Government-Wide Financial Statements: Fund Financial Statements: Notes to the Financial Statements

Government Auditing Standards

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Profile of the Government 1

Local Economy 2

Long-term Financial Planning 3

Relevant Financial Policies 5

Major Initiatives 6

Awards and Acknowledgments 7

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Management s Responsibility for the Financial Statements Auditor s Responsibility Government Auditing Standards, Opinions www.gfhllp.com Greenville Mauldin Mount Pleasant (864) 451-7381 (864) 232-5204 (843) 735-5805

Other Matters Required Supplementary Information Supplementary and Other Information Government Auditing Standards Government Auditing Standards Government Auditing Standards 14

TheFinanceDepartment MissionStatement 15

Introductory Section, Financial Section Statistical Section government-wide financial statements fund financial statements Government-Wide Financial Statements statement of net position statement of activities 17

Government-Wide Financial Statements (Continued) Fund Financial Statements fund Governmental funds modified accrual basis of accounting governmental activities governmental funds Internal service funds governmental activities Agency Funds 18

Fund Financial Statements (Continued) 19

o o o o 23

Intergovernmental Related Improvements 26

Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions 27

Basic Financial Statements 29

Related Organizations 43

Major Operations Governmental activities business-type activities Direct expenses Program revenues general revenues economic resources measurement focus accrual basis of accounting. current financial resources measurement focus modified accrual basis of accounting. available 44

Governmental fund types General Fund, a major fund, Special revenue funds Capital projects funds 45

GO Bond Fund, a major capital projects fund Infrastructure Management Fund, a major capital projects fund TIF Bond Fund, a major capital projects fund Debt service funds Proprietary Fund Types Internal Service Funds Health Services Fund 46

Fiduciary Fund Types Agency Funds 1. Cash, Cash Equivalents, and Investments 47

1. Cash, Cash Equivalents, and Investments (Continued) Accounting and Financial Reporting for Certain Investments and for External Investment Pools Receivables and Payables 48

2. Receivables and Payables (Continued) 3. Inventories and Prepaid Items 4. Capital Assets 49

4. Capital Assets (Continued) 5. Compensated Absences Accounting for Compensated Absences 6. Accrued Liabilities andlong-term Obligations 50

7. Deferred Outflows/Inflows of Resources Elements of Financial Statements deferred outflows of resources deferred pension charges deferred pension charges deferred inflows of resources, unavailable revenue property taxes unavailable revenue other deferred revenue deferred pension credits deferred pension credits 8. Fund Balance Fund Balance Reporting and Governmental Fund Type Definitions 51

8. Fund Balance (Continued) 9. Net Position 10. Encumbrances 52

11. Pensions 12. Other Postemployment Benefits 13. Accounting Estimates 14. Fair Value 53

14. Fair Value (Continued) 15. Comparative Data Deposits 54

Investments 55

Reconciliation to the Financial Statements Property Taxes Development Receivable 56

Unavailable, Deferred, and Unearned Revenues 57

Interfund Receivables and Payables Interfund Transfers 58

South Carolina Transportation Infrastructure Bank General Obligation Bonds 60

General Obligation Bonds (Continued) Tax Increment Financing Bonds Capital Lease Obligations 61

Capital Lease Obligations (Continued) 62

Participation in Public Entity Risk Pools for Property and Casualty Insurance 64

Participation in Public Entity Risk Pools for Property and Casualty Insurance (Continued) Self-Insurance Health Plan 65

Plan Description Plan Membership Plan Benefits 66

Plan Benefits (Continued) Plan Contributions 67

Plan Contributions (Continued) Actuarial Assumptions and Methods 68

Actuarial Assumptions and Methods (Continued) 69 Long-term Expected Rate of Return

Long-term Expected Rate of Return (Continued) Pension Liabilities, Pension Expense, and Deferred Outflows/Inflows of Resources Related to Pensions 70

Pension Liabilities, Pension Expense, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) 71

Pension Liabilities, Pension Expense, and Deferred Outflows/Inflows of Resources Related to Pensions (Continued) Discount Rate Plans Fiduciary Net Position 72

Payable to Plans Grants Litigation 73

Plan Description 74

Funding Policy Actuarial Methods and Assumptions 75

Actuarial Methods and Assumptions (Continued) Annual OPEB Costs and Rollforward of Net OPEB Obligation 76

Actuarial Methods and Assumptions (Continued) Schedule of Funding Progress 77

Required Supplementary Information 79

TOWN OF MOUNT PLEASANT, SOUTH CAROLINA NOTES TO THE BUDGETARY COMPARISON SCHEDULES FOR THE YEAR ENDED JUNE 30, 2016 A. BASIS OF ACCOUNTING The budgetary comparison schedules have been presented on the modified accrual basis of accounting, which is consistent with accounting principles generally accepted in the United States of America. B. BUDGETARY INFORMATION The Town follows the following procedures in establishing the budgetary data reflected in the budgetary comparison schedules: 1. Prior to May 1, the Town Administrator submits to the Town Council a proposed operating budget previously reviewed by the appropriate standing committees of Council for the fiscal year commencing July 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings, Budget Committee meetings, and Council meetings are conducted by the Budget Committee, which includes all members of Town Council, at the Municipal Complex to inform and obtain taxpayer comments. 3. The budget is legally enacted through passage of an ordinance by July 1. The budget is amended at midyear. Any supplemental budgetary appropriations made at this time are subject to the same procedures as the original budget ordinance. 4. The Town Administrator is authorized to administer the budget and may only transfer appropriated funds between accounts within each department without Town Council's prior approval provided the transfer does not alter the total appropriations for a department. Town Council must approve any revisions that alter the total appropriations of a department. Department managers are responsible for managing their respective budgets. Department managers are not allowed to make transfers of appropriated funds. The legal level of budgetary authority is at the departmental level. 5. Legally adopted budgets are employed as a management control device during the year for the General Fund, TIF Bond Capital Projects Fund, and six (6) Special Revenue Funds (i.e. Accommodations Tax Fund, Hospitality Tax Fund, Special Permit Fund, Storm Water Utility Fund, Victims Advocate Fund, and Impact Assessment Fund). Expenditures may not legally exceed appropriations on the fund level. The Federal Grants Fund, State and Local Grants Fund, Donor Programs Fund, Special Projects Fund, Infrastructure Management Funds, and Capital Equipment Fund are not formally budgeted but effective budgetary control is achieved through the various grant budgets, bond indentures, and construction project authorizations. 6. The budgets for the budgeted funds are legally adopted on a basis consistent with GAAP. 7. The budgets at the end of the year for these funds represent the budgets adopted and amended by the Town Council plus encumbrances and funds designated for continuing projects carried over from the preceding year. 8. Encumbrances do not lapse but are brought forward to the new fiscal year and added to the budget adopted by Town Council for that year. It is Town policy to close out all encumbrances possible before year-end. The Town had no encumbrances at June 30, 2016. 9. All unencumbered appropriations, except those designated as continuing projects by the Town Administrator, lapse at yearend. 10. Town Council made one supplementary budget adjustment at mid-year to adjust the revenue and expense budgets to reflect new estimates for current year activity/results. 82

Supplementary Information 89

Non-Major Governmental Funds Special Revenue and Capital Project Funds Special Revenue Funds Accommodations Tax Fund - This fund is used to account for state and local funds relating to accommodations tax revenue and for disbursements for tourism related activities as defined by SC Code of Laws Section 6-4-5. Donor Programs Fund - This fund is used to account for donated funds to the Town of Mount Pleasant for specific purposes. This fund is also used to receipt corporate and foundation related awards to the Town for specified purposes. This fund is not a budgeted fund, rather revenues are recorded when received and budgets established at the time of donation. After the close of the fiscal year funds remaining are re-budgeted for the specified purposes. The Town registers annually with the Secretary of State in compliance with the SC Solicitation of Charitable Funds Act. Federal Grants Fund This fund is used to account for funds received from the federal government (including its agencies) that are restricted for a specified purpose. The Town from time to time may also transfer in other monies in order to meet grant match requirements or to assist with the payment of other non-reimbursable costs. State and Local Grants Fund This fund is used to account for funds received from state and local governments (including their agencies) that are restricted for a specified purpose. The Town from time to time may also transfer in other monies in order to meet grant match requirements or to assist with the payment of other non-reimbursable costs. Hospitality Tax Fund - This fund is used to account for receipts and disbursements for the Town s 2% hospitality tax applied to food and beverage sales in accordance with SC Code of Laws Section(s) 6-1-700 to 6-1-770 Special Permit Fund - This fund is used to account for revenue from temporary permits issued by the State for the sale of alcoholic beverages and the expenditure of these fees as dictated by SC Code of Laws Section 12-33-40 and Section 61-6-2010. Storm Water Fund - This fund is used to account for the annual collection of storm water fees and the disbursement of funds to maintain, repair and improve the Town s drainage system in accordance with SC Code of Laws Sections(s) 48-14-10 to 48-15-150 and Town of Mount Pleasant Code of Ordinances, Title V, Chapter 52.02. Victims Advocate Fund -This fund is used to account for funds received from Municipal Court fines to be used to assist victims of crime as mandated by State Law in Titles 14, 15 and 16. This program is monitored by the State Office of Victims Assistance (SOVA). The Police Department is responsible for the submission of the annual budget to the SOVA office and for preparing annual reports related to the expenditure of these funds. Impact Assessment Fund - This fund is used to account for the funds assessed on residential and non-residential development and used for capital acquisitions or improvements by the general government, police, fire, public services, planning and recreation departments in accordance with SC Code of Laws Title 6, Section 6-1-910 and the Town of Mount Pleasant Code of Ordinances, Title XV, Chapter 154: Municipal Impact Fees. Capital Projects Funds Special Projects Fund - These are funds from Operational Transfers combined to complete a project or from other sources not otherwise identified such as residual bond proceeds after arbitrage is completed related to General Obligation Bond ( GOB ) or Tax Increment Financing Bond ( TIF ) Funds. After the close of the fiscal year funds remaining for projects are re-budgeted based on the specified purposes. At the close of a project, any remaining funds will be made available in the Special Projects Fund for future projects. Town officials may budget available funds to new projects during the annual budget process or during the year on a project by project basis. 91

Capital Equipment Fund These are budgeted funds used to account for lease proceeds for the acquisition of new capital equipment. Funds remaining for prior year lease proceeds are re-budgeted for the specified purpose(s) after the close of the fiscal year. Debt Service Funds 2014 General Obligation Bond Debt Service Fund As per the bond covenants for the 2014 General Obligation Bond issued by the Town of Mount Pleasant, the Town is required to maintain sinking funds to service the debt related to the bond issuance. 92

STATISTICAL SECTION This part of the Town of Mount Pleasant s ( Town ) comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, notes, and required supplementary information says about the Town s overall financial health. Contents Page Financial Trends Information 105 These schedules contain trend information to help the reader understand how the Town s financial performance and well-being have changed over time. Revenue Capacity Information 110 These schedules contain information to help the reader assess the Town s most significant local revenue source, the property tax. Debt Capacity Information 114 These schedules present information to help the reader assess the affordability of the Town s current levels of outstanding debt and the Town s ability to issue additional debt in the future. Demographic and Economic Information 119 These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town s financial activities take place. Operating Information 121 These schedules contain service and infrastructure data to help the reader understand how the information in the Town s financial report relates to the services the Town provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 107

Fund Balance Reporting and Governmental Fund Type Definitions 111

GOVERNMENT AUDITING STANDARDS Government Auditing Standards deficiency in internal control material weakness significant deficiency Government Auditing Standards www.gfhllp.com Greenville Mauldin Mount Pleasant (864) 451-7381 (864) 232-5204 (843) 735-5805

Government Auditing Standards 132