414,5522030 383,000 21,145 16,011 420,1562031 396,000 17,894 13,706 427,6002032 408,000 14,533 11,323 433,8562033 421,000 11,069 8,867 440,9362034 435,000 7,495 6,334 448,8292035 448,000 3,805 3,632 455,437

Total $ 8,205,980 $ 649,557 $ 489,933 $ 9,345,470

Other Loans

128

Exhibit K-3

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Salaries and Official Bonds of Principal OfficialsPrimary Government and Discretely Presented Metropolitan School DepartmentFor the Year Ended June 30, 2017

SalaryPaid

DuringOfficial Authorization for Salary Period Bond Surety

Metropolitan Mayor Section 8-24-102, TCA, and $ 68,977 $ 100,000 (2) RLI Insurance Company Metropolitan Council

Highway Superintendent Section 8-24-102, TCA 68,977 100,000 (2) "Director of Schools State Board of Education

and Metropolitan Board of Education 89,633 100,000 (2) Western Surety Company

Trustee Section 8-24-102, TCA 59,721 358,933 (2) Auto-Owners (Mutual) InsuranceAssessor of Property Section 8-24-102, TCA 59,721 50,000 (2) RLI Insurance CompanyMetropolitan Clerk Section 8-24-102, TCA 59,721 50,000 (2) "Circuit, General Sessions, and Juvenile Courts Clerk Section 8-24-102, TCA 59,721 50,000 (2) "Clerk and Master Section 8-24-102, TCA

and Chancery Court Judge 59,721 50,000 (2) "Register of Deeds Section 8-24-102, TCA 59,721 50,000 (2) "Sheriff Section 8-24-102, TCA 65,693 (1) 100,000 (2) "

Employee Bonds Metropolitan Employees 400,000 Tennessee Risk Management Trust School Department Employees 400,000 "

(1) Does not include a law enforcement training supplement of $600.(2) All elected officials, director of schools, and finance director are additionally covered by the employee fidelity insurance pursuant to Section 8-19-101, TCA .

129

Exhibit K-4

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Detailed Revenues -

All Governmental Fund TypesFor the Year Ended June 30, 2017


Urban Waste / Drug Officers -General Services Sanitation Control Fees

Local TaxesCounty Property Taxes

Current Property Tax $ 2,567,459 $ 6,923 $ 251,763 $ 0 $ 0Trustee's Collections - Prior Year 27,310 83 3,139 0 0Circuit Clerk/Clerk and Master Collections - Prior Years 9,475 0 970 0 0Interest and Penalty 5,315 19 587 0 0Payments in-Lieu-of Taxes - T.V.A. 207,100 4,896 0 0 0

County Local Option TaxesLocal Option Sales Tax 243,653 0 0 0 0Hotel/Motel Tax 9,562 0 0 0 0Litigation Tax - General 18,249 0 0 0 0Litigation Tax - Special Purpose 113 0 0 0 0Litigation Tax - Jail, Workhouse, or Courthouse 23,316 0 0 0 0Business Tax 28,410 0 0 0 0Mixed Drink Tax 56 0 0 0 0Mineral Severance Tax 0 0 0 0 0

Statutory Local TaxesBank Excise Tax 43,274 0 0 0 0Wholesale Beer Tax 82,060 0 0 0 0Interstate Telecommunications Tax 690 0 0 0 0Other Statutory Local Taxes 0 0 0 0 0

Total Local Taxes $ 3,266,042 $ 11,921 $ 256,459 $ 0 $ 0

Licenses and PermitsLicenses

Cable TV Franchise $ 12,183 $ 3,108 $ 0 $ 0 $ 0

(Continued)


130

Exhibit K-4


All Governmental Fund Types (Cont.)



Licenses and Permits (Cont.)Permits

Building Permits $ 2,870 $ 0 $ 0 $ 0 $ 0Total Licenses and Permits $ 15,053 $ 3,108 $ 0 $ 0 $ 0

Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 1,074 $ 0 $ 0 $ 0 $ 0Officers Costs 1,299 0 0 0 0Drug Control Fines 0 0 0 8,310 0Drug Court Fees 133 0 0 0 0Jail Fees 656 0 0 0 0Data Entry Fee - Circuit Court 216 0 0 0 0

Criminal CourtDUI Treatment Fines 570 0 0 0 0Courtroom Security Fee 21 0 0 0 0

General Sessions CourtFines 6,048 0 0 0 0Officers Costs 7,833 0 0 0 0Game and Fish Fines 135 0 0 0 0Drug Control Fines 0 0 0 1,140 0Drug Court Fees 861 0 0 0 0Jail Fees 1,904 0 0 0 0DUI Treatment Fines 1,235 0 0 0 0Data Entry Fee - General Sessions Court 1,727 0 0 0 0Courtroom Security Fee 131 0 0 0 0

(Continued)


131

Exhibit K-4





Fines, Forfeitures, and Penalties (Cont.)Juvenile Court

Fines $ 142 $ 0 $ 0 $ 0 $ 0Chancery Court

Officers Costs 218 0 0 0 0Data Entry Fee - Chancery Court 230 0 0 0 0

Total Fines, Forfeitures, and Penalties $ 24,433 $ 0 $ 0 $ 9,450 $ 0

Charges for Current ServicesGeneral Service Charges

Solid Waste Disposal Fee $ 0 $ 0 $ 212,908 $ 0 $ 0Patient Charges 150,989 0 0 0 0

FeesRecreation Fees 8,762 0 0 0 0Copy Fees 1,023 0 0 0 0Library Fees 1,678 0 0 0 0Greenbelt Late Application Fee 200 0 0 0 0Vending Machine Collections 36 0 0 0 0Constitutional Officers' Fees and Commissions 0 0 0 0 136Data Processing Fee - Register 2,232 0 0 0 0Data Processing Fee - Sheriff 869 0 0 0 0Sexual Offender Registration Fee - Sheriff 2,250 0 0 0 0Data Processing Fee - County Clerk 1,116 0 0 0 0

Total Charges for Current Services $ 169,155 $ 0 $ 212,908 $ 0 $ 136

(Continued)


132

Exhibit K-4





Other Local RevenuesRecurring Items

Investment Income $ 30,599 $ 0 $ 0 $ 0 $ 0Lease/Rentals 986 0 0 0 0Commissary Sales 4,554 0 0 0 0Sale of Recycled Materials 0 0 39,970 0 0E-Rate Funding 1,769 0 0 0 0Miscellaneous Refunds 7,495 0 0 0 0

Nonrecurring ItemsSale of Equipment 376 0 933 0 0Sale of Property 12,132 0 0 0 0Damages Recovered from Individuals 1,374 0 0 0 0Contributions and Gifts 6,506 0 0 0 0

Other Local RevenuesOther Local Revenues 4,679 0 0 0 0

Total Other Local Revenues $ 70,470 $ 0 $ 40,903 $ 0 $ 0

Fees Received From County OfficialsFees In-Lieu-of Salary

County Clerk $ 60,585 $ 0 $ 0 $ 0 $ 0Circuit Court Clerk 11,567 0 0 0 0General Sessions Court Clerk 24,633 0 0 0 0Clerk and Master 14,782 0 0 0 0Juvenile Court Clerk 2,076 0 0 0 0Register 28,611 0 0 0 0Sheriff 4,738 0 0 0 0Trustee 185,031 0 0 0 0

Total Fees Received From County Officials $ 332,023 $ 0 $ 0 $ 0 $ 0

(Continued)


133

Exhibit K-4





State of TennesseeGeneral Government Grants

Juvenile Services Program $ 4,500 $ 0 $ 0 $ 0 $ 0Public Safety Grants

Law Enforcement Training Programs 7,200 0 0 0 0Health and Welfare Grants

Health Department Programs 100,484 0 0 0 0Public Works Grants

State Aid Program 0 0 0 0 0Litter Program 0 0 32,858 0 0

Other State RevenuesIncome Tax 8,647 0 0 0 0Beer Tax 22,947 0 0 0 0Vehicle Certificate of Title Fees 6,200 0 0 0 0Alcoholic Beverage Tax 12,337 0 0 0 0Emergency Hospital - Prisoners 21,458 0 0 0 0Contracted Prisoner Boarding 115,004 0 0 0 0Gasoline and Motor Fuel Tax 0 0 0 0 0Petroleum Special Tax 0 0 0 0 0Registrar's Salary Supplement 3,791 0 0 0 0State Shared Sales Tax - Cities 44,246 0 0 0 0Other State Grants 312,470 0 0 0 0Other State Revenues 17,822 0 354 0 0

Total State of Tennessee $ 677,106 $ 0 $ 33,212 $ 0 $ 0

(Continued)


134

Exhibit K-4





Federal GovernmentFederal Through State

Homeland Security Grants $ 16,465 $ 0 $ 0 $ 0 $ 0Other Federal through State 39,333 0 0 0 0

Total Federal Government $ 55,798 $ 0 $ 0 $ 0 $ 0

Other Governments and Citizens GroupsOther Governments

Contributions $ 30,000 $ 0 $ 0 $ 0 $ 0Citizens Groups

Donations 60,702 0 0 0 0Total Other Governments and Citizens Groups $ 90,702 $ 0 $ 0 $ 0 $ 0

Total $ 4,700,782 $ 15,029 $ 543,482 $ 9,450 $ 136

(Continued)


135

Exhibit K-4



Highway / General GeneralPublic Debt CapitalWorks Service Projects Total


Current Property Tax $ 37,749 $ 781,060 $ 37,636 $ 3,682,590Trustee's Collections - Prior Year 471 5,022 2,982 39,007Circuit Clerk/Clerk and Master Collections - Prior Years 145 2,590 367 13,547Interest and Penalty 88 1,146 448 7,603Payments in-Lieu-of Taxes - T.V.A. 0 0 0 211,996

County Local Option TaxesLocal Option Sales Tax 0 243,653 0 487,306Hotel/Motel Tax 0 0 0 9,562Litigation Tax - General 0 0 0 18,249Litigation Tax - Special Purpose 0 0 0 113Litigation Tax - Jail, Workhouse, or Courthouse 0 0 0 23,316Business Tax 12,000 0 0 40,410Mixed Drink Tax 0 0 0 56Mineral Severance Tax 7 0 0 7

Statutory Local TaxesBank Excise Tax 0 0 0 43,274Wholesale Beer Tax 0 0 0 82,060Interstate Telecommunications Tax 0 0 0 690Other Statutory Local Taxes 0 397,758 0 397,758

Total Local Taxes $ 50,460 $ 1,431,229 $ 41,433 $ 5,057,544


Cable TV Franchise $ 0 $ 0 $ 0 $ 15,291

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

136

Exhibit K-4




Licenses and Permits (Cont.)Permits

Building Permits $ 0 $ 0 $ 0 $ 2,870Total Licenses and Permits $ 0 $ 0 $ 0 $ 18,161

Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 0 $ 0 $ 0 $ 1,074Officers Costs 0 0 0 1,299Drug Control Fines 0 0 0 8,310Drug Court Fees 0 0 0 133Jail Fees 0 0 0 656Data Entry Fee - Circuit Court 0 0 0 216

Criminal CourtDUI Treatment Fines 0 0 0 570Courtroom Security Fee 0 0 0 21

General Sessions CourtFines 0 0 0 6,048Officers Costs 0 0 0 7,833Game and Fish Fines 0 0 0 135Drug Control Fines 0 0 0 1,140Drug Court Fees 0 0 0 861Jail Fees 0 0 0 1,904DUI Treatment Fines 0 0 0 1,235Data Entry Fee - General Sessions Court 0 0 0 1,727Courtroom Security Fee 0 0 0 131

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

137

Exhibit K-4




Fines, Forfeitures, and Penalties (Cont.)Juvenile Court

Fines $ 0 $ 0 $ 0 $ 142Chancery Court

Officers Costs 0 0 0 218Data Entry Fee - Chancery Court 0 0 0 230

Total Fines, Forfeitures, and Penalties $ 0 $ 0 $ 0 $ 33,883

Charges for Current ServicesGeneral Service Charges

Solid Waste Disposal Fee $ 0 $ 0 $ 0 $ 212,908Patient Charges 0 0 0 150,989

FeesRecreation Fees 0 0 0 8,762Copy Fees 0 0 0 1,023Library Fees 0 0 0 1,678Greenbelt Late Application Fee 0 0 0 200Vending Machine Collections 0 0 0 36Constitutional Officers' Fees and Commissions 0 0 0 136Data Processing Fee - Register 0 0 0 2,232Data Processing Fee - Sheriff 0 0 0 869Sexual Offender Registration Fee - Sheriff 0 0 0 2,250Data Processing Fee - County Clerk 0 0 0 1,116

Total Charges for Current Services $ 0 $ 0 $ 0 $ 382,199

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

138

Exhibit K-4





Investment Income $ 0 $ 0 $ 0 $ 30,599Lease/Rentals 0 0 0 986Commissary Sales 0 0 0 4,554Sale of Recycled Materials 0 0 0 39,970E-Rate Funding 0 0 0 1,769Miscellaneous Refunds 3,279 0 0 10,774

Nonrecurring ItemsSale of Equipment 0 0 0 1,309Sale of Property 0 0 0 12,132Damages Recovered from Individuals 0 0 0 1,374Contributions and Gifts 0 0 0 6,506

Other Local RevenuesOther Local Revenues 0 0 0 4,679

Total Other Local Revenues $ 3,279 $ 0 $ 0 $ 114,652

Fees Received From County OfficialsFees In-Lieu-of Salary

County Clerk $ 0 $ 0 $ 0 $ 60,585Circuit Court Clerk 0 0 0 11,567General Sessions Court Clerk 0 0 0 24,633Clerk and Master 0 0 0 14,782Juvenile Court Clerk 0 0 0 2,076Register 0 0 0 28,611Sheriff 0 0 0 4,738Trustee 0 0 0 185,031

Total Fees Received From County Officials $ 0 $ 0 $ 0 $ 332,023

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

139

Exhibit K-4





Juvenile Services Program $ 0 $ 0 $ 0 $ 4,500Public Safety Grants

Law Enforcement Training Programs 0 0 0 7,200Health and Welfare Grants

Health Department Programs 0 0 0 100,484Public Works Grants

State Aid Program 571,934 0 0 571,934Litter Program 0 0 0 32,858

Other State RevenuesIncome Tax 0 0 0 8,647Beer Tax 0 0 0 22,947Vehicle Certificate of Title Fees 0 0 0 6,200Alcoholic Beverage Tax 0 0 0 12,337Emergency Hospital - Prisoners 0 0 0 21,458Contracted Prisoner Boarding 0 0 0 115,004Gasoline and Motor Fuel Tax 1,284,493 0 0 1,284,493Petroleum Special Tax 5,747 0 0 5,747Registrar's Salary Supplement 0 0 0 3,791State Shared Sales Tax - Cities 0 0 0 44,246Other State Grants 0 0 0 312,470Other State Revenues 0 0 0 18,176

Total State of Tennessee $ 1,862,174 $ 0 $ 0 $ 2,572,492

(Continued)

Special Revenue

FundDebt Service

FundCapital

Projects Fund

140

Exhibit K-4





Homeland Security Grants $ 0 $ 0 $ 0 $ 16,465Other Federal through State 0 0 0 39,333

Total Federal Government $ 0 $ 0 $ 0 $ 55,798

Other Governments and Citizens GroupsOther Governments

Contributions $ 0 $ 0 $ 0 $ 30,000Citizens Groups

Donations 0 0 0 60,702Total Other Governments and Citizens Groups $ 0 $ 0 $ 0 $ 90,702

Total $ 1,915,913 $ 1,431,229 $ 41,433 $ 8,657,454

Special Revenue

FundDebt Service

FundCapital

Projects Fund

141

Exhibit K-5


All Governmental Fund TypesDiscretely Presented Metropolitan School Department For the Year Ended June 30, 2017

General SchoolPurpose Federal CentralSchool Projects Cafeteria Total


Current Property Tax $ 2,994,970 $ 0 $ 0 $ 2,994,970Trustee's Collections - Prior Year 37,352 0 0 37,352Circuit Clerk/Clerk and Master Collections - Prior Years 11,539 0 0 11,539Interest and Penalty 6,988 0 0 6,988

County Local Option TaxesLocal Option Sales Tax 487,307 0 0 487,307

Statutory Local TaxesInterstate Telecommunications Tax 575 0 0 575

Total Local Taxes $ 3,538,731 $ 0 $ 0 $ 3,538,731


Marriage Licenses $ 589 $ 0 $ 0 $ 589Total Licenses and Permits $ 589 $ 0 $ 0 $ 589

Charges for Current ServicesEducation Charges

Tuition - Regular Day Students $ 12,200 $ 0 $ 0 $ 12,200Lunch Payments - Children 0 0 126,462 126,462Lunch Payments - Adults 0 0 2,328 2,328Income from Breakfast 0 0 51,957 51,957A la Carte Sales 0 0 7,693 7,693Community Service Fees - Children 35,540 0 0 35,540

Total Charges for Current Services $ 47,740 $ 0 $ 188,440 $ 236,180

(Continued)


142

Exhibit K-5


All Governmental Fund TypesDiscretely Presented Metropolitan School Department (Cont.)



Investment Income $ 0 $ 0 $ 239 $ 239E-Rate Funding 9,103 0 0 9,103Miscellaneous Refunds 43,880 0 992 44,872

Nonrecurring ItemsDamages Recovered from Individuals 2,985 0 0 2,985

Other Local RevenuesOther Local Revenues 372 0 0 372

Total Other Local Revenues $ 56,340 $ 0 $ 1,231 $ 57,571


On-behalf Contributions for OPEB $ 40,616 $ 0 $ 0 $ 40,616State Education Funds

Basic Education Program 4,670,570 0 0 4,670,570Early Childhood Education 96,997 0 0 96,997Other State Education Funds 13,858 0 4,485 18,343Coordinated School Health 85,000 0 0 85,000Career Ladder Program 21,220 0 0 21,220

Other State RevenuesBeer Tax 41,325 0 0 41,325Alcoholic Beverage Tax 37,384 0 0 37,384Other State Grants 3,000 0 0 3,000

Total State of Tennessee $ 5,009,970 $ 0 $ 4,485 $ 5,014,455

(Continued)


143

Exhibit K-5





USDA School Lunch Program $ 0 $ 0 $ 188,086 $ 188,086USDA - Commodities 0 0 23,245 23,245Breakfast 0 0 62,211 62,211Vocational Education - Basic Grants to States 0 13,271 0 13,271Title I Grants to Local Education Agencies 0 160,319 0 160,319Special Education - Grants to States 0 229,270 0 229,270Special Education Preschool Grants 0 15,009 0 15,009Eisenhower Professional Development State Grants 0 27,689 0 27,689Other Federal through State 0 14,478 0 14,478

Total Federal Government $ 0 $ 460,036 $ 273,542 $ 733,578

Other Governments and Citizens GroupsCitizens Groups

Donations $ 30,909 $ 0 $ 0 $ 30,909Total Other Governments and Citizens Groups $ 30,909 $ 0 $ 0 $ 30,909

Total $ 8,684,279 $ 460,036 $ 467,698 $ 9,612,013


144

Exhibit K-6

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Detailed Expenditures -

All Governmental Fund TypesFor the Year Ended June 30, 2017

General FundGeneral Government

County CommissionOther Per Diem and Fees $ 9,600Audit Services 2,214Liability Insurance 50,583Trustee's Commission 63,041Workers' Compensation Insurance 45,275

Total County Commission $ 170,713

County Mayor/ExecutiveCounty Official/Administrative Officer $ 68,977Accountants/Bookkeepers 38,282Longevity Pay 2,000Communication 1,678Data Processing Services 6,717Dues and Memberships 6,715Legal Notices, Recording, and Court Costs 2,209Printing, Stationery, and Forms 552Other Charges 425Data Processing Equipment 437Office Equipment 2,597

Total County Mayor/Executive 130,589

County AttorneyCounty Official/Administrative Officer $ 7,491

Total County Attorney 7,491

Election CommissionCounty Official/Administrative Officer $ 53,749Part-time Personnel 3,316Other Salaries and Wages 3,500Election Commission 1,092Election Workers 4,600In-service Training 350Communication 725Dues and Memberships 100Legal Notices, Recording, and Court Costs 6,687Maintenance and Repair Services - Office Equipment 4,000Postal Charges 349Printing, Stationery, and Forms 538Travel 2,975Other Contracted Services 7,740

Total Election Commission 89,721

Register of DeedsCounty Official/Administrative Officer $ 59,721Part-time Personnel 1,261Communication 394Maintenance Agreements 2,018

(Continued)

145

Exhibit K-6



General Fund (Cont.)General Government (Cont.)

Register of Deeds (Cont.)Printing, Stationery, and Forms $ 891Office Equipment 54

Total Register of Deeds $ 64,339

PlanningCounty Official/Administrative Officer $ 5,383Communication 458Legal Notices, Recording, and Court Costs 346Office Supplies 1,443

Total Planning 7,630

County BuildingsCustodial Personnel $ 21,506Legal Notices, Recording, and Court Costs 88Maintenance and Repair Services - Buildings 23,106Pest Control 439Postal Charges 5,796Custodial Supplies 2,371Electricity 12,206General Construction Materials 390Natural Gas 3,201Office Supplies 4,422Water and Sewer 4,355Other Supplies and Materials 9,425

Total County Buildings 87,305

Preservation of RecordsPart-time Personnel $ 7,210Communication 741Data Processing Services 237Maintenance Agreements 426Postal Charges 20Office Supplies 2,533

Total Preservation of Records 11,167

FinancePurchasing

Purchasing Personnel $ 30,002Office Supplies 648

Total Purchasing 30,650

Property Assessor's OfficeCounty Official/Administrative Officer $ 59,721Part-time Personnel 6,299In-service Training 311Communication 705Data Processing Services 988

(Continued)

146

Exhibit K-6



General Fund (Cont.)Finance (Cont.)

Property Assessor's Office (Cont.)Printing, Stationery, and Forms $ 130Other Contracted Services 5,329Office Equipment 527

Total Property Assessor's Office $ 74,010

County Trustee's OfficeCounty Official/Administrative Officer $ 59,721Part-time Personnel 1,942In-service Training 250Communication 469Data Processing Services 6,366Dues and Memberships 100Legal Notices, Recording, and Court Costs 393Printing, Stationery, and Forms 88Travel 561Office Equipment 1,030

Total County Trustee's Office 70,920

County Clerk's OfficeCounty Official/Administrative Officer $ 59,721Part-time Personnel 14,955Communication 554Maintenance and Repair Services - Office Equipment 8,214Printing, Stationery, and Forms 551Office Equipment 55

Total County Clerk's Office 84,050

Administration of JusticeCircuit Court

County Official/Administrative Officer $ 59,721Part-time Personnel 6,337Jury and Witness Expense 1,926Communication 522Data Processing Services 9,224Dues and Memberships 402Maintenance Agreements 2,642Printing, Stationery, and Forms 271Travel 50Office Equipment 1,025

Total Circuit Court 82,120

General Sessions CourtJudge(s) $ 69,761Dues and Memberships 150Travel 870

Total General Sessions Court 70,781

(Continued)

147

Exhibit K-6



General Fund (Cont.)Administration of Justice (Cont.)

Chancery CourtCounty Official/Administrative Officer $ 59,721Part-time Personnel 1,886Communication 419Dues and Memberships 462Printing, Stationery, and Forms 308Travel 148Periodicals 610Office Equipment 955

Total Chancery Court $ 64,509

Juvenile CourtSupervisor/Director $ 9,000Other Contracted Services 525

Total Juvenile Court 9,525

Judicial CommissionersCounty Official/Administrative Officer $ 14,762In-service Training 75Communication 75Dues and Memberships 150

Total Judicial Commissioners 15,062

Public SafetySheriff's Department

County Official/Administrative Officer $ 65,693Assistant(s) 43,589Supervisor/Director 42,228Deputy(ies) 180,244Investigator(s) 76,357Lieutenant(s) 32,972Sergeant(s) 38,976Dispatchers/Radio Operators 165,106Part-time Personnel 7,292Longevity Pay 37,000Overtime Pay 14,232Other Salaries and Wages 19,203In-service Training 11,613Communication 12,483Contracts with Private Agencies 2,600Dues and Memberships 1,075Maintenance and Repair Services - Equipment 225Maintenance and Repair Services - Vehicles 33,463Medical and Dental Services 448Postal Charges 885Printing, Stationery, and Forms 3,163Travel 2,132Other Contracted Services 9,886

(Continued)

148

Exhibit K-6



General Fund (Cont.)Public Safety (Cont.)

Sheriff's Department (Cont.)Gasoline $ 33,192Office Supplies 3,422Uniforms 3,889Other Supplies and Materials 3,473Data Processing Equipment 2,930Law Enforcement Equipment 9,449Motor Vehicles 33,170

Total Sheriff's Department $ 890,390

Special PatrolsOffice Supplies $ 254Other Charges 41Law Enforcement Equipment 2,623

Total Special Patrols 2,918

Administration of the Sexual Offender RegistryOther Contracted Services $ 400Office Supplies 1,804

Total Administration of the Sexual Offender Registry 2,204

JailInstructional Computer Personnel $ 64Foremen 32,299Guards 193,484Secretary(ies) 27,736Longevity Pay 8,000Overtime Pay 2,164Other Salaries and Wages 10,026In-service Training 1,372Data Processing Services 809Maintenance and Repair Services - Buildings 6,017Maintenance and Repair Services - Equipment 1,498Medical and Dental Services 47,666Pest Control 228Custodial Supplies 4,776Drugs and Medical Supplies 158Electricity 21,554Food Preparation Supplies 1,710Food Supplies 30,479Natural Gas 3,246Prisoners Clothing 2,108Uniforms 2,723Water and Sewer 8,755Other Supplies and Materials 32,135Other Charges 2

Total Jail 439,009

(Continued)

149

Exhibit K-6



General Fund (Cont.)Public Safety (Cont.)

CommissaryPrinting, Stationery, and Forms $ 543Office Supplies 94

Total Commissary $ 637

Fire Prevention and ControlPart-time Personnel $ 15,450In-service Training 3,885Communication 2,002Dues and Memberships 20Maintenance Agreements 12,265Maintenance and Repair Services - Buildings 6,429Maintenance and Repair Services - Vehicles 23,193Medical and Dental Services 176Pest Control 783Electricity 3,558Gasoline 2,719Natural Gas 2,553Office Supplies 300Water and Sewer 679Other Supplies and Materials 982Excess Risk Insurance 3,767Motor Vehicles 125,000Other Equipment 32,753

Total Fire Prevention and Control 236,514

Other Emergency ManagementSupervisor/Director $ 13,735In-service Training 180Communication 10,394Dues and Memberships 55Maintenance and Repair Services - Equipment 1,129Maintenance and Repair Services - Vehicles 903Gasoline 1,258Office Supplies 257Uniforms 225Other Supplies and Materials 30,365

Total Other Emergency Management 58,501

Public Health and WelfareLocal Health Center

Medical Personnel $ 80,506Communication 2,732Contracts with Government Agencies 14,002Contracts with Private Agencies 15,957Maintenance and Repair Services - Buildings 1,231Pest Control 162Travel 809

(Continued)

150

Exhibit K-6



General Fund (Cont.)Public Health and Welfare (Cont.)

Local Health Center (Cont.)Other Contracted Services $ 200Custodial Supplies 10Drugs and Medical Supplies 64Office Supplies 148Utilities 4,667Water and Sewer 66Other Supplies and Materials 165Other Charges 6,429

Total Local Health Center $ 127,148

Rabies and Animal ControlOther Supplies and Materials $ 5,999

Total Rabies and Animal Control 5,999

Ambulance/Emergency Medical ServicesSupervisor/Director $ 41,305Paraprofessionals 180,839Part-time Personnel 24,122Longevity Pay 11,000Overtime Pay 29,252Other Salaries and Wages 13,229In-service Training 597Communication 956Data Processing Services 12,616Dues and Memberships 1,730Legal Notices, Recording, and Court Costs 246Maintenance and Repair Services - Buildings 1,589Maintenance and Repair Services - Equipment 4,659Maintenance and Repair Services - Vehicles 9,926Medical and Dental Services 2,225Pest Control 162Travel 191Drugs and Medical Supplies 17,473Electricity 3,764Equipment and Machinery Parts 7,924Gasoline 3,675Natural Gas 522Office Supplies 1,009Uniforms 1,614Water and Sewer 1,414Refunds 547

Total Ambulance/Emergency Medical Services 372,586

Alcohol and Drug ProgramsDrug Treatment $ 1,530

Total Alcohol and Drug Programs 1,530

(Continued)

151

Exhibit K-6



General Fund (Cont.)Public Health and Welfare (Cont.)

Regional Mental Health CenterContracts with Other Public Agencies $ 2,500

Total Regional Mental Health Center $ 2,500

Social, Cultural, and Recreational ServicesSenior Citizens Assistance

Contributions $ 8,500Total Senior Citizens Assistance 8,500

LibrariesAssistant(s) $ 20,815Supervisor/Director 31,829Part-time Personnel 17,499Longevity Pay 4,000In-service Training 45Communication 2,972Data Processing Services 1,634Dues and Memberships 135Maintenance and Repair Services - Buildings 4,937Pest Control 168Postal Charges 244Travel 569Custodial Supplies 437Electricity 4,068Instructional Supplies and Materials 2,049Library Books/Media 4,334Natural Gas 1,310Office Supplies 1,989Periodicals 746Water and Sewer 843Other Charges 9,580Office Equipment 5,873

Total Libraries 116,076

Parks and Fair BoardsAssistant(s) $ 3,478Supervisor/Director 5,738Attendants 8,651Communication 428Dues and Memberships 680Maintenance and Repair Services - Buildings 17,547Maintenance and Repair Services - Equipment 11,482Electricity 17,591Gasoline 1,827Natural Gas 679Water and Sewer 9,238Chemicals 2,193Other Supplies and Materials 25

Total Parks and Fair Boards 79,557

(Continued)

152

Exhibit K-6



General Fund (Cont.)Agriculture and Natural Resources

Agricultural Extension ServiceSalary Supplements $ 51,858Part-time Personnel 7,891Employee and Dependent Insurance 1,501Communication 1,128Data Processing Services 2,000Travel 3,388Other Charges 892

Total Agricultural Extension Service $ 68,658

Forest ServiceContracts with Government Agencies $ 350

Total Forest Service 350

Soil ConservationPart-time Personnel $ 7,313Communication 682Matching Share 2,298

Total Soil Conservation 10,293

Other OperationsTourism

Custodial Personnel $ 2,318Dues and Memberships 3,000Maintenance and Repair Services - Buildings 60Custodial Supplies 1,518Electricity 678General Construction Materials 100,779Water and Sewer 288

Total Tourism 108,641

Other Economic and Community DevelopmentOther Charges $ 245,000

Total Other Economic and Community Development 245,000

Veterans' ServicesCounty Official/Administrative Officer $ 1,882

Total Veterans' Services 1,882

Other ChargesOther Charges $ 7,419

Total Other Charges 7,419

Employee BenefitsSocial Security $ 169,057Pensions 57,224Employee and Dependent Insurance 370,410Unemployment Compensation 4,544Local Retirement 17,881

Total Employee Benefits 619,116

Total General Fund $ 4,476,010

(Continued)

153

Exhibit K-6



Urban Services FundGeneral Government

Other General AdministrationElectricity $ 18,526Trustee's Commission 221Other Charges 634

Total Other General Administration $ 19,381

Total Urban Services Fund $ 19,381

Solid Waste/Sanitation FundPublic Health and Welfare

Waste PickupCounty Official/Administrative Officer $ 2,550Laborers 21,166Social Security 1,814Unemployment Compensation 67Maintenance and Repair Services - Vehicles 75Gasoline 944Instructional Supplies and Materials 5,023Other Supplies and Materials 347

Total Waste Pickup $ 31,986

Recycling CenterAssistant(s) $ 3,178Laborers 65,604Part-time Personnel 52,260Longevity Pay 4,000Other Salaries and Wages 7,514Social Security 9,851Medical Insurance 21,715Unemployment Compensation 274Communication 458Contracts with Private Agencies 168,475Legal Notices, Recording, and Court Costs 819Maintenance and Repair Services - Buildings 51,106Maintenance and Repair Services - Vehicles 33,417Other Contracted Services 11,723Diesel Fuel 18,769Office Supplies 74Tires and Tubes 5,716Utilities 1,696Trustee's Commission 7,164Vehicle and Equipment Insurance 506Workers' Compensation Insurance 14,916Motor Vehicles 140,858Solid Waste Equipment 59,658

Total Recycling Center 679,751

Total Solid Waste/Sanitation Fund 711,737

(Continued)

154

Exhibit K-6



Drug Control FundPublic Safety

Drug EnforcementIn-service Training $ 80Communication 2,020Confidential Drug Enforcement Payments 1,000Maintenance and Repair Services - Vehicles 1,195Law Enforcement Supplies 405Uniforms 294Other Charges 98

Total Drug Enforcement $ 5,092

Total Drug Control Fund $ 5,092

Constitutional Officers - Fees FundAdministration of Justice

Circuit Court ClerkBank Charges $ 68

Total Circuit Court Clerk $ 68

General Sessions CourtBank Charges $ 68

Total General Sessions Court 68

Total Constitutional Officers - Fees Fund 136

Highway/Public Works FundHighways

AdministrationCounty Official/Administrative Officer $ 68,977Assistant(s) 46,067Secretary(ies) 42,536Longevity Pay 5,000Social Security 9,999Pensions 9,300Employee and Dependent Insurance 5,197Life Insurance 273Unemployment Compensation 480Employer Medicare 2,339Data Processing Services 7,178Postal Charges 188Printing, Stationery, and Forms 429Travel 1,237Office Supplies 342Other Charges 1,066Office Equipment 86

Total Administration $ 200,694

Highway and Bridge MaintenanceEquipment Operators $ 130,474

(Continued)

155

Exhibit K-6



Highway/Public Works Fund (Cont.)Highways (Cont.)

Highway and Bridge Maintenance (Cont.)Truck Drivers $ 125,713Laborers 93,193Temporary Personnel 1,230Longevity Pay 29,000Social Security 22,300Pensions 4,083Employee and Dependent Insurance 74,587Life Insurance 860Unemployment Compensation 2,197Employer Medicare 5,215Contracts with Private Agencies 26,329Dues and Memberships 1,980Rentals 625Asphalt 5,190Asphalt - Cold Mix 53Concrete 1,258Crushed Stone 19,340Riprap 3,108Pipe 3,038Road Signs 683Salt 1,797Other Charges 1,468Maintenance Equipment 1,493

Total Highway and Bridge Maintenance $ 555,214

Operation and Maintenance of EquipmentMechanic(s) $ 44,100Longevity Pay 3,000Social Security 2,667Pensions 1,045Employee and Dependent Insurance 11,102Life Insurance 104Unemployment Compensation 240Employer Medicare 624Custodial Supplies 294Diesel Fuel 18,083Equipment and Machinery Parts 14,521Garage Supplies 3,558Gasoline 7,029Lubricants 2,042Small Tools 264Tires and Tubes 8,644Vehicle Parts 4,359Other Charges 1,249Maintenance Equipment 1,400

Total Operation and Maintenance of Equipment 124,325

(Continued)

156

Exhibit K-6



Highway/Public Works Fund (Cont.)Highways (Cont.)

Other ChargesAdvertising $ 915Communication 2,202Internet Connectivity 655Electricity 2,847Propane Gas 574Water and Sewer 403Liability Insurance 5,365Premiums on Corporate Surety Bonds 50Trustee's Commission 13,695Vehicle and Equipment Insurance 5,365

Total Other Charges $ 32,071

Employee BenefitsWorkers' Compensation Insurance $ 22,875

Total Employee Benefits 22,875

Capital OutlayBridge Construction $ 11,150Building Construction 4,847Highway Equipment 76,774State Aid Projects 599,063Other Capital Outlay 134,730

Total Capital Outlay 826,564

Total Highway/Public Works Fund $ 1,761,743

General Debt Service FundPrincipal on Debt

General GovernmentPrincipal on Notes $ 1,600,000Principal on Other Loans 91,120

Total General Government $ 1,691,120

EducationPrincipal on Other Loans $ 299,880

Total Education 299,880

Interest on DebtGeneral Government

Interest on Notes $ 55,613Interest on Other Loans 11,318

Total General Government 66,931

EducationInterest on Other Loans $ 58,588


(Continued)

157

Exhibit K-6



General Debt Service Fund (Cont.)Other Debt Service

General GovernmentTrustee's Commission $ 22,281Other Debt Service 8,389

Total General Government $ 30,670

EducationOther Debt Service $ 51,345


Total General Debt Service Fund $ 2,198,534

General Capital Projects FundCapital Projects

Administration of Justice ProjectsBuilding Construction $ 28,209

Total Administration of Justice Projects $ 28,209

Public Safety ProjectsMotor Vehicles $ 204,917

Total Public Safety Projects 204,917

Social, Cultural, and Recreation ProjectsTrustee's Commission $ 836Building Improvements 21,520

Total Social, Cultural, and Recreation Projects 22,356

Total General Capital Projects Fund 255,482

Total Governmental Funds - Primary Government $ 9,428,115

158

Exhibit K-7


All Governmental Fund TypesDiscretely Presented Metropolitan School Department For the Year Ended June 30, 2017

General Purpose School FundInstruction

Regular Instruction ProgramTeachers $ 2,352,130Career Ladder Program 11,001Homebound Teachers 3,473Educational Assistants 87,822Other Salaries and Wages 3,888Certified Substitute Teachers 1,480Non-certified Substitute Teachers 51,350Social Security 145,772Pensions 212,497Medical Insurance 456,788Employer Medicare 34,092Instructional Supplies and Materials 89,045Textbooks - Bound 2,438Other Supplies and Materials 3,695Other Charges 3,851Regular Instruction Equipment 96,502

Total Regular Instruction Program $ 3,555,824

Alternative Instruction ProgramTeachers $ 53,125Social Security 3,133Pensions 4,802Medical Insurance 5,285Employer Medicare 733

Total Alternative Instruction Program 67,078

Special Education ProgramTeachers $ 300,994Homebound Teachers 5,573Educational Assistants 61,974Social Security 22,391Pensions 30,108Medical Insurance 65,039Employer Medicare 5,237

Total Special Education Program 491,316

Career and Technical Education ProgramTeachers $ 229,806Social Security 13,444Pensions 20,697Medical Insurance 42,674Employer Medicare 3,144Instructional Supplies and Materials 1,893

Total Career and Technical Education Program 311,658

(Continued)

159

Exhibit K-7



General Purpose School Fund (Cont.)Support Services

AttendanceSupervisor/Director $ 6,847Career Ladder Program 100Social Security 411Pensions 628Medical Insurance 1,042Employer Medicare 96

Total Attendance $ 9,124

Health ServicesMedical Personnel $ 47,602Social Security 2,856Pensions 4,299Medical Insurance 3,953Employer Medicare 668Other Supplies and Materials 589Other Charges 264

Total Health Services 60,231

Other Student SupportGuidance Personnel $ 91,263Clerical Personnel 942School Resource Officer 57,952Other Salaries and Wages 67,394Social Security 9,650Pensions 14,353Medical Insurance 16,234Employer Medicare 2,257Evaluation and Testing 38,209Other Contracted Services 16,000Other Supplies and Materials 4,011In Service/Staff Development 2,657Other Charges 10,300

Total Other Student Support 331,222

Regular Instruction ProgramSupervisor/Director $ 107,619Career Ladder Program 500Librarians 96,358Educational Assistants 17,012Other Salaries and Wages 66,397Social Security 16,588Pensions 19,893Medical Insurance 56,917Employer Medicare 3,880Travel 1,062Library Books/Media 9,498In Service/Staff Development 90

Total Regular Instruction Program 395,814

(Continued)

160

Exhibit K-7



General Purpose School Fund (Cont.)Support Services (Cont.)

Special Education ProgramSupervisor/Director $ 40,960Clerical Personnel 2,000Social Security 2,461Pensions 3,748Medical Insurance 8,776Employer Medicare 576Travel 3,997

Total Special Education Program $ 62,518

Career and Technical Education ProgramSupervisor/Director $ 27,789Social Security 1,646Pensions 2,512Medical Insurance 4,165Employer Medicare 385


Other ProgramsOn-behalf Payments to OPEB $ 40,616

Total Other Programs 40,616

Board of EducationBoard and Committee Members Fees $ 2,695Social Security 167Medical Insurance 31,444Unemployment Compensation 5,159Employer Medicare 39Audit Services 5,132Dues and Memberships 9,841Travel 550Liability Insurance 16,560Trustee's Commission 77,867Workers' Compensation Insurance 88,934In Service/Staff Development 1,300Other Charges 11,332

Total Board of Education 251,020

Director of SchoolsCounty Official/Administrative Officer $ 89,633Clerical Personnel 22,356Social Security 6,498Pensions 8,601Medical Insurance 22,410Employer Medicare 1,520Communication 59,596Travel 2,332

(Continued)

161

Exhibit K-7




Director of Schools (Cont.)Office Supplies $ 4,066Other Charges 12,176Administration Equipment 5,525

Total Director of Schools $ 234,713

Office of the PrincipalPrincipals $ 147,180Career Ladder Program 1,208Assistant Principals 172,525Secretary(ies) 74,957Clerical Personnel 79,100Social Security 27,543Pensions 32,399Medical Insurance 86,766Employer Medicare 6,442Communication 1,647Other Charges 3,000Administration Equipment 12,098

Total Office of the Principal 644,865

Fiscal ServicesAccountants/Bookkeepers $ 84,185Social Security 4,989Pensions 1,877Medical Insurance 13,795Employer Medicare 1,167

Total Fiscal Services 106,013

Operation of PlantCustodial Personnel $ 160,355Social Security 9,058Pensions 3,576Medical Insurance 50,599Employer Medicare 2,118Maintenance and Repair Services - Equipment 140Custodial Supplies 38,409Electricity 272,556Natural Gas 24,273Water and Sewer 35,247Other Supplies and Materials 20,956Building and Contents Insurance 49,682

Total Operation of Plant 666,969

Maintenance of PlantMaintenance Personnel $ 71,319Social Security 4,273

(Continued)

162

Exhibit K-7




Maintenance of Plant (Cont.)Pensions $ 1,590Medical Insurance 5,360Employer Medicare 999Maintenance and Repair Services - Buildings 10,312Maintenance and Repair Services - Equipment 56,661Pest Control 1,920Other Supplies and Materials 28,437Other Charges 910Maintenance Equipment 4,100

Total Maintenance of Plant $ 185,881

TransportationMechanic(s) $ 34,713Bus Drivers 207,714Other Salaries and Wages 11,756Social Security 15,509Pensions 5,988Medical Insurance 8,728Employer Medicare 3,627Medical and Dental Services 2,892Diesel Fuel 46,722Tires and Tubes 8,733Vehicle Parts 25,158Other Supplies and Materials 5,719Vehicle and Equipment Insurance 14,541Other Charges 7,672Transportation Equipment 79,956

Total Transportation 479,428

Operation of Non-Instructional ServicesCommunity Services

Other Salaries and Wages $ 22,631Social Security 1,348Pensions 608Medical Insurance 2,396Employer Medicare 315Other Supplies and Materials 2,432Other Charges 295

Total Community Services 30,025

Early Childhood EducationSupervisor/Director $ 6,752Teachers 44,647Educational Assistants 16,719Social Security 3,718Pensions 5,019

(Continued)

163

Exhibit K-7



General Purpose School Fund (Cont.)Operation of Non-Instructional Services (Cont.)

Early Childhood Education (Cont.)Medical Insurance $ 21,852Employer Medicare 870

Total Early Childhood Education $ 99,577

Capital OutlayRegular Capital Outlay

Building Improvements $ 162,454Total Regular Capital Outlay 162,454

Total General Purpose School Fund $ 8,222,843

School Federal Projects FundInstruction

Regular Instruction ProgramTeachers $ 80,067Certified Substitute Teachers 840Non-certified Substitute Teachers 520Social Security 5,040Pensions 7,238Employer Medicare 1,179Instructional Supplies and Materials 37,408Other Charges 617Regular Instruction Equipment 10,731

Total Regular Instruction Program $ 143,640

Special Education ProgramTeachers $ 39,990Educational Assistants 79,934Non-certified Substitute Teachers 390Social Security 6,649Pensions 5,397Medical Insurance 34,984Employer Medicare 1,555Maintenance and Repair Services - Equipment 396Instructional Supplies and Materials 14,716Other Supplies and Materials 110Special Education Equipment 25,830


Career and Technical Education ProgramInstructional Supplies and Materials $ 1,217Vocational Instruction Equipment 10,258


(Continued)

164

Exhibit K-7



School Federal Projects Fund (Cont.)Support Services

Health ServicesMedical Personnel $ 10,768Social Security 587Pensions 969Medical Insurance 3,953Employer Medicare 137

Total Health Services $ 16,414

Other Student SupportEvaluation and Testing $ 10,407Travel 1,062In Service/Staff Development 581

Total Other Student Support 12,050

Regular Instruction ProgramSupervisor/Director $ 17,047Social Security 1,023Pensions 1,541Medical Insurance 2,210Employer Medicare 239Food Supplies 1,128In Service/Staff Development 27,688

Total Regular Instruction Program 50,876

Special Education ProgramClerical Personnel $ 2,000Social Security 124Pensions 45Employer Medicare 29Travel 79Other Charges 88


Career and Technical Education ProgramTravel $ 206In Service/Staff Development 264

Total Career and Technical Education Program 470

TransportationOther Salaries and Wages $ 5,549Social Security 344Pensions 124Employer Medicare 80

Total Transportation 6,097

Total School Federal Projects Fund $ 453,338

(Continued)

165

Exhibit K-7



Central Cafeteria FundOperation of Non-Instructional Services

Food ServiceCafeteria Personnel $ 186,624Social Security 10,316Pensions 4,044Medical Insurance 56,981Employer Medicare 2,413Maintenance and Repair Services - Equipment 4,680Transportation - Other than Students 2,313Travel 471Food Supplies 158,381Office Supplies 1,185USDA - Commodities 23,245Other Supplies and Materials 13,195Other Charges 2,571Food Service Equipment 324

Total Food Service $ 466,743

Total Central Cafeteria Fund $ 466,743

Total Governmental Funds - Metropolitan School Department $ 9,142,924

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STATUTORY SECTION

This part of the Metropolitan Government of Lynchburg, Moore County’s annual financial report presents detailed information required by state statute for the Metropolitan Lynchburg – Moore County Water and Sewer Department. This information is presented solely for the purposes of statutory compliance and additional analysis and is not a required part of the financial statements. This information is unaudited. It has not been subjected to any auditing procedures.

Table(s) Page(s) Demographic and Economic Information:

These schedules offer water rates and water loss reports required by state statute to help the reader understand how well the utility is performing. 1-2 168-170

Source: Metropolitan Lynchburg – Moore County Water and Sewer Department.

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Table 1

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Water Rates and CustomersWater and Sewer Department FundFor the Year Ended June 30, 2017

Water Rates

First 2,000 gallons $ 20.00 per monthAll over 2,000 gallons 8.15 per 1000 gallons

Sewer Rates

First 2,000 gallons $ 15.99 per monthAll over 2,000 gallons 7.99 per 1000 gallons

Number of Customers at June 30, 2017

Water 2,403Sewer 309

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Table 2

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Unaccounted for WaterWater and Sewer Department FundFor the Year Ended June 30, 2017

Water Audit Report for: Metropolitan Lynchburg Moore County Utility Department (TN0000416)Reporting Year:

All volumes to be entered as: MILLION GALLONS (US) PER YEAR

Master Meter and Supply Error Adjustments

WATER SUPPLIED Pcnt: Value:Volume from own sources: 9 268.612 MG/Yr 9 0.00% MG/Yr

Water imported: 7 4.299 MG/Yr 9 0.00% MG/YrWater exported: n/a 0.000 MG/Yr MG/Yr

Enter negative % or value for under-registrationWATER SUPPLIED: 272.911 MG/Yr Enter positive % or value for over-registration

.AUTHORIZED CONSUMPTION

Billed metered: 8 156.088 MG/YrBilled unmetered: n/a 0.000 MG/YrUnbilled metered: 10 1.482 MG/Yr Pcnt: Value:

Unbilled unmetered: 5 3.411 MG/Yr 1.25% MG/Yr

AUTHORIZED CONSUMPTION: 160.981 MG/Yr

WATER LOSSES (Water Supplied - Authorized Consumption) 111.930 MG/Yr

Apparent Losses Pcnt: Value:Unauthorized consumption: 10 0.682 MG/Yr 0.25% MG/Yr

Default option selected for unauthorized consumption - a grading of 5 is applied but not displayed

Customer metering inaccuracies: n/a 0.000 MG/Yr MG/YrSystematic data handling errors: 5 0.390 MG/Yr 0.25% MG/Yr

Apparent Losses: 1.072 MG/Yr

Real Losses (Current Annual Real Losses or CARL)Real Losses = Water Losses - Apparent Losses: 110.857 MG/Yr

WATER LOSSES: 111.930 MG/Yr

NON-REVENUE WATERNON-REVENUE WATER: 116.823 MG/Yr

= Water Losses + Unbilled Metered + Unbilled Unmetered

SYSTEM DATALength of mains: 9 233.0 miles

Number of active AND inactive service connections: 8 2,380Service connection density: 10 conn./mile main

YesAverage length of customer service line: ft

Average operating pressure: 8 70.0 psi

COST DATA

Total annual cost of operating water system: 9 $1,766,813 $/YearCustomer retail unit cost (applied to Apparent Losses): 9 $9.83

Variable production cost (applied to Real Losses): 8 $1,458.00 $/Million gallons

WATER AUDIT DATA VALIDITY SCORE:

PRIORITY AREAS FOR ATTENTION:

1: Volume from own sources

2: Unauthorized consumption

3: Systematic data handling errors

AWWA Free Water Audit Software: Reporting Worksheet

2017 7/2016 - 6/2017

<----------- Enter grading in column 'E' and 'J' ---------->

Default option selected for Unbilled unmetered - a grading of 5 is applied but not displayed

Based on the information provided, audit accuracy can be improved by addressing the following components:

Default option selected for Systematic data handling errors - a grading of 5 is applied but not displayed

Are customer meters typically located at the curbstop or property line?

Average length of customer service line has been set to zero and a data grading score of 10 has been applied

$/1000 gallons (US)

*** YOUR SCORE IS: 83 out of 100 ***

A weighted scale for the components of consumption and water loss is included in the calculation of the Water Audit Data Validity Score

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? Click to access definition

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Please enter data in the white cells below. Where available, metered values should be used; if metered values are unavailable please estimate a value. Indicate your confidence in the accuracy of the input data by grading each component (n/a or 1-10) using the drop-down list to the left of the input cell. Hover the mouse over the cell to obtain a description of the grades

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(length of service line, beyond the property boundary, that is the responsibility of the utility)

Use buttons to selectpercentage of water

suppliedOR

value

?Click here: for help using option buttons below

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+ Click to add a comment

WAS v5.0

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American Water Works Association.Copyright © 2014, All Rights Reserved.

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To select the correct data grading for each input, determine the highest grade where the utility meets or exceeds all criteria for that grade and all grades below it.

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Table 2a

The Metropolitan Government of Lynchburg, Moore County, TennesseeSchedule of Unaccounted for WaterWater and Sewer Department FundFor the Year Ended June 30, 2017

Water Audit Report for: Metropolitan Lynchburg Moore County Utility Department (TN0000416)Reporting Year:

*** YOUR WATER AUDIT DATA VALIDITY SCORE IS: 83 out of 100 ***System Attributes:

Apparent Losses: 1.072 MG/Yr

+ Real Losses: 110.857 MG/Yr

= Water Losses: 111.930 MG/Yr

Unavoidable Annual Real Losses (UARL): 41.33 MG/Yr

Annual cost of Apparent Losses: $10,543

Annual cost of Real Losses: $161,630 Valued at Variable Production Cost

Performance Indicators:

Non-revenue water as percent by volume of Water Supplied: 42.8%

Non-revenue water as percent by cost of operating system: 10.1% Real Losses valued at Variable Production Cost

Apparent Losses per service connection per day: 1.23 gallons/connection/day

Real Losses per service connection per day: N/A gallons/connection/day

Real Losses per length of main per day*: 1,303.51 gallons/mile/day

Real Losses per service connection per day per psi pressure: N/A gallons/connection/day/psi

From Above, Real Losses = Current Annual Real Losses (CARL): 110.86 million gallons/year

Infrastructure Leakage Index (ILI) [CARL/UARL]: 2.68* This performance indicator applies for systems with a low service connection density of less than 32 service connections/mile of pipeline

AWWA Free Water Audit Software:

2017 7/2016 - 6/2017

Return to Reporting Worksheet to change this assumpiton

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American Water Works WAS v5.0

Operational

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SINGLE AUDIT SECTION

171

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements

Performed in Accordance With Government Auditing Standards



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 business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Metropolitan Government of Lynchburg, Moore County, Tennessee, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the metropolitan government’s basic financial statements, and have issued our report thereon dated December 13, 2017. Our report includes a reference to other auditors who audited the financial statements of the Metropolitan Lynchburg Moore County Water and Sewer Department, as described in our report on the metropolitan government’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 the metropolitan government’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the metropolitan government’s internal control. Accordingly, we do not express an opinion on the effectiveness of the metropolitan government’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph 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. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

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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. We consider one deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a material weakness: 2017-003.

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. We consider the following deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency: 2017-004.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the metropolitan government’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and are described in the accompanying Schedule of Findings and Questioned Costs as items: 2017-001 and 2017-002.

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 the metropolitan government’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Very truly yours,


December 13, 2017

JPW/yu

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Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance and on the Schedule of Expenditures of

Federal Awards Required by the Uniform Guidance



Report on Compliance for Each Major Federal Program

We have audited the Metropolitan Government of Lynchburg, Moore County, Tennessee’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 the metropolitan government’s major federal programs for the year ended June 30, 2017. Other auditors have audited the compliance of the metropolitan government with the types of compliance requirements described above that are applicable to its major federal program Water and Waste Disposal Systems for Rural Communities (CFDA No. 10.760) for the year ended June 30, 2017. The metropolitan government’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 requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of the metropolitan government’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

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about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the metropolitan government’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit and the report of other auditors provide a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the metropolitan government’s compliance.

Opinion on Each Major Federal Program

In our opinion, based on our audit and the audit of the other auditors, the Metropolitan Government of Lynchburg, Moore County, Tennessee, 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, 2017.

Report on Internal Control Over Compliance

Management of the metropolitan government 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 the metropolitan government’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 the metropolitan government’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

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consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Metropolitan Government of Lynchburg, Moore County, Tennessee, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the metropolitan government’s basic financial statements. We issued our report thereon dated December 13, 2017, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Very truly yours,


December 13, 2017

JPW/yu

176

The Metropolitan Government of Lynchburg, Moore County, Tennessee, and the Metropolitan School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2)For the Year Ended June 30, 2017

Federal Pass-throughFederal/Pass-through Agency/State CFDA Entity IdentifyingGrantor Program Title Number Number

U.S. Department of Agriculture:Direct Program:

Water and Waste Disposal System for Rural Communities (5) 10.760 N/A $ 2,118,901Passed-through State Department of Education:

Child Nutrition Cluster: (4)School Breakfast Program 10.553 (3) 62,211National School Lunch Program 10.555 (3) 188,086

Passed-through State Department of Agriculture:Child Nutrition Cluster: (4)

National School Lunch Program (Commodities - Noncash Assistance) 10.555 (3) 23,245Cooperative Forestry Assistance 10.664 (3) 3,000

Total U.S. Department of Agriculture $ 2,395,443

U.S. Department of Interior:Passed-through Tennessee Wildlife Resource Agency:

Sport Fish Restoration 15.605 (3) $ 750Total U.S. Department of Interior $ 750

U.S. Department of Transportation:Passed-through State Department of Transportation:

State and Community Highway Safety 20.600 (3) $ 13,122Alcohol Open Container Requirements 20.607 (3) 9,981Interagency Hazardous Materials Public Sector Training and Planning Grants 20.703 (3) 11,018

Total U.S. Department of Transportation $ 34,121

U.S. Institute of Museum and Library Services:Passed-through Tennessee Library and Archives:

Grants to States 45.310 (3) $ 1,462Total U.S. Institute of Museum and Library Services $ 1,462

U.S. Department of Education:Passed-through State Department of Education:

Title I Grants to Local Educational Agencies 84.010 N/A $ 159,031Special Education Cluster: (4)

Special Education Grants to States 84.027 N/A 230,277Special Education Preschool Grants 84.173 N/A 15,009

Career and Technical Education - Basic Grants to States 84.048 N/A 13,588Supporting Effective Instruction State Grants (formerly

Improving Teacher Quality State Grants) 84.367 N/A 28,217Total U.S. Department of Education $ 446,122

U.S. Department of Health and Human Services:Passed-through State Department of Education:

Child Care and Development Block Grant 93.575 (3) $ 7,216Total U.S. Department of Health and Human Services: $ 7,216

U.S. Department of Homeland Security:Passed-through State Department of Military:

Emergency Management Performance Grants 97.042 (3) $ 7,500Homeland Security Grant Program 97.067 (3) 8,965

Total U.S. Department of Homeland Security $ 16,465

Total Expenditures of Federal Grants $ 2,901,579

(Continued)

Expenditures

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The Metropolitan Government of Lynchburg, Moore County, Tennessee, and the Metropolitan School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2) (Cont.)

FederalFederal/Pass-through Agency/State CFDA ContractGrantor Program Title Number Number

State GrantsRural Local Health Services - State Department of Health N/A (3) $ 100,484Archive Grant - Tennessee Secretary of State N/A (3) 1,720Litter Program - State Department of Transportation N/A (3) 32,858Pilot-Lottery for Pre-K Classrooms - Early Childhood Education - State

Department of Education N/A (3) 96,997Coordinated School Health - State Department of Education N/A (3) 85,000Riparian Conservation Grant - Tennessee Wildlife Resource Agency N/A (3) 250Access to Health and Healthy Active Built Environments - State Department of

Health N/A (3) 10,000Tourism Enhancement Grant - State Department of Economic and Community

Development N/A (3) 50,000Economic Development Growth Program - State Department of Economic and

Community Development N/A (3) 250,000Capitalization Grants for Clean Water State Revolving Funds - State Department

of Environment and Conservation N/A (3) 112,133ABC Grant - South Central Tennessee Development District N/A (3) 500Safe Schools Act of 03 - Department of Education N/A (3) 9,960Read to Be Ready Coaching Network - State Department of Education N/A (3) 3,898Student Ticket Subsidy Grant - Tennessee Arts Commission N/A (3) 3,000Juvenile Justice and Delinquency Prevention - State Commission on Children

and Youth N/A (3) 4,500

Total State Grants $ 761,300

CFDA = Catalog of Federal Domestic AssistanceN/A = Not Applicable

(3) Information not available.(4) Child Nutrition Cluster total $273,542; Special Education Cluster total $245,286.(5) During the year, the Water and Sewer Department received and expended grant proceeds of $456,361 and loan

proceeds of $1,662,540 from the U.S. Dept. of Agriculture for an ongoing project. The loan balance outstandingfor this project on June 30, 2017, was $1,902,826. The government has no ongoing requirements other thanthe repayment of the loan.

Expenditures

(1) Presented in conformity with generally accepted accounting principles using the modified accrual basis of accounting.(2) Metropolitan Moore County elected not to use the 10% de minimus cost rate permitted in the Uniform Guidance.

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The Metropolitan Government of Lynchburg, Moore County, TennesseeSummary Schedule of Prior-year FindingsFor the Year Ended June 30, 2017

Fiscal Page Finding CFDAYear Number Number Number


2016 181 2016-001

2016 182 2016-002 N/A Corrected

2016 182 2016-003 N/A Corrected

OFFICE OF DIRECTOR OF SCHOOLS

2016 183 2016-004 N/A

2016 183-184 2016-005 N/A

2016 183-184 2016-005 N/A

There were no prior-year federal award findings to report.

OFFICES OF TRUSTEE, METROPOLITAN CLERK, CLERK AND MASTER, REGISTER OF DEEDS, AND SHERIFF

Duties were not Segregated Adequately

Not Corrected - See Explanation on Corrective Action Plan

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 whether corrected ornot. Presented below are financial statement findings along with their current status from the Annual Financial Report ofthe Metropolitan Government of Lynchburg, Moore County, Tennessee, for the year ended June 30, 2017.

Title of Finding Current Status

Prior-year Financial Statement Findings

Prior-year Federal Awards Findings

The Office had Deficiencies in Budget Operations

The Office of Director of Schools had Deficiencies in Budget Operations

N/A

Corrected

Not Corrected - See Explanation on Corrective Action Plan

CorrectedDuties were not Segregated Adequately

Competitive Bids were not Solicited for the Purchase of Food for Inmate Meals

Amounts Withheld from Contractor Payments were not Deposited into an Escrow Account


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Financial Statements:

1. Our report on the financial statements of the Metropolitan Government ofLynchburg, Moore County, Tennessee, is unmodified.

2. Internal Control Over Financial Reporting:

* Material weakness identified? YES

* Significant deficiency identified? YES

3. Noncompliance material to the financial statements noted? NO

Federal Awards:

4. Internal Control Over Major Federal Programs:

* Material weakness identified? NO

* Significant deficiency identified? NONE REPORTED

5. Type of report auditor issued on compliance for major programs. UNMODIFIED

6. Any audit findings disclosed that are required to be reported inaccordance with 2 CFR 200.516(a)? NO

7. Identification of major federal programs:

* CFDA Numbers: 10.760 Water and Waste Disposal System for Rural Communities

8. Dollar threshold used to distinguish between type A and Type B Programs. $750,000

9. Auditee qualified as low-risk auditee? YES

LYNCHBURG, MOORE 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

Findings and recommendations, as a result of our audit, are presented below. We reviewed these findings and recommendations with management to provide an opportunity for their response. However, management did not provide written responses to the findings for inclusion in this report. Management’s corrective action plans, whether related to the financial statements or federal awards, are presented separately in the Management’s Corrective Action Plan in the Single Audit Section of this report. Findings relating specifically to the audit of federal awards, if any, are separately presented under Part III, Findings and Questioned Costs for Federal Awards.


FINDING 2017-001 COMPETITIVE BIDS WERE NOT SOLICITED FOR THE PURCHASE OF FOOD AND HEALTHCARE FOR INMATES (Noncompliance Under Government Auditing Standards)

The metropolitan government follows the Metropolitan Charter, which provides for all purchases and contracts for goods or services to be made through a consolidated Metropolitan Purchasing Department. The Metropolitan Council has not created a consolidated Metropolitan Purchasing Department. However, effective June 21, 1999, (amended October 18, 2004) the Metropolitan Council provided for the Office of Metropolitan Mayor to follow the bid requirements set forth in the County Purchasing Law of 1983, Sections 5-14-201 through 5-14-206, Tennessee Code Annotated. These statutes provide for competitive bids on all purchases exceeding $10,000. We noted the following purchasing deficiencies:

A. The office did not solicit competitive bids for the purchase of food for inmatemeals. The metropolitan government paid a total of $18,496 for food forinmate meals during the fiscal year ended June 30, 2017. This findingresulted from management’s failure to correct the finding noted in prior-years’ audit reports.

B. The office did not solicit competitive bids for services related to inmatehealthcare. The metropolitan government paid a total of $42,000 for theseservices during the fiscal year ended June 30, 2017. This deficiency existsbecause management failed to comply with the Metropolitan Charter.

The failure to solicit competitive bids could result in the county paying more than the most competitive price.

RECOMMENDATION

Competitive bids should be solicited for purchases exceeding $10,000 as required by the Metropolitan Charter.

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FINDING 2017-002 GENERAL FUND APPROPRIATIONS EXCEEDED ESTIMATED AVAILABLE FUNDING (Noncompliance Under Government Auditing Standards)

The budget and subsequent amendments approved by the Metropolitan Council for the General Fund resulted in appropriations exceeding estimated available funding by $22,563. Sound budgetary principles dictate that appropriations be held within estimated available funding. This deficiency was the result of a lack of management oversight. RECOMMENDATION Appropriations that exceed estimated available funding should not be submitted to the Metropolitan Council, and the Metropolitan Council should not approve such appropriations.

_________________________________________ OFFICE OF HIGHWAY SUPERINTENDENT FINDING 2017-003 THE HIGHWAY/PUBLIC WORKS FUND REQUIRED

MATERIAL AUDIT ADJUSTMENTS FOR PROPER FINANCIAL STATEMENT PRESENTATION

(Internal Control – Material Weakness Under Government Auditing Standards)

At June 30, 2017, certain general ledger account balances in the Highway Public/Works Fund were not materially correct, and audit adjustments were required for the financial statements to be materially correct at year-end. Material audit adjustments were required to increase receivables by $285,923 and to recognize contracts payable of $293,753. Generally accepted accounting principles require the Highway Department to have adequate internal controls over the maintenance of its accounting records. Material audit adjustments were required because the Highway Department’s financial reporting system did not prevent, detect, or correct potential misstatements in the accounting records. It is a strong indicator of a material weakness in internal controls if the Highway Department has ineffective controls over the maintenance of its accounting records, which are used to prepare the financial statements, including the related notes to the financial statements. This deficiency is the result of a lack of management oversight. We presented audit adjustments to management that they approved and posted to properly present the financial statements in this report. RECOMMENDATION The Highway Department should have appropriate processes in place to ensure its general ledgers are materially correct.

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FINDING 2017-004 DUTIES WERE NOT SEGREGATED ADEQUATELY (Internal Control – Significant Deficiency Under Government Auditing Standards)

Duties were not segregated adequately among the employees of the Office of Circuit and General Sessions Courts Clerk. Employees responsible for maintaining the accounting records in this office were also involved in receipting, depositing, and/or disbursing funds. Sound business practices dictate that management is responsible for designing internal controls to give reasonable assurance of the reliability of financial reporting and of the effectiveness and efficiency of operations. This lack of segregation of duties is the result of management’s decisions based on the availability of financial resources and is a significant deficiency in internal controls that increases the risk of unauthorized transactions. Also, this deficiency is the result of management’s failure to correct the finding noted in prior-years’ audit reports.

RECOMMENDATION

The circuit and general sessions courts clerk should segregate duties to the extent possible using available resources.

183

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, 2017.

184

FindingNumber


2017-001

2017-002

OFFICE OF HIGHWAY SUPERINTENDENT

2017-003


2017-004

We reviewed the financial statement and federal award findings and recommendations with management toprovide an opportunity for their response as required by the auditee requirements within Title 2 U.S. Code ofFederal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirementsfor Federal Awards (Uniform Guidance). Management’s corrective action plans for all financial statementfindings and federal award findings are presented in this section and have been indexed below. The correctiveaction plans were prepared by management and have been presented as they were submitted.

Metropolitan Government of Lynchburg, Moore County, TennesseeManagement's Corrective Action Plan


Title of Finding

The Highway/Public Works Fund Required Material Audit Adjustments for Proper Financial Statement Presentation

General Fund Appropriations Exceeded Estimated Available Funding

Duties were not Segregated Adequately

Competitive Bids were not Solicited for the Purchase of Food and Healthcare for Inmates

Corrective ActionPlan Page Number

186

186-187

188

189

185

186

Anticipated Completion Date of Corrective Action: June 30, 2018

Repeat Finding: No

Reason Corrective Action was Not Taken in the Prior Year:

Planned Corrective Action: The fund balances from the audit will be presented to the Metro Council each year to be amended so that actual fund balances will be reflected in the budget for that year.

Signature:

187

Milton Ferrell, Highway Superintendent

FINDING:

Metro Moore County Highway Department 680 Booneville Highway Lynchburg, TN 37352

Corrective Action Plan

Phone: (93 I )759-7800

Fax: (931 )759-7800

Email: [email protected]

THE HIGHWAY/PUBLIC WORKS FUND REQUIRED MATERIAL AUDIT ADJUSTMENTS FOR PROPER FINANCIAL STATEMENT PRESENTATION

Response and ,Corrective Action Plan Prepared by: Milton Ferrell, Superintendent

Person Responsible for Implementing the Corrective Action: Anita Thrower, Bookkeeper

Anticipated Completion Date of Corrective Action: July 1, 2017

Repeat Finding: No

Reason Corrective Action was Not Taken in the Prior Year: N/A

Planned Corrective Action: The Highway Department will contact Moore County Trustee for revenue received in July that should be booked in previous fiscal year and will contact vendors for expenses that occurred in previous fiscal year. Revenue and expenses will be booked in proper fiscal year.

Signature:

188

Christy Millsaps Circuit Court Clerk

Metropolitan Moore County

P.O. Box 206 • Lynchburg, TN 37352 Phone: (931) 759-7208 • Fax: (931) 759-7208

Corrective Action Plan

FINDING: DUTIES WERE NOT SEGREGATED ADEQUATELY

Response and Corrective Action Plan Prepared by: Christy Millsaps, Court Clerk

Person Responsible for Implementing the Corrective Action: Christy Millsaps, Court Clerk

Anticipated Completion Date of Corrective Action: In Action

Repeat Finding: Yes

Reason Corrective Action was Not Taken in the Prior Year: Corrective action has been started. Due to the fact this office only has one full time person it will be hard to totally solve.

Planned Corrective Action:

Part time help is to check deposits and bank statements.

Signature:

189

BEST PRACTICES

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 items noted below are best practices 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 Metropolitan Moore County.

METROPOLITAN MOORE COUNTY SHOULD ADOPT A CENTRAL SYSTEM OF ACCOUNTING AND BUDGETING

Metropolitan Moore County does not have a central system of accounting and budgeting. Sound business practices dictate that establishing a central system would significantly improve internal controls over the accounting and budgeting processes. The absence of a central system of accounting and budgeting has been a management decision by the metropolitan council 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 and budgeting covering all county departments.

METROPOLITAN MOORE COUNTY SHOULD IMPLEMENT THE PROVISIONS OF THE CHARTER THAT PROVIDE FOR A

CONSOLIDATED PURCHASING DEPARTMENT

The metropolitan government follows the Metropolitan Charter, which provides for all purchases and contracts for goods or services to be made through a consolidated Metropolitan Purchasing Department. The charter further provides for the metropolitan mayor to manage/conduct the Metropolitan Purchasing Department according to the procedures adopted by the metropolitan council. The metropolitan council is required by the charter to establish a three-member oversight committee to oversee the activity of the Metropolitan Purchasing Department. However, the metropolitan council has not created a consolidated Metropolitan Purchasing Department. We recommend the government implement the provisions of the charter that provide for a consolidated Purchasing Department.

190

Documents

THE METROPOLITAN GOVERNMENT OF LYNCHBURG MOORE COUNTY ...comptroller.tn.gov/repository/CA/2017/FY17MooreAFR.pdf · LYNCHBURG, MOORE COUNTY, TENNESSEE ... Christy Millsaps, Circuit,