Fiscal Year 2019 CAFR (PDF)

QUEEN ANNE'S COUNTY, MARYLAND

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS

Page(s)

INTRODUCTORY SECTION

Letter of Transmittal 1-5 Certificate of Achievement for Excellence in Financial Reporting 7 Organization Chart 8 Certain Elected and Other Officials 9

FINANCIAL SECTION

Independent Auditor's Report 11-13 Management's Discussion and Analysis (required supplementary information) 15-29

BASIC FINANCIAL STATEMENTS 31

Government-Wide Financial Statements Statement of Net Position 32-33 Statement of Activities 34-35 Governmental Fund Financial Statements Balance Sheet 36 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 37 Statement of Revenues, Expenditures and Changes in Fund Balances 38 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 39

Enterprise Fund Financial Statements Statement of Net Position 40-41 Statement of Revenues, Expenses, and Changes in Net Position 42-43 Statement of Cash Flows 44-45 Fiduciary Fund Statements Statement of Fiduciary Net Position 46 Statement of Changes in Fiduciary Net Position 47 Notes to Financial Statements 49-122

REQUIRED SUPPLEMENTARY INFORMATION 123

Maryland State Retirement and Pensions Systems Schedule of the Proportionate Share of the Net Pension Liability 124 Schedule of Contributions 124 Actuarial Assumptions - Pension Plan 125 Other Post-Employment Benefits (OPEB) Trust Schedule of Changes in the Net OPEB Liability 126 Schedule of Actual Employer Contribution as a Percentage of Covered-Employee Payroll 127 Actuarial Assumptions - OPEB Plan 127

Length of Service Awards Program (LOSAP) Schedule of Changes in the Net LOSAP Liability 128 Notes to the Required Supplemental Information (LOSAP) 128 Budgetary Comparisons for General Fund 129 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 130-132

QUEEN ANNE'S COUNTY, MARYLAND

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEAR ENDED JUNE 30, 2019

TABLE OF CONTENTS (CONTINUED)

Page(s)

FINANCIAL SECTION (CONTINUED)

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

(OTHER SUPPLEMENTARY INFORMATION) 134

Non-Major Governmental Funds 135-137 Combining Balance Sheet 138-140 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 142-144 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budgetary Basis 146-153 Non-Major Enterprise Funds 155-156 Combining Statement of Net Position 157 Combining Statement of Revenues, Expenses, and Changes in Net Position 158 Combining Statement of Cash Flows 159

Fiduciary Funds 160-161 Other Post-Employment Benefit Trust Fund Combining Statement of Fiduciary Net Position 162 Combining Statement of Changes in Fiduciary Net Position 163 Agency Funds Statement of Assets and Liabilities 165 Statement of Changes in Assets and Liabilities 166-167 Community Partnerships for Children Special Revenue Fund 168 Combining Balance Sheets - By Grantor 169 Schedule of Revenues, Expenditures, and Changes in Fund Balances -

By Community Partnership Agreements (CPA) and Non-Community Partnership Agreements (Non-CPA) 170-172 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budgetary Basis 174-175

STATISTICAL SECTION (UNAUDITED) 177

Table 1 Net Position by Component - Government-Wide 178-179 2a Changes in Net Position - Government-Wide 180-183 2b General Tax Revenues - Governmental Activities 184 3 Fund Balances - Governmental Funds 185 4 Changes in Fund Balances - Governmental Funds 186-187 5 Assessed Value of Taxable and Exempt Property 189 6a Real Property Tax Rates - County Direct Rate 190 6b Real Property Tax Rates - County Special Taxing Districts 191

6c Real Property Tax Rates - Overlapping Governments - Towns 192-193 7 Ten Highest Commercial Property Taxpayers 194 8 Property Tax Levies and Collections 195 9 Ratios of Outstanding Debt by Type 196 10 Ratios of General Bonded Debt Outstanding 197 11 Computation of Net Direct and Overlapping Debt 199 12a Computation of Legal Debt Margin 200-201 12b Computation of Local Debt Limit 202-203 13 Principal Employers 204

14 Demographic Statistics 205 15 County Government Employees - Full-Time Equivalents 206 16 County Government Employees - Full-Time Only by Function 207 17 Operating Indicators by Function 208 18 Capital Asset Statistics by Function 209 Introductory Section Queen O F F I C E O F B U D G E T , FINANCE AND

INFORMATION TECHNOLOGY

Anne’s The Liberty Building County 107 North Liberty Street Centreville, Maryland 21617 County Commissioners: Telephone: (410) 758-4064 James J. Moran, At Large Fax: (410) 758-3036 J ack N. Wilson Jr., District 1 S tephen Wilson, District 2 County Administrator: Todd R. Mohn Philip L. Dumenil, District 3 Director, Budget, Finance and IT: Jonathan R. Seeman Christopher M. Corchiarino, District 4 Chief Treasury Officer: Jeffrey A. Rank

Information Technology Manager: Megan DelGaudio December 11, 2019 The Board of County Commissioners and The Citizens of Queen Anne’s County, Maryland

FORMAL TRANSMITTAL OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR)

State law requires that all general-purpose governments publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of Queen Anne’s County, Maryland for the fiscal year

ended June 30, 2019.

This report consists of management’s representations concerning the finances of Queen Anne’s County. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in the report. To provide a reasonable basis for making these representations, the management of Queen Anne’s County has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse

and to compile sufficient reliable information for the preparation of Queen Anne’s County’s financial statements in conformity with Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, Queen Anne’s County’s comprehensive framework of internal controls has been designed to provide a reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert

that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

Queen Anne’s County’s financial statements have been audited by TGM Group LLC, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of Queen Anne’s County, for the fiscal year ended June 30, 2019, are free of material misstatement. The independent audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles

used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that Queen Anne’s County’s financial statements for the fiscal year ended June 30, 2019, are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report.

The independent audit of the financial statements of Queen Anne’s County is part of a broader, federally mandated, “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements

involving the administration of federal awards. These reports are available in Queen Anne’s County’s separately issued Single Audit report.

____________________________ ___________________________

-1- GAAP requires that management provide a narrative introduction, overview, and analysis, entitled Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. Queen Anne’s County’s MD&A can be found immediately following the report of the independent auditor.

PROFILE OF THE GOVERNMENT

Queen Anne’s County is situated on the Eastern Shore of Maryland. It is bordered to the north by Kent County, to the east by the State of Delaware, to the south by Caroline and Talbot counties, and to the west by the Chesapeake Bay. Access to the western shore of Maryland is provided by the Chesapeake Bay Bridge. The County is 373 square miles in area and has approximately 50,750 citizens. The County seat is located in Centreville. The County

Commissioners of Queen Anne’s County are empowered to levy a property tax on both real and personal properties located within its boundaries.

Queen Anne’s County was formed in 1706 and is governed by a five-member Board of County Commissioners.

County code provides that one Commissioner be elected purely at large; the remaining four Commissioners must reside in specific districts, but are elected at large. The Commissioners operate under Maryland’s Code Home Rule form of government. Both the executive and legislative functions of the County are vested with the Board of County Commissioners.

Queen Anne’s County provides a full range of services including public safety (police, volunteer fire protection, emergency services, detention center, and animal control), highways and streets, solid waste, planning and zoning, economic development, culture and recreation, education, libraries, and general administrative services. In conjunction with the State, the County also operates services related to general community health and social services.

In addition, the County operates a water and wastewater utility, an airport, a golf course, and public landings and marinas.

BUDGETARY CONTROLS

The annual budget serves as the foundation for the County’s financial and budgetary controls to ensure compliance with legal provisions embodied in the annual appropriation resolution approved by the County Commissioners. The County budget is comprised of the budget message, current revenue and expense budgets and the capital budget and capital program. Activities of the general fund, certain special revenue funds, and the enterprise funds are included in

the current budget.

The current operating budget includes appropriations for the full range of basic services. These services include county administration, public safety, education, public works, community services, parks, debt and other agencies.

The capital budget includes funds to construct major governmental facilities such as the new County Courthouse, roads, schools, and water and sewer infrastructure. Capital projects usually take more than a year to complete, unlike the operating budget which covers only a year.

The budget process begins each fall when the County departments receive budget preparation instructions for the capital budget which is then followed by instructions for the operating budget. The budget preparation is directed by the Director of Budget, Finance, and Information Technology. After a thorough review of the departmental requests, a County Administrator’s proposed budget is submitted to the County Commissioners in March. The County

Commissioners then conduct a series of public hearings and work sessions to review the proposed budget. After its review, the County Commissioners finalize the budget and set tax rates, fees and charges needed to generate enough revenue to balance the budget. The budget must be adopted by the County Commissioners on or before the last day of the month of the fiscal year currently ending, although the Commissioners typically adopt the budget at the end of

May.

The Office of Budget, Finance, and Information Technology is responsible for budgetary control. The appropriated budgets are prepared at the fund, function (e.g., public safety), and department (e.g., Detention Center) level.

Expenditures/expenses may not legally exceed appropriations, based on the level at which they were adopted. For the General Fund, annual expenditure budgets are legally adopted at the departmental level. For all other Governmental Funds, for which annual budgets are adopted, expenditure budgets are legally adopted at the fund level. Budgets for -2- the General Capital Projects Fund and the Roads Capital Projects Fund reflect multi-year appropriations at the

individual project level.

Department Heads may make transfers of appropriations within a department of up to $10,000 with the approval of the County Administrator. Transfers of appropriations or appropriation of new revenues in excess of $10,000 require the approval of the County Commissioners. Budget to actual comparisons are provided in this report for individual governmental funds for which an appropriated annual budget has been adopted. The budget comparisons for the

general fund are presented as part of the Required Supplementary Information portion of this report. For non-major funds with appropriated annual budgets, budget to actual comparisons are presented in the Supplementary Information subsection of this report.

ECONOMIC OUTLOOK AND CONDITION

The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which Queen Anne’s County operates.

The unemployment rate for Queen Anne’s County is typically below the state and national averages, as shown in the chart below. The June 2019 rate for the County was 3.4%, compared to the state’s rate of 3.9% and the U.S.’s rate of 3.7%. The 2019 average rate for the County was 3.2%.

LOCAL ECONOMY

The local employment base is somewhat limited and centers on several stable manufacturers, as well as the agriculture, maritime, construction, retail, leisure, and hospitality industries. The three largest employers are governmental units, including the County, the Board of Education, and Chesapeake College. There is a small, but growing, base of specialty manufacturers. In addition, the County’s proximity to the Western Shore enables about

60% of the workforce to commute to locations outside the County, primarily to higher paying jobs in the Baltimore and Washington areas.

Property, income, recordation, and transfer tax revenue all increased when comparing current year to prior year for governmental funds. Property taxes increased in fiscal year 2019 by 3.9% to $70.6 million due to an increase in assessable base. Property tax revenue is projected to decrease by 0.4% into fiscal year 2020 with revenue projected to be approximately $283 thousand below the 2019 fiscal year level. The reason for the decrease is fiscal year 2020 had

a slight decrease in the assessable base. Local income tax is the County’s other main revenue source. Income tax collections increased by 6.7% in fiscal year 2019, from $51.8 million in fiscal year 2018 to $55.3 million in fiscal year 2019 as a result of increased employment and wage gains.

-3- Recordation tax improved in fiscal year 2019 with an increase of 4.6% over fiscal year 2018, from $5.7 million in fiscal year 2018 to $6.0 million in fiscal year 2019. In addition to an increase in recordation tax revenue, the transfer tax revenue also increased in fiscal year 2019 by 4.8%, from $2.0 million in fiscal year 2018 to $2.1 million in fiscal year 2019. Both the recordation and transfer tax revenue increases are a direct result of the continued improvement in

the housing market and recent development in the County.

LONG TERM FINANCIAL PLANNING

Rainy Day Fund – Ordinance No. 12-21 was adopted in January 2013 for the purpose of establishing and maintaining a Rainy Day Fund for contingencies of an emergency nature; requiring annual reports on such fund balance; providing for the appropriation of such funds to meet emergency needs; and requiring surplus revenues be used to maintain the Rainy Day Fund at a set minimum amount. Beginning in fiscal year 2017, County Ordinance

No. 16-24 changed the minimum amount of the rainy day fund to 8% (previously 7%) of the following year’s budgeted general fund operating revenues, as recommended by the Spending Affordability Committee. The County funded the Rainy Day Fund with the required amount of $11,420,069 in fiscal year 2019.

Revenue Stabilization Fund (Previously “Special Fund”) – Resolution No. 14-05 was adopted in March 2014 for the purpose of establishing and maintaining a Special Fund to set aside certain general funds of the County for certain unanticipated projects, initiatives, and other one-time expenses. Resolution No. 16-99 was adopted in December 2016 for the purpose of renaming the “Special Fund” to the Revenue Stabilization Fund and revising the maximum amount

of such fund. The maximum amount of the Revenue Stabilization Fund shall not exceed 5% of budgeted general fund operating revenues and the transfer to the General Fund shall only be made after the requirements of the Rainy Day Fund have been met. The County funded the Revenue Stabilization Fund with $1,000,000 in fiscal year 2019. The current balance of the Revenue Stabilization Fund is $6,000,000.

Spending Affordability Committee – Ordinance No. 15-11 was adopted in November 2015 for the purpose of establishing a committee to provide recommendations and projections for the upcoming budget year. Specifically, the Committee is charged to review in detail the status and projections of revenues and expenditures for the County for the next budget year and subsequent five years; to review future County revenue levels and consider the impact of

economic factors such as changes in personal income and assessable base growth; and to review future expenditure levels with consideration of County long-term obligations and any pressure for growth in costs.

The Committee’s recommendations help determine general expenditure guidelines based on projected revenue, and the amount of new County debt authorization for the upcoming fiscal year. The Committee recommends policy changes primarily regarding budgeting, debt, and fund balance. This Committee also assesses the County’s ability to repay bond debt, determines debt capacity using several debt measures, and provides general guidance regarding

future capital budgets.

Capital Projects - The County Commissioners’ six-year capital program, starting with fiscal year 2020, prioritizes capital expenditures over these years to meet the County’s needs. The six-year program totals $193.3 million and includes: $40.7 million for various Sanitary District projects (includes the Southern Kent Island Sewer Service at $28.6 million); $35.2 million for various school related projects (includes $19.3 million for the Centreville Middle

School renovation); $25.0 million for Roads Board capital projects (includes $12.0 million for asphalt overlays);

$23.4 million for the Detention Center (almost entirely for the Detention Center renovation); $13.0 million for Parks;

$12.2 million for the Department of Emergency Services; $8.7 million for the Bay Bridge Airport; $8.4 million for Public Library System (Kent Island Library Expansion); and $7.4 million for Administration and General Services.

FINANCIAL POLICIES

Bond Ratings - The financial policies and management practices of Queen Anne’s County were recognized by three major rating agencies. Fitch Rating Service issued an AAA bond rating, Moody’s issued a rating of Aa1, and Standard & Poor’s also issued a AAA rating.

Debt Management Policy – In calendar year 2013, the County adopted Resolution 13-04, which revised the County’s Local Debt Policy. In accordance with this policy, the Director of Budget, Finance, and Information Technology is responsible for following certain procedures to ensure that debt limits established by the Policy are not -4- exceeded. A key element of the Policy is that prior to the issuance of any new bonded indebtedness, the Director

must certify that existing and new General Obligation Debt will not exceed (1) 2.5% of the total taxable assessable base and (2) $3,000 per capita. This policy also stipulates that although there is some flexibility as to the acceptable percentage of debt service to general fund expenditures, and no absolute limit has been established by the rating agencies or the Government Finance Officers Association, anything above 12% of total general fund expenditures

would be a cause to carefully monitor debt service. In addition to the debt management policy, the Spending Affordability Committee recommended that the limit of debt service to general fund expenditures should be limited to 10% and the County Commissioners have adopted that as a limit.

For fiscal year 2019, Queen Anne’s County general obligation debt was 1.7% of the total taxable assessable base, and the per capita debt measurement was $2,733. The debt service was 9.0% of the general fund expenditures for the year.

All thresholds are well below the policy limits.

Fund Balance Policy – Resolution 12-21 was adopted in calendar year 2012 for the purpose of establishing criteria in which year end fund balances can be used. There are five purposes for which using fund balance is permitted: (1) paygo for items/projects in the County Capital Improvement Plan, (2) as a supplement to the Rainy Day Fund if it is underfunded, (3) to pay down existing debt, (4) reserved for future non-operating expenses related to fiscal

emergencies, and (5) as one time non-recurring expenditures of capital or non-capital items.

AWARDS AND ACKNOWLEDGMENTS

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Queen Anne’s County, Maryland for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2018. The Certificate of Achievement is a prestigious national award that recognizes conformance with the highest standards for preparation of state and local government

financial reports. In order to be awarded a Certificate of Achievement, the County must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. Queen Anne’s County, Maryland has received a Certificate of Achievement for the last twenty consecutive years (fiscal years 1999-2018). We believe our current comprehensive annual financial report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate.

The preparation of the comprehensive annual financial report was made possible by the dedicated service of the entire staff of the finance office. Each member of the department has my sincere appreciation for the contributions made in preparation of this report. Special recognition is given to members of the Audit Team: Nichole Hepfer, who is the principal staff member responsible for preparing the report, Justine Franzen, Teresa Ward, and Karen Rodgers. Their

dedication and professionalism in the preparation of Queen Anne’s County financial statements has resulted in consistently accurate and transparent financial reporting.

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QUEEN ANNE’S COUNTY, MARYLAND

GOVERNMENTAL ORGANIZATION

CERTAIN ELECTED AND OTHER OFFICIALS

AS OF JUNE 30, 2019

CERTAIN ELECTED OFFICIALS

County Commissioners James J. Moran, At Large Jack N. Wilson, Jr., District 1 Stephen Wilson, District 2 Philip L. Dumenil, District 3 Christopher M. Corchiarino, District 4 State’s Attorney Lance G. Richardson, Esq.

Sheriff Raymond G. Hofmann

CERTAIN DEPARTMENT HEADS AND OTHER OFFICIALS

County Administrator Todd R. Mohn Director of Public Works Alan Quimby, P.E.

Director of County Administration Todd R. Mohn Director of Planning and Zoning E. Michael Wisnosky Director of Community Services Catherine R. Willis Director of Budget, Finance and Information Technology Jonathan R. Seeman Chief Treasury Officer Jeffrey Rank County Attorney Patrick E. Thompson, Esq.

Independent Auditor Bond Counsel Financial Advisor TGM Group LLC McKennon, Shelton Public Advisory Consultants Certified Public Accountants & Henn, LLP Baltimore, Maryland Salisbury, Maryland Baltimore, Maryland -9- -10-

INDEPENDENT AUDITORS’ REPORT

County Commissioners of Queen Anne’s County Centreville, Maryland 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 Queen Anne’s County, Maryland (the “County”) as of and for the year

ended June 30, 2019, 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 component unit financial statements of the Queen Anne’s County Free Library. 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 Queen Anne’s County Free Library, is based solely upon the

reports 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.

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.

-11- 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 reports of the 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 Queen Anne’s County, Maryland, as of June 30,

2019, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter During the year ended June 30, 2019, the County had a prior period restatement related to the LOSAP Plan. See Note 15 and 20 to the financial statements. Our opinion is not modified with respect to this matter.

Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be

an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods

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

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The introductory section, other supplementary information, and statistical section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The other supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such

information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other -12- supplementary information is fairly stated in all material respects in relation to the basic financial

statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 10, 2019, on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 County’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance.

Salisbury, Maryland December 10, 2019 -13- -14- Management’s Discussion and Analysis Introduction This section of the Comprehensive Annual Financial Report of Queen Anne’s County, Maryland (the County) presents a narrative overview and analysis of the financial activities of Queen Anne’s County Government for the fiscal year ended June 30, 2019. We encourage readers to consider the discussion and analysis along with

the other information in this report, including the transmittal letter, basic financial statements, and the notes to the financial statements.

Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Queen Anne’s County Government’s basic financial statements. The County’s basic financial statements are comprised of three components:

Government-Wide Financial Statements Fund Financial Statements Notes to the Financial Statements This report also contains other required and non-required supplementary information in addition to the basic financial statements themselves.

Government-Wide financial statements: The government-wide financial statements are designed to provide readers with a broad overview of Queen Anne’s County Government’s finances, in a manner comparable to a private sector business.

The statement of net position presents information on all of Queen Anne’s County Government’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position and condition of Queen Anne’s County Government is improving or declining.

The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected

taxes and earned but unused vacation leave).

Both of the government-wide financial statements distinguish functions of Queen Anne’s County Government that are principally supported by taxes and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities).

The governmental activities of Queen Anne’s County Government include general government, public safety, public works, health, social services, education, library, conservation of natural resources, and economic and community development. The business-type activities of Queen Anne’s County Government include water and sewer services, an airport, a golf course, and public landings and marinas.

The government-wide financial statements include not only Queen Anne’s County Government itself (known as the primary government), but also legally separate component units. Queen Anne’s County Government has the following discretely presented component units: Queen Anne’s County Board of Education and the Queen Anne’s County Free Library. Financial information for these component units is reported separately

from the financial information presented for the primary government itself. The government-wide financial statements can be found in the basic financial statements section of this report.

-15- Fund Financial Statements: A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Queen Anne’s County Government, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of Queen Anne’s County Government can be divided into

three categories: governmental funds, proprietary funds, and fiduciary funds. Fund financial statements can be found throughout this report, as listed in the table of contents.

Governmental funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a

government’s near term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near term financing decisions. Both the balance sheet

and the statement of revenues, expenditures, and changes in fund balances for governmental funds provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. These two reconciliations begin with governmental fund financial data; describe all transactions that are added or subtracted to yield governmental activities; and end with governmental activities financial data. These

reconciliations can be found within this report, as listed in the table of contents.

Queen Anne’s County maintains three types of governmental funds: the general fund, a variety of special revenue funds, and five capital project funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for all governmental funds. Fund type is identified for each fund.

Queen Anne’s County adopts an annual appropriated budget for its general fund (includes the roads board);

school, fire, and parks impact fee capital projects funds; and the following special revenue funds: department of aging, housing and community services, grants fund, economic development incentive, BRIDGE fund, community partnerships for children, law library, inmate welfare, agricultural transfer, rural legacy, dredging special assessments, and Kent Narrows. A budgetary comparison statement has been provided for each of

these funds, which can be found within this report, as listed in the table of contents.

Proprietary funds: Queen Anne’s County maintains enterprise funds to report the same functions presented as business-type activities in the government-wide financial statements. Queen Anne’s County Government uses enterprise funds to account for its water and sewer services, airport, golf course, and public landings and marinas. The basic proprietary fund financial statements can be found within this report, as listed in the table

of contents.

Fiduciary funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support Queen Anne’s County Government’s own programs. The County acts as a fiduciary for two trust and five agency funds. The accounting used for fiduciary funds is

much like that used for proprietary funds except that the agency funds report only assets and liabilities and do not report net assets or changes therein. The basic fiduciary fund financial statements can be found within this report, as listed in the table of contents.

Notes to the financial statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found within this report, as listed in the table of contents.

-16- Government-wide Financial Analysis Statement of Net Position A summary of government-wide assets, liabilities, and net position is as follows:

Governmental Activities Business Type Activities Total Summary of Net Position 2019 2018 * 2019 2018 2019 2018 * Current and Other Assets $ 114,236,045 $ 105,581,548 $ 37,222,731 $ 21,600,111 $ 151,458,776 $ 127,181,659 Capital Assets 181,658,454 177,815,678 118,044,330 112,821,224 299,702,784 290,636,902 Total Assets 295,894,499 283,397,226 155,267,061 134,421,335 451,161,560 417,818,561 Total Deferred Outflows of Resources 8,075,641 7,703,714 738,797 673,112 8,814,438 8,376,826

Noncurrent liabilities 216,472,932 208,949,793 43,105,229 38,831,428 259,578,161 247,781,221 Other liabilities 9,806,608 11,429,918 1,994,221 2,095,483 11,800,829 1 3,525,401 Total Liabilities 226,279,540 220,379,711 45,099,450 40,926,911 271,378,990 261,306,622 Total Deferred Inflows of Resources 5,222,543 5,114,715 12,667,589 1,262,115 17,890,132 6,376,830 Net position:

Net investment in capital assets 115,143,089 114,794,226 85,916,730 84,386,291 201,059,819 199,180,517 Restricted amounts 18,962,289 13,275,244 2,234,440 1,060,134 21,196,729 14,335,378 Unrestricted amounts (deficit) (61,637,321) (62,462,956) 10,087,649 7,458,996 (51,549,672) (55,003,960) Total Net Position $ 72,468,057 $ 65,606,514 $ 98,238,819 $ 92,905,421 $ 170,706,876 $ 158,511,935

* Restated for prior period adjustment (see Note 20).

The County’s total current and other assets increased by $24.3 million, or 19.1 percent, to $151.5 million. The County’s total assets and deferred outflows of resources exceeded its total liabilities and deferred inflows of resources at the close of fiscal year 2019 by $170.7 million.

Net position is divided into three categories: net investment in capital assets; restricted amounts; and unrestricted amounts. By far the largest portion, $201.1 million, of the County’s total net position reflects its investment in capital assets (e.g. land, buildings, machinery and equipment, vehicles, and infrastructure), less any related and outstanding debt used to construct or acquire those assets. The County uses these capital assets

to provide services to citizens; consequently, they are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay the debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities.

It is important to note that, although counties in the State of Maryland issue debt for the construction of schools, the school buildings are owned by each county’s Board of Education. Ownership reverts to the county government only if the local Board determines a building is no longer needed for educational purposes.

Therefore, while the County’s financial statements include outstanding debt related to Board of Education capital assets, those statements do not include the capital assets funded by the debt. Debt outstanding for the Board of Education amounted to $58.0 million at June 30, 2019. Absent the effect of this relationship, the County would have reported a positive unrestricted amount of $6.5 million on its government-wide financial

statements, rather than the negative unrestricted net assets of $51.5 million reported herein. For a multi-year view of this calculation, see the Footnote presented in Table 1 of the Statistical Section.

An additional $21.2 million of the County’s total net position represents resources that are subject to restrictions on how they may be used. For governmental activities, this amount includes: $11.8 million related to general government services; $3.2 million for economic/community development; $3.2 million for public safety; and $725 thousand for conservation of natural resources. For business-type activities, this amount

includes $1.3 million restricted to meet Sanitary District debt covenants and $975 thousand for capital projects.

At the end of the current fiscal year, Queen Anne’s County Government reports positive balances in two out of three categories of net position, both for the government as a whole, as well as for its separate governmental activities. Business-type activities reports positive balances in all net position categories.

-17- Statement of Activities The following table summarizes changes in net position for governmental and business-type activities during the year:

Governmental Activities Business Type Activities Total Summary of Changes in Net Position 2019 2018 * 2019 2018 2019 2018 * Revenues:

Program revenues:

Charges for services $ 6 ,505,479 $ 6,724,371 $ 11,376,269 $ 10,031,887 $ 17,881,748 $ 16,756,258 Operating grants and contributions 5,453,618 5,738,111 2,133,701 255,687 7 ,587,319 5,993,798 Capital grants and contributions 4,348,637 3,025,897 3,626,906 4,198,378 7,975,543 7,224,275 General revenues:

Property taxes 7 0,670,569 67,736,404 - - 70,670,569 6 7,736,404 Local income tax 57,728,293 55,211,695 - - 57,728,293 5 5,211,695 Other local taxes Admission and amusement taxes 155,913 158,881 - - 155,913 158,881 Recordation taxes 5,986,660 5,723,114 - - 5,986,660 5,723,114 Hotel taxes 650,613 617,293 - - 650,613 617,293 County transfer taxes 2,093,502 1,997,292 - - 2,093,502 1,997,292 Investment income 1,772,464 978,955 550,691 439,716 2 ,323,155 1,418,671

Gain on sale of capital assets 25,823 87,734 33,100 - 58,923 8 7,734 Miscellaneous 979,201 630,895 865,732 865,879 1 ,844,933 1,496,774 Total Revenues 156,370,772 148,630,642 1 8,586,399 1 5,791,547 174,957,171 164,422,189 Expenses:

Governmental Activities:

General government 1 6,493,064 15,833,152 - - 16,493,064 1 5,833,152 Public safety 31,231,182 27,130,890 - - 31,231,182 2 7,130,890 Public works 19,118,090 17,665,141 - - 19,118,090 1 7,665,141 Health 1,865,300 1,996,939 - - 1,865,300 1,996,939 Social services 5,804,131 5,152,409 - - 5,804,131 5,152,409 Education 62,579,905 62,296,920 - - 62,579,905 6 2,296,920 Libraries 1,858,711 1,785,580 - - 1,858,711 1,785,580

Conservation of natural resources 2,696,971 2,567,600 - - 2,696,971 2,567,600 Economic and Community development 1,808,000 2,477,129 - - 1,808,000 2,477,129 Interest and fiscal charges 4,712,864 4,294,929 - - 4,712,864 4,294,929 Business-type Activities:

Water and sewer - - 11,232,955 12,297,109 11,232,955 1 2,297,109 Airport - - 1,434,031 1,077,168 1,434,031 1,077,168 Golf course - - 584,718 509,150 584,718 509,150 Public landings and marinas - - 1,342,308 534,966 1,342,308 534,966 Total Expenses 148,168,218 141,200,689 1 4,594,012 1 4,418,393 1 62,762,230 155,619,082 Increase (Decrease) in Net Position before Transfers 8,202,554 7,429,953 3,992,387 1,373,154 12,194,941 8,803,107

Transfers in (out) (1,341,011) (183,026) 1,341,011 183,026 - - Increase in Net Position 6,861,543 7,246,927 5 ,333,398 1 ,556,180 1 2,194,941 8,803,107 Net Position, prior year 65,606,514 58,359,587 92,905,421 91,349,241 158,511,935 149,708,828 Net Position - current year $ 72,468,057 $ 65,606,514 $ 9 8,238,819 $ 9 2,905,421 $ 1 70,706,876 $ 158,511,935

* Restated for prior period adjustment (see Note 20).

-18- Governmental activities:

Revenues for governmental activities were $156.4 million for fiscal year 2019. The following chart depicts revenues by source for governmental activities:

Revenues by Source ‐ Governmental Activities For the Year Ended June 30, 2019 County transfer taxes Gain on Sale of Capital 1.34% Assets 0.02% Hotel taxes Miscellaneous 0.41% Investment 0.63% Charges for services Income 4.16% Recordation taxes 1.13% 3.83% Operating, capital & restricted grants Admission and amusement taxes 6.27% 0.10% Local income tax 36.92% Property taxes 45.19%  Taxes comprise the largest source of County revenue, totaling $137.3 million (87.8 percent) of total

revenue for fiscal year 2019. Of that amount, property and local income tax together yielded $128.4 million (82.1 percent) of all revenue. Each County sets its own property and income tax rates, within parameters established by the State. For fiscal year 2019, the County’s property tax rate remained constant at $.8471 per $100 of assessed value of real property, based on full cash value of that property. The County’s local income tax rate was set at 3.2 percent, effective January 1, 2012 and

thereafter. There is no local sales tax in the State of Maryland.

 Charges for services, totaling $6.5 million, reflect fees charged to County citizens. These primarily support public works ($1.8 million or 27.4 percent), general government ($1.8 million or 27.2 percent), public safety ($1.4 million or 21.8 percent), and education ($1.3 million or 20.3 percent).

 Operating grants and contributions, totaling $5.5 million, reflect grants from Federal and State agencies that support specific County programs. Programs that benefitted the most were: social services ($2.1 million or 38.9 percent), public safety ($1.2 million or 21.3 percent), and public works ($1.2 million or 21.2 percent).

 Capital grants and contributions, totaling $4.3 million, reflect contributions from Federal and State agencies, as well as developers. Conservation of natural resources benefits the most from capital grants and contributions during the year ($2.1 million or 48.7 percent). Public Works also benefited from capital grants and contributions during the year ($1.4 million or 31.1 percent).

-19- Expenses for all governmental activities were $148.2 million for fiscal year 2019. The following chart depicts expenses by function for governmental activities:

Expenses ‐ Governmental Activities For the Year Ended June 30, 2019 Economic and Interest and fiscal Community Conservation of development charges natural resources 1.22% 3.18% 1.82% General government 11.13% Libraries 1.25% Public safety 21.08% Education 42.24% Public works Health 12.90% Social services 1.26% 3.92% As noted in the chart above and the table below, by far the County’s largest program and highest priority is

education, with expenses totaling $62.6 million (42.2 percent). The following table summarizes costs and program-related revenues for the same programs in order of priority, yielding net service costs:

Expenses Program-Related Revenues Net Cost of Services Net Cost of Governmental Activities 2019 2018 2019 2018 2019 2018 Education $ 62,579,905 $ 62,296,920 $ 1,318,609 $ 1,272,301 $ (61,261,296) $ (61,024,619) Public Safety 31,231,182 27,130,890 2,753,662 2,966,001 (28,477,520) (24,164,889) Public Works 19,118,090 17,665,141 4,293,239 2,883,893 (14,824,851) (14,781,248) General Government 16,493,064 15,833,152 2,966,703 3,410,185 (13,526,361) (12,422,967)

Social Services 5,804,131 5,152,409 2,387,208 2,147,920 (3,416,923) (3,004,489) Economic and Community Development 1,808,000 2,477,129 205,300 1,126,819 (1,602,700) (1,350,310) Conservation of Natural Resources 2,696,971 2,567,600 2,339,954 1,681,260 (357,017) (886,340) Other 8,436,875 8,077,448 43,059 - (8,393,816) (8,077,448) Total $ 148,168,218 $ 141,200,689 $ 16,307,734 $ 15,488,379 $ (131,860,484) $ (125,712,310)

Of the total cost of $148.2 million for governmental activities, $16.3 million (11.0 percent), of those costs were covered by program-related revenues paid by individuals and external governmental entities. Of these outside entities, individuals who benefited directly from County programs were charged user fees of $6.5 million, while governments and other organizations that benefited indirectly from these programs contributed operating

grants of $5.5 million and capital grants of $4.3 million.

County taxpayers paid for most of the remaining $131.9 million in net program costs, through a variety of County taxes, for a total of $137.3 million. Net program costs of services provided to the public, in order of net cost, were: $61.3 million for education; $28.5 million for public safety; $14.8 million for public works;

$13.5 million for general government; $3.4 million for social services; $1.6 million for economic and community development; $357 thousand for conservation of natural resources; and $8.4 million for other services. See Changes in Net Position and General Fund Budgetary Highlights for further details.

-20- Changes in net position: Government-wide revenues, less expenses, plus/minus transfers in/out, yield changes in net position. During fiscal year 2019, governmental activities increased the County’s net position overall by $6.9 million, compared to an increase of $7.2 million in fiscal year 2018. The following discussion explains changes in net position relative to the prior fiscal year.

Revenues for governmental activities increased by $7.7 million (5.2 percent). The following key revenues changed, when compared to the prior fiscal year:

 Property taxes increased by $3.0 million (4.3 percent), from $67.7 million in fiscal year 2018 to $70.7 million in fiscal year 2019 due to an increase in property assessments.

 Income taxes increased by $2.5 million (4.6 percent), from $55.2 million in fiscal year 2018 to $57.7 million in fiscal year 2019. This increase was the result of increased receipts from the State for the County’s portion of the income tax collections.

 Capital grants and contributions increased by $1.3 million (43.7 percent), from $3.0 million in fiscal year 2018 to $4.3 million in fiscal year 2019. The key factor for this change is that public works increased by $1.1 million due to grant funding received in fiscal year 2019 for the Cross County Connector Trail.

Expenses for governmental activities increased by $7.0 million (4.9 percent) and transfers out to business-type activities increased by $1.2 million. Key positive and negative expense changes, in order of relative importance, are:

 Public Safety increased by $4.1 million (15.1 percent). Almost half of the increase resulted from an increase of $2.0 million in the pension funding as a result of the pension liability recorded at the County level, which increased in fiscal year 2019. In addition, Emergency Services increased by $736 thousand, the Sheriff’s Office increased by $434 thousand, and Volunteer Fire and Rescue Services

increased by $351 thousand.

 Public Works increased by $1.5 million (8.2 percent). Of the total increase, $684 thousand was the result of an increase in the pension expense associated with public works. There was also an expense of $498 thousand in fiscal year related to the turf fields that the County installed at the two high schools, of which there was no expense in fiscal year 2018. There were additional increases of $250

thousand related to paving projects and $212 thousand for preventative maintenance.

 General Government increased by $660 thousand (4.2 percent), mainly as a result of an increase of $640 thousand in the pension expense associated with general government.

 Transfers out to business-type activities increased by $1.2 million due to a transfer of $975 thousand from the General Capital Projects Fund to the Sanitary District. These funds were collected in fiscal year 2018 for developer contributed capital for the Four Seasons development and recorded in the General Capital Projects Fund. During fiscal year 2019, the funds were transferred from the General

Capital Projects Fund to Sanitary, which is where the funds will be spent going forward.

-21- Business-type activities:

Revenues, transfers in, and expenses for business-type activities were $18.6 million, $1.3 million, and $14.6 million, respectively, for fiscal year 2019. The following two charts depict revenues by source and expenses by service for business-type activities:

Revenues by Source ‐ Business‐Type Activities For the Year Ended June 30, 2019 Miscellaneous 4.66% Investment income Gain on sale of 2.96% capital assets 0.18% Operating & capital grants & Charges for contributions services 30.99% 61.21% Expenses by Service ‐ Business‐Type Activities For the Year Ended June 30, 2019 Public landings Golf course and marinas 4.01% 9.20% Airport 9.83% Water and sewer 76.96%

Business-type activities increased the County’s net position altogether by $5.3 million in fiscal year 2019, which is $3.8 million more than the the prior year’s increase of $1.6 million. The fiscal year 2019 change in net position resulted primarily from:

 Operating revenues before transfers increased by $2.8 million (17.7 percent), from $15.8 million in fiscal year 2018 to $18.6 million in fiscal year 2019, for all business-type activities. Charges for services increased by $1.3 million due to increased revenue in Sanitary. Operating grants and contributions increased by $1.9 million. The increase can be broken down as follows: $430 thousand increase in Sanitary, $664 thousand increase in the Bay Bridge Airport and $784 thousand increase in

Public Landings. Capital grants and contributions decreased $571 thousand primarily due to a decrease in funding for the Four Seasons development, due to the timing of the development.

 Transfers in to business-type activities increased by $1.2 million, mainly due to a transfer of $975 thousand from the General Capital Projects Fund to the Sanitary District, as mentioned above in the section on governmental expenses.

-22- Financial Analysis of the Government’s Funds As noted earlier, Queen Anne’s County Government uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Detailed financial data based on the government’s fund accounting can be found in the governmental fund statements in this report.

Governmental Funds: The focus of Queen Anne’s County Government’s governmental funds is to provide information on near term inflows, outflows, and balances of spendable resources. Such information is useful in assessing Queen Anne’s County Government’s near term financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end

of a fiscal year.

As of the end of the current fiscal year, Queen Anne’s County Government’s governmental funds reported combined ending fund balances of $89.7 million, compared to $81.2 million for the prior year. Approximately 13.2 percent of this total ($11.8 million) constitutes unassigned fund balance, which is available for spending.

The total unassigned fund balance of $11.8 million is comprised of $11.9 million of positive unassigned fund balance for the general fund, reduced by negative unassigned fund balances of $28 thousand in the non-major governmental funds. Additional detail on the negative unassigned balances can be found in Note 16 of this report.

The nonspendable fund balance of $1.6 million, at 1.8 percent of the total fund balance, is not available for spending and includes amounts related to inventory and loans receivable. Restricted fund balance of $27.0 million (30.1 percent) includes amounts that can be spent only for specific purposes stipulated by external sources or legal restrictions. Included in the restricted fund balance is $11.4 million for the rainy day fund.

Committed fund balance of $24.5 million (27.3 percent) represents those amounts that can be used only for the specific purposes of the government’s highest level of decision-making authority. Included in the committed fund balance is $6.0 million for the revenue stabilization fund.

The remaining $24.8 million of fund balance (27.6 percent) constitutes assigned fund balances. These amounts are intended to be used by the government for the specific purposes of each fund.

The General Fund is the chief operating fund of Queen Anne’s County Government. At the end of the current fiscal year, the General Fund had a total fund balance of $35.1 million, which is an increase of $3.0 million from the fiscal year 2018 balance of $32.1 million.

Of the total $35.1 million in fund balance, $11.9 million is unassigned, meaning that there are no constraints on how the funds can be spent. Beginning in fiscal year 2017, County Ordinance No. 16-24 changed the minimum amount of the rainy day fund to 8.0 percent (previously 7.0 percent) of budgeted general fund operating revenues as recommended by the Spending Affordability Committee. As a result of that Ordinance,

$11.4 million of rainy day funds are included in the General Fund’s restricted fund balance of $14.4 million for fiscal year 2019. The remaining fund balance is comprised of $1.6 million in nonspendable, $6.0 million in committed, and $1.2 million of assigned.

For further explanations of General Fund revenues and expenditures, see the General Fund Budgetary Highlights section of this MD&A.

The General Capital Projects Fund accounts for all capital projects related to governmental funds, except those accounted for in the Roads Capital Projects Fund, which is discussed below.

As of June 30, 2019, the General Capital Projects Fund has a total fund balance of $31.2 million, compared to $26.6 million at the end of the prior fiscal year. The $31.2 million in total fund balance is comprised of $8.3 million in restricted fund balance, mainly for unspent bond proceeds, $2.3 million of fund balance committed for specific projects, and $20.6 million of assigned fund balance.

-23- The Roads Capital Projects Fund accounts for financial resources used for the construction of County Road infrastructure, as well as other large multi-year projects that relate to capital assets.

As of June 30, 2019, the Roads Capital Projects Fund has a total fund balance of $3.0 million, compared to $2.7 million at the end of the prior fiscal year. Of this total $3.0 million fund balance, $2.4 million has been assigned to fund ongoing projects, while $574 thousand has been contributed by local developers and is committed to fund specific infrastructure improvements.

Proprietary funds: Queen Anne’s County Government’s enterprise fund statements provide the same type of information found in the government-wide financial statements, but in more detail. Also, due to/due from other funds are combined in the government-wide statements and reported as Internal Balances between governmental and business-type activities, which net to zero.

Total unrestricted net position of the Sanitary District Enterprise Funds at the end of fiscal year 2019 amounted to $11.8 million, which is $2.4 million more than the prior year. Net investment in capital assets also increased by $1.6 million. In addition, the restricted amount for capital projects increased by $975 thousand, due to the Four Seasons development.

Total net position of the Sanitary District amounted to $76.9 million at the end of fiscal year 2019, which increased by $5.2 million when compared to the prior year.

The unrestricted net position of the Bay Bridge Airport Enterprise Fund at year end amounted to negative $1.4 million compared to a negative $1.6 million at the end of the prior fiscal year, reflecting an increase of $182 thousand. The investment in capital assets for the Bay Bridge Airport changed slightly, with a decrease of $45 thousand in the current fiscal year.

Total net position of the Bay Bridge Airport amounted to $15.2 million at the end of fiscal year 2019, which is an increase of $137 thousand from the prior year amount of $15.0 million.

A discussion of Enterprise Fund capital assets and long-term debt can be found in those sections presented later in this MD&A.

General Fund Budgetary Comparisons The County adopts an operating budget for the General Fund as of July 1 each year and amends that budget throughout the year in response to actual expenditures. The Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual can be found as part of Required Supplemental Information, which is located after the Notes. The Schedule reports original and final budgets, as well as the variance between actual

expenditures and final budgets.

Original to Final Budget Comparisons: The final expenditure budget for the General Fund, including transfers out, totaled $145.8 million. Amendments increased spending authority by $7.7 million during fiscal year 2019, when compared to the original budget of $138.1 million.

Major components of these expenditure budget increases are as follows:

 Budgeted Transfers Out to General Capital Projects increased by $7.2 million during the year. There are several capital projects in which the County plans to move aggressively on, and will rely on fund balance available in the General Capital Projects fund to cover a portion of the costs.

 Budgeted Public Safety increased by $271 thousand, due to miscellaneous increases in the Sheriff’s Office, the Detention Center, and Emergency Services.

Budget to Actual Comparisons: Actual revenues for the General Fund, including other financing sources and before appropriated fund balance were less than final budgetary estimates by $969 thousand.

-24- Actual expenditures, and other financing uses, were less than final budgetary appropriations by $4.7 million.

The net effect of these two disparities was a positive variance of actual to final budget of $3.7 million.

The most noteworthy differences between final budgeted amounts and actual amounts are summarized as follows:

Revenues:

 Intergovernmental revenue was $178 thousand less than the final budget (8.7 percent) due to the revenue of several grants being less than the budgeted amounts.

 Transfers In were $1.1 million less than the final budget (100 percent), as a result of transfer in from School Impact fees not being made in the fiscal year. Management determined that it was more advantageous to leave the funds in the Impact Fee Fund in anticipation of future Board of Education projects.

Expenditures:

 Final Budgeted Salaries and Benefits were $38.6 million for the year, while actual costs were $36.9 million. They were underspent at year-end by $1.7 million (4.4 percent). The Sheriff’s Office was underspent by $774 thousand, Parks department by $399 thousand, Roads department by $301 thousand, Engineering by $256 thousand, and the Detention Center by $226 thousand. This was due to the number of vacant positions during the fiscal year and the lapsed funds associated with the

recruitment of staff.

 Final Budgeted Other Operating Charges were $107.2 million for the year, while actual costs were $104.2 million. These costs were lower than budget at year end by $3.0 million (2.8 percent).

Operating Charges include contracted services, supplies, other charges, debt service, and transfers out.

o Contracted Services were underspent by $501 thousand, with the largest savings realized by the Detention Center ($218 thousand), Information Technology ($90 thousand), and Contingency ($73 thousand).

o Supplies were underspent by $402 thousand, largely due to savings by Roads ($334 thousand) and Solid Waste ($80 thousand).

o Other Charges were underspent by $1.2 million. Of this amount, the health department realized savings of $505 thousand, which represents the unspent portion of their allocation that was returned to the County in fiscal year 2019. Additional savings were realized by Contingency ($226 thousand), Intergovernmental ($167 thousand), and Non-Departmental ($129 thousand). The remaining savings for other charges were spread throughout the

General Fund.

o Debt Service was underspent by $127 thousand, which resulted from estimating the debt service payments for the recent bonds before the final schedules were available.

o Transfers Out were underspent by $764 thousand, due to savings realized by the Department of Aging ($415 thousand), Housing and Community Services ($105 thousand) and the Golf Course Enterprise Fund ($121 thousand), which allowed these departments to forgo this portion of their appropriation.

Capital Assets and Debt Administration Capital assets: Queen Anne’s County Government’s investment in capital assets for its governmental and business-type activities as of June 30, 2019 amounted to $299.7 million (net of accumulated depreciation).

-25- This investment in capital assets includes land and land improvements, intangible rights, construction in progress, buildings, improvements other than buildings, infrastructure, autos, machinery, and equipment.

Capital asset activities, net of depreciation, are summarized as follows:

Governmental Activities Business Type Activities Total Capital Assets, Net of Depreciation 2019 2018 2019 2018 2019 2018 Land and Land Improvements $ 86,448,217 $ 86,654,575 $ 15,632,770 $ 15,632,770 $ 102,080,987 $ 102,287,345 Intangible Rights - Easements 821,819 8 21,819 6,140 6,140 827,959 827,959 Construction in Progress 27,161,399 20,382,545 9,480,284 18,612,368 36,641,683 38,994,913 Buildings 31,614,518 32,473,236 6,244,299 6,575,399 37,858,817 39,048,635

Improvements other than Buildings 7,340,954 7,574,887 9,035,890 9,440,097 16,376,844 17,014,984 Infrastructure 9,973,515 10,360,916 67,965,145 52,799,809 77,938,660 63,160,725 Auto, Machinery, and Equipment 18,298,032 19,547,700 9,679,802 9,754,641 27,977,834 29,302,341 Total $ 181,658,454 $ 177,815,678 $ 118,044,330 $ 112,821,224 $ 299,702,784 $ 290,636,902 Queen Anne’s County’s total investment in capital assets for the current fiscal year, net of depreciation,

increased by 3.1 percent, or $9.1 million. Of this amount, governmental investment in capital assets increased by $3.9 million, while business-type investment in capital assets increased by $5.2 million.

Changes in the County’s capital assets, with depreciation shown separately, are summarized as follows. Note that completed projects that were reclassified from construction in progress (CIP) to other asset accounts during the year net to zero and are reported in the same column.

Governmental Activities Changes in Capital Assets 2018 Additions Transfers Retirements 2019 Land and Land Improvements $ 86,654,575 $ - $ - $ (206,358) $ 86,448,217 Intangible Rights - Easements 821,819 - - - 821,819 Construction in Progress 20,382,545 7 ,352,034 (241,802) (331,378) 27,161,399 Buildings 48,139,565 4 2,901 180,802 - 48,363,268 Improvements other than Buildings 10,832,917 187,000 - - 11,019,917

Infrastructure 19,236,142 - - - 19,236,142 Auto, Machinery, and Equipment 37,292,372 1 ,820,906 61,000 (1,288,369) 37,885,909 Total Assets before depreciation 223,359,935 9,402,841 - (1,826,105) 230,936,671 Less Depreciation (45,544,257) (4,689,306) - 955,346 (49,278,217) Total Assets after depreciation $ 177,815,678 $ 4,713,535 $ - $ (870,759) $ 181,658,454 Business-Type Activities Changes in Capital Assets 2018 Additions Transfers Retirements 2019

Land and Land Improvements $ 15,632,770 $ - $ - $ - $ 15,632,770 Intangible Rights - Easements 6,140 - - - 6,140 Construction in Progress 18,612,368 3 ,574,015 (12,668,181) (37,918) 9,480,284 Buildings 16,165,829 - - - 16,165,829 Improvements other than Buildings 15,110,933 71,540 - (56,443) 15,126,030 Infrastructure 86,246,006 4 ,258,038 12,657,181 - 103,161,225 Auto, Machinery, and Equipment 25,410,660 5 43,444 11,000 (339,471) 25,625,633

Total Assets before depreciation 177,184,706 8,447,037 - (433,832) 185,197,911 Less Depreciation (64,363,482) (3,180,419) - 390,320 (67,153,581) Total Assets after depreciation $ 112,821,224 $ 5,266,618 $ - $ (43,512) $ 118,044,330 Noteworthy capital asset events during the current fiscal year for governmental activities included the following:

 Land decreased by $206 thousand due to the sale of a lot in the Matapeake Business Park.

-26-  Construction in Progress (CIP) increased by a net amount of $6.8 million. The following factors contributed to this increase:

Major additions to Construction in Progress totaling $7.4 million include: (a) Construction and site work for the new Courthouse ($4.2 million); (b) Design and site work for the Cross County Connector Trail ($2.7 million); (c) ERP software ($245 thousand); (d) Kent Island Library expansion ($99 thousand); and (e) Information Technology improvements ($56 thousand).

Costs reclassified from Construction in Progress totaling $242 thousand include: (a) County Complex Building ($181 thousand) and (b) Emergency Services public network ($61 thousand).

Retirements from Construction in Progress of $331 thousand include write-offs of costs incurred in:

(a) Emergency Services public network ($209 thousand) and (b) Detention Center roof replacement

project ($122 thousand) due to the projects not resulting in an asset.

 Buildings increased by $224 thousand, as the result of construction and improvements made to the County Complex Building.

 Improvements other than buildings increased by $187 thousand, resulting from the fiber network construction.

 Auto, Machinery and Equipment increased by a net amount of $594 thousand. The following factors contributed to this net increase:

Additions and costs reclassified from Construction in Progress totaled $1.9 million and included departmental vehicles and equipment replacement for the following: (a) Emergency Services ($431 thousand); (b) Roads ($405 thousand); (c) Sheriff’s Office ($342 thousand); (d) Parks ($289 thousand); (e) General Services ($169 thousand); (f) Aging ($134 thousand) and (g) Information Technology ($22 thousand).

Retired assets of $1.3 million included the following, the majority of which were fully depreciated: (a) Aging vehicles sold or discarded ($320 thousand); (b) Detention Center equipment sold or discarded ($249 thousand); (c) Roads equipment and vehicles sold or discarded ($263 thousand); (d) Parks equipment and vehicles sold or discarded ($210 thousand); and (e) Sheriff’s Office vehicles sold as part of replacement program ($204 thousand).

Noteworthy capital asset transactions during the current fiscal year for business-type activities included the following:

 Construction in Progress decreased by a net amount of $9.1 million. The following factors contributed to this decrease:

Major additions to Construction in Progress totaling $3.6 million include: (a) planning, design and construction work for the Southern Kent Island (SKI) sewer system ($3.3 million) and (b) obstruction removal and wildlife fence construction for the Bay Bridge Airport ($280 thousand).

Costs reclassified from Construction in Progress include planning, design and construction work for the Southern Kent Island (SKI) sewer system ($12.7 million).

Retirements from Construction in Progress of $38 thousand include write-offs of costs incurred in the Blue Heron Golf Course irrigation project due to the project not resulting in an asset.

 Improvements other than buildings increased by a net amount of $15 thousand. The following factors contributed to this decrease:

-27- Additions totaled $71 thousand as a result of paving at Matapeake Pier Public Landing.

Retired assets of $56 thousand include perimeter fencing at the Bay Bridge Airport.

 Infrastructure increased by $16.9 million. The following factors contributed to this increase:

Major additions totaling $4.2 million include: (a) various water and sewer infrastructure contributed by commercial developers to be maintained by the County ($3.6 million), of which $2.7 million was related to the Four Seasons development) and (b) planning, design and construction work for the Southern Kent Island (SKI) sewer system ($631 thousand).

Costs reclassified to Infrastructure from Construction in Progress include the Southern Kent Island (SKI) sewer system ($12.7 million).

 Auto, Machinery and Equipment increased by a net amount of $215 thousand. The following factors contributed to this increase:

Major additions totaling $543 thousand include: (a) New sewer pumps, well pumps and other sanitation equipment ($394 thousand) and (b) Sanitary District vehicles and trailers ($149 thousand).

Costs reclassified from Construction in Progress include sanitation equipment ($11 thousand).

Retired assets of $339 thousand included: (a) Sanitary District equipment and vehicles sold or discarded ($269 thousand); (b) Public Landings equipment sold or discarded ($48 thousand); and (c) Bay Bridge Airport equipment and vehicles sold or discarded ($22 thousand).

Additional information on the County’s capital assets can be found in Note 6 of this report.

Long-term debt: At the end of the current fiscal year, Queen Anne’s County Government had total bonded debt, loans, capital leases, other post-employment benefit obligations, net pension liability, LOSAP (Volunteer Fireman Pension Plan Length of Service Award Program), and compensated absence obligations of $260.0 million for its governmental and business-type activities.

The full faith, credit and unlimited taxing power of the County are irrevocably pledged to the levy and collection of taxes in order to provide for the payment of principal and interest due on the bonded debt.

Of this $260.0 million in debt, $43.1 million is considered to be self-supporting, in that obligations of the County’s enterprise funds will be funded through charges and assessments related to the operations of those funds. In addition, the Sanitary District’s Debt Service Fund holds total assets of $1.3 million, which are restricted to payment of the Sanitary District’s subsequent year’s debt. See Note 10 for restricted assets and

subsequent year debt service obligations.

Debt activities are summarized as follows:

Governmental Activities Business Type Activities Total Outstanding Debt 2019 2018 * 2019 2018 2019 2018 * Bonds, Notes, and Premiums $ 137,083,402 $ 133,984,765 $ 32,144,767 $ 28,461,016 $ 1 69,228,169 $ 162,445,781 Other Post-Employment Benefit Obligation 43,482,396 41,211,334 8,027,801 7,688,150 51,510,197 48,899,484 Net Pension Liability 2 6,508,985 24,362,611 2,528,455 2,299,155 29,037,440 26,661,766

LOSAP Liability * 6,669,736 6,829,996 - - 6,669,736 6 ,829,996 Compensated Absences 2,728,413 2,561,087 404,206 383,107 3,132,619 2 ,944,194 Total Long-term Debt $ 216,472,932 $ 208,949,793 $ 43,105,229 $ 38,831,428 $ 2 59,578,161 $ 247,781,221

* Restated for prior period adjustment (see Note 20).

During the 2019 fiscal year, the County’s total net debt increased by $11.8 million (4.8 percent). Of this amount, governmental debt increased by $7.5 million (3.6 percent), while business-type debt increased by $4.3 -28- million (11.0 percent). In fiscal year 2019, the County issued the public facilities bonds of 2019 totaling $11.0 million. The Sanitary District continued borrowing funds through the Maryland Water Quality

Administration for the Southern Kent Island (SKI) project. The total amount borrowed for this project in fiscal year 2019 was $4.9 million. In addition, the total other post-employment benefit obligations increased by $2.6 million, the net pension liability increased by $2.4 million, the LOSAP liability decreased by $160 thousand, and compensated absences increased by $188 thousand. Offsetting these increases and decreases were changes

in accruals, plus the County’s repayment of existing debt in accordance with established repayment schedules for bonds, notes, and capital lease agreements.

Additional information on the County’s long-term debt can be found in Note 9 of this report.

The public local laws of Queen Anne’s County limit the amount of general obligation debt to no more than $8.0 million, beyond any bonded indebtedness of the County. Currently, approximately $6.9 million of this authority is available. All other debt has been authorized under specific legislation. Additional information on the computation of the legal debt margin can be found in Table 12 of the Statistical Section of this report.

During fiscal year 2019, Queen Anne’s County Government received “AAA” bond ratings from both Fitch Rating Service and Standard & Poor’s and an “Aa1” bond rating from Moody’s.

Economic Factors and Next Year’s Budget and Rates The following economic factors were considered in preparing Queen Anne’s County Government’s operating and capital budgets for the 2020 fiscal year:

 Property assessments are projected to decrease by 0.75 percent over the previous year, based on State Assessment Office values used to compute the Constant Yield rate.

 Income tax revenue was projected at $55.8 million for the 2020 budget.

The following are a few of the highlights from the fiscal year 2020 budget:

o Other Post-Employment Benefits shall continue to be funded in accordance with the approved ten year plan;

o The Board of Education will be funded at Maintenance of Effort plus $1.5 million in fiscal year 2020;

o The County employees will receive a one percent cost of living allowance as of July 1, 2019 and also Pay for Performance using rating levels of 1, 2, and 3; and o The County has instituted an On the Spot Awards Program, providing a cash bonus for extraordinary performance such as completing a special project or implementing a new process.

Requests for information This financial report is designed to provide a general overview of Queen Anne’s County Government’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Queen Anne’s County Finance Office, 107 N. Liberty Street, Centreville, Maryland 21617. This report can also be

found on the County’s website, http://www.qac.org (see Government, Departments, Budget, Finance, and IT, Accounting section, Link to 2019 Comprehensive Annual Financial Report (CAFR)).

-29- -30- Basic Financial Statements -31-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF NET POSITION

JUNE 30, 2019

PRIMARY GOVERNMENT

GOVERNMENTAL BUSINESS-TYPE

ACTIVITIES ACTIVITIES TOTAL

ASSETS

Equity in Pooled Cash and Investments $ 63,439,606 $ 15,505,791 $ 78,945,397 Cash and Cash Equivalents - - - Taxes Receivable (Net) 1,207,873 - 1,207,873 Accounts and Loans Receivable (Net) 7,395,613 554,799 7,950,412 Special Assessments (Net) 917,339 - 917,339 Internal Balances 1,783,116 ( 1,783,116) - Due from Primary Government - - - Due from Other Governments 22,963,486 252,685 23,216,171 Bond Interest Reimbursement Receivable - Build America Bond 77,847 3,186 81,033

Inventories 1,139,440 785,271 1,924,711 Prepaid Items 477,007 - 477,007 Endowment Fund - - - Restricted Assets:

LOSAP Plan Assets 2,860,808 - 2,860,808 Equity in Pooled Cash and Investments 11,973,910 9,512,956 21,486,866 Accounts Receivable (Net) - 6,597 6,597 Special Assessments Receivable (Net) - 12,384,562 12,384,562 Capital Assets:

Nondepreciable Assets 114,431,435 25,119,194 139,550,629 Depreciable Assets, Net 67,227,019 92,925,136 160,152,155 Total Assets 295,894,499 155,267,061 451,161,560

DEFERRED OUTFLOWS OF RESOURCES

Deferred Outflows related to Other Post-Employment Benefit Obligation 1,469,210 218,347 1,687,557 Deferred Outflows related to Pensions 5,220,740 503,283 5,724,023 Deferred Outflows related to LOSAP 509,398 - 509,398 Deferred Charge on Refunding 876,293 17,167 893,460 Total Deferred Outflows of Resources 8,075,641 738,797 8,814,438

LIABILITIES

Accounts Payable and Other Current Liabilities 7,036,431 1,631,470 8,667,901 Accrued Interest Payable 1,728,409 131,094 1,859,503 Due to Component Units 67,635 - 67,635 Due to Other Governmental Agencies 379,509 - 379,509 Unearned Revenue 594,624 47,916 642,540 Escrow Deposits - 183,741 183,741 Noncurrent Liabilities:

Due within One Year 11,343,402 1,428,392 12,771,794 Due in More than One Year 205,129,530 41,676,837 246,806,367 Total Liabilities 226,279,540 45,099,450 271,378,990

DEFERRED INFLOWS OF RESOURCES

Deferred Inflows related to Other Post-Employment Benefit Obligations 18,858 2,820 21,678 Deferred Inflows related to Pensions 2,987,355 280,207 3,267,562 Deferred Inflows related to LOSAP 442,699 - 442,699 Deferred Assessments 917,339 12,384,562 13,301,901 Deferred Fees 856,292 - 856,292 Total Deferred Inflows of Resources 5,222,543 12,667,589 17,890,132

NET POSITION

Net Investment in Capital Assets 115,143,089 85,916,730 201,059,819 Amounts Restricted for:

General Government 11,789,017 - 11,789,017 Economic/Community Development 3,211,366 - 3,211,366 Public Safety 3,234,992 - 3,234,992 Conservation of Natural Resources 725,710 - 725,710 Social Services 1,204 - 1,204 Debt Service - 1,259,440 1,259,440 Capital Projects - 975,000 975,000 Other Purposes - - - Unrestricted Amounts (Deficit) ( 61,637,321) 10,087,649 (51,549,672) Total Net Position $ 72,468,057 $ 98,238,819 $ 170,706,876

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

-32-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF NET POSITION

JUNE 30, 2019

(CONTINUED)

COMPONENT UNITS

BOARD OF FREE

EDUCATION LIBRARY

$ - $ - 13,711,800 623,329

- -

379,933 25,837

- -

- -

67,635 - 1,548,605 -

- -

52,156 - 24,318 -

- 165,119

- -

- -

- -

- -

11,116,685 29,850 149,924,812 1,345,170 176,825,944 2,189,305 10,039,920 231,144 1,007,819 -

- -

- -

11,047,739 231,144 10,783,094 110,331

- -

- -

- -

1,159,812 -

- -

317,251 - 201,057,418 755,406 213,317,575 865,737 20,596,825 - 545,810 -

- -

- -

- -

21,142,635 - 159,113,347 1,375,020

- -

- -

- -

- -

- -

- -

144,284 - 75,431 22,172 (205,919,589) 157,520 $ (46,586,527) $ 1,554,712 The accompanying notes to the basic financial statements are an integral part of this statement.

-33-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2019

PRIMARY GOVERNMENT

OPERATING CAPITAL

CHARGES FOR GRANTS AND GRANTS AND TOTAL

EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS REVENUE

PRIMARY GOVERNMENT

Governmental Activities General Government $ 16,493,064 $ 1,769,520 $ 716,683 $ 4 80,500 $ 2,966,703 Public Safety 31,231,182 1,415,187 1,161,505 1 76,970 2,753,662 Public Works 19,118,090 1,784,040 1,155,251 1 ,353,948 4,293,239 Health 1,865,300 - - - - Social Services 5,804,131 91,183 2,120,065 1 75,960 2,387,208 Education 62,579,905 1,318,609 - - 1,318,609 Library 1,858,711 - - 43,059 43,059 Conservation of Natural Resources 2,696,971 126,940 94,814 2 ,118,200 2,339,954

Economic/Community Development 1,808,000 - 205,300 - 205,300 Interest and Fiscal Charges 4,712,864 - - - - Total Governmental Activities 148,168,218 6,505,479 5,453,618 4 ,348,637 16,307,734 Business-type Activities Water and Sewer 11,232,955 10,524,474 520,000 3 ,626,906 14,671,380 Airport 1,434,031 24,710 725,109 - 749,819 Golf Course 5 84,718 373,014 - - 373,014 Public Landings and Marinas 1,342,308 454,071 888,592 - 1,342,663

Total Business-type Activities 14,594,012 11,376,269 2,133,701 3 ,626,906 17,136,876 Total Primary Government $ 162,762,230 $ 17,881,748 $ 7 ,587,319 $ 7 ,975,543 $ 33,444,610

COMPONENT UNITS

Board of Education $ 125,086,865 $ 1,550,586 $ 2 0,379,544 $ 4 ,111,268 $ 26,041,398 Free Library 2,477,043 4,914 390,415 - 395,329 Total Component Units $ 127,563,908 $ 1,555,500 $ 2 0,769,959 $ 4 ,111,268 $ 26,436,727 General Revenues Local Property Tax Local Income Tax Other Local Taxes Admission and Amusement Taxes Recordation Taxes Hotel Taxes County Transfer Taxes Grants and Contributions Not Restricted to Specific Programs

Investment Income Gain on Sale of Capital Assets Miscellaneous Transfers In (Out) Total General Revenues and Transfers Change in Net Position Net Position - Beginning of Year Adjustment to Beginning Net Position Net Position - Beginning of Year, as Restated Net Position - End of Year The accompanying notes to the basic financial statements are an integral part of this statement.

-34-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

NET (EXPENSE) REVENUE AND CHANGES IN NET POSITION

PRIMARY GOVERNMENT COMPONENT UNITS

GOVERNMENTAL BUSINESS-TYPE BOARD OF FREE

ACTIVITIES ACTIVITIES TOTAL EDUCATION LIBRARY

$ (13,526,361) $ - $ (13,526,361) $ - $ - ( 28,477,520) - ( 28,477,520) - - ( 14,824,851) - ( 14,824,851) - - ( 1,865,300) - ( 1,865,300) - - ( 3,416,923) - ( 3,416,923) - - ( 61,261,296) - ( 61,261,296) - - ( 1,815,652) - ( 1,815,652) - - ( 357,017) - (357,017) - - ( 1,602,700) - ( 1,602,700) - - ( 4,712,864) - ( 4,712,864) - - (131,860,484) - (131,860,484) - -

- 3,438,425 3,438,425 - -

- (684,212) (684,212) - -

- (211,704) (211,704) - -

- 3 55 355 - -

- 2,542,864 2,542,864 - -

$ (131,860,484) $ 2,542,864 $ (129,317,620) $ - $ - $ - $ - $ - $ (99,045,467) $ -

- - - - (2,081,714)

- - - (99,045,467) (2,081,714)

70,670,569 - 70,670,569 - - 57,728,293 - 57,728,293 - - 155,913 - 155,913 - - 5,986,660 - 5,986,660 - - 650,613 - 650,613 - - 2,093,502 - 2,093,502 - -

- - - 85,065,722 1,993,712

1,772,464 550,691 2,323,155 5 5,957 11,028 25,823 3 3,100 58,923 - - 979,201 865,732 1,844,933 188,448 28,092 ( 1,341,011) 1,341,011 - - - 138,722,027 2,790,534 141,512,561 85,310,127 2,032,832 6,861,543 5,333,398 12,194,941 (13,735,340) ( 48,882) 70,043,717 92,905,421 162,949,138 (32,851,187) 1,619,388 ( 4,437,203) - ( 4,437,203) - ( 15,794) 65,606,514 92,905,421 158,511,935 (32,851,187) 1,603,594

$ 72,468,057 $ 98,238,819 $ 170,706,876 $ (46,586,527) $ 1,554,712 The accompanying notes to the basic financial statements are an integral part of this statement.

-35-

QUEEN ANNE'S COUNTY, MARYLAND

BALANCE SHEET

GOVERNMENTAL FUNDS

JUNE 30, 2019

MAJOR FUNDS NON-MAJOR TOTAL

GENERAL GENERAL ROADS GOVERNMENTAL GOVERNMENTAL

FUND CAPITAL CAPITAL FUNDS FUNDS

ASSETS

Cash and Cash Equivalents $ 25,810,445 $ 19,349,456 $ 2,955,371 $ 15,324,334 $ 6 3,439,606 Prepaid Items 477,007 - - - 4 77,007 Receivables Taxes Receivable (Net) 1,207,873 - - - 1 ,207,873 Accounts and Loans Receivable 176,258 850,964 - 6,368,391 7 ,395,613 Special Assessments (Net) - - 96,352 820,987 9 17,339 Due from Other Governments 17,150,728 1,264,698 - 627,024 1 9,042,450 Due from Other Funds 692,255 1,185,967 - - 1 ,878,222

Inventory 1,139,440 - - - 1 ,139,440 Restricted Restricted LOSAP Plan Assets 2,860,808 - - - 2 ,860,808 Restricted Equity in Pooled Cash - 11,973,910 - - 1 1,973,910 Total Assets $ 49,514,814 $ 34,624,995 $ 3,051,723 $ 23,140,736 $ 1 10,332,268

LIABILITIES

Accrued Liabilities $ 3,185,157 $ 3,284,439 $ 2,995 $ 439,140 $ 6 ,911,731 Due to Other Funds - - - 95,106 9 5,106 Due to Component Units - 67,635 - - 6 7,635 Due to Other Governmental Agencies - - - 379,509 3 79,509 Unearned Revenue 477,260 48,655 - 68,709 5 94,624 Total Liabilities 3,662,417 3,400,729 2,995 982,464 8 ,048,605

DEFERRED INFLOWS OF RESOURCES

Unavailable Income Taxes 10,303,716 - - - 1 0,303,716 Unavailable Property Taxes 217,260 - - - 2 17,260 Unavailable Inter-County Bonds Receivable 272,098 - - - 2 72,098 Unavailable Benefit Assessments - - 96,352 820,987 9 17,339 Unavailable Fees - - - 856,292 8 56,292 Total Deferred Inflows 10,793,074 - 96,352 1,677,279 1 2,566,705

FUND BALANCES

Nonspendable 1,616,447 - - - 1 ,616,447 Restricted 14,361,899 8,285,675 - 4,312,464 2 6,960,038 Committed 6,000,000 2,315,787 574,251 15,624,041 2 4,514,079 Assigned 1,224,503 20,622,804 2,378,125 572,652 2 4,798,084 Unassigned 11,856,474 - - (28,164) 1 1,828,310 Total Fund Balances 35,059,323 31,224,266 2,952,376 20,480,993 8 9,716,958 Total Liabilities, Deferred Inflows and Fund Balances $ 49,514,814 $ 34,624,995 $ 3,051,723 $ 23,140,736 $ 1 10,332,268

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

-36-

QUEEN ANNE'S COUNTY, MARYLAND

RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION

JUNE 30, 2019

Total Fund Balance - Governmental Funds $ 89,716,958 Amounts reported for Governmental activities in the Statement of Net Position are different because:

Receivables not included in the governmental funds because they relate to debt.

A portion of the County's 2014 Bond offering related to debt issued on behalf of Chesapeake College.

Although Queen Anne's County will submit the payments to the lender for the bonds, there are five Counties total that will share the expense of the debt service for the Chesapeake College project.

A receivable is booked in Government-Wide in order to offset the debt recorded on the books related to the portion of the Chesapeake College project that the other Counties are responsible for.

ADD Accounts Receivable - Related to Chesapeake College Debt 3,921,036 A portion of the County’s 2009 Bond offering was issued using Build America Bonds.

As an incentive to use these bonds, the Federal government offered an interest reimbursement grant, which offsets the County's debt service for interest expense. At year end, a receivable is booked for the interest reimbursement due, but not yet received, which relates to the interest expense not paid yet.

ADD Bond Interest Reimbursement Receivable - Build America Bond 7 7,847 Capital assets used in governmental fund activities are not current financial resources and therefore are not reported in the funds.

ADD Nondepreciable capital assets Land and Land Improvements $ 43,379,173 Infrastructure 43,890,863 Construction in Progress 27,161,399 114,431,435 ADD Depreciable capital assets Buildings 48,363,268 Improvements other than Buildings 11,019,917 Machinery and Equipment 24,251,453 Vehicles 13,634,456 Infrastructure 19,236,142 Less Accumulated depreciation (49,278,217) 67,227,019 Revenues that are deferred in the governmental funds because they do not

provide current financial resources are recognized as revenues in the Statement of Activities.

ADD Property Taxes deferred in governmental funds 217,260 ADD Income Taxes deferred in governmental funds 10,303,716 ADD Loans receivable deferred in governmental funds 272,098 10,793,074 Long-term liabilities related to governmental fund activities are not due and payable in the current period and therefore are not reported in the funds.

SUBTRACT Accrued Interest Payable (1,728,409) SUBTRACT Liability for Retirement Incentive (124,700) SUBTRACT Long-Term Liabilities Due within One Year Accrued Compensated Absences (1,595,091) Bonds and Notes Payable (9,748,311) (11,343,402) SUBTRACT Long-Term Liabilities Due in More than One Year Other Post-Employment Benefit Obligation (43,482,396) Net Pension Liability (26,508,985) Net LOSAP Liability (6,669,736)

Accrued Compensated Absences (1,133,322) Bonds and Notes Payable ( 127,335,091) (205,129,530) ADD / SUBTRACT Deferred Inflows and Outflows Deferred Inflows- Other Post-Employment Benefit Obligations (18,858) Deferred Inflows - Maryland State Pension (2,987,355) Deferred Inflows - LOSAP (442,699) Deferred Outflows- Other Post-Employment Benefit Obligations 1,469,210 Deferred Outflows - Maryland State Pension 5,220,740

Deferred Outflows - LOSAP 509,398 Deferred Charge On Refunding 876,293 4,626,729 Total Net Position - Governmental Activities $ 72,468,057 The accompanying notes to the basic financial statements are an integral part of this statement.

-37-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

MAJOR FUNDS NON-MAJOR TOTAL

GENERAL GENERAL ROADS GOVERNMENTAL GOVERNMENTAL

FUND CAPITAL CAPITAL FUNDS FUNDS

REVENUES

Taxes Local Property Tax $ 70,577,908 $ - $ - $ 37,385 $ 70,615,293 Local Income Tax 55,282,162 - - - 55,282,162 Admission and Amusement Taxes 155,913 - - - 155,913 Recordation Taxes 5,806,760 - - 1 79,900 5,986,660 Hotel Taxes 650,613 - - - 650,613 County Transfer Taxes 2,093,502 - - - 2,093,502 State Shared Taxes 1,121,945 - - 49,723 1,171,668 Franchise Fee 485,521 - - - 485,521 Licenses and Permits 684,773 54,087 - - 738,860

Intergovernmental 1,873,567 1,993,714 - 4 ,417,418 8,284,699 Bond Interest Reimbursement - Build America Bond 319,362 - - - 319,362 Charges for Current Services 2,976,554 - 13,380 2 ,098,189 5,088,123 Fines and Forfeitures 81,394 463 - 1 11,118 192,975 Investment Income 1,201,645 252,723 52,689 2 65,407 1,772,464 Donations 860 - - 30,224 31,084 Miscellaneous 798,670 81,453 - 99,078 979,201 Total Revenues 144,111,149 2,382,440 66,069 7 ,288,442 153,848,100

EXPENDITURES

Current General Government 9,049,637 691,266 - 24,684 9,765,587 Public Safety 25,012,214 1,090,422 - 7 01,477 26,804,113 Public Works 9,249,052 188,534 2,025,031 44,240 11,506,857 Health 1,832,104 - - - 1,832,104 Social Services 368,219 55,565 - 3 ,953,489 4,377,273 Education 58,897,367 3,743,042 - - 62,640,409 Library 1,833,513 - - - 1,833,513 Conservation of Natural Resources 580,298 9,691 - 2 ,127,749 2,717,738

Economic/Community Development 648,486 41 - 9 89,738 1,638,265 Parks 3,529,332 1,126,837 - - 4,656,169 Recreation 776,564 - - - 776,564 Intergovernmental 469,695 - - - 469,695 Miscellaneous 5,260,260 - - - 5,260,260 Capital Outlay - 8,955,093 353,839 1 4,950 9,323,882 Debt Service Principal 7,779,115 - - 76,705 7,855,820 Debt Issuance Costs - 211,447 - - 211,447 Interest and Fiscal Charges 4,586,387 - - - 4,586,387

Total Expenditures 129,872,243 16,071,938 2,378,870 7 ,933,032 156,256,083 Excess of Revenues Over (Under) Expenditures 14,238,906 (13,689,498) (2,312,801) (644,590) (2,407,983)

OTHER FINANCING SOURCES (USES)

Issuance of Debt - 8,468,736 2,531,264 - 11,000,000 Bond Premiums - 1,011,998 - - 1,011,998 Proceeds of Capital Asset Disposals 36,849 194,739 - - 231,588 Insurance Proceeds - 3,100 - 1 4 3,114 Transfers In - 9,677,593 - 2 ,911,304 12,588,897 Transfers Out (11,264,690) (1,012,625) - (1,652,593) (13,929,908) Other Financing Sources (Uses) (11,227,841) 18,343,541 2,531,264 1 ,258,725 10,905,689 Net Increase in Fund Balances 3,011,065 4,654,043 218,463 6 14,135 8,497,706

Fund Balances, July 1 before Restatement 29,655,465 26,570,223 2,733,913 1 9,866,858 78,826,459 Adjustment to Restate Beginning Fund Balances 2,392,793 - - - 2,392,793 Fund Balances, July 1 32,048,258 26,570,223 2,733,913 1 9,866,858 81,219,252 Fund Balances, June 30 $ 35,059,323 $ 31,224,266 $ 2,952,376 $ 2 0,480,993 $ 89,716,958 The accompanying notes to the basic financial statements are an integral part of this statement.

-38-

QUEEN ANNE'S COUNTY, MARYLAND

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2019

Change in Fund Balances - Total governmental funds, per Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds $ 8 ,497,706 Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlay expenditures are reported in Governmental Funds during the year. However, in the Statement of Activities, costs for capital asset purchases are allocated over the estimated useful lives of those assets and reported as depreciation expense over a number of years. Therefore, the change in assets differs from the change in fund balance by the amount of capital asset purchases that will be capitalized and depreciated over a number of years, less the offsetting depreciation expense for the current year.

Proceeds received on disposal of capital assets are reported in Governmental Funds as current financial resources. In the Statement of Activities, only the gain or (loss) realized on disposal of capital assets is reported. Thus, the change in net assets differs from the change in fund balance by the cost of capital assets sold, net of accumulated depreciation (i.e., book value). In addition, developer contributions of capital assets (primarily infrastructure) are not reported in Governmental Funds because they do not represent current

financial resources available to cover this year's expenditures. Thus, the change in net assets differs from the change in fund balance by the capital assets received.

Donated Capital Assets are not reported in Governmental Funds because they are not current financial resources.

However, in the Statement of Activities, they are recognized as capital contributions and as capital assets.

The following is a summary of the net increase in capital assets, which is detailed in Note 6 - Capital Assets - Primary Government.

ADD capital assets acquired as capital outlay $ 174,625 ADD capital assets resulting from general capital projects 9,228,216 SUBTRACT book value of disposed capital assets, net of accumulated depreciation (870,759) SUBTRACT current year depreciation expense (4,689,306) Net Increase in Capital Assets 3 ,842,776 Receivables not included in the governmental funds because they relate to debt.

A portion of the County's 2014 Bond offering related to debt issued on behalf of Chesapeake College. Although Queen Anne's County will submit the payments to the lender for the bonds, there are five Counties that will share the expense of the debt service for the Chesapeake College project. A receivable is booked in Government-Wide in order to offset the debt recorded on the books related to the portion of the Chesapeake College project that the other Counties are responsible for.

CHANGE in bond receivable related to 2014 bonds (188,656) Liability for retirement incentive As part of the retirement incentives offered in fiscal year 2018, retirees were given a certain period of health insurance at no cost, rather than the normal premium. The maximum period of no cost health insurance was five years. The liability for the benefit offered to the retirees is included in the government wide statements and adjusted each year until the benefit period is over.

CHANGE in liability for the retirement incentive 4 0,281 A portion of the County’s 2009 Bond offering was issued using Build America Bonds. As an incentive to use these bonds, the Federal government offered an interest reimbursement grant, which offsets the County’s debt service for interest expense. Therefore, at year end, a receivable is booked for the interest reimbursement due, but not yet received.

CHANGE in bond interest reimbursement receivable - Build America Bond (4,558) Revenues that are earned but not collected within sixty days after the end of the fiscal year are not considered to be "available" to meet current cash requirements and are deferred in the Governmental Funds to the following year. However, these revenues are recognized in the Statement of Activities. The amount by which this type of deferred inflows increased or (decreased) relative to the

prior year is as follows:

CHANGE in Property Tax Deferred Inflows 5 5,276 CHANGE in Income Tax Deferred Inflows 2 ,446,131 Issuance of long-term debt (e.g., bonds, notes, and capital leases) provides current financial resources to Governmental Funds, while repayment of principal due for long-term debt consumes current resources. In the Statement of Net Assets, issuing debt increases long term liabilities, while repayment reduces those liabilities.

ADD retirements and repayments made on long term debt 8,913,361 SUBTRACT proceeds of debt (12,011,998) SUBTRACT College reimbursement received (214,991) ADD County's allocation to College for debt 60,504 SUBTRACT Deferred Refunding Costs (211,377) (3,464,501) Some accrued expenses, reported in the Statement of Activities, do not require the use of current financial resources and are not reported as expenditures in the Governmental Funds.

CHANGE in:

Accrued Interest Payable (200,126) Accrued Other Post Employment Benefit Obligation (2,271,062) Net pension liability - Maryland State Pension (2,146,374) Net LOSAP Liability 1 60,260 Accrued Compensated Absences (167,326) Deferred outflow of resources - Other Post-Employment Benefit Obligations 1 ,246,929 Deferred outflow of resources - Maryland State Pension (see Note 12) (1,173,023) Deferred outflow of resources - LOSAP 5 09,398

Deferred inflow of resources - Other Post-Employment Benefit Obligations (18,858) Deferred inflow of resources - Maryland State Pension (see Note 12) 1 39,969 Deferred inflow of resources - LOSAP (442,699) Change in Net Position - governmental activities, per Statement of Activities $ 6 ,861,543 The accompanying notes to the basic financial statements are an integral part of this statement.

-39-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF NET POSITION

ENTERPRISE FUNDS

JUNE 30, 2019

SANITARY DISTRICT

SEWER WATER RESTRICTED

ASSETS OPERATIONS OPERATIONS FUND

Current Assets Unrestricted Equity in Pooled Cash $ 8,954,840 $ 5,740,240 $ - Accounts Receivable (Net) 334,101 162,490 - Due from Other Governments - - - Bond Interest Reimbursement Receivable - Build America Bond - - - Inventories 7 34,822 - - Restricted Restricted Equity in Pooled Cash - - 8,253,516 Restricted Accounts Receivable (Net) - - 6,597 Total Current Assets 10,023,763 5,902,730 8,260,113

Noncurrent Assets Restricted Special Assessments Receivable (Net) - - 1,063,655 Capital Assets 122,409,016 29,991,954 - Less Accumulated Depreciation (49,328,521) ( 10,765,639) - Total Capital Assets, Net of Depreciation 73,080,495 19,226,315 - Total Noncurrent Assets 73,080,495 19,226,315 1,063,655 Total Assets 83,104,258 25,129,045 9,323,768

DEFERRED OUTFLOWS OF RESOURCES

Deferred Outflow for Other Post-Employment Benefit Obligation 162,817 45,959 - Deferred Outflow for Pension Contributions 347,373 101,464 - Deferred Charge on Refunding - - - Total Deferred Outflows of Resources 510,190 147,423 -

LIABILITIES

Current Liabilities Payable from Unrestricted Assets Accounts Payable 1 ,333,919 133,508 - Accrued Interest Payable 96,426 - - Escrow Deposits 1 66,841 - - Due to Other Funds - - - Unearned Revenue 44,127 - - Current Portion of Compensated Absences 146,543 51,766 - Current Portion of Bonds/Notes Payable 934,063 - - Total Current Liabilities 2 ,721,919 185,274 - Noncurrent Liabilities Payable from Unrestricted Assets

Compensated Absences 104,120 36,780 - Other Post-Employment Benefit Obligation 5 ,739,516 1,698,764 - Net Pension Liability 1 ,752,879 509,009 - Bonds/Notes Payable 28,485,693 - - Total Noncurrent Liabilities 36,082,208 2,244,553 - Total Liabilities 38,804,127 2,429,827 -

DEFERRED INFLOWS OF RESOURCES

Deferred Inflow for Pension Contributions 193,378 56,532 - Deferred Inflow for Other Post-Employment Benefit Obligation 2,107 591 - Unavailable Water and Sewer Assessments - - 1,063,655 Total Deferred Inflows of Resources 195,485 57,123 1,063,655

NET POSITION

Net Investment in Capital Assets 43,660,739 19,226,315 - Amounts Restricted for:

Debt Service - - - Capital Projects - 975,000 - Unrestricted Amounts (Deficit) 954,097 2,588,203 8,260,113 Total Net Position $ 44,614,836 $ 22,789,518 $ 8,260,113 The accompanying notes to the basic financial statements are an integral part of this statement.

-40-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF NET POSITION

ENTERPRISE FUNDS

JUNE 30, 2019

(CONTINUED)

TOTAL

PRIMARY

SANITARY DISTRICT NON-MAJOR GOVERNMENT

DEBT SERVICE BAY BRIDGE ENTERPRISE ENTERPRISE

FUND TOTAL AIRPORT FUNDS FUNDS

$ - $ 14,695,080 $ 8,531 $ 802,180 $ 15,505,791

- 496,591 14,480 43,728 554,799

- - 1 70,685 82,000 252,685

- - 504 2,682 3,186

- 734,822 45,930 4,519 785,271

1,259,440 9,512,956 - - 9,512,956

- 6,597 - - 6,597

1,259,440 25,446,046 240,130 935,109 26,621,285 11,320,907 12,384,562 - - 12,384,562

- 152,400,970 23,505,633 9,291,308 185,197,911

- (60,094,160) (5,116,882) ( 1,942,539) ( 67,153,581)

- 92,306,810 18,388,751 7,348,769 118,044,330

11,320,907 104,691,372 18,388,751 7,348,769 130,428,892 12,580,347 130,137,418 18,628,881 8,283,878 157,050,177

- 208,776 1,953 7,618 218,347

- 448,837 14,137 40,309 503,283

- - 10,104 7,063 17,167

- 657,613 26,194 54,990 738,797

- 1,467,427 92,609 71,434 1,631,470

- 96,426 23,317 11,351 131,094

- 166,841 16,900 - 183,741

- - 1 ,157,803 625,313 1,783,116

- 44,127 - 3,789 47,916

- 198,309 11,282 26,717 236,308

- 934,063 1 18,597 139,424 1,192,084

- 2,907,193 1 ,420,508 878,028 5,205,729

- 140,900 8,016 18,982 167,898

- 7,438,280 2 77,984 311,537 8,027,801

- 2,261,888 69,832 196,735 2,528,455

- 28,485,693 1 ,689,404 777,586 30,952,683

- 38,326,761 2 ,045,236 1,304,840 41,676,837

- 41,233,954 3 ,465,744 2,182,868 46,882,566

- 249,910 7,774 22,523 280,207

- 2,698 25 97 2,820

11,320,907 12,384,562 - - 12,384,562 11,320,907 12,637,170 7,799 22,620 12,667,589

- 62,887,054 16,590,854 6,438,822 85,916,730

1,259,440 1,259,440 - - 1,259,440

- 975,000 - - 975,000

- 11,802,413 (1,409,322) (305,442) 10,087,649

$ 1,259,440 $ 76,923,907 $ 15,181,532 $ 6,133,380 $ 98,238,819 The accompanying notes to the basic financial statements are an integral part of this statement.

-41-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

ENTERPRISE FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

SANITARY DISTRICT

SEWER WATER RESTRICTED

OPERATIONS OPERATIONS FUND

OPERATING REVENUES

Charges for Services $ 6,272,591 $ 2,439,591 $ 1,730,427 Intergovernmental 90,000 - 333,250 Bond Interest Reimbursement - Build America Bond - - - Material Sales - 15,700 - Miscellaneous Revenues 17,103 154,153 - Total Operating Revenues 6,379,694 2,609,444 2,063,677

OPERATING EXPENSES

Cost of Sales and Services Collection 3,156,737 - - Distribution - 365,813 - Treatment 1,276,110 1,325,965 - Shop 149,950 88,109 - Airport - - - Recreation - - - Total Cost of Sales and Services 4,582,797 1,779,887 - Administration and Inspection 946,114 571,552 - Other Post-Employment Benefit Contributions 116,518 32,713 - Pension Liability Adjustment 230,641 65,937 - Depreciation 1,912,926 665,406 -

Total Operating Expenses 7,788,996 3,115,495 - Operating Income (Loss) (1,409,302) (506,051) 2,063,677

NON-OPERATING REVENUES (EXPENSES)

Investment Income 120,465 109,973 291,161 Interest Expense (326,469) - - Gain (Loss) on Disposal of Capital Assets 33,100 (1,995) - Total Non-Operating Revenues (Expenses) (172,904) 107,978 291,161 Income (Loss) Before Contributions and Transfers (1,582,206) (398,073) 2,354,838 Capital Contributions, Fees and Grants 2,938,267 688,639 -

TRANSFERS

Transfers In 1,059,710 975,000 423 Transfers Out (5,000) (5,000) (1,052,106) Net Transfers In (Out) 1,054,710 970,000 (1,051,683) Change in Net Position 2,410,771 1,260,566 1,303,155 Total Net Position - Beginning of Year 42,204,065 21,528,952 6,956,958 Total Net Position - End of Year $ 44,614,836 $ 22,789,518 $ 8,260,113 The accompanying notes to the basic financial statements are an integral part of this statement.

-42-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

ENTERPRISE FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

TOTAL

PRIMARY

SANITARY DISTRICT NON-MAJOR GOVERNMENT

DEBT SERVICE BAY BRIDGE ENTERPRISE ENTERPRISE

FUND TOTAL AIRPORT FUNDS FUNDS

$ 81,865 $ 10,524,474 $ 24,710 $ 827,085 $ 11,376,269 96,750 520,000 723,071 877,743 2,120,814

- - 2,038 10,849 12,887

- 15,700 176,882 51,911 244,493

- 171,256 426,351 23,632 621,239

178,615 11,231,430 1,353,052 1,791,220 14,375,702

- 3,156,737 - - 3,156,737

- 365,813 - - 365,813

- 2,602,075 - - 2,602,075

- 238,059 - - 238,059

- - 888,820 - 888,820

- - - 1,649,745 1,649,745

- 6,362,684 888,820 1,649,745 8,901,249

- 1,517,666 - - 1,517,666

- 149,231 1,382 5,372 155,985

- 296,578 9,820 21,437 327,835

- 2,578,332 432,516 169,571 3,180,419

- 10,904,491 1,332,538 1,846,125 14,083,154

178,615 326,939 20,514 (54,905) 292,548 28,718 550,317 374 - 550,691

- (326,469) (98,518) (42,735) (467,722)

- 31,105 (2,975) (38,166) (10,036)

28,718 254,953 (101,119) (80,901) 72,933 207,333 581,892 (80,605) (135,806) 365,481

- 3,626,906 - - 3,626,906

1,052,106 3,087,239 217,779 158,232 3,463,250 (1,060,133) (2,122,239) - - (2,122,239) (8,027) 965,000 217,779 158,232 1,341,011 199,306 5,173,798 137,174 22,426 5,333,398 1,060,134 71,750,109 15,044,358 6,110,954 92,905,421 $ 1,259,440 $ 76,923,907 $ 15,181,532 $ 6,133,380 $ 98,238,819 The accompanying notes to the basic financial statements are an integral part of this statement.

-43-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF CASH FLOWS

ENTERPRISE FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

SANITARY DISTRICT

SEWER WATER RESTRICTED

OPERATIONS OPERATIONS FUND

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers and users $ 6,198,910 $ 2,488,544 $ 1,729,344 Receipts from other operating sources 107,103 169,853 333,250 Receipts from bond interest reimbursement - Build America Bond - - - Payments to suppliers ( 2,108,632) ( 1,147,872) ( 36,766) Payments to employees and on behalf of employees (3,582,150) ( 1,182,600) - Net Cash Provided by Operating Activities 615,231 327,925 2,025,828

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Transfers in from other funds 1,059,710 975,000 423 Receipts from interfund loans - - - Transfers to other funds ( 5,000) ( 5,000) ( 1,052,106) Principal paid on interfund loans - - - Net Cash Provided (Used) by Noncapital Financing Activities 1,054,710 970,000 ( 1,051,683)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Proceeds from the disposition of capital assets 33,100 - - Principal paid on capital debt (924,815) - - Receipts from state loan 4,859,750 - - Interest paid on capital debt (312,900) - - Acquisition and construction of capital assets (4,443,771) ( 21,597) - Net Cash (Used) by Capital and Related Financing Activities ( 788,636) ( 21,597) -

CASH FLOWS FROM INVESTING ACTIVITIES

Net Cash Provided by Investing Activities - Investment Income 120,465 109,973 291,161 Net Increase (Decrease) in Cash and Cash Equivalents 1,001,770 1,386,301 1,265,306 Balances - Beginning of the year 7,953,070 4,353,939 6,988,210 Balances - End of the year $ 8,954,840 $ 5,740,240 $ 8,253,516 Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ (1,409,302) $ ( 506,051) $ 2,063,677

Adjustments to reconcile operating income (loss) to net cash provided by operating activities:

Depreciation 1,912,926 665,406 - Effect of changes in operating assets and liabilities:

Accounts receivable, net (13,812) 48,953 ( 1,083) Special assessments receivable, net - - ( 95,097) Operating grants receivable - - - Build America Bonds Interest receivable - - - Inventories and Prepaid Expenses (52,112) - - Vendor accounts payable (124,202) 18,465 ( 36,766) Compensated absences 14,443 2,502 - Other Post-Employment Benefit Obligation 116,518 32,713 - Pension Obligation 230,641 65,937 -

Escrow deposits payable 91,569 - - Deferred revenue collected in advance (151,438) - 95,097 Net Cash Provided by Operating Activities $ 615,231 $ 327,925 $ 2,025,828 Noncash investing, capital and financing activities:

Donation of capital assets (infrastructure) by developers $ 2,938,267 $ 688,639 $ - The accompanying notes to the basic financial statements are an integral part of this statement.

-44-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF CASH FLOWS

ENTERPRISE FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

TOTAL

PRIMARY

SANITARY DISTRICT NON-MAJOR GOVERNMENT

DEBT SERVICE BAY BRIDGE ENTERPRISE ENTERPRISE

FUND TOTAL AIRPORT FUNDS FUNDS

$ 81,954 $ 10,498,752 $ 37,705 $ 840,623 $ 11,377,080 96,750 706,956 1,214,172 883,286 2,804,414

- - 2,067 11,007 13,074

- ( 3,293,270) ( 691,489) ( 1,288,201) ( 5,272,960)

- ( 4,764,750) ( 134,115) ( 351,283) ( 5,250,148)

178,704 3,147,688 428,340 95,432 3,671,460 1,052,106 3,087,239 217,779 158,232 3,463,250

- - 1,157,803 625,313 1,783,116

( 1,060,133) ( 2,122,239) - - ( 2,122,239)

- - ( 1,305,335) ( 648,061) ( 1,953,396)

( 8,027) 965,000 70,247 135,484 1,170,731

- 33,100 375 - 33,475

- ( 924,815) ( 106,552) ( 127,400) ( 1,158,767)

- 4,859,750 - - 4,859,750

- ( 312,900) ( 104,990) ( 46,963) ( 464,853)

- ( 4,465,368) ( 279,263) ( 75,500) ( 4,820,131)

- ( 810,233) ( 490,430) ( 249,863) ( 1,550,526)

28,718 550,317 374 - 550,691 199,395 3,852,772 8,531 ( 18,947) 3,842,356 1,060,045 20,355,264 - 821,127 21,176,391 $ 1,259,440 $ 24,208,036 $ 8 ,531 $ 802,180 $ 25,018,747 $ 178,615 $ 326,939 $ 20,514 $ ( 54,905) $ 292,548

- 2,578,332 432,516 169,571 3,180,419

89 34,147 14,095 12,019 60,261 ( 11,320,907) ( 11,416,004) - - ( 11,416,004)

- - ( 112,132) ( 70,000) ( 182,132)

- - 29 158 187

- ( 52,112) ( 21,436) 1,252 ( 72,296)

- ( 142,503) 82,869 6,638 ( 52,996)

- 16,945 1,783 2,371 21,099

- 149,231 1,382 5,372 155,985

- 296,578 9,820 21,437 327,835

- 91,569 ( 1,100) - 90,469

11,320,907 11,264,566 - 1,519 11,266,085 $ 178,704 $ 3,147,688 $ 428,340 $ 95,432 $ 3,671,460 $ - $ 3,626,906 $ - $ - $ 3,626,906 The accompanying notes to the basic financial statements are an integral part of this statement.

-45-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF FIDUCIARY NET POSITION

PRIVATE PURPOSE TRUST, OTHER POST-EMPLOYMENT BENEFIT TRUST, AND AGENCY FUNDS

JUNE 30, 2019

PRIVATE

PURPOSE

TRUST FUND OTHER

TAX SALE POST-EMPLOYMENT AGENCY

DEPOSITS BENEFIT TRUST FUND FUNDS

ASSETS

Cash and Cash Equivalents $ 7 6,113 $ 1,616,753 $ 8 25,698 Investments, at Fair Value Debt Securities - 1,687,417 - Fixed Income Fund - 3 42,967 - Mutual and Global Funds - 2,932,400 - International - 1,159,631 - Total Investments - 6,122,415 - Total Assets 7 6,113 7,739,168 $ 8 25,698

LIABILITIES

Accrued Expenses - 9 ,045 $ - Due to Other Governments - 1 59,907 2 36,120 Deposits and Escrows - - 5 89,578 Total Liabilities - 1 68,952 $ 8 25,698

NET POSITION

Held in Trust $ 7 6,113 Restricted for Other Post-Employment Benefits $ 7,570,216 The accompanying notes to the basic financial statements are an integral part of this statement.

-46-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

PRIVATE PURPOSE TRUST AND OTHER POST-EMPLOYMENT BENEFIT TRUST FUND

FOR THE YEAR ENDED JUNE 30, 2019

PRIVATE

PURPOSE

TRUST FUND

TAX SALE

DEPOSITS

ADDITIONS

Total Additions - Tax Sale Collections in Excess of Tax Due $ 2 9,811

DEDUCTIONS

Distributions to Property Holders - Change in Assets 2 9,811

NET POSITION HELD IN TRUST

Net Position-Beginning of Year 4 6,302 Net Position-End of Year $ 7 6,113

OTHER

POST-EMPLOYMENT

BENEFIT TRUST FUND

ADDITIONS

CONTRIBUTIONS

Employers $ 5 ,070,462 Members 9 98,275 Total Contributions 6 ,068,737 Investment Earnings Interest 2 15,199 Net Increase in the Fair Value of Investments 1 23,420 Total Investment Gain 3 38,619 Less Investment Expenses ( 3,115) Net Investment Gain 3 35,504 Total Additions 6 ,404,241

DEDUCTIONS

Claims Paid 4 ,599,963 Administrative Expenses 2 4,083 Total Deductions 4 ,624,046 Change in Assets 1 ,780,195

NET POSITION RESTRICTED FOR OTHER POST-EMPLOYMENT BENEFITS

Net Position-Beginning of Year 5 ,790,021 Net Position-End of Year $ 7 ,570,216 The accompanying notes to the basic financial statements are an integral part of this statement.

-47-

QUEEN ANNE'S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

INDEX

Note 1 Summary of Significant Accounting Policies 49-60 2 Budgets and Budgetary Accounting 60-61 3 Cash, Investments and Investment Income 62-67 4 Accounts Receivable 68-69 5 Unearned Revenue 70 6 Capital Assets 71-75 7 Interfund Receivables and Payables 76 8 Interfund Transfers 77 9 Noncurrent Liabilities 78-87 10 Restricted Assets and Liabilities and Fund Balances 88-91 11 Risk Management 91-92 12 Retirement Plans 92-101

13 Deferred Compensation Plan 101 14 Other Post-Employment Benefits 101-116 15 Volunteer Fireman Pension Plan Length of Service Award Program 116-118 16 Deficit Equity Balances 119 17 Commitments and Contingencies 119-120 18 Joint Venture 120-121 19 Pollution Remediation Obligations 121-122 20 Prior Period Restatement 122 -48-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the County conform to accounting principles generally accepted in the United States of America (GAAP) applicable to local government entities. The following is a summary of significant policies.

A. REPORTING ENTITY

Queen Anne’s County, Maryland (the County) was founded in 1706. The County is governed by five Commissioners who are elected to serve four-year terms. This board assumes responsibilities conferred upon them by the Maryland General Assembly under Code Home Rule and provides the following services: public safety, public facility/infrastructure maintenance and improvements, sanitation, health and social services, education, recreation and culture, library, conservation of natural resources, economic and

community development, and general administrative services.

As required by GAAP, these financial statements present the primary government and its component units, which are entities for which the primary government is considered financially accountable. The decision to include a potential component unit in the financial reporting entity was made by applying the criteria set forth in the Government Accounting Standards Board (GASB) Statements No. 14 and 39. Blended component units, although separate entities, are in substance, part of the government’s

operations. However, each discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for descriptions) to emphasize that it is legally separate from the government.

Blended Component Units The Queen Anne’s County Sanitary District serves citizens of the government and is governed by a board comprised of the government’s elected Commissioners. The rates for user charges and bond issuance authorizations are approved by the Board of Commissioners and the legal liability for the general obligation portion of the District’s debt remains with the government. The Sanitary District is reported as an enterprise fund.

The Queen Anne’s County Roads Board serves all the citizens of the government and is governed by a board comprised of the government’s elected Commissioners. All operations of the Roads Board are approved by the Board of Commissioners and the legal liability for any debt remains with the government. The Roads Operating Fund is included in with the General Fund.

Discretely Presented Component Units Components units are legally separate entities that are included in the County’s reporting entity because of the significance of their operating or financial relationships with the County. The criteria for including organizations as component units within the County’s reporting entity include whether:

 the organization is legally separate  the County Commissioners appoint a voting majority of the organization’s board  the County Commissioners have the ability to impose their will on the organization  the organization has the potential to impose a financial benefit/burden on the County  the organization is fiscally dependent on the County Based on the application of these criteria, the following organizations are considered component units of Queen Anne’s County

Government. Their financial data is discretely presented in separate columns in the government-wide financial statements. Both discretely presented component units have a June 30 year end.

The Board of Education of Queen Anne’s County is a five-member body responsible for the operation of Queen Anne’s County Schools. Beginning with the November 2008 election, the members were elected by the County voters. The Board of Education is a component unit of Queen Anne’s County, Maryland by virtue of the Board’s fiscal dependency on the County through the County’s responsibility for levying taxes, issuing debt, and its budgetary control over the Board of Education.

The Queen Anne’s County Free Library is a component unit of the Queen Anne’s County Government by virtue of the Library’s fiscal dependency on the County. The County levies taxes and approves the Library’s budget. The Library Board of Trustees governs the Library. Vacancies on the Board of Trustees are filled by vote of the remaining members of that Board.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A. REPORTING ENTITY (CONTINUED)

Discretely Presented Component Units (continued) Complete financial statements of the discretely presented component units can be obtained from their respective administrative offices listed below:

Board of Education of Queen Anne’s County Queen Anne’s County Free Library 202 Chesterfield Avenue 121 S. Commerce Street Centreville, Maryland 21617 Centreville, MD 21617 Joint Venture The operation of the Midshore Regional Landfill is considered a joint venture of the County. Disclosure of the County’s participation in this joint venture is presented in Note 18.

Complete financial statements can be obtained at the joint ventures’ administrative office listed below:

Maryland Environmental Service 259 Najoles Road Millersville, Maryland 21108

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

Government-Wide Financial Statements – The government-wide financial statements report information on all of the nonfiduciary activities of the Primary Government and its component units. Since, by definition, assets of fiduciary funds are held for the benefit of a third party (other local governments, private parties, etc.) and cannot be used to address activities or obligations of the County, these funds are not incorporated into the government-wide statements.

Interfund activity within the primary government’s governmental activities and business-type activities has been eliminated from the government-wide statements. Interfund services provided and used are not eliminated in the process of consolidation. Residual balances between the governmental and business-type categories are presented on the Statement of Net Position as “Internal balances”.

Governmental activities of the Primary Government, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

Statement of Net Position – This statement is designed to display the financial position of the reporting entity as of year-end.

Governments report all capital assets, including infrastructure, in the government-wide Statement of Net Position and report depreciation expense, the cost of “using up” capital assets, in the Statement of Activities. Net position is divided into three categories:

1) net investment in capital assets; 2) restricted amounts; and 3) unrestricted amounts. Net Investment in capital assets consists of

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 capital assets. Restricted amounts are assets for which constraints are placed due to restrictions that are either (1) externally imposed by creditors, grantors, contributors, or laws

and regulations of the government, or (2) imposed by law through constitutional provisions or enabling legislation. Unrestricted amounts consist of net assets that do not meet the definition of restricted or invested in capital assets.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED)

Statement of Activities – This statement demonstrates the degree to which the direct expenses of a given function for the fiscal year are offset by program revenues. Therefore, this statement reflects both the gross and net costs per functional category (general government; public safety; public works; health; social services; education; library; conservation of natural resources; and economic/community development) that are otherwise supported by general revenues. Direct expenses (including depreciation) 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. The operating grants and contributions column includes operating-specific and discretionary (either operating or capital) grants, while the capital grants and contributions

column reflects capital-specific grants. Taxes and other items not properly included among program revenues are reported as general revenues. The County does not allocate indirect expenses.

Fund Financial Statements – Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

In the fund financial statements, financial transactions and accounts of the County are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise assets, liabilities, fund balance/net assets, revenues, and expenditures/expenses.

Governmental Fund Budget-to-Actual Comparison Statements – Demonstrating compliance with the legally adopted budget is an important component of government’s accountability to the public. The County provides a budget-to-actual comparison of the General Fund as part of the required supplementary information section located after the Notes to the basic financial statements. A budget-to-actual comparison is provided for the General Fund on a departmental level as required supplementary information, and

for all non-major governmental funds with legally adopted budgets in the supplementary information section.

The County and many other governments revise their original budgets over the course of the year for a variety of reasons; the County’s amended budget is reflected in a separate column in the budget-to-actual comparison statements. Variances are calculated based on final budgets.

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Measurement Focus and Basis of Accounting Full Accrual Basis Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. 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 revenue in the year in which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met. Capital assets and related depreciation are recorded in these statements, as well as debt, accrued compensated absences, other post-employment benefits, and other accruals.

Modified Accrual Basis Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION

(CONTINUED)

Revenues are recorded as soon as they are susceptible to accrual (i.e., when they are both measurable and available). Revenues are considered to be available when they are collectible within the current period, or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment has matured and is due. Similarly, expenditures related to claims, judgments,

compensated absences, and other post-employment benefits are recorded only to the extent that they are expected to be liquidated with expendable available financial resources. Capital assets, and related depreciation, as well as long-term liabilities are not recorded in these statements.

In applying the susceptible to accrual concept to income taxes (distributed by the State), property taxes, and inter-governmental revenues other than grants, the County defines “available” as received within 60 days after year-end.

In the State of Maryland, the State has assumed responsibility for the collection of all income taxes and for distributing those collections to the respective counties. The counties set their individual tax rates within limits provided by State law. However, collection and pursuit of delinquent taxes are the responsibility of the State. The County records estimated receivables relating to income taxes when the underlying income is earned. Amounts not received within 60 days are reported as deferred inflows of

resources. At year-end, deferred revenue relating to income taxes primarily includes the final fiscal year distribution (which is normally received in September after the fiscal year-end) and amounts related to late filers, delinquent returns and audits, and unallocated withholding, all of which are not received within the County’s availability period. Most deferred inflows are expected to be received from the State within the next fiscal year; however, collections related to delinquent returns and audits as well as

unallocated withholding may not be remitted to the County for several years.

In applying the susceptible to accrual concept to operating and capital grants, which are classified with intergovernmental revenues in the fund financial statements, the County records receivables when the applicable eligibility requirements including time requirements are met. Related revenues are recognized to the extent that cash is expected to be received within one year of year-end. Resources

received before the eligibility requirements are met are reported as unearned revenue.

Licenses and permits, charges for services, and miscellaneous revenues (except earnings on investments) are generally recorded as revenues when received in cash during the year. At year-end, receivables are recorded for significant amounts due. If such amounts are received in cash after year-end within the County’s 60-day availability period, they are recognized as revenue. Benefit assessment receivables not billed at year end are reported as deferred inflows of resources.

Fiduciary Funds – The County’s trust fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, as is used by proprietary funds. Agency funds report only assets and liabilities; they do not report changes in net position. Therefore, agency funds are reported using the accrual basis of accounting to recognize receivables and payables. Activity during the year is accounted for as additions to and deductions from asset and liability accounts (for Agency

Funds) and Net Position (for Private Purpose and Other Post-Employment Benefit Trust Funds). Since fiduciary funds are, by their very nature, independent of the County, they are omitted from all government-wide statements.

Financial Statement Presentation - The County reports the following major governmental and proprietary funds, as well as fiduciary funds.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION

(CONTINUED)

General Fund – This fund is the general operating fund of the County. It is used to account for all financial resources except those required or recommended, by GAAP, to be accounted for in another fund.

Capital Projects Funds – General Capital Projects - This fund accounts for financial resources to be used for the acquisition or construction of major capital facilities, as well as other large multi-year projects that relate to capital assets, that are financed from general governmental resources.

Roads Capital Projects - This fund accounts for financial resources to be used for the construction of County Road infrastructure, as well as other large multi-year projects that relate to capital assets, that are financed from grants received from State and Federal Governments, Highway User Tax funds, and general governmental resources.

Non-Major Governmental Funds – There are nineteen non-major governmental funds, which are used to account for and report the proceeds of specific revenue sources. Included in the nineteen non-major governmental funds are sixteen special revenue funds and three capital project funds.

Major Enterprise Funds - Enterprise Funds are used to account for those activities of the Primary Government that are financed and operated in a manner similar to private business enterprises in that all costs and expenses, including depreciation, are recovered primarily or partially through user charges. The Sanitary District Funds are intended to be selfsupporting as a whole, while the Airport is intended to be only partially self-supporting. The County reports the following

major enterprise funds:

Sanitary District - Sewer Operations - This fund is used to account for the operation of the sewer system serving approximately 7,756 customers.

Water Operations - This fund is used to account for the operation of the water supply system serving approximately 4,539 customers.

Restricted Fund - This fund is used to account for the proceeds of sewer and water capacity charges (one-time allocation fees) and is used to fund capital and debt service expenses.

Debt Service Fund - This fund is used to account for the collection of special benefit assessments, and financial resources from other sources, to fund debt associated with construction of water and sewer facilities in accordance with debt covenants.

Bay Bridge Airport – This fund is used to account for the operation of the County’s airport that serves small, private aircraft.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION

(CONTINUED)

Non-Major Enterprise Funds – Non-major Enterprise Funds account for activities which are commercial in nature and are primarily or partially intended to be self-supporting. The County has two non-major enterprise funds, neither of which is meant to be fully self-supporting. These funds include the Golf Course and Public Landings and Marinas.

Fiduciary Funds – Fiduciary Funds are used to report assets held in a trustee or agency capacity for entities other than the County. The County reports the following fiduciary fund types:

Private-Purpose Trust Fund – This fund accounts for an arrangement under which monies received at tax sale, in excess of taxes due, are legally held in trust for property owners who have not been located within a legally-defined time frame.

Other Post-Employment Benefit Trust Fund– This fund accounts for the funding of retiree benefit plans of Queen Anne’s County and other participating agencies, which are the Queen Anne’s County Board of Education and Queen Anne’s County Free Library. Other agencies and political subdivisions have the right to participate in this Trust Fund also, as an investment vehicle for their Other Post-Employment Benefit Plan

through the pooling of investment resources.

Agency Funds - These funds are used to account for assets held in a purely custodial capacity where the County receives, temporarily invests, and remits such resources to individuals, private organizations or other governments.

These monies include escrow deposits for tax ditches, zoning deposits, state and town tax collections, motor vehicle administration deposits, and abandoned property.

Certain amounts in the prior years’ financial statements have been reclassified to conform to the current year’s presentation.

The financial statements of the County have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to local government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial principles. The most significant of the County’s accounting policies are described below.

In the process of aggregating data for the Statement of Net Position and the Statement of Activities, some amounts reported as interfund activity and balances in the funds should be eliminated or reclassified. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. The effect of interfund services provided and used between functions has not been eliminated in the Statement of Activities, since to do so would distort the direct costs and program revenues

reported for the various functions concerned.

Proprietary funds distinguish operating revenues and expenses from non-operating 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 enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All

revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY

1) Cash and Investments

Cash and Cash Equivalents – For Statement of Cash Flows reporting purposes, the County has defined “cash equivalents” as short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present an insignificant risk of changes in value because of changes in interest rates.

Generally, only investments with maturities of three months or less at time of purchase meet this definition. The balance sheet classification for “cash and cash equivalents” in the Statement of Cash Flows includes the following:

“Equity in pooled cash and investments,” “Cash and cash equivalents,” and “Restricted Equity in pooled cash and investments.”

2) Receivables and Payables

Due To/From Other Funds and Internal Balances – Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are current and are referred to as “due to/from other funds.” On the Statement of Net Position, these balances are referred to as “internal balances” and are reported as positive and negative “assets” that net to zero for the primary government as a whole.

Trade Accounts Receivable – Trade and other receivables are shown net of an allowance for uncollectible accounts.

The allowance for uncollectible accounts is calculated based on historical collection data and, in some cases, specific account analysis.

3) Inventories, Prepaids, and Other Assets

Inventories consisting of materials, parts and supplies are recorded at cost and determined by the first-in, first-out method. Inventories held for resale are reported at lower of cost or market and also determined by the first-in, first-out method. For budgetary purposes, the cost is recorded as an expenditure at the time individual inventory items are purchased (purchase method). The consumption method is used for financial reporting purposes whereby expense is

recognized as the items are used (consumed). Reported inventories are equally offset by a fund balance reserve.

Inventories in the Proprietary Funds are also recorded using the consumption method.

Prepaid items are payments made to vendors for services that will benefit periods beyond the end of the fiscal year.

4) Capital Assets

Capital assets, which include property, plant, equipment, intangibles, and infrastructure assets (e.g. roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The County defines capital assets as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess

of one year. Such assets are valued at cost where historical records are available and at estimated historical cost where no historical records exist. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are recorded at acquisition value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value or functionality of the asset, or materially extend asset lives, are not capitalized.

Land and other inexhaustible assets such as intangible property easements and other land usage rights are capitalized but not depreciated, as these assets are expected to have indefinite useful lives.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED)

4) Capital Assets (continued)

Major outlays for capital assets and improvements are capitalized as the projects are constructed. Interest is capitalized on proprietary fund assets acquired with tax-exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense, incurred from the date of the borrowing until completion of the project, with interest earned on invested proceeds over the same period. Capital projects that are under construction and not yet

ready for their intended use at year-end are classified as “construction in progress” (CIP).

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

Assets Years Buildings and structures 20 - 50 Improvements other than buildings 15 - 50 Infrastructure 20 - 50 Machinery and equipment 5 - 20 Office furniture, fixtures and equipment 5 - 15 Vehicles 7 – 10

5) Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.

In addition to liabilities, the statement of financial position will 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 until that time.

6) Other Post-Employment Benefit Obligation (OPEB)

Primary Government – The Queen Anne’s County post-employment benefit plan provides medical insurance benefits to retirees and their eligible dependents. The Plan’s financial information is prepared based on full accrual accounting. Expenses are recognized on the accrual basis as retirees’ insurance costs are incurred. Typically, OPEB liabilities are liquidated in the following governmental funds: the General Fund, Department of Aging, Housing and

Community Services, and Community Partnerships for Children. OPEB liabilities are also liquidated in the following enterprise funds: Sanitary Sewer, Sanitary Water, Bay Bridge Airport, Golf Course, and Public Landings and Marinas.

Additional details regarding other post-employment benefits can be found in Notes 9 and 14.

In both the government-wide and enterprise funds, liability for other post-employment benefits is adjusted at the end of the fiscal year. For the year ended June 30, 2019, the net other post-employment benefit obligation amounted to $51,510,197, including both governmental ($43,482,396) and business-type activities ($8,027,801).

Component Unit - Board of Education – For the year ended June 30, 2019, the net other post-employment benefit obligation for the Board of Education amounted to $193,804,027.

Component Unit – Free Library – For the year ended June 30, 2019, the net other post-employment benefit obligation for the Library amounted to $755,406.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED)

7) Net Pension Liability

Primary Government – The Queen Anne’s County government participates in the Maryland State Retirement and Pension Systems. Beginning in fiscal year 2015, the County was required to report the net pension liability associated with this system. Typically, pension liabilities are liquidated in the following governmental funds: the General Fund, Department of Aging, Housing and Community Services, and Community Partnerships for Children. Pension

liabilities are also liquidated in the following enterprise funds: Sanitary Sewer, Sanitary Water, Bay Bridge Airport, Golf Course, and Public Landings and Marinas. Additional details regarding retirement benefits can be found in Notes 9 and 12. For the year ended June 30, 2019, the net pension liability amounted to $29,037,440, including both governmental ($26,508,985) and business-type activities ($2,528,455).

Component Unit - Board of Education – For the year ended June 30, 2019, the net pension liability for the Board of Education amounted to $4,839,054.

8) Volunteer Fireman Pension Plan Length of Service Award Program (LOSAP)

Primary Government – The LOSAP is a single-employer defined benefit length of service award program that covers all volunteer members of the County’s Fire and EMS Commission. The County began recording the net LOSAP liability associated with this benefit in fiscal year 2019 with the implementation of Governmental Accounting Standards Board’s Statement No. 73, Accounting and Financial Reporting for

Pensions and Related Assets That are Not Within the Scope of GASB Statement 68. Additional details regarding LOSAP benefits can be found in Notes 9 and 15. For the year ended June 30, 2019, the net LOSAP liability amounted to $6,669,736, entirely in governmental activities.

9) Compensated Absences

Primary Government – The County’s policy is to pay employees for any unused vacation time, up to a maximum of 65 days, upon termination of employment. Compensated absences are reported in governmental funds only if they have matured, such as payments upon termination of employment, vacation, and compensatory time paid as they are used during the year. Such time is paid as regular wages. Compensated absences are reported in enterprise funds as

they are accrued. In the government-wide statements, the liability for compensated absences is adjusted at the end of each fiscal year to current salary costs. Accumulated unpaid leave of the County amounted to $3,132,619 at June 30, 2019, including both governmental ($2,728,413) and business-type activities ($404,206).

Component Unit - Board of Education – Accumulated unpaid annual leave is accrued when earned in the Unrestricted Current Expense Fund using the modified accrual basis of accounting. In fiscal year 1992, the Board adopted the practice of paying for any unused vacation time, up to the maximum number of days that employees can carry over from one year to the next, upon termination of employment. Maximum number of days varies from 20 to

30 days, depending on classification. Liabilities for compensated absences are inventoried at the end of each fiscal year and adjusted to current salary costs. Accumulated compensated absences as of June 30, 2019 amounted to $803,438. Because payment of sick leave is contingent upon employees’ future illness or retirement, the Board of Education expects its commitment to provide sick leave to be met during the normal course of activities over the

working lives of its present employees. Any accumulated unused sick leave at retirement will ultimately be taken into consideration and paid through retirement benefits by the State of Maryland.

10) Long-Term Obligations

In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statements of net assets. Bond premiums are deferred and amortized over the life of the bonds using the bonds outstanding method. Bonds payable in the proprietary fund financial statements and

noncurrent liabilities in the government-wide financial statements are reported net of the applicable bond premium or discount. Bond issuance costs are reported in the period in which they have been incurred.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED)

10) Long-Term Obligations (continued)

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond 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 expenditures. When debt is refunded in an advance refunding, payments to the Bond Refunding Agent and associated bond issuance costs are reported as other financing uses. When debt is refunded in a current refunding,

the principal on refunded debt is reported as other financing uses.

11) Net Position/Fund Equity

In the government-wide financial statements, the County has reported an unrestricted net deficit of $51,549,672. This deficit is due to the fact that the County issues general obligation bonded debt for purposes of capital construction on behalf of the Queen Anne’s County Board of Education. The capital assets constructed with the proceeds of this debt are reported on the financial statements of Queen Anne’s County Board of Education. This amount is also classified as

net investment in capital assets in the Board of Education column of the Component Units section of the County’s government-wide Statement of Net Position. Since the Board of Education is not authorized to borrow funds, they do not have any debt.

Since the issuance of such debt has not resulted in capital assets owned by the Primary Government, the effect of this debt is reflected in a deficit balance in unrestricted net assets in the Governmental Activities column of the government-wide Statement of Net Position. At June 30, 2019, the County has reported outstanding general obligation debt related to assets held by the Board of Education amounting to $58,007,072 (of which $53,977,786 has

been spent and the remaining $4,029,286 relates to unspent bond proceeds). Absent the effect of this relationship, the County would have reported unrestricted net assets of governmental activities in the amount of $6,457,400.

The County reports a portion of its net position in its government-wide financial statements as restricted. In this context, restricted means that, as of June 30, 2019, this portion of net position was restricted for a particular purpose either by external parties; by provision of the County Charter; or by enabling legislation. Net position restricted by enabling legislation represents legislative restrictions that a party external to the government can compel the

government to honor. For the County, such amounts represent primarily accumulated net position attributed to revenue streams that are restricted for specified purposes in the County Code. This generally includes the Rainy Day Fund, Capital Projects Fund impact fee collections and developer exactions on hand for outside entities; restricted amount for special revenue funds; and ending restricted net assets of the Sanitary District and other enterprise funds.

Such amounts, which are restricted in the government-wide statement of Net Position, are as follows at year-end:

Restricted Amounts Governmental activities $ 18,962,289 Business-type activities:

Debt Service $ 1,259,440 Capital Projects 9 75,000 2,234,440 Total Restricted Amounts $ 21,196,729 Note that unspent bond proceeds of $7,997,749 are included in restricted fund balance for the General Capital Projects Fund. At the Government-Wide level, the unspent bond proceeds are offset by the liability.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED)

11) Net Position/Fund Equity (continued)

In the fund financial statements, fund balances of governmental funds are classified as follows:

Nonspendable – amounts that cannot be spent either because they are not in a spendable form or because they are legally or contractually required to be maintained intact. Nonspendable fund balances for the County include inventory and prepaid items.

Restricted – amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments.

Committed – amounts that can be used only for specific purposes determined by a formal action of the Queen Anne’s County Commissioners. The Commissioners are the highest level of decision-making authority for the County.

Commitments may be established, modified, or rescinded only through formal actions such as a County Ordinance approved by the County Commissioners.

Assigned – amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. The assignment of funds rests with the County Commissioners. In addition, GASB 54 requires all positive residual amounts in special revenue funds to be reported as assigned.

Unassigned – all other spendable amounts; however, the General Fund is the only fund permitted to have a positive unassigned fund balance. Negative unassigned fund balances may occur in other governmental funds.

The County typically uses restricted fund balances first, followed by committed resources, and then assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds.

12) Property Tax

The County's real property tax is levied each July 1 on the assessed values certified as of that date for all taxable real property located in the County. The levy functions as a lien against the property. Assessed values are established by the Maryland State Department of Assessments and Taxation at estimated market value. A revaluation of all property is required to be completed every three years. Taxes are then billed to property owners and collected by the County.

Property represented by delinquent taxes is sold at a public auction in May of the following calendar year, with title transferring after foreclosure proceedings have been completed.

For small businesses that meet certain criteria and also principal residences, an installment plan is offered whereby total tax is paid in two equal installments. The first installment is due by September 30. Beginning October 1, a 1% penalty is charged on the first day of each month that the installment remains unpaid. This 1% penalty is based on the amount of the first installment only. The second installment is due by December 31. Beginning January 1, the 1%

penalty would then include all outstanding balances. The County accepts partial payments.

For non-principal residences, payment is due in full by September 30. Beginning October 1, a penalty is charged for each month that taxes remain unpaid. For new construction, completed and assessed between July 1 and December 31, a supplementary tax is levied equal to half of the full-year levy. Payment in full is due by March 31. Beginning April 1, a penalty is charged for each month that taxes remain outstanding.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. ASSETS, LIABILITIES, AND NET POSITION OR EQUITY (CONTINUED)

12) Property Tax (continued)

Real and personal property taxes are levied at rates enacted by the County Commissioners in the annual budget on the assessed value as determined by the Maryland Department of Assessments and Taxation. The rates of levy cannot exceed the constant yield rate furnished by the Maryland Department of Assessments and Taxation without public notice and only after public hearings. The County tax rate for the fiscal year ended

June 30, 2019 was $0.8471 per $100 of assessed value.

E. NEW ACCOUNTING PRONOUNCEMENTS

The County adopted the provisions of the following Governmental Accounting Standards Board Statements:

GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets that are not Within the Scope of GASB 68; GASB Statement No. 83, Certain Asset Retirement Obligations; and GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements.

The County will be analyzing the effects of these pronouncements and plans to adopt them as applicable by their effective date.

GASB Statement No. 84, Fiduciary Activities; GASB Statement No. 87, Leases; GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, and GASB Statement No. 90, Majority Equity Interests.

NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING

Pursuant to the Code of Public Local Laws of Queen Anne's County, the County Commissioners adopt an annual operating budget and real property tax rate prior to July 1 each year. This action, taken after public hearings, provides the spending authority for the fiscal year beginning on July 1. Unexpended and unencumbered appropriation authority expires the following June 30, except in the case of Capital Projects where appropriations lapse only upon completion or

cancellation of each project by the County Commissioners. The appropriated budgets are prepared at the fund, function, and departmental level. Expenditures/expenses may not legally exceed appropriations, based on the level at which they were adopted. For the General Fund, annual expenditure budgets are legally adopted at the departmental level. For all other Governmental Funds, for which annual budgets are adopted, expenditure budgets are legally adopted at the fund

level.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 2 - BUDGETS AND BUDGETARY ACCOUNTING (CONTINUED)

During the fiscal year, the Commissioners may adopt supplemental appropriations. For the year ended June 30, 2019, supplemental appropriations were as follows:

Original Final Supplemental Appropriations Budget Budget Increase General Fund - expenditures and transfers $ 138,061,406 $ 145,826,408 $ 7,765,002 Special Revenue Funds that adopt annual budgets Non-Major Funds that adopt annual budgets - Department of Aging - expenditures $ 2 ,831,967 $ 2,998,956 $ 166,989 Housing & Community Services - expenditures 1 ,690,057 1,773,265 83,208 Grants Fund - expenditures 2 86,233 284,133 (2,100)

Economic Development Incentive- expenditures - 524,853 524,853 BRIDGE Fund - transfers - 288,000 288,000 Community Partnerships for Children - expenditures 1 ,069,854 1,350,688 280,834 Rural Legacy - expenditures - 2,759,073 2,759,073 Fire Company Impact Fees - expenditures 2 90,500 415,166 124,666 Parks & Rec Impact Fees - transfers 1 50,400 1,514,993 1,364,593 Total Special Revenue Funds that adopt annual budgets $ 6 ,319,011 $ 11,909,127 $ 5,590,116

All final budgets are presented as amended. The County Administrator may approve budget amendments of $10,000 or less throughout the year. Amendments greater than $10,000 require the approval of the County Commissioners.

Annual operating budgets are legally adopted for the General Fund (includes the Roads Board) and the following nonmajor governmental funds: Department of Aging, Housing and Community Services, Grants Fund, Economic Development Incentive, BRIDGE Fund, Community Partnerships for Children, Law Library, Inmate Welfare, Agricultural Transfer, Rural Legacy, Dredging Special Assessments, Kent Narrows, School Impact Fees Capital Projects,

Fire Company Impact Fees Capital Projects, and Parks and Recreation Impact Fees Capital Projects. Proprietary Fund budgets are adopted for management control only and include all enterprise funds. Budgets are adopted using the same method of accounting as that used for Fund reporting purposes.

Budgets for the General Capital Projects Fund and the Roads Capital Projects Fund reflect multi-year appropriations at the individual project level. Expenditures may not legally exceed appropriations at that level and appropriations lapse at the completion or cancellation of individual projects. Since these capital projects funds do not adopt an annual budget per project, a Statement of Revenues, Expenditures, and Changes in Fund Balances on a budget-to-actual basis is not

presented for these funds.

No General Fund departments exceeded their legally adopted expenditure budgets for the year ended June 30, 2019.

However, salary reversions are budgeted as a lump sum negative $960,000, but actual amounts are realized in the individual departments and are not reported as a lump sum in the reversions activity.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME

A. DEPOSITS AND INVESTMENTS

PRIMARY GOVERNMENT AND FIDUCIARY FUNDS

Deposits are maintained in a variety of financial institutions. Statutes authorize the County to invest in obligations of the United States Government, Federal government agency obligations, secured time deposits in Maryland banks, bankers’ acceptances, the Maryland Local Government Investment Pool, money market mutual funds, commercial paper and repurchase agreements secured by direct government or agency obligations.

At year-end, the County Primary Government had deposits of $36,161,045 with local banks (carrying value $43,165,150). Of those balances, $501,000 was insured by federal depository insurance (FDIC). The uninsured balances were fully collateralized by securities placed with the respective banks’ escrow agents and held in the County’s name.

Of these options, the County participates in the Maryland Local Government Investment Pool (MLGIP), which provides all local government units of the state with a safe investment vehicle for short-term investment of funds. The State Legislature created MLGIP with the passage of Article 95 Section 22G, of the Annotated Code of Maryland. PNC Financial manages the MLGIP, under administrative control of the State Treasurer. A MLGIP Advisory Committee of

current participants reviews the activities of the Fund on a quarterly basis and provides suggestions to enhance the pool.

The MLGIP portfolio is managed in a manner consistent with the Securities and Exchange Commission’s Rule 2a-7 of the Investment Company Act of 1940. Standard and Poors rates the MLGIP as AAAm. The fair value of the pool is the same as the value of the pool shares. At June 30, 2019, the County had investments in MLGIP of $57,267,113, which are recorded at cost, which approximates fair value.

As of June 30, 2019, the County’s investments (excluding investments held for retiree health benefits), for both custodial and credit risk purposes, consisted solely of shares in the MLGIP. This investment is not deemed to have either risk and is in conformity with the County’s policy relating to minimal credit risk of investments.

The majority of the Retiree Health Trust investments are invested in the Maryland Association of Counties Pooled OPEB Trust (MACO Trust). The MACO Trust is administered by Davenport & Company LLC, and is a wholly-owned instrumentality of its members. The twelve members who are the sole contributors to the Trust consist of the following:

Allegany, St. Mary’s, Queen Anne’s, and Talbot Counties, City of Annapolis, College of Southern Maryland, Town of Bel Air, Talbot County Board of Education, St. Mary’s County Metropolitan Commission, Harford Community College, Harford County Public Library, and LaVale Sanitary Commission.

The assets of the Trust are managed by a Board of Trustees and consist of U.S. Treasury obligations, U.S. government agencies, corporate and foreign bonds, municipal obligations, taxable fixed income securities, mutual funds, global funds, and international equity securities.

Cash and cash equivalents for the MACO Trust include an investment in a money market mutual fund. At June 30, 2019, the weighted average maturity (WAM) for the Trust’s money market mutual fund investment was 30 days. At June 30, 2019, the short-term rating of the money market mutual fund was AAAm by Standard & Poor’s.

The main objectives of the Trust’s investment policy are the protection of investment principal and maximizing investment income through diversification while assuring financial liquidity. The policy allows for investment in U.S. and Non-U.S. equities, corporate, government, or government agency bonds, non U.S. bonds, Real Estate and Limited Partnerships.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME (CONTINUED)

A. DEPOSITS AND INVESTMENTS (CONTINUED)

PRIMARY GOVERNMENT AND FIDUCIARY FUNDS (CONTINUED)

The Trust categorizes its fair value measurements with the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset and gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are

described below:

 Level 1 – Valuations based on unadjusted quoted prices for identical assets or liabilities in active markets;

 Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or identical assets or liabilities in less active markets, such as dealer or broker markets; and  Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable, such as pricing models, discounted cash flow models and similar techniques not

based on market, exchange, dealer or broker-traded transactions.

Transactions are recorded on the trade date. Realized gains and losses are determined using the identified cost method.

Any change in net unrealized gain or loss from the preceding period is reported in the statement of revenues, expenses and changes in net position. Dividends are recorded on the ex-dividend date. Interest is recorded on the accrual basis.

Following is a description of the valuation methodologies used for assets measured at fair value.

Equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices.

The Trust has the following recurring fair value measurements as of June 30, 2019, of which Queen Anne’s County’s portion was 14.9% of the total:

Level 1 Level 2 Level 3 June 30, 2019 Investments by fair value level:

Debt Securities U.S. Treasury Obligations $ - $ 2,704,422 $ - $ 2 ,704,422 U.S. Governmental Agencies - 2,517,733 - 2 ,517,733 Corporate & Foreign bonds - 5,566,111 - 5 ,566,111 Municipal Obligations - 536,004 - 5 36,004 Equity and Mutual Fund Investments Taxable Fixed Income Funds - 2,301,657 - 2 ,301,657 Mutual Funds 17,110,521 - - 1 7,110,521 Global Funds 2,568,839 - - 2 ,568,839 International 7,782,289 - - 7 ,782,289

Total $ 27,461,649 $ 13,625,927 $ - $ 4 1,087,576 Interest rate risk is the risk that changes in market interest rates that will adversely affect the fair value of an investment.

Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The Trust’s investment policy states that the duration of the portfolio should be within 6 months of the Barclays Capital Aggregate Bond Index. The Trusts’ weighted average years to maturity as of June 30, 2019 was 11.9 years.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME (CONTINUED)

A. DEPOSITS AND INVESTMENTS (CONTINUED)

PRIMARY GOVERNMENT AND FIDUCIARY FUNDS (CONTINUED)

Information about the sensitivity of the fair values of the Trust’s investments to market interest rate fluctuations is provided by the following table that shows the distribution of the Trust’s investments by maturity as of June 30, 2019:

Investment Maturities (in Years) Less than 1 1 - 5 6 - 10 More than 10 Total Investments with maturities U.S. Treasury Obligations $ - $ 1,736,664 $ 161,856 $ 8 05,902 $ 2,704,422 U.S. Governmental Agencies - 171,190 3 48,725 1 ,997,818 2,517,733 Corporate & Foreign bonds - 2,223,470 1 ,966,986 1 ,375,655 5,566,111 Municipal Obligations - 392,053 1 43,951 - 536,004 Total $ - $ 4,523,377 $ 2 ,621,518 $ 4 ,179,375 $ 11,324,270

Credit Risk. The Trust is exposed to both market risk, the risk arising from changes in fair value, and credit risk, the risk of failure by another party to perform according to the terms of a contract. The Trust bears the risk of loss only to the extent of the fair value of its respective investments. At June 30, 2019 the ratings of the underlying investments of the Trust’s investments were as follows:

Rating Aa1/Aa2/ Baa1/Baa2/ Type Aaa Aa3 A1/A2/A3 Baa3 Ba1 Not Rated Total U.S. Treasury Obligations $ 2 ,704,422 $ - $ - $ - $ - $ - $ 2,704,422 U.S. Governmental Agencies 5 6,197 - - - - 2,461,536 2,517,733 Corporate & Foreign bonds 3 10,291 900,831 1,934,214 1,970,273 - 450,502 5,566,111 Municipal Obligations 1 02,599 342,194 - - - 91,211 536,004 Total $ 3 ,173,509 $ 1,243,025 $ 1,934,214 $ 1,970,273 $ - $ 3,003,249 $ 11,324,270

The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, the Trust will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Trust’s investment policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments.

The Trust has all of its assets on deposit with Wilmington Trust Company in connection with its investing and cash management activities. In the event of a financial institution’s insolvency, recovery of Trust assets on deposit may be limited to account insurance or other protection afforded such deposits.

The following summarizes custodial credit risk related to investments held by the custodian as of June 30, 2019, which are uninsured and unregistered as well as the interest rate range:

Fair Value Interest Rate Range U.S. Treasury Obligations $ 2 ,704,422 .375-4.5% U.S. Governmental Agencies 2 ,517,733 1.3-4.5% Corporate & Foreign bonds 5 ,566,111 2.0-5.875% Municipal Obligations 5 36,004 2.68-5.57% Taxable Fixed Income Funds 2 ,301,657 N/A Mutual Funds 17,110,521 N/A Global Funds 2 ,568,839 N/A International 7 ,782,289 N/A Total $ 4 1,087,576 -64-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME (CONTINUED)

A. DEPOSITS AND INVESTMENTS (CONTINUED)

PRIMARY GOVERNMENT AND FIDUCIARY FUNDS (CONTINUED)

Concentration of credit risk. The following general asset allocation guidelines have been established through the Trust’s investment policy.

Asset Class Minimum Maximum Target Equities 50% 70% 65% Fixed Income 30% 50% 35% Cash and Equivalents 0% 10% 0% The Trust held the following investments as of June 30, 2019 that exceeded 5% of the total investment balance as of June 30, 2019:

Name Amount DFA US Small-Cap Value Fund $ 3 ,135,723 Lazard International Strategic Equity Funds 3 ,913,139 Transamerica TS&W International Equity Fund 3 ,865,569 Vanguard 500 Index Fund 7 ,868,636 Vanguard Mid-Cap Index Fund -Admiral Shares 3 ,191,016 New World Fund 2 ,568,839 BlackRock High Yield Bond 2 ,301,657 Cohen & Syeers Realty 2 ,915,146 Foreign currency risk is the risk that changes in the exchange rate of investments will adversely affect the fair value of an

investment. The Trust was not exposed to Foreign Currency risk as of June 30, 2019 as the Trust did not have any investments denominated in foreign currencies.

For the year ended June 30, 2019, the annual money-weighted rate of return on investments, net of expense, was 7.7%.

The money-weighted rate of return expresses investment performance, net of investment expenses, adjusted for the changing amounts actually invested.

Capital Accounts The Trust accounts for contributions, allocations and redemptions on a per member capital account basis. The revenues, consulting and management fees, and administrative service fee are allocated pro rata to the capital accounts of each member based on committed capital. The fair value of Member capital accounts are determined monthly.

Income Taxes The Trust complies with the requirements of Section 115 of the Internal Revenue Code and is exempt from income taxes.

LOSAP Funds The LOSAP funds are invested in a MassMutual General Investment Account (GIA). The GIA, backed by MassMutual’s general assets, is designed to provide stable, guaranteed rate of return and guarantee of principal. General investment account assets are managed with reference to their associated liabilities so product specifications and obligations to clients can be met with a high degree of certainty, even when market conditions change. Investment risk management is a

high priority. Strict diversification among industries and individual issuers help mitigate credit risk. Various quantitative tools and systems, as well as qualitative approaches, are used to manage interest rate risk and liquidity risk. Assets in the GIA were managed to range from 5 to 6 years. The Massachusetts Mutual Life Insurance Company (does not apply to any separate investment accounts or mutual funds offered by MassMutual or its affiliates) are rated AA+ from Standard

and Poor’s.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME (CONTINUED)

A. DEPOSITS AND INVESTMENTS (CONTINUED)

PRIMARY GOVERNMENT AND FIDUCIARY FUNDS (CONTINUED)

LOSAP Funds (Continued) If the GIA Contract is fully or partially terminated, participants will receive the liquidation value of the GIA instead of the book value (i.e., contract value), which is the value disclosed on participant statements and recorded within these financial statements. The liquidation value is determined in accordance with a formula contained in the GIA Contract and is designed to reflect the value of the assets in the general investment account. This liquidation value may be more or less

than the book value of the plan’s investment in the GIA Contract. This means that upon partial or full termination of the GIA Contract a participant’s account balance in the GIA may be either increased or decreased.

The County’s LOSAP fund GIA account balance as of June 30, 2019 is $2,860,808 and is included in restricted LOSAP plan assets on the general fund balance sheet.

The fair value GAAP hierarchy is based on the valuation of inputs used to measure the fair value of the asset. Level 1 inputs are quoted market prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 are significant unobservable inputs. GIA is measured on recurring basis and is considered to be Level 3 as liquidation value is based on actuarial formula as defined under the terms of the contract with no observable

price.

COMPONENT UNITS (BOARD OF EDUCATION AND LIBRARY)

Component Unit - Board of Education - At year-end, the carrying amount of deposits was $13,711,800, including $300,000 in certificates of deposit and excluding the carrying amount of fiduciary funds. At June 30, 2019, the Board had deposits of approximately $13.8 million with local banks and the bank deposits were fully insured or collateralized.

Component Unit – Library - At year-end, the carrying amount of all bank deposits, including a $10,500 certificate of deposit, was $623,329, while collected bank balances were $640,341. Of the bank balances, $250,000 was secured by the FDIC and $390,341 was secured by collateral held by the pledging bank’s trust department but not in the Library’s name.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 3 – CASH, INVESTMENTS AND INVESTMENT INCOME (CONTINUED)

B. INVESTMENT INCOME

PRIMARY GOVERNMENT

Total investment income earned in all governmental and business-type funds was credited for use as follows:

Investment Governmental Funds Income Major Governmental Funds General Fund $ 1,201,645 General Capital Projects 252,723 Roads Capital Projects 52,689 Non-Major Governmental Funds 265,407 Total Investment Income $ 1,772,464 Business-Type Funds Major Enterprise Funds Sanitary District $ 550,317 Bay Bridge Airport 374 Total Investment Income $ 550,691 -67-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 4 - ACCOUNTS RECEIVABLE

Receivables as of June 30, 2019 for the governmental and business-type activities are as follows:

Total General Roads Non-Major Total Total Governmental General Capital Capital Governmental Governmental Enterprise and Enterprise Accounts Receivable Fund Projects Projects Funds Funds Funds Funds Receivables Taxes - Real Property $ 277,156 $ - $ - $ - $ 277,156 $ - $ 2 77,156 Taxes - Property Used for Generating Electricity 526,793 - - - 526,793 - 5 26,793 Taxes - Other 403,924 - - - 403,924 - 4 03,924

Subtotal Taxes 1,207,873 - - - 1,207,873 - 1 ,207,873 Other Accounts Receivable:

Queen Anne's County Public Housing Authority - 8 50,357 - - 850,357 - 8 50,357 Sanitary District - User and Septage Fees - - - - - 496,591 4 96,591 Board of Education 30,329 - - - 30,329 - 3 0,329 Retirees Insurance 33,111 - - - 33,111 - 3 3,111 Governmental Funds - User Fees 29,602 - - - 29,602 - 2 9,602 Public Landings Receivables - - - - - 43,728 4 3,728 Airport - Fuel Sales and User and Rental Fees - - - - - 14,480 1 4,480

Miscellaneous Receivables 83,216 6 07 - 29,466 113,289 - 1 13,289 Subtotal Other Accounts Receivable 176,258 8 50,964 - 29,466 1,056,688 554,799 1 ,611,487 Loans Receivable - - - 6,338,925 6,338,925 - 6 ,338,925 Subtotal Other Accounts and Loans Receivable 176,258 8 50,964 - 6,368,391 7,395,613 554,799 7 ,950,412 Special Assessments - - 9 6,352 820,987 917,339 - 9 17,339 Intergovernmental Income Taxes Held by State 15,628,823 - - - 15,628,823 - 1 5,628,823

Grants Receivable 507,809 1 ,264,698 - 627,024 2,399,531 255,871 2 ,655,402 Recordation Tax 615,914 - - - 615,914 - 6 15,914 State-Shared Highway User Tax 126,084 - - - 126,084 - 1 26,084 Bonds Receivable 272,098 - - - 272,098 - 2 72,098 Subtotal Intergovernmental 17,150,728 1 ,264,698 - 627,024 19,042,450 255,871 1 9,298,321 Restricted Receivables Accounts Receivable - - - - - 6,597 6 ,597 Special Assessments - - - - - 12,384,562 1 2,384,562

Subtotal Restricted Receivables - - - - - 12,391,159 1 2,391,159 Total Receivables $ 18,534,859 $ 2,115,662 $ 9 6,352 $ 7,816,402 $ 28,563,275 $ 13,201,829 $ 41,765,104 The County does not have any allowance for doubtful accounts related to the above receivables.

In Fiscal Year 2014, the County issued bonds on behalf of three mid-shore counties (Dorchester, Caroline, and Talbot) in order to provide funding for the new Center for Allied Health and Athletics at Chesapeake College. Therefore, in addition to the Governmental and Enterprise Fund receivables listed above, the County also has a $3.9 million receivable on its government-wide Statement of Net Position, which represents the collective obligation of the three aforementioned counties

for funding the facility at Chesapeake College.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 4 - ACCOUNTS RECEIVABLE (CONTINUED)

The County expects to receive all receivables listed in the table within one year, excluding the following items.

Intergovernmental receivables include bonds receivable from four other counties. In years 2000 and 2003, Queen Anne’s County sold $2,815,000 and $710,000, respectively, of its general obligation bonds for the purpose of providing the local share of capital projects at Chesapeake College. Five counties, including Queen Anne’s County, provide local support for the College. The other four counties supporting Chesapeake College reimburse Queen Anne’s County for their portion of

the debt service. Bonds are amortized over the 20-year life of each of the original Queen Anne's County Bonds. The current carrying value for the bonds receivable from the other four counties are $133,311 and $138,787, respectively, for a total of $272,098. The College bills and collects from the original five counties an amount sufficient to cover this debt service and reimburses this amount to Queen Anne’s County on a semi-annual basis. In addition to these two receivables

related to Chesapeake College, there is also a receivable of $3.9 million included in the Government-Wide Statement of Net Position. Details are included on the previous page.

Loans receivable in the amount of $6,338,925 relate to the Housing and Community Services, Impact Fees, and Revolving Loan Special Revenue Funds. Loans receivable in the amount of $5,412,350 for Housing and Community Services will be repaid when the homes are sold, in virtually all cases. These loans support housing rehabilitation and home-ownership.

When the loans are repaid to the County, the funds are then loaned out again to serve the same purpose. Loans for the Revolving Loan Fund in the amount of $70,283 are also repaid over a number of years.

The remaining loan receivable balance of $856,292 relates to school, fire, and parks and recreation impact fees. In July 2007, the County began accepting promissory notes for impact fees, in certain situations, with the understanding that when certificate of occupancy was obtained, these notes would be paid in full. To ensure repayment, the notes attach to the property incurring the impact fee; therefore, payment will be required automatically prior to legal transfer of title.

Income taxes held by the State in the amount of $15,628,823 have been estimated by the State as income tax due for “tax years” 2015 and prior. It may take five years or longer for the State to receive all amounts relating to these “tax years” and remit those monies to the County. However, the State indicates that this is a reasonable estimate of their liability to the County and the County reports this amount in accordance with GAAP.

Special Assessments in the amount of $917,339 represent receivables for governmental activities. Part of this amount consists of $96,352 for assessments levied on homeowners to reimburse the County for construction or upgrade of private roads prior to their acceptance into the County Roads System. The other part of this amount consists of $820,987 for assessments levied on homeowners relating to dredging costs. Payment of these assessments is expected over a number of

years.

Restricted Special Assessments in the amount of $12,384,562 represent restricted receivables for the Sanitary District.

These receivables relate to assessments levied on homeowners for the construction of sewer and water lines, as well as for hook up costs. Only the current portion due is billed and the remaining balances are repaid over a number of years, as determined by the original agreement. As the funds are paid back, the County uses the money to repay debt.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 5 – UNEARNED REVENUE

Governmental funds report unearned revenue in connection with resources that have been received, but unearned. At the end of the current fiscal year, the components of unearned revenue were reported as follows:

Unearned Governmental Funds Revenue General Fund Property Tax Deferrals $ 23,713 Inspection Fees Collected in Advance 453,547 Subtotal 477,260 General Capital Projects Fund Grant Drawdowns in Excess of Expenditures 48,655 Non-Major Governmental Funds Grant Drawdowns in Excess of Expenditures 68,709 Total Unearned Revenue $ 594,624 Business-Type Funds Major Enterprise Funds Sanitary District Inspection Fees $ 38,127

Miscellaneous 6,000 Subtotal 44,127 Non-Major Enterprise Funds 3,789 Total Unearned Revenue $ 47,916 -70-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 6 – CAPITAL ASSETS

PRIMARY GOVERNMENT

Changes in the County’s capital assets for governmental activities for the year ended June 30, 2019 are summarized as follows, with depreciation shown separately. Assets resulting from completed capital projects are shown in the Transfers column. Asset retirements are shown in the Decreases column.

Balance Balance Governmental Activities June 30, 2018 Increases Transfers Decreases June 30, 2019 Capital Assets, not being depreciated:

Land $ 39,049,429 $ - $ - $ (206,358) $ 38,843,071 Intangible Rights - Easements 821,819 - - - 821,819 Land Improvements 3,714,283 - - - 3,714,283 Construction in Progress 20,382,545 7 ,352,034 (241,802) (331,378) 27,161,399 Land - Inexhaustible Infrastructure Improvements 43,890,863 - - - 43,890,863 Total Capital Assets, not being depreciated 107,858,939 7 ,352,034 (241,802) (537,736) 114,431,435

Capital Assets, being depreciated:

Buildings and Building Improvements 48,139,565 4 2,901 180,802 - 48,363,268 Improvements other than Buildings 10,832,917 1 87,000 - - 11,019,917 Vehicles 12,918,122 1 ,438,185 - (721,851) 13,634,456 Equipment 12,864,259 3 19,951 - (525,506) 12,658,704 Furniture and Fixtures 11,509,991 6 2,770 61,000 (41,012) 11,592,749 Infrastructure Improvements - Depreciable 19,236,142 - - - 19,236,142 Total Capital Assets, being depreciated 115,500,996 2 ,050,807 241,802 (1,288,369) 116,505,236

Less Accumulated Depreciation for:

Buildings and Building Improvements 15,666,329 1 ,082,421 - - 16,748,750 Building Improvements - - - - - Improvements other than Buildings 3,258,030 4 20,933 - - 3,678,963 Vehicles 7,434,485 9 49,892 - (563,915) 7,820,462 Equipment 7,331,129 7 36,027 - (350,419) 7,716,737 Furniture and Fixtures 2,979,058 1 ,112,632 - (41,012) 4,050,678 Infrastructure Improvements - Depreciable 8,875,226 3 87,401 - - 9,262,627

Total Accumulated Depreciation 45,544,257 4 ,689,306 - (955,346) 49,278,217 Total Capital Assets, being depreciated, net 69,956,739 (2,638,499) 241,802 (333,023) 67,227,019 Governmental activities Capital Assets, net $ 177,815,678 $ 4,713,535 $ - $ (870,759) $ 181,658,454 -71-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 6 – CAPITAL ASSETS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

Changes in the County’s capital assets for business-type activities for the year ended June 30, 2019 are summarized as follows, with depreciation shown separately. Assets resulting from completed capital projects are shown in the Transfers column. Asset retirements are shown in the Decreases column.

Balance Balance Business-Type Activities June 30, 2018 Increases Transfers Decreases June 30, 2019 Capital Assets, not being depreciated:

Land $ 13,142,176 $ - $ - $ - $ 1 3,142,176 Land Improvements 9,500 - - - 9 ,500 Intangible Rights 6,140 - - - 6 ,140 Construction in Progress 18,612,368 3 ,574,015 (12,668,181) (37,918) 9 ,480,284 Land - Inexhaustible Infrastructure Improvements 2,481,094 - - - 2 ,481,094 Total Capital Assets, not being depreciated 34,251,278 3 ,574,015 (12,668,181) (37,918) 2 5,119,194 Capital Assets, being depreciated:

Buildings and Improvements to Buildings 16,165,829 - - - 1 6,165,829 Improvements other than Buildings 15,110,933 7 1,540 - (56,443) 1 5,126,030 Vehicles 1,744,372 1 49,280 - (153,682) 1 ,739,970 Equipment 23,635,479 3 76,100 11,000 (180,182) 2 3,842,397 Furniture and Fixtures 30,809 1 8,064 - (5,607) 4 3,266 Infrastructure Improvements - Depreciable 86,246,006 4 ,258,038 12,657,181 - 1 03,161,225

Total Capital Assets, being depreciated 142,933,428 4 ,873,022 12,668,181 (395,914) 1 60,078,717 Less Accumulated Depreciation for:

Buildings and Improvements to Buildings 9,590,430 3 87,543 - (56,443) 9 ,921,530 Improvements other than Buildings 5,670,836 4 19,304 - - 6 ,090,140 Vehicles 1,237,982 8 8,745 - (153,682) 1 ,173,045 Equipment 14,398,485 5 33,243 - (179,567) 1 4,752,161 Furniture and Fixtures 19,552 1 ,701 - (628) 2 0,625 Infrastructure Improvements - Depreciable 33,446,197 1 ,749,883 - - 3 5,196,080 Total Accumulated Depreciation 64,363,482 3 ,180,419 - (390,320) 6 7,153,581

Total Capital Assets, being depreciated, net 78,569,946 1 ,692,603 12,668,181 (5,594) 9 2,925,136 Business-Type activities Capital Assets, net $ 112,821,224 $ 5 ,266,618 $ - $ (43,512) $ 1 18,044,330 -72-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 6 – CAPITAL ASSETS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

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

Governmental Activities Depreciation General Government $ 259,445 Public Safety 1,959,827 Public Works 2,025,062 Health 21,122 Social Services 329,949 Library 25,198 Conservation of Natural Resources 30,572 Economic/Community Development 38,131 $ 4,689,306 Business-Type Activities Major Enterprise Funds:

Sanitary District $ 2,578,332 Bay Bridge Airport 432,516 Non-Major Enterprise Funds 169,571 $ 3,180,419 -73-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 6 – CAPITAL ASSETS (CONTINUED)

COMPONENT UNITS

Board of Education: Capital asset activity for the year ended June 30, 2019 is as follows:

Balance Balance Board of Education June 30, 2018 Increases Transfers Decreases June 30, 2019 Capital Assets, not being depreciated:

Land $ 6,363,040 $ - $ - $ - $ 6,363,040 Construction in Progress 4,330,772 708,373 ( 285,500) - 4,753,645 Total Capital Assets, not being depreciated 10,693,812 708,373 ( 285,500) - 11,116,685 Capital Assets, being depreciated:

Land Improvements 5,398,921 12,045 - - 5,410,966 Buildings 207,142,985 - 285,500 - 207,428,485 Furniture, Fixtures, and Equipment 16,119,435 1,064,940 - (225,088) 16,959,287 Total Capital Assets, being depreciated 228,661,341 1,076,985 285,500 (225,088) 229,798,738 Less Accumulated Depreciation for:

Land Improvements 4,478,097 123,396 - - 4,601,493 Buildings 59,722,835 4,315,408 - - 64,038,243 Furniture, Fixtures, and Equipment 10,279,225 1,176,870 - (221,905) 11,234,190 Total Accumulated Depreciation 74,480,157 5,615,674 - (221,905) 79,873,926 Total Capital Assets, being depreciated, net 154,181,184 ( 4,538,689) 285,500 (3,183) 149,924,812 Capital Assets, net $ 164,874,996 $ ( 3,830,316) $ - $ (3,183) $ 161,041,497

-74-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 6 – CAPITAL ASSETS (CONTINUED)

COMPONENT UNITS (CONTINUED)

Queen Anne’s County Free Library: Capital asset activity for the year ended June 30, 2019 is as follows:

Balance Balance Library June 30, 2018 Increases Decreases June 30, 2019 Capital Assets, not being depreciated:

Artwork $ 29,850 $ - $ - $ 29,850 Capital Assets, being depreciated:

Books and Media 1 ,880,928 194,428 (221,866) 1,853,490 Building Improvements 4 02,207 - - 402,207 Equipment 1 52,852 3,033 - 155,885 Total Capital Assets, being depreciated 2 ,435,987 197,461 (221,866) 2,411,582 Less Accumulated Depreciation 1 ,094,574 166,599 (194,761) 1,066,412 Total Capital Assets, being depreciated, net 1 ,341,413 30,862 (27,105) 1,345,170 Capital Assets, net $ 1,371,263 $ 30,862 $ (27,105) $ 1,375,020

-75-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 7 - INTERFUND RECEIVABLES AND PAYABLES

Interfund receivables and payables are usually used by the County to cover temporary cash deficits in individual funds until grant or similar resources are received. Occasionally, these receivables and payables are used in lieu of short-term external borrowing, such as for capital lease agreements.

The interfund and intra-entity receivables and payables consist of the following at June 30, 2019:

Due from Fund Non-Major Bay Bridge Non-Major Governmental Airport Enterprise Total Due Due to Fund General Fund $ 6 6,942 $ - $ 6 25,313 $ 692,255 General Capital Projects 2 8,164 1,157,803 - 1,185,967 Total Due to Other Funds $ 9 5,106 $ 1,157,803 $ 6 25,313 $ 1,878,222 Interfund receivables and payables are reported on the Statement of Net Position as Internal Balances, net of transactions between the same types of funds.

-76-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 8 - INTERFUND TRANSFERS

Interfund transfers represent a transfer of resources from one fund to another without expectation of repayment. Usually, these transfers are undertaken to enable the receiving entity to provide services that the government has determined to be in the best interest of the County. The following interfund transfers were made during the fiscal year ended June 30, 2019:

Transfers in Fund Total General Non-Major Major Non-Major Total Transfers Out Capital Projects Governmental Enterprise Enterprise Transfers In Transfers Out Fund General Fund $ 11,264,690 $ 8,303,000 $ 2,623,304 $ 195,374 $ 143,012 $ 11,264,690 General Capital Projects 1,012,625 - - 997,405 15,220 1,012,625 Total Major Governmental Funds 12,277,315 8,303,000 2,623,304 1,192,779 158,232 12,277,315 Non-Major Governmental 1,652,593 1,364,593 288,000 - - 1,652,593

Sanitary District - Sewer 5,000 5,000 - - - 5,000 Sanitary District - Water 5,000 5,000 - - - 5,000 Sanitary District - Restricted 1,052,106 - - 1,052,106 - 1,052,106 Sanitary District - Debt Service 1,060,133 - - 1,060,133 - 1,060,133 Total Major Enterprise Funds 2,122,239 10,000 - 2,112,239 - 2,122,239 Total Transfers Out $ 16,052,147 $ 9,677,593 $ 2,911,304 $ 3,305,018 $ 158,232 $ 16,052,147 -77-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 - NONCURRENT LIABILITIES

A. CHANGES IN NONCURRENT LIABILITIES

During the year ended June 30, 2019, the following changes occurred in the noncurrent liabilities of the primary government’s governmental activities:

PRIMARY GOVERNMENT Retirements Due in Balance Additions and Balance Due Within More than Governmental Activities June 30, 2018 * of debt Repayments June 30, 2019 One Year One Year General Bonds Payable $ 121,875,081 $ 11,000,000 $ 7,751,673 $ 125,123,408 $ 8,523,712 $ 116,599,696 General Bonds Payable - Related to PHA 931,074 - 80,717 850,357 84,339 766,018 General Bonds Payable - Related to Ches College 4,109,692 - 188,656 3,921,036 196,159 3,724,877

Notes Payable 1,417,461 - 319,138 1,098,323 322,734 775,589 Bond Premiums 5,651,457 1 ,011,998 573,177 6,090,278 621,367 5,468,911 Subtotal Governmental Activities Debt 133,984,765 1 2,011,998 8,913,361 137,083,402 9,748,311 127,335,091 Other Post-Employment Benefit Obligation 41,211,334 3 ,839,530 1,568,468 43,482,396 - 43,482,396 Net Pension Liability 24,362,611 2 ,146,374 - 26,508,985 - 26,508,985

LOSAP Liability * 6,829,996 - 160,260 6,669,736 - 6,669,736 Compensated Absences 2,561,087 1 ,769,270 1,601,944 2,728,413 1,595,091 1,133,322 Total Governmental Activities Debt $ 208,949,793 $ 19,767,172 12,244,033 $ 216,472,932 $ 11,343,402 $ 205,129,530 Less College Reimbursements ( 214,991) Total Governmental Retirements and Repayments $ 12,029,042 *Restated for prior period adjustment (see Note 20)

The reconciliation from retirements and repayments in the above table to the total principal payments on the Statement of Revenues, Expenditures, and Changes in Fund Balance is as follows:

Retirements and Repayments General Bonds Payable $ 7,751,673 Notes Payable 319,138 LESS: College Reimbursements ( 214,991) Total Principal Payments $ 7,855,820 The County added amounts to several bond offerings on behalf of Chesapeake College, which cannot borrow money on its own. The College reimbursed the County $214,991 for this year’s principal and interest payments.

-78-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

A. CHANGES IN NONCURRENT LIABILITIES (CONTINUED)

During the year ended June 30, 2019, the following changes occurred in the noncurrent liabilities of the primary government’s business-type activities:

PRIMARY GOVERNMENT Retirements Due in Balance Additions and Balance Due Within More than Business-Type Activities June 30, 2018 of debt Repayments June 30, 2019 One Year One Year Golf Course $ 242,988 $ - $ 75,124 $ 167,864 $ 75,871 $ 91,993 Bay Bridge Airport 1,834,475 - 106,552 1,727,923 110,520 1,617,403 Public Landings and Marinas 781,688 - 52,276 729,412 54,399 675,013 Sanitary District 25,484,821 4 ,859,750 924,815 29,419,756 934,063 28,485,693

Subtotal Debt 28,343,972 4 ,859,750 1,158,767 32,044,955 1,174,853 30,870,102 Bond Premiums Golf Course 23,471 - 8,655 14,816 8,654 6,162 Bay Bridge Airport 88,155 - 8,077 80,078 8,077 72,001 Public Landings and Marinas 5,418 - 500 4,918 500 4,418 Subtotal Bond Premiums 117,044 - 17,232 99,812 17,231 82,581 Subtotal Business-Type Activities Debt 28,461,016 4 ,859,750 1,175,999 32,144,767 1,192,084 30,952,683

Other Post-Employment Benefit Obligation 7,688,150 3 39,651 - 8,027,801 - 8,027,801 Net Pension Liability 2,299,155 2 29,300 - 2,528,455 - 2,528,455 Compensated Absences 383,107 2 45,846 224,747 404,206 236,308 167,898 Total Business-Type Activities Debt $ 38,831,428 $ 5,674,547 $ 1,400,746 $ 43,105,229 $ 1,428,392 $ 41,676,837 -79-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

A. CHANGES IN NONCURRENT LIABILITIES (CONTINUED)

During the year ended June 30, 2019, the following changes occurred in the noncurrent liabilities of the primary government’s Component Units:

COMPONENT UNITS Retirements Due in Balance Additions and Balance Due Within More than Board of Education and Free Library June 30, 2018 * of new debt Repayments June 30, 2019 One Year One Year Queen Anne's County Board of Education Retirement Incentives $ 1,320 $ - $ 1,320 $ - $ - $ - Compensated Absences 818,927 - 15,489 803,438 1 45,537 657,901 Capital Leases 2,083,056 - 154,906 1,928,150 1 71,714 1,756,436

Other Post-Employment Benefit Obligation 171,829,758 21,974,269 - 193,804,027 - 193,804,027 Net Pension Liability 4,399,321 439,733 - 4,839,054 - 4,839,054 Subtotal 179,132,382 22,414,002 171,715 201,374,669 3 17,251 201,057,418 Free Library Other Post-Employment Benefit Obligation * 482,393 273,013 - 755,406 - 755,406 Total Noncurrent Liabilites: Component Units $ 179,614,775 $ 22,687,015 $ 171,715 $ 202,130,075 $ 317,251 $ 201,812,824

*Restated for prior period adjustment.

-80-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

B. GENERAL OBLIGATION BONDS, NOTES, OTHER POST-EMPLOYMENT BENEFIT OBLIGATION,

NET PENSION LIABILITY, AND COMPENSATED ABSENCES

PRIMARY GOVERNMENT

All general obligation bonds are valid and legally binding general obligations of Queen Anne’s County and constitutes an irrevocable pledge of its full faith and credit and unlimited taxing power. Governmental bonds are payable from ad valorem taxes, unlimited as to rate or amount on all real, tangible, personal, and certain intangible property subject to taxation at full rate for local purposes in the County.

Business-type bonds, while representing general obligations of the County government, are to be paid from income earned by the related enterprise fund. Enterprise funds that have such debt are: Sewer Operations, Bay Bridge Airport, Blue Heron Golf Course, and Public Landings and Marinas.

During fiscal year 2019, the County implemented Governmental Accounting Standards Board’s Statement (GASB) Statement 73, Accounting and Financial Reporting for Pensions and Related Assets That are Not Within the Scope of GASB Statement 68. The County’ Fire and EMS Commission Pension Plan Length of Service Award Program (“LOSAP”) is included in GASB 73 reporting. For governmental funds, the LOSAP obligations are reported in the

government-wide statements in the public safety function. There are not any LOSAP obligations in the enterprise funds.

LOSAP costs in governmental funds are charged to the General Fund. Additional information can be found in Note 15.

During fiscal year 2018, the County implemented the provisions of Governmental Accounting Standards Board (GASB) Statement 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other than Pensions. For governmental funds, the other post-employment benefit obligations are reported in the government-wide statements in the function in which that employee usually charges their productive time. For enterprise funds, these obligations are

reported in the enterprise fund in which that employee charges the majority of their productive time. Other Post- Employment Benefit Obligation costs in governmental funds are charged to the General Fund. Additional information can be found in Note 14, Other Post-Employment Benefits.

During fiscal year 2015, the County implemented the provisions of Governmental Accounting Standards Board (GASB) Statement 68, Accounting and Financial Reporting for Pensions. For governmental funds, the net pension liability is reported in the government-wide statements in the function in which that employee usually charges their productive time.

For enterprise funds, these obligations are reported in the enterprise fund in which the employee charges the majority of their productive time. Net Pension Liability costs in governmental funds are charged to the Governmental Fund in which the employee charges their time. Additional information can be found in Note 12, Retirement Plans.

Compensated absences that mature during the fiscal year, in that they are paid when the employee takes vacation leave or upon the employee’s termination, are typically liquidated from the governmental or enterprise fund in which that employee charges the majority of their productive time. They are paid as regular wages. Compensated absences that do not mature during the fiscal year are accrued at year-end as an adjustment to liability for compensated absences. For

governmental funds, these adjustments are reported in the government-wide statements in the function in which that employee usually charges their productive time. For enterprise funds, these adjustments are reported in the enterprise fund in which that employee charges the majority of their productive time. In the case of grant-funded activities that disallow compensated absences as an eligible cost, they are paid as administrative wages in the same Fund. Compensated

absences in governmental funds are primarily charged to the General Fund or Special Revenue Funds; they are usually not charged to Capital Projects Funds.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

B. GENERAL OBLIGATION BONDS, NOTES, OTHER POST-EMPLOYMENT BENEFIT OBLIGATION,

NET PENSION LIABILITY, AND COMPENSATED ABSENCES (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

As of June 30, 2019, general obligation bonds and notes payable for governmental activities are comprised of the following, along with other post-employment benefits, net pension liability, and accrued compensated absences:

Year Amount Outstanding Due in Paying Interest Series of Original June 30, Due Within More than Governmental Activities Fund Rate Matures Issue 2019 One Year One Year General Obligation Bonds Payable 2009 Public Facilities General 1.400%-5.625% 2030 $ 28,499,154 $ 17,864,524 $ 1,338,324 $ 16,526,200 2011 Public Facilities General 2.00%-4.25% 2031 21,532,570 14,899,937 977,752 13,922,185 2012 Refunding Bonds General 2.00%-4.00% 2023 8,010,000 3,422,013 808,447 2,613,566

2014 Public Facilities General 2.00%-4.00% 2034 17,590,000 13,552,081 677,975 12,874,106 2015 Public Facilities General 3.00%-5.00% 2036 11,622,756 10,303,415 434,027 9,869,388 2015 Refunding Bonds General 2.00%-5.00% 2027 13,521,625 11,163,090 1,176,846 9,986,244 2016 Public Facilities General 2.00%-4.00% 2036 13,934,364 12,994,392 491,385 12,503,007 2016 Refunding Bonds General 2.00%-5.00% 2019 8,042,773 1,713,956 1,713,956 -

2017 Public Facilities General 3.00%-5.00% 2037 12,600,000 12,210,000 410,000 11,800,000 2018 Public Facilities General 3.00%-5.00% 2038 16,000,000 16,000,000 495,000 15,505,000 2019 Public Facilities General 3.00%-5.00% 2039 11,000,000 11,000,000 - 11,000,000 2009 Public Facilities Due from PHA 1.400%-5.625% 2030 872,644 559,140 41,888 517,252 2012 Refunding Bonds (2003 Bonds) Due from PHA 3.50%-4.50% 2023 335,000 92,987 21,553 71,434

2015 Refunding Facilities (2006 Bonds) Due from PHA 2.00%-3.00% 2027 240,112 198,230 20,898 177,332 2014 Public Facilities Due from other Counties 2.00%-4.00% 2034 4,800,000 3,921,036 196,159 3,724,877 Subtotal Bonds Payable 129,894,801 8,804,210 121,090,591 Notes Payable State of Maryland - Price Ck. Spec. Rev. 0.00% 2021 625,000 48,000 24,000 24,000 State of Maryland - Grove Ck. Spec. Rev. 0.00% 2034 510,617 306,367 20,425 285,942

State of Maryland - Narrows Pointe Spec. Rev. 0.00% 2030 15,542 493,038 27,391 465,647 Suntrust Financing General 2.51% 2020 1,215,590 250,918 250,918 - Subtotal Notes Payable 1 ,098,323 3 22,734 7 75,589 Subtotal Bonds and Notes Payable 130,993,124 9,126,944 121,866,180 Bond Premiums 6,090,278 621,367 5,468,911 Subtotal Governmental Activities Debt 137,083,402 9,748,311 127,335,091 Other Post-Employment Benefit Obligation 43,482,396 - 43,482,396

Net Pension Liability 26,508,985 - 26,508,985 LOSAP Liability 6,669,736 - 6,669,736 Compensated Absences 2,728,413 1,595,091 1,133,322 Total Governmental Activities $ 216,472,932 $ 11,343,402 $ 205,129,530 -82-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

B. GENERAL OBLIGATION BONDS, NOTES, OTHER POST-EMPLOYMENT BENEFIT OBLIGATION,

NET PENSION LIABILITY, AND COMPENSATED ABSENCES (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

The annual requirements to amortize general obligation bonds and notes payable outstanding as of June 30, 2019 for governmental activities are as follows:

Governmental Activities Year Ending Governmental Bonds Payable Governmental Notes Payable June 30, Principal Interest Total Principal Interest Total 2020 $ 8,804,210 $ 4,894,594 $ 13,698,804 $ 322,734 $ 6,252 $ 328,986 2021 7,744,500 4 ,673,875 12,418,375 71,816 - 71,816 2022 8,087,864 4 ,334,450 12,422,314 47,816 - 47,816 2023 8,461,048 3 ,977,309 12,438,357 47,816 - 47,816 2024 7,854,303 3 ,601,710 11,456,013 47,816 - 47,816

2025-2029 41,022,332 1 2,945,366 53,967,698 239,080 - 239,080 2030-2034 30,472,222 5 ,444,076 35,916,298 239,072 - 239,072 2035-2039 16,678,321 1 ,278,652 17,956,973 82,173 - 82,173 2040 770,001 1 1,549 781,550 - - - $ 129,894,801 $ 41,161,581 $ 171,056,382 $ 1,098,323 $ 6,252 $ 1,104,575 A portion of the County’s 2009 Bond offering was issued using Build America Bonds. As an incentive to use these

bonds, the Federal government offered an interest reimbursement grant, which offsets the County’s debt service for interest expense. As a result, the County received interest reimbursements of $327,691 during fiscal year 2019, which are reported separately as a specific intergovernmental grant. The net effect of this reimbursement is shown below.

Net Effect of Federal Build America Bonds Interest Reimbursement on Interest Expense Interest Expense Interest Net Interest on 2009 Bonds Reimbursement Expense Governmental Activities $ 958,942 $ ( 314,804) $ 6 44,138 Business-Type Activities Bay Bridge Airport 6,207 ( 2,038) 4 ,169 Public Landings and Marinas 33,044 ( 10,849) 22,195 Total Business-Type Activities 39,251 ( 12,887) 2 6,364 Total $ 998,193 $ ( 327,691) $ 6 70,502

-83-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

B. GENERAL OBLIGATION BONDS, NOTES, OTHER POST-EMPLOYMENT BENEFIT OBLIGATION,

NET PENSION LIABILITY, AND COMPENSATED ABSENCES (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

General obligation bonds and notes payable outstanding as of June 30, 2019 for business-type activities are comprised of the following, as well as other post-employment benefits, net pension liability, and accrued compensated absences:

Year Amount Outstanding Due in Interest Series of Original June 30, Due Within More than Business -Type Activities Rate Matures Issue 2019 One Year One Year Golf Course 2016 Public Facilities Bonds 2.00%-4.00% 2036 $ 85,636 $ 95,608 $ 3 ,615 $ 91,993 2016 Refunding Bonds 2.00%-5.00% 2019 339,062 72,256 7 2,256 - Bond Premiums 14,816 8 ,654 6,162 Subtotal Golf Course 182,680 8 4,525 98,155 Bay Bridge Airport

2009 Public Facilities Bonds 1.400%-5.625% 2030 180,501 115,655 8 ,664 106,991 2011 Public Facilities Bonds 2.00%-4.25% 2031 21,968 16,729 1 ,123 15,606 2014 Public Facilities Bonds 2.00%-4.00% 2034 964,940 816,883 4 0,866 776,017 2015 Public Facilities Bonds 3.00%-5.00% 2036 577,244 616,584 2 5,973 590,611 2015 Refunding Bonds 2.00%-5.00% 2027 173,556 143,283 1 5,105 128,178 2016 Refunding Bonds 2.00%-4.00% 2036 88,165 18,789 1 8,789 -

Bond Premiums 80,078 8 ,077 72,001 Subtotal Airport 1,808,001 1 18,597 1,689,404 Public Landings and Marinas 2009 Public Facilities Bonds 1.400%-5.625% 2030 947,976 615,681 46,124 569,557 2011 Public Facilities Bonds 2.00%-4.25% 2031 133,908 93,333 6 ,125 87,208 2015 Refunding Bonds 2.00%-5.00% 2027 24,707 20,398 2 ,150 18,248 Bond Premiums 4,918 5 00 4,418 Subtotal Public Landings and Marinas 734,330 5 4,899 679,431

Sanitary District Maryland Water Quality-2005 Enhancement 1.00% 2027 18,252,291 7,724,574 9 34,063 6,790,511 Maryland Water Quality-2017 Loan 0.80% 2051 21,695,182 21,695,182 - 21,695,182 Subtotal Sanitary District 29,419,756 9 34,063 28,485,693 Total Business-Type Activities Debt 32,144,767 1 ,192,084 30,952,683 Other Post-Employment Benefit Obligation 8,027,801 - 8,027,801 Net Pension Liability 2,528,455 - 2,528,455

Compensated Absences 404,206 2 36,308 167,898 Total Business-Type Activities $ 43,105,229 $ 1 ,428,392 $ 41,676,837 -84-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

B. GENERAL OBLIGATION BONDS, NOTES, OTHER POST-EMPLOYMENT BENEFIT OBLIGATION,

NET PENSION LIABILITY, AND COMPENSATED ABSENCES (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

The annual requirements to amortize business-type bonds and notes outstanding at June 30, 2019, are as follows:

Business-Type Activities Year Ending Business-Type Bonds Payable Business-Type Notes Payable June 30, Principal Interest Total Principal Interest Total 2020 $ 240,790 $ 106,049 $ 346,839 $ 934,063 $ 381,684 $ 1,315,747 2021 155,498 9 7,205 252,703 943,404 4 03,201 1,346,605 2022 162,136 8 9,957 252,093 1,898,092 4 36,745 2,334,837 2023 168,953 8 2,357 251,310 1,915,182 3 98,950 2,314,132 2024 175,697 7 4,342 250,039 1,932,429 3 81,705 2,314,134

2025-2029 937,670 2 56,629 1,194,299 7,878,596 1 ,557,883 9,436,479 2030-2034 667,772 8 2,698 750,470 5,115,604 1 ,156,511 6,272,115 2035-2039 116,683 4 ,262 120,945 5,326,650 9 45,464 6,272,114 2040-2043 - - - 3,475,736 4 63,910 3,939,646 $ 2,625,199 $ 793,499 $ 3,418,698 $ 29,419,756 $ 6,126,053 $ 35,545,809

C. ISSUANCE OF NEW DEBT

PRIMARY GOVERNMENT

On April 23, 2019, Queen Anne's County issued Public Facilities Bonds of 2019 for $11,000,000. These General Obligation Bonds carry interest rates of 3.0 to 5.0 percent and mature serially through 2039. The primary use of the bond proceeds is to provide funding for the new County courthouse, Roads capital projects, various Board of Education projects, with minor amounts earmarked for construction of general government capital projects. Moody’s Investor

Service has assigned the rating of Aa1, Fitch Ratings has assigned a rating of AAA and Standard & Poor’s also assigned a AAA rating to the Queen Anne’s County 2019 Bonds.

In fiscal year 2017, the County began borrowing funds through the Maryland Water Quality Financing Administration for the Southern Kent Island (SKI) Sanitary Project. The total loan amount will be approximately $32 million and funds will be disbursed as the project costs are incurred. Principal payments will begin in 2022 and the loan will be repaid over 30 years at an interest rate of 0.80%. In fiscal year 2019, the County received $4,859,750 as part of this loan. The total

received as of June 30, 2019 was $21,695,182. At completion of the SKI project, it is anticipated that $1,267,000 of the loan with the Maryland Water Quality Financing Administration will be forgiven and the County will not need to repay those funds. At that time, the County will clear the debt for the final amount forgiven.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

D. MUNICIPAL LEASE

PRIMARY GOVERNMENT

In January 2016, the County signed a note with SunTrust Equipment Financing & Leasing Corporation for the purchase of replacement vehicles for various County departments. The total amount of the note was $1,215,590 and is payable over five years. This note is secured by the vehicles purchased. The first payment was made in February 2016. The annual interest rate is 2.51%. The outstanding balance as of June 30, 2019 is $250,918.

E. LEASE OBLIGATIONS

OPERATING LEASE – PRIMARY GOVERNMENT

In October 2009, Queen Anne’s County entered into an operating lease agreement as lessor for ground space at the Bay Bridge Airport. The Airport leased a parcel of land approximately 9,000 square feet to CSP Properties, LLC beginning in November 2009 for a term of twenty-five years, ending in fiscal year 2035. Included in the lease agreement is the requirement that the lessee, CSP Properties, LLC, construct an aircraft hangar at its sole expense, subject to certain

criteria. At the end of the lease, the aircraft hangar and any improvements made to it become the sole property of the Bay Bridge Airport.

Lease revenues for the year ended June 30, 2019 amounted to $5,092. Minimum future lease revenues are as follows:

Fiscal Year Ending Lease June 30, Payments 2020 $ 5,635 2021 5,635 2022 5,710 2023 5,748 2024 5,748 2025-2029 29,471 2030-2034 30,419 2035 2,074 Minimum Future Rental Revenue $ 90,440 In fiscal year 2019, Queen Anne’s County entered into an agreement with the Division of Housing and Community Services (DHCS) to lease property from DHCS for $1 per year over the next 25 years.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 9 – NONCURRENT LIABILITIES (CONTINUED)

F. LOCAL DEBT POLICY

PRIMARY GOVERNMENT

In May 2013, Queen Anne’s County adopted Resolution No. 13-04, which updated and replaced Resolution No. 09-13, to continue a local debt policy in compliance with Article 95, Section 22F of the Annotated Code of Maryland. This policy requires that the County’s Director of Budget, Finance, and Information Technology: (1) prepare a six-year capital project plan each year; (2) propose an amount to be transferred from the General Fund operating balances to the General

Capital Projects Fund to serve as pay-as-you-go funding in the latter Fund, in order to lessen the need for future County debt; (3) limit the County’s non-bonded indebtedness to $8.0 million for general operating expenses or capital improvements; and (4) certify that the sum of outstanding general bonded debt and any new general obligation debt is 2.5% or less of the total taxable assessable base and is $3,000 or less per capita. This policy also stipulates that although

there is some flexibility as to the acceptable percentage of debt service to general fund expenditures, and no absolute limit has been established by the rating agencies or the Government Finance Officers Association, anything above 12% of total general fund expenditures would be a cause to carefully monitor debt service. In addition to the debt policy, the Spending Affordability Committee recommended that the limit of debt service to general fund expenditures should be

limited to 10% and the County Commissioners have adopted that as a limit.

Queen Anne’s County has complied with the above policy, and has not had any violations. For calculations relating to this local debt policy, see Table 12-b in the Statistical Section of this document.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 10 – RESTRICTED ASSETS AND LIABILITIES AND FUND BALANCES

A. RESTRICTED ASSETS AND RELATED LIABILITIES

PRIMARY GOVERNMENT

BUSINESS-TYPE ACTIVITIES

Queen Anne’s County Sanitary District Restricted Fund - The County Commissioners created a restricted fund within the Sanitary District Enterprise Fund in November of 1989 by enabling legislation. Revenue sources to the fund are sales of water and sewer allocations and interest earned on investments. Authorized uses of restricted funds are major capital expenses for repairs, construction, plant expansion, debt service, or other similar uses within the Sanitary District. To date, such funds have been used

almost exclusively for debt service.

Debt Service Fund - Principal and interest payments for water and wastewater debt used to expand the service area are payable primarily from water and sewer special benefit assessments. These assessments, made at the time the expansion is ready for use, are created by enabling legislation and amortized over the same life as underlying debt. They constitute a lien on the served property and may be prepaid at any time. The amount of assessments collectable in future years is

recorded as benefit assessments receivable. A portion of those assessments receivable is not due currently and is recorded as unearned revenue.

Water Quality Revolving Loan Fund debt covenants stipulate that sufficient financial resources must be available in the Debt Service Fund as of June 30 of each year to cover the subsequent year’s debt service payments. If such resources are not available at that time, the covenants require that the County increase service rates, impose benefit assessments, or otherwise increase financial resources so that debt service payments are covered before they are due throughout the year.

The assets and related liabilities restricted for the above purposes at June 30, 2019 are as follows:

Sanitary District Business -Type Activities Restricted Debt Service Total Current Restricted Assets Equity in Pooled Cash $ 8,253,516 $ 1,259,440 $ 9 ,512,956 Accounts Receivable (Net) 6,597 - 6 ,597 Subtotal Current Restricted Assets 8,260,113 1,259,440 9 ,519,553 Noncurrent Restricted Assets Special Assessments Receivable (Net) 1,063,655 11,320,907 1 2,384,562 LESS Deferred Inflows - Unavailable Water and Sewer Assessments ( 1,063,655) (11,320,907) (12,384,562)

Net Restricted Assets $ 8,260,113 $ 1,259,440 $ 9 ,519,553 -88-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 10 – RESTRICTED ASSETS AND LIABILITIES AND FUND BALANCES (CONTINUED)

B. RESTRICTED NET POSITION

PRIMARY GOVERNMENT

GOVERNMENTAL ACTIVITIES

Net Investment in Capital Assets for governmental activities, is calculated as follows:

Governmental Activities Total Debt excluding Compensated Absences, Pension, OPEB, and LOSAP Obligations $ (136,207,109) (includes $876,293 for deferred charge on refunding) Add back: Debt relating to Board of Education Assets $ 53,977,786 Add back: Unspent portion of Bond Proceeds for Board of Education debt 4 ,029,286 Add back: Unspent portion of Bond Proceeds for Governmental debt 3 ,968,463 Add back: Debt relating to Chesapeake College 6 ,018,448

Add back: Debt relating to PHA 850,357 Add back: Debt relating to non-capital assets (Dredging) 847,404 Add back debt unrelated to Capital Assets 69,691,744 Net Assets Invested in Capital Assets 181,658,454 Net Investment in Capital Assets $ 115,143,089

BUSINESS-TYPE ACTIVITIES

Net Investment in Capital Assets, Restricted Amounts, Unrestricted Amounts, and Net Position for business-type activities, are as follows:

Sanitary District Non-Major Total Sewer Water Restricted Debt Service Total Bay Bridge Enterprise Enterprise Business-Type Activities Operating Operating Fund Fund Sanitary Airport Funds Funds Capital Assets, net of Accumulated Depreciation $ 73,080,495 $ 19,226,315 $ - $ - $ 92,306,810 $ 18,388,751 $ 7,348,769 $ 118,044,330 Less: Debt excluding Compensated Absences, OPEB, and Net Pension Liability (29,419,756) - - - (29,419,756) (1,808,001) ( 917,010) ( 32,144,767)

Plus: Deferred Charge on Refunding - - - - - 10,104 7,063 17,167 Net Investment in Capital Assets 43,660,739 19,226,315 - - 62,887,054 16,590,854 6,438,822 85,916,730 Restricted Amounts Debt Service - - - 1,259,440 1,259,440 - - 1,259,440 Capital Projects - 975,000 - - 975,000 - - 975,000 Total Restricted Amounts - 975,000 - 1,259,440 2,234,440 - - 2,234,440 Total Unrestricted Amounts (Deficit) 954,097 2,588,203 8,260,113 - 11,802,413 (1,409,322) ( 305,442) 10,087,649

Total Net Position $ 44,614,836 $ 22,789,518 $ 8,260,113 $ 1,259,440 $ 76,923,907 $ 15,181,532 $ 6,133,380 $ 98,238,819 -89-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 10 – RESTRICTED ASSETS AND LIABILITIES AND FUND BALANCES (CONTINUED)

C. FUND BALANCES

PRIMARY GOVERNMENT

Governmental fund balances are composed of the following:

Total General General Roads Non-Major Governmental Governmental Funds Fund Capital Capital Governmental Funds Nonspendable Inventory $ 1,139,440 $ - $ - $ - $ 1,139,440 Prepaid Items 477,007 - - - 477,007 Subtotal Nonspendable 1,616,447 - - - 1,616,447 Restricted Rainy Day Fund 11,420,069 - - - 11,420,069 Unspent Bond Proceeds - 7,997,749 - - 7,997,749 Economic and Community Development - - - 3,211,366 3,211,366

Employee Benefits - LOSAP 2,860,808 - - - 2,860,808 Agricultural Easements - - - 477,487 477,487 Impact Fees - 247,435 - - 247,435 Inmate Welfare - - - 221,843 221,843 Critical Areas - - - 220,971 220,971 Mosquito Control 79,063 - - - 79,063 Sheriff's Drug Task Force - - - 152,341 152,341 Vehicle Acquisition - 40,491 - - 40,491 Dredging - - - 27,251 27,251 Sheriff - Federal Confiscated Funds 1,959 - - - 1,959

Donor-Specified Purposes - - - 1,205 1,205 Subtotal Restricted 14,361,899 8,285,675 - 4,312,464 26,960,038 Committed Impact Fees - - - 9,382,122 9,382,122 Revenue Stabilization Fund 6,000,000 - - - 6,000,000 Economic Development - 1,048,242 - 6,241,369 7,289,611 Rubble Surcharge - 707,412 - - 707,412 Developer Exactions - 560,133 574,251 - 1,134,384 Agricultural Easements - - - 550 550 Subtotal Committed 6,000,000 2,315,787 574,251 15,624,041 24,514,079

Assigned Encumbrances - 10,868,549 2,080,754 - 12,949,303 Subsequent Years' Expenditures 422,603 3,877,968 160,000 572,652 5,033,223 Capital Projects - 3,839,963 137,371 - 3,977,334 Loans Receivable - 2,036,324 - - 2,036,324 Income Tax Contingency 801,900 - - - 801,900 Subtotal Assigned 1,224,503 20,622,804 2,378,125 572,652 24,798,084 Unassigned General Fund 11,856,474 - - - 11,856,474 Fire Company Impact Fees - - - (28,164) (28,164)

Subtotal Unassigned 11,856,474 - - (28,164) 11,828,310 Total Governmental Funds Balances $ 35,059,323 $ 31,224,266 $ 2,952,376 $ 20,480,993 $ 89,716,958 -90-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 10 – RESTRICTED ASSETS AND LIABILITIES AND FUND BALANCES (CONTINUED)

C. FUND BALANCES (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

Encumbrances included in the General Capital and Roads Capital funds are for the following purposes:

General Roads Capital Capital General Government $ 3,176,370 $ - Parks & Recreation 3,226,341 - Economic Development 1,474,303 - Education 1,348,512 - Public Works 577,439 - Public Safety 495,438 - Library 268,863 - Conservation of Natural Resources 180,282 - Social Services 121,001 - Resurfacing Contracts and Materials - 1,584,903 Roads Construction Equipment - 495,851 Total Encumbrances $ 10,868,549 $ 2,080,754

NOTE 11 - RISK MANAGEMENT

The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The government carries commercial insurance to cover such risks. Certain assets of the County such as roads, bridges, and other infrastructure are not insurable due to their nature.

General Insurance Coverage - The County is a participant in the Local Government Insurance Trust (LGIT), which is a consortium of Maryland local governments created to provide insurance coverage and services to Maryland local governments. The LGIT provides general liability, public officials’ liability, fleet insurance, and building and property insurance to its members.

Workmen’s compensation and fidelity insurance are obtained from various commercial insurance companies.

Risk Sharing - Subscribers to coverage provided by LGIT share the risk among participants of the pools. As a result, the County's annual premium requirements will be affected by the loss experience of the various insurance pools in which it participates. Also, the County may be subject to additional assessments from time to time. These amounts would be recorded as expenditures when they are probable and can be reasonably estimated. Conversely, favorable

performance of certain insurance pools may result in reduced premiums.

Health Insurance - Effective with the 1996 fiscal year, the County joined together with other Eastern Shore county governments, libraries, and Boards of Education to form the Eastern Shore of Maryland Education Consortium Health Insurance Alliance (ESMEC), a public entity risk pool currently operating as a common risk management and insurance program for health insurance coverage. CareFirst BlueCross BlueShield, of Maryland, administers this

program.

The agreement for formulation of the alliance provides that the pool will be self-sustaining through member premiums. In addition to the annual premiums, the pooling agreement provides for additional assessments, if needed, but not to exceed certain limits. No additional assessments were needed for fiscal year 2019 and, as of the date of this report, it is believed that there are no outstanding claims in excess of the equity of the trust.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 11 - RISK MANAGEMENT (CONTINUED)

Effective January 2017, the County prescription plan moved to a new pharmacy benefit manager, Express Scripts, which is separate from CareFirst.

Settlements – In fiscal year 2017 and 2019, settlements have not exceeded insurance coverage for any type of policy in effect. In fiscal year 2018, the County paid out $29,874 as a result of a settlement involving an employee.

NOTE 12 - RETIREMENT PLANS

Virtually all full and eligible part-time employees of Queen Anne’s County, Maryland, and its related agencies are covered by one of the statewide contributory pension systems of the State of Maryland.

Maryland State Retirement and Pension Systems Organization The State Retirement Agency is the administrator of the Maryland State Retirement and Pension System (the System).

The System was established by the State Personnel and Pensions Article of the Annotated Code of Maryland to provide retirement allowances and other benefits to State employees, teachers, police, judges, legislators, and employees of participating governmental units. Responsibility for the System’s administration and operation is vested in a 15 member Board of Trustees. The System is made up of two cost-sharing employer pools: the “State Pool” and the “Municipal

Pool”. The State Pool consists of State agencies, boards of education, community colleges, and libraries. The Municipal Pool consists of participating governmental units that elected to join the System. Neither pool shares in each other’s actuarial liabilities, thus participating governmental units that elect to join the System (the “Municipal Pool”) share in the liabilities of the Municipal Pool only. The State Retirement Agency issues a publicly available financial report that

includes financial statements and required supplementary information for the System. That report may be obtained by writing to the State Retirement and Pension System of Maryland, 120 E. Baltimore Street, Suite 1660, Baltimore, Maryland 21202-1600 or on-line at www.sra.maryland.gov.

The System is comprised of the Teachers’ Retirement and Pension Systems, Employees’ Retirement and Pension Systems, State Police Retirement System, Judges’ Retirement System, and the Law Enforcement Officers’ Pension System (LEOPS).

The following groups of employees participate in:

Employees Plan Board of Education - regular employees Employees System Board of Education - teachers Teachers System Library Teachers System Queen Anne's County:

Elected officials Employees System Sheriff's Deputies LEOPS Regular employees Employees System The System is a cost sharing multiple-employer defined benefit pension plan.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

Basis of Accounting The System’s financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. For purposes of measuring 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 System and additions to/deductions from the System’s fiduciary net position have been

determined on the same basis as they are reported by the System. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.

Covered Members Teachers’ Retirement and Pension Systems The Teachers’ Retirement System was established on August 1, 1927, to provide retirement allowances and other benefits to teachers in the State. Effective January 1, 1980, the Teachers’ Retirement System was closed to new members and the Teachers’ Pension System was established. As a result, teachers hired after December 31, 1979, became members of the

Teachers’ Pension System as a condition of employment. On or after January 1, 2005, an individual who is a member of the Teachers’ Retirement System may not transfer membership to the Teachers’ Pension System.

Employees’ Retirement and Pension Systems On October 1, 1941, the Employees’ Retirement System was established to provide retirement allowances and other benefits to State employees, elected and appointed officials and the employees of participating governmental units.

Effective January 1, 1980, the Employees’ Retirement System was essentially closed to new members and the Employees’ Pension system was established. As a result, State employees (other than correctional officers) and employees of participating governmental units hired after December 31, 1979, became members of the Employees’ Pension System as a condition of employment, while all State correctional officers and members of the Maryland General

Assembly continue to be enrolled as members of the Employees’ Retirement System. On or after January 1, 2005, an individual who is a member of the Employees’ Retirement System may not transfer membership to the Employees’ Pension System.

The Law Enforcement Officers’ Pension System (LEOPS) The Law Enforcement Officers’ Pension System (LEOPS) was established on July 2, 1990, to provide retirement allowances and other benefits for certain State and local law enforcement officers. This System includes both retirement plan and pension plan provisions which are applicable to separate portions of the System’s membership. The retirement plan provisions are only applicable to those members who, on the date they elected to participate in LEOPS, were

members of the Employees’ Retirement System. This System’s pension plan provisions are applicable to all other participating law enforcement officers.

Summary of Significant Plan Provisions All plan benefits are specified by the State Personnel and Pensions Article of the Annotated Code of Maryland. For all individuals who are members of the Employees’, Teachers’, Correctional Officers’ or State Police Retirement System on or before June 30, 2011, retirement allowances are computed using both the highest three years’ Average Final Compensation (AFC) and the actual number of years of accumulated creditable service. For individuals who become

members of the State Police Retirement System or the Correctional Officers’ Retirement System on or after July 1, 2011, retirement allowances are computed using both the highest five years’ AFC and the actual number of years of accumulated creditable service. For all individuals who are members of the pension systems of the State Retirement and Pension System on or before June 30, 2011, pension allowances are computed using both the highest three consecutive

years’ AFC and the actual number of years of accumulated creditable service. For any individual who becomes a member of one of the pension systems on or after July 1, 2011, pension allowances are computed using both the highest -93-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

five consecutive year’s AFC and the actual number of years of accumulated creditable service. Various retirement options are available under each system which ultimately determines how a retiree’s benefit allowance will be computed.

Some of these options require actuarial reductions based on the retiree’s and/or designated beneficiary’s attained age and similar actuarial factors.

Beginning July 1, 2011, the member contribution rate was increased for members of the Teachers’ Pension System and Employees’ Pension Systems from 5% to 7% and from 4% to 6% respectively, in fiscal year 2013 and 7% in the fiscal year 2014 and beyond for members of the Law Enforcement Officers’ Pension System. Beginning July 1, 2013, the member contribution rate was increased for members of the Judges’ Retirement System from 6% to 8%.

In addition, the benefit attributable to service on or after July 1, 2011 in many of the pension systems now will be subject to different cost-of-living adjustments (COLA) that is based on the increase in the Consumer Price Index (CPI) and capped at 2.5% or 1.0% based on whether the market value investment return for the preceding calendar year was higher or lower than the investment return assumption used in the valuation.

A brief summary of the retirement eligibility requirements of and the benefits available under the various systems in effect are as follows:

Service Retirement Allowances A member of either the Teachers’ or Employees’ Retirement System is generally eligible for full retirement benefits upon the earlier of attaining age 60 or accumulating 30 years of creditable service regardless of age. The annual retirement allowance equals 1/55 (1.81%) of the member’s AFC multiplied by the number of years of accumulated creditable service.

An individual who is a member of either the Teachers’ or Employees’ Pension System on or before June 30, 2011, is eligible for full retirement benefits upon the earlier of attaining age 62, with specified years of eligibility service, or accumulating 30 years of eligibility service regardless of age. An individual who becomes a member of either the Teachers’ or Employees’ Pension System on or after July 1, 2011, is eligible for full retirement benefits if the member’s

combined age and eligibility service equals at least 90 years or if the member is at least age 65 and has accrued at least 10 years of eligibility service.

For most individuals who retired from either the Teachers’ or Employees’ Pension System on or before June 30, 2006, the annual pension allowance equals 1.2% of the member’s AFC, multiplied by the number of years of creditable service accumulated prior to July 1, 1998, plus 1.4% of the member’s AFC, multiplied by the number of years of creditable service accumulated subsequent to June 30, 1998. With certain exceptions, for individuals who are members of the

Teachers’ or Employees’ Pension System on or after July 1, 2006, the annual pension allowance equals 1.2% of the member’s AFC, multiplied by the number of years of creditable service accumulated prior to July 1, 1998, plus 1.8% of the member’s AFC, multiplied by the number of years of creditable service accumulated subsequent to June 30, 1998.

Beginning July 1, 2011, any new member of the Teachers’ or Employees’ Pension System shall earn an annual pension allowance equal to 1.5% of the member’s AFC multiplied by the number of years of creditable service accumulated as a member of the Teachers’ or Employee’s Pension System.

Exceptions to these benefit formulas apply to members of the Employees’ Pension System, who are employed by a participating governmental unit that does not provide the 1998 or 2006 enhanced pension benefits or the 2011 reformed pension benefits. The pension allowance for those members equals 0.8% of the member’s AFC up to the social security integration level (SSIL), plus 1.5% of the member’s AFC in excess of the SSIL, multiplied by the number of years of

accumulated creditable service. For the purpose of computing pension allowances, the SSIL is the average of the social security wage bases for the past 35 calendar years ending with the year the retiree separated from service.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

A member of the Law Enforcement Officers’ Pension System is eligible for full retirement benefits upon the earlier of attaining age 50 or accumulating 25 years of eligibility service regardless of age. The annual retirement allowance for a member who is covered under the retirement plan provisions equals 1/50 (2.0%) of the member’s AFC multiplied by the number of years of accumulated creditable service up to 30 years, plus 1/100 (1.0%) of the member’s AFC multiplied by

the number of years of accumulated creditable service in excess of 30 years. For members subject to the pension provisions, full service pension allowances equal 2.0% of AFC up to a maximum of 60% (30 years of credit).

Vested Allowances Any individual who is a member of the State Retirement and Pension System on or before June 30, 2011 (other than a judge or a legislator), and who terminates employment before attaining retirement age but after accumulating 5 years of eligibility service is eligible for a vested retirement allowance. Any individual who joins the State Retirement and Pension System on or after July 1, 2011 (other than a judge or a legislator), and who terminates employment before

attaining retirement age but after accumulating 10 years of eligibility service is eligible for a vested retirement allowance.

A member, who terminates employment prior to attaining retirement age and before vesting, receives a refund of all member contributions and interest.

Early Service Retirement A member of either the Teachers’ or Employees’ Retirement System may retire with reduced benefits after completing 25 years of eligibility service. Benefits are reduced by 0.5% per month for each month remaining until the retiree either attains age 60 or would have accumulated 30 years of creditable service, whichever is less. The maximum reduction for a Teachers’ or Employees’ Retirement System member is 30%.

An individual who is a member of either the Teachers’ or Employees’ Pension System on or before June 30, 2011 may retire with reduced benefits upon attaining age 55 with a least 15 years of eligibility service. Benefits are reduced by 0.5% per month for each month remaining until the retiree attains age 62. The maximum reduction for these members of the Teachers’ or Employees’ Pension System is 42%. An individual who becomes a member of either the Teachers’ or

Employees’ Pension System on or after July 1, 2011, may retire with reduced benefits upon attaining age 60 with at least 15 years of eligibility service. Benefits are reduced by 0.5% per month for each month remaining until the retiree attains age 65. The maximum reduction for these members of the Teachers’ or Employees’ Pensions System is 30%.

Members of the State Police, Judges’, Law Enforcement Officers’ and Local Fire and Police Systems are not eligible for early service benefits.

Disability and Death Benefits Generally, a member covered under retirement plan provisions who is permanently disabled after 5 years of service receives a service allowance based on a minimum percentage (usually 25%) of the member’s AFC. A member covered under pension plan provisions who is permanently disabled after accumulating 5 years of eligibility service receives a service allowance computed as if service had continued with no change in salary until the retiree attained age 62. A

member (other than a member of the Maryland General Assembly or a judge, both of which are ineligible for accidental disability benefits) who is permanently and totally disabled as the result of an accident occurring in the line of duty receives 2/3 (66.7%) of the member’s AFC plus an annuity based on all member contributions and interest. Death benefits are equal to a member’s annual salary as of the date of death plus all member contributions and interest.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

Adjusted Retirement Allowances Retirement and pension allowances are increased annually to provide for changes in the cost of living according to prescribed formula. Such adjustments for retirees are based on the annual change in the CPI. For the Teachers’ and Employees’ Retirement Systems (TRS/ERS) the method by which the annual COLA’s are computed depends upon elections made by members who were active on July 1, 1984 (or within 90 days of returning to service, for members who

were inactive on July 1, 1984) enabling the member to receive either an unlimited COLA , a COLA limited to 5% or a two part combination COLA depending upon the COLA election made by the member.

Effective July 1, 1998, for Teachers’, Employees’, and LEOPS retirees, the adjustment is capped at a maximum 3% compounded and is applied to all benefits which have been in payment for one year. The annual increase to pension allowances for Employees’ Pension System retirees who were employed by a participating governmental unit that does not provide enhanced pension benefits are limited to 3% of the initial allowance.

However, beginning July 1, 2011, for benefits attributable to service earned on or after July 1, 2011, in all of the systems except the judges’ and legislators’ systems, the adjustment is capped in the lesser of 2.5% or the increase in CPI if the most recent calendar year market value rate of return was greater than or equal to the assumed rate. The adjustment is capped at the lesser of 1% or the increase in CPI if the market value return was less than the assumed rate of return. In

years in which COLAs would be less than zero due to a decline in the CPI, retirement allowances will not be adjusted.

COLAs in succeeding years are adjusted until the difference between the negative COLA that would have applied and the zero COLA is fully recovered.

Actuarial Assumptions The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation In the 2018 actuarial valuation, 2.60% general, 3.10% wage. In the 2017 actuarial valuation, 2.65% general, 3.15% wage.

Salary Increases In the 2018 actuarial valuation, 3.10% to 9.10%. In the 2017 actuarial valuation, 3.15% to 9.15%.

Investment Rate of Return In the 2018 actuarial valuation, 7.45%. In the 2017 actuarial valuation, 7.50%.

Discount Rate 7.45% in 2018; 7.5% in 2017 Retirement Age Experience-based table of rates that are specific to the type of eligibility condition. Last updated for the 2015 valuation pursuant to an experience study of the period 2010 - 2014.

Mortality RP-2014 Mortality Tables with generational mortality projections using scale MP-2014 (2-dimensional) mortality improvement scale.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

Investments The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and

by adding expected inflation. Best estimates of geometric real rates of return were adopted by the Board of Trustees after considering input from the System’s investment consultant(s) and actuary(s). For each major asset class that is included in the System’s target asset allocation, these best estimates are summarized in the following table:

Long-Term Expected Real Rate Asset Class Target Allocation of Return Public Equity 37% 5.8% Private Equity 13% 6.7% Rate Sensitive 19% 1.1% Credit Opportunity 9% 3.6% Real Assets 14% 4.8% Absolute Return 8% 3.2% Total 100% The above was the Board of Trustees adopted asset allocation policy and best estimate of geometric real rates of return for each major asset class as of June 30, 2018.

For the years ended June 30, 2018, the annual money-weighted rate of return on pension plan investments, net of the pension plan investment expense, was 8.08%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Discount rate A single discount rate of 7.45% was used to measure the total pension liability. The single discount rate was based on the expected rate of return on pension plan investments of 7.45%. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the

member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

Sensitivity of the Net Pension Liability Regarding the sensitivity of the net pension liability to changes in the single discount rate, the following presents the plan’s net pension liability, calculated using a single discount rate of 7.45%, as well as what the plan’s net pension liability would be if it were calculated using a discount rate that is 1% point lower or 1% point higher:

1% Decrease Discount Rate 1% Increase System to 6.45% 7.45% to 8.45% County $ 41,823,891 $ 29,037,440 $ 18,425,622 Board of Education 6,969,892 4 ,839,054 3 ,070,603 Teachers’ and Employees’ Retirement Systems and Teachers’ and Employees’ Pension Systems Employer Contributions:

In accordance with Maryland Senate Bill 1301, Budget Reconciliation and Financing Act of 2012, the Board is required to pay the State a specified percentage of the normal cost portion of the total pension cost for teachers. The normal cost is the portion of the total retirement benefit cost that is allocated to the current year of the employee’s service. The specified percentage increases each fiscal year, until fiscal year 2017, when the Board began paying 100% of the normal

cost for each teacher.

Pension Liabilities, Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions Because the State of Maryland pays the unfunded liability for the Teachers’ Systems on behalf of the Board and Library, and the Board pays the normal cost for the Teachers’ Systems, the Board and Library are not required to record its’ share of the unfunded pension liability for the Teachers’ Systems, the State of Maryland is required to record that liability. The

Board is required to record a liability for the Employees’ Systems.

At June 30, 2019, the Board of Education reported a liability for its proportionate share of the net pension liability that reflected a reduction for State pension support provided to the Board. The amount recognized by the Board as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the Board were as follows:

Board's proportionate share of the net pension liability (Employees' Systems) $ 4,839,054 State's proportionate share of the net pension liability (Teachers' Systems) 6 2,503,519 Total $ 67,342,573 -98-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The County’s proportion of the net pension liability was calculated as follows by the System(s):

1. Calculate the net pension liability for the entire System. For purposes of funding the System, all calculations are

determined on an actuarial basis and are completed through the development of rates based on two separate asset pools, one for employees of the State of Maryland (the State) and one for the Participating Governmental Units (“PGUs”). These pools are kept on an actuarial basis and allow for the State to fund only State employees and PGUs to fund only PGU employees. For the accounting of the System, however, the assets of the System

are accounted in a single pool which is audited annually.

2. Determine the total contributions to the System by the State and PGUs, inclusive of any underfunding of

contributions.

3. Based on the number of participants at each Board of Education, calculate the difference between what each

Board would have contributed if they funded at the rate of all other participating governments and what the Board actually contributed. The difference between what the Board contributed and what they would have contributed if they funded at the rate of the other participating governments, is then added to the total contribution to the System, to calculate the System’s adjusted contribution.

4. Calculate for each participating government, their percentage of the adjusted System contribution by dividing

the total adjusted System contribution into each primary government contribution.

5. Provide each PGU its adjusted percentage of contribution and the System’s net pension liability and other

related amounts.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

At June 30, 2019, the County reported the following related to pensions:

BOARD OF

COUNTY EDUCATION

Employer's proportionate (percentage) of the collective net pension liability 0.1383948% 0.0230633% Employer's proportionate share of the collective net pension liability $ 29,037,440 $ 4,839,054 Pension expense recognized by the employer for the year ended June 30, 2019 $ 6,442,639 $ 3,382,986 Deferred outflows of resources June 30, 2018 $ 7,008,929 $ 1,211,479 Year end June 30, 2018 contributions ( 2,759,698) (459,901)

Difference between expected and actual experience - - Change in assumptions 176,256 2 9,373 Amortization of items allowed by GASB 68 ( 1,636,842) (291,815) Year end June 30, 2019 contributions 2,935,378 518,683 Deferred outflows of resources June 30, 2019 $ 5,724,023 $ 1,007,819 Deferred inflows of resources June 30, 2018 $ 3,420,881 $ 586,217 Net difference between projected and actual investment earnings 292,690 4 8,776

Difference between actual and expected experience 766,491 127,735 Amortization of items allowed by GASB 68 ( 1,212,500) (216,918) Deferred inflows of resources June 30, 2019 $ 3,267,562 $ 545,810 NPL June 30, 2018 $ 26,661,766 $ 4,399,321 Change in NPL factored for contributions 2,375,674 439,733 NPL June 30, 2019 $ 29,037,440 $ 4,839,054 The $2,935,378 and $518,683 of deferred outflows of resources resulting from the County and the Board’s contributions

to the Employees’ Systems subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2020. Other amounts reported as deferred outflows of resources for the County will be amortized over a five year period, as follows:

Deferred Outflows June 30, (Inflows) 2020 $ 663,869 2021 9 9,993 2022 (765,444) 2023 (387,088) 2024 (90,247) Total $ (478,917) -100-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 12 - RETIREMENT PLANS (CONTINUED)

Total Covered On-Behalf Payroll Payroll By State County - MD Retirement and pension $ 31,534,609 $ 26,185,838 $ - Board of Education 61,346,846 57,590,119 5 ,872,921 Library 1,305,749 1 ,305,749 176,488 Covered payroll refers to all compensation paid to active employees covered by the Systems.

Pension contributions made by the State of Maryland, on behalf of the Board of Education and the Library are recognized as both revenue and expenditure.

NOTE 13 - DEFERRED COMPENSATION PLAN

The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan, available to all County employees, permits them to defer a portion of their salary until future years.

Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency.

All amounts of compensation deferred under the plan; all property and rights purchased with those amounts; and all income attributable to those amounts, property or rights are solely the property and rights of the participants. The County has no liability for losses under the plan.

Investments are managed by the plan’s administrator based on several different investment options, or combinations thereof. The choice of the investment option(s) to be used is made by each participant. The County has no management control over the assets of the plan. Accordingly, per GASB Statement No. 32, the assets of the plan are not included in these financial statements.

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS

Other Post-Employment Benefit Trust (OPEB Trust) On June 23, 2009, the County enacted County Ordinance No. 09-12, which established a Trust entity entitled “Other Post-Employment Benefit Trust – County Commissioners of Queen Anne’s County, County Commissioners of Kent County, and Participating Agencies” (OPEB Trust). The purpose of the OPEB Trust is to: (1) fund costs of health insurance and other post-employment benefits to eligible retirees of the primary government, the Queen Anne’s County

Board of Education, and the Queen Anne’s County Free Library; (2) accumulate and invest financial resources for this purpose; (3) provide health insurance and other post-employment benefits for eligible retirees; and (4) provide related administrative services.

Other agencies and political subdivisions have the right to participate in this Trust now and in the future. Such unrelated entities may deposit funds with the Trust for investment purposes related to their OPEB plans. At June 30, 2019, funds in the amount of $159,907 were reported as a liability of the Trust to Kent County, Maryland. Kent County is holding these assets for the benefit of their plan participants.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

Other Post-Employment Benefit Trust (OPEB Trust) (Continued) OPEB Trustees have exclusive authority to manage the assets of the Trust. The Board of Trustees consists of five members: two representing Queen Anne’s County Government; two representing the Queen Anne’s County Board of Education; and one representing Kent County. In lieu of separate financial statements for the OPEB Trust, Queen Anne’s

County presents the Trust entity’s complete financial statements within this document.

In fiscal year 2015, the County Commissioners approved the County joining the MACo (Maryland Association of Counties) Pooled OPEB Investment Trust Fund. All information presented in this note on other post-employment benefits refer to the Trust entity entitled “Other Post-Employment Benefit Trust – County Commissioners of Queen Anne’s County, County Commissioners of Kent County, and Participating Agencies” (OPEB Trust). A separate Trust

document for the MACo OPEB Trust can be found on the MACo website at www.mdcounties.org.

PRIMARY GOVERNMENT

Plan Reporting The measurement date for GASB 74 is the Employer’s fiscal year end, June 30, 2019. Plan assets (Fiduciary Net Position) are measured as of this date. The Total OPEB Liability (TOL) as of this date is based on an actuarial valuation as of January 1, 2019, with adjustments made for the one-and-a-half year difference. Adjustments include Service Cost, Interest on Total OPEB Liability, and expected benefit payments during the year. This is also known as a roll-forward.

Under GASB 74, the Net OPEB Liability (NOL) is established as the difference between the Total OPEB Liability and the Plan Fiduciary Net Position. The NOL is very much like the unfunded actuarial accrued liability that is developed for the funding valuation, with adjustments for any time between the valuation date and the measurement date.

Relevant Dates  Valuation Date: January 1, 2019  Measurement Date: June 30, 2019  Reporting Date: June 30, 2019 Plan Membership The following is a summary of the plan membership as of January 1, 2019.

Active 415 Retired 172 Total 587 Plan Description The County’s Other Post-Employment Benefit Plan (OPEB Plan) is an agent multiple-employer defined benefit healthcare plan that covers retired employees of the primary government, the Queen Anne’s County Board of Education, and the Queen Anne’s County Free Library. The Plan was established as specified in County Ordinance No. 09-12.

Plan descriptions and actuarial assumptions for each participant are described: (1) as follows for the primary government and (2) in financial statements issued separately for all other participants.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

Plan description (Continued) The County’s Retiree Health Insurance Program provides medical insurance benefits to retirees and their eligible dependents. The retiree and their dependents will receive a subsidy as outlined in the tables below provided that (1) the retiree retired directly from County service with a County retirement/pension allowance, (2) has health insurance through the County prior to retirement, (3) retired with at least 15 years of County service, and (4) the retiree elects to participate

upon retirement. Retirees who retire directly from County service with a County retirement/pension with less than 15 years of County service, who have health insurance through the County prior to retirement and who elect to participate upon retirement are eligible for the County’s Retiree Health Insurance Program however are not eligible for a subsidy.

Medical/Drug Plan PPO (80/20), EPO (85/15), BCA (85/15), Medicare Supplement Eligibility Queen Anne’s County and Library employees are eligible to continue group insurance coverage after retirement provided that:

a. Retiring employees have coverage in effect when they stop working.

b. Retirement commences on the first of the month, following the last day they are employed.

c. An employee must have been a permanent active employee. To receive a subsidy, must have at least 15 years of service.

d. Eligibility for Retirement:

Non-LEOPS hired on or after 7/1/2011  Rule of 90 (age plus service is at least 90), or  Age 65 with 10 years of service, or  Age 60 with 15 years of service Non-LEOPS hired before 7/1/2011  Age 55 with 15 years of service, or  Age 62 with 5 years of service, or  Age 63 with 4 years of service, or  Age 64 with 3 years of service, or  Age 65 with 2 years of service, or  30 years of service (regardless of age)

LEOPS

 Age 50 (no service requirement), or  25 years of service (no age requirement) Retiree Payment The employer subsidy is based on service, which medical plan you are enrolled in, retirement date and location.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

Plan description (Continued) Employees who retire prior to September 2, 2011 (regardless of medical plan enrolled in) Years of Subsidy Service Percentage 0 - 14 0.0% 15 54.0% 16 57.6% 17 61.2% 18 64.8% 19 68.4% 20 72.0% 21 75.6% 22 79.2% 23 82.8% 24 86.4% 25 or more 90.0% Employees who retire between September 2, 2011 and August 31, 2012 Years of Subsidy Percentage Service EPO Plan PPO Plan 0 - 14 0.0% 0.0%

15 54.0% 54.0% 16 57.6% 57.1% 17 61.2% 60.2% 18 64.8% 63.3% 19 68.4% 66.4% 20 72.0% 69.5% 21 75.6% 72.6% 22 79.2% 75.7% 23 82.8% 78.8% 24 86.4% 81.9% 25 or more 90.0% 85.0% Employees who retire on or after September 1, 2012 Years of Subsidy Percentage Service EPO or BCA Plans PPO Plan 0 - 14 0.0% 0.0% 15 54.0% 54.0% 16 57.1% 56.6% 17 60.2% 59.2% 18 63.3% 61.8% 19 66.4% 64.4% 20 69.5% 67.0% 21 72.6% 69.6%

22 75.7% 72.2% 23 78.8% 74.8% 24 81.9% 77.4% 25 or more 85.0% 80.0% -104-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

Plan description (Continued) Plan Changes Since Prior Valuation There have been no changes in eligibility or cost sharing provisions since the prior valuation, which included the retiree payment changes outlined above.

Actuarial Information Actuarial assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2019, using the following actuarial assumptions, applied to all periods included in the measurement:

 Investment Return: 6.00%, net of investment expense and including inflation  Healthcare Trend: 6.75% initially, grading down to 4.25% ultimate Mortality rates are based on the PUB2010G Headcount tables with Scale SSA18 applied on a generational basis.

PUB2010G Headcount tables are used for those on disability, if applicable.

Changes in Actuarial assumptions There were no changes in actuarial assumptions since the prior year, except the change in discount rate due to an updated fund availability analysis and the change to the Mortality tables.

Actuarial Methods for Determining Employer Contributions The same economic and demographic assumptions are used for both funding and financial reporting purposes under GASB 74/75.

The Entry Age method is used for accounting/GASB purposes, therefore all of the actuarial figures within this Report are based on it. Actuarially Determined Contributions are also based on the Entry Age method, with a closed level percentage of payroll amortization of the unfunded liability (19 years remaining).

Expected Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected

inflation. This is then modified through a Monte-Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return.

Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of June 30, 2019, and the final investment return assumption, are summarized in the following table:

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

Expected Return (Continued) Long-Term Expected Asset Class Real Return - Portfolio Weight Domestic Equity 5.75% 48% International Funds 6.25% 13% Fixed Income – U.S. 1.65% 33% Global Funds 4.50% 6% Cash Equivalents 0.40% 0% Total Weighted Average Real Return 4.39% 100% Plus Inflation 2.50% Total Return w/o Adjustment 6.89% Risk Adjustment -0.89% Total Expected Return 6.00% Discount Rate The discount rate used to measure the total OPEB liability is 5.66%. The County’s funding expectations/policy is to

contribute 60% of the Actuarially Determined Contribution in fiscal year 2019, then increase this percentage 10% each year until the actuarial cost is being contributed in full annually. It is expected that benefits will be paid from the trust when a 50% funding level is reached. Based on this information, we project that benefits will be financed on a pay as you go basis until 2030, then from the trust there forward.

Therefore, the expected trust return of 6.00% is blended with the 20-year Aa bond rate* of 3.13%. The blended rate is 5.66%. The prior rate was 5.75%.

*Source: Fidelity general obligation municipal bond index.

Net OPEB Liability Sensitivity of the net OPEB liability to changes in the discount rate The following presents the net OPEB liability of the plan, calculated using the current discount rate, as well as what the net OPEB liability would be if it were calculated using a discount rate that is 1% point lower or 1% point higher:

DISCOUNT RATE

1% Decrease to Discount Rate 1% Increase to System 4.66% 5.66% 6.66% Net OPEB liability $ 62,455,164 $ 51,510,197 $ 42,838,582 Sensitivity of the net OPEB liability to changes in the trend rate The following presents the net OPEB liability of the plan, calculated using the current health care trend rate, as well as what the net OPEB liability would be if it were calculated using a health care trend rate that is 1% point lower or 1%

point higher:

HEALTH CARE TREND

1% Decrease to Discount Rate 1% Increase to System 3.25% 4.25% 5.25% Net OPEB liability $ 41,559,743 $ 51,510,197 $ 64,341,722 -106-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

Net OPEB Liability (Continued) Changes in the net OPEB liability are as follows:

Total OPEB Liability ("TOL") Service cost $ 1,164,669 Interest 3 ,136,157 Changes in benefit terms - Difference between expected and actual experience 735,549 Changes in assumptions 915,266 Benefit payments (1,568,468) Net change in total OPEB liability 4 ,383,173 Total OPEB liability - beginning of year 54,150,461 Total OPEB liability - end of year $ 58,533,634 Plan Fiduciary Net Position ("PFNP")

Contributions - employer $ 3,037,243 Contributions - member - Net investment income 342,827 Benefit payments (1,568,468) Admin expenses ( 39,142) Other - Net change in plan fiduciary net position 1 ,772,460 Plan fiduciary net position - beginning of year 5 ,250,977 Plan fiduciary net position - end of year 7 ,023,437 Net OPEB liability ("NOL") - beginning of year 48,899,484 Net OPEB liability - end of year $ 51,510,197

PFNP as a % of TOL 12.0% Covered employee payroll $ 23,843,440 NOL as a % of covered employee payroll 216.0% -107-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

OPEB Expense The amount of OPEB expense recognized in the reporting period are as follows:

Service cost $ 1,164,669 Interest on total OPEB liability 3,136,157 Difference between expected and actual experience* 8 1,728 Changes in actuarial assumptions* 131,254 Employee contributions - Projected earnings on plan investments (315,729) Difference between projected and actual earnings* ( 1,000) Administrative expense 3 9,142 Other changes in fiduciary net position - Total OPEB expense $ 4,236,221

* - portions recognized for expense

Deferred Inflow/Outflow Summary The deferred outflows / inflows are as follows:

Deferred Deferred Outflows Inflows June 30, 2018 $ 254,144 $ - Difference between expected and actual experience 7 35,549 - Changes in actuarial assumptions 9 15,266 - Net difference between projected and actutal earnings on investments - (27,098) Amortization of items allowed by GASB 75 (217,402) 5,420 June 30, 2019 $ 1,687,557 $ (21,678) Net deferred outflows / (inflows) will be amortized as follows:

2020 $ 211,982 2021 211,982 2022 211,983 2023 207,564 2024 212,982 Thereafter 609,386 Total $ 1,665,879 -108-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS

BOARD OF EDUCATION

Plan description The Board of Education of Queen Anne’s County administers a single-employer defined benefit healthcare plan (“the Plan”). The plan provides healthcare insurance for eligible retirees and their spouses through the Board’s group health insurance plan, which covers both active and retired members. The Plan does not issue a stand-alone report. Benefit provisions are based on contractual agreements with employee groups. Employees are eligible to participate in the Plan

upon retirement. Participants must meet the eligibility requirements of the Maryland State Teachers’ pension system described below:

For members hired before July 1, 2011, the earliest retirement eligibility is the earlier of:

 Age 55 with 15 years of service,  Age 62 with 5 years of service,  Age 63 with 4 years of service,  Age 64 with 3 years of service,  Age 65 with 2 years of service, or  30 years of service, regardless of age.

 For members hired after July 1, 2011, the earliest retirement eligibility is the earlier of  Rule of 90 (age plus service is at least 90),  Age 65 with 10 years of service,  Age 60 with 15 years of service As of July 1, 2018, the date of the last actuarial valuation, approximately 395 retirees were receiving benefits, and 951 active employees are potentially eligible to receive future benefits.

Funding Policy The Board pays a portion of retiree healthcare premiums based on years-of-service ranging from 5 years of service to 25+ years of service until the retiree becomes Medicare-eligible. The retiree pays the remaining premium, including the cost of eligible dependents. Pre-Medicare retirees may choose between two medical plans (a PPN plan and an EPO plan).

Both plans include medical and prescription benefits. Once a participant is Medicare eligible, the participant must switch to a Medicare supplement plan, which is also packaged with a prescription plan. Retirees have the option of electing dental and vision coverage in addition to medical coverage.

Employer Contribution Retirees receive a subsidy for their post-retirement medical insurance based on service. The subsidy requires a minimum of 5 years of service for Administration and 10 years of service for Teachers. For teachers, once ten years of service is reached, the Board covers 36% of the cost of the individual’s EPO health plan. The percentage subsidized by the Board increases 3.6% per year for every year of service in excess of ten. At 25 years of service, the maximum subsidy of 90% is

reached. For administrators, once five years of service is reached, the Board covers 35% of the cost of the individual’s EPO health plan. The percentage subsidized by the Board increases 5.5% per year for every year of service in excess of five. At 15 years of service, the maximum subsidy of 90% is reached. Retirees with less than the minimum years of service required to receive a subsidy are allowed access to the medical coverage, but must pay 100% of the published

rates. In addition, the Board is contractually obligated to pay the full cost of medical insurance for certain retired directors, superintendents, and their spouses.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS (CONTINUED)

BOARD OF EDUCATION (CONTINUED)

Employer Contribution (Continued) The Board also pays the cost of providing term life insurance for its retirees in varying amounts depending upon length of service and date of retirement. The benefits payable upon death are $5,000 (fixed) for 5 to 25 years of service or $50,000 (maximum-based on annual salary at retirement) for over 25 years of service. There is a reduction of benefit of 25% at age 70 and a benefit reduction of 33.3% at age 75 and beyond.

Net OPEB Liability The annual OPEB expense under GASB Statement No. 75 is equal to the change in the unfunded actuarial accrued liability from the prior year’s measurement date to the current year measurement date, with some of the liability changes being deferred to future years. Changes in the actuarial accrued liability due to experience gains or losses or changes in assumptions are recognized over the expected future working lifetime of all plan participants, including retirees. For the

fiscal year ended June 30, 2019, the Board recognized an OPEB expense of $12,313,973.

The Board’s total OPEB liability is an amount actuarially determined in accordance with the parameters of GASB Statement No. 75. The following table shows the components of the Board’s total and net OPEB liability as of June 30, 2019:

Total OPEB Liability Service cost $ 7 ,522,124 Interest 6,111,678 Changes in benefit terms - Difference between expected and actual experience 4,130,252 Changes in assumptions 7,164,658 Benefit payments (2,953,427) Net change in total OPEB liability 2 1,975,285 Total OPEB liability - beginning of year 172,337,274 Total OPEB liability - end of year (a) $ 194,312,559 Plan Fiduciary Net Position ("PFNP")

Contributions - employer $ 2 ,953,427 Net investment income 1 ,016 Benefit payments (2,953,427) Admin expenses - Net change in plan fiduciary net position 1 ,016 Plan fiduciary net position - beginning of year 507,516 Plan fiduciary net position - end of year (b) 508,532 Net OPEB liability - end of year (a-b) $ 193,804,027 Payments have typically been liquated from the General Fund in prior years.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS (CONTINUED)

BOARD OF EDUCATION (CONTINUED)

Funding Status and Funding Progress Contributions to the plan are made as benefit payments and expenses become due. As of the most recent actuarial valuation, the plan was 0.26% funded. The total OPEB liability for benefits was $194,312,559 and plan assets at market value totaled $508,532, resulting in a net OPEB liability of $193,804,027. The covered employee payroll was $57,590,119, and the ratio of the net OPEB liability to the covered payroll was 336.52%.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and

new estimates are made about the future. The schedule of net OPEB liability, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the net OPEB liability is increasing or decreasing over time relative to the total OPEB liability for benefits.

Additional information as of the latest actuarial valuation is as follows:

 Measurement date – The Board selected a June 30, 2018 measurement date for fiscal year-end 2019. The measurement date can be any date between the last day of the prior fiscal year and the last day of the current fiscal year.

 Cost method – This valuation uses the Entry Age Normal Funding Method calculated on an individual basis with level percentage of payroll.

 Claims data – Monthly paid claims, administrative expenses and enrollment for employees and retirees from February 1, 2015 through January 31, 2018 were supplied by the carrier. Claims were divided into pre and post 65 age retirees.

 Demographic data – Data included current medical coverage for current employees and retirees as of July 1, 2018.

 Discount rate assumption - Benefits are discounted based on the Bond Buyer GO 20-year Bond Municipal Bond Index, an index rate for 20-year tax exempt general obligation municipal bonds with an average rating of AA/Aa or higher. This rate was 3.62% as of June 30, 2018.

 Health care trend – The medical trend assumption was developed using the Society of Actuaries (SOA) Long- Run Medical Cost Trend Model. The SOA model was released in December 2007 and is updated annually. The following assumptions were used as input variables into this model:

Rate of Inflation 2.2% Rate of growth in real income / GDP per year 1.6% Excess medical cost growth 1.3% Health Share of GDP Resistance Point 25.0% Year for limiting cost growth to GDP growth 2075 -111-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS (CONTINUED)

BOARD OF EDUCATION (CONTINUED)

Funding Status and Funding Progress (Continued)  Salary Scale – State of Maryland salary scale assumption for teachers.

 Decrement Assumptions – Healthy PubT.H-2010 Mortality Table (teacher, headcount-weighted), Fully Generational, Projected using Scale MP-2018 and base year 2010 Disability RP 2014 Disabled Mortality with Males Set Forward One Year Sensitivity of the Net OPEB Liability The following table presents the Board’s net OPEB liability using the discount rate of 3.62%, as well as what the net OPEB liability would be if it were calculated using a discount rate that is 1% point lower or 1% point higher than the

current rate:

Board's Net OPEB Discount Rate Liability 1% decrease 2.62% $ 233,698,428 Current discount rate 3.62% $ 193,804,027 1% increase 4.62% $ 162,470,152 The following table presents the Board’s net OPEB liability using the health care trend rate of 3.80%, as well as what the net OPEB liability would be if it were calculated using a trend rate that is 1% point lower or 1% point higher than the current rate:

Health Care Board's Net OPEB Trend Rate Liability 1% decrease 2.80% $ 159,481,541 Current trend rate 3.80% $ 193,804,027 1% increase 4.80% $ 239,709,640 Deferred Inflows/Outflows of Resources related to OPEB At June 30, 2019, the Board reported deferred outflows of resources and deferred inflows of resources related to the OPEB plan from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ 6,368,585 $ ( 20,243,617) Net difference between projected and actual investment earnings on OPEB plan investments - (1,364) Difference between actual and expected experience 3 ,671,335 (351,844) Total $ 10,039,920 $ ( 20,596,825) -112-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS (CONTINUED)

BOARD OF EDUCATION (CONTINUED)

Deferred Inflows/Outflows of Resources related to OPEB (Continued) Amounts reported as differences between projected and actual earnings on OPEB plan investments will be amortized and expensed over a closed five-year period. Amounts reported as differences between expected and actual experience will be amortized and expensed over a period equal to the average remaining service lives of all employees that are provided

with other post-employment benefits through the plan. Amounts reported as changes in assumptions will be amortized and expensed over a period equal to the average remaining service lives of all employees that are provided with other post-employment benefits through the plan. Amortization expense related to net deferred inflows and outflows of resources over the next five years is expected to be as follows:

Year ended June 30:

2020 $ (1,319,829) 2021 (1,319,829) 2022 (1,319,831) 2023 (1,319,647) 2024 (1,319,443) Thereafter (3,958,326) $ (10,556,905) Changes in assumptions in the most recent actuarial valuation included adjusting the long term medical trend assumption.

LIBRARY

Plan description The Library participates in an agent multiple-employer defined benefit healthcare plan (“the Plan”) that covers retired employees of Queen Anne’s County, the Queen Anne’s County Board of Education, and the Library. A Trust entity was established in June, 2009 entitled Other Post- Employment Benefit Trust – County Commissioners of Queen Anne’s County, County Commissioners of Kent County, and Participating Agencies (the “Trust”).

Unrelated agencies and political subdivisions have the right to participate in this Trust and deposit funds for investment purposes. Accordingly, funds are being held in the Trust on behalf of Kent County, Maryland for the benefit of their plan participants.

The Trust assets are managed by a Board of Trustees consisting of five members: two representing Queen Anne’s County Government, two representing Queen Anne’s County Board of Education, and one representing Kent County. In lieu of separate financial statements for the Trust, Queen Anne’s County presents the Trust entity’s complete financial statements in their Combined Annual Financial Report.

Benefits provided The plan reimburses eligible retirees for a portion of healthcare insurance based on years-of-service ranging from $3,000 for 15 years of service to $4,400 for 25 plus years of service. The retiree pays the remaining premium, including the cost of eligible dependents. Participants must meet the eligibility requirements of the State Retirement and Pension System of Maryland, which are age 55 with 15 years of service, age 62 with 5 years of service, or 30 years of service (regardless of

age).

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS (CONTINUED)

LIBRARY (CONTINUED)

Employees covered by benefit terms The following is a summary of plan membership as of January 1, 2019.

Number of participants Active 15 Retired 6 Total 21 Contributions The Library pays retiree healthcare benefits on a pay-as-you-go basis. For the year ended June 30, 2019, the Library contributed $20,248 for six retirees.

Net OPEB liability The Library's net OPEB liability was measured as of June 30, 2019, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation January 1, 2019.

Actuarial assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2019, using the following actuarial assumptions, applied to all periods in the measurement:

Healthcare trend – Because this is a flat dollar plan and retirees secure their own insurance, the trend is not applicable.

Mortality rates are based on PUB2010G Headcount tables with Scale SSA18 applied on a generational basis. PUB2010G Headcount Disabled tables are used for those on disability, if applicable.

There were no changes in actuarial assumptions since the prior year, except the change in discount rate due to an updated fund availability analysis and the change to the mortality tables.

Actuarial methods for determining employer contributions use the same economic and demographic assumptions for both funding and financial reporting purposes under GASB 74/75. The Entry Age method is used for accounting/GASB purposes, therefore all of the actuarial figures within this report are based on it. Actuarially Determined Contributions are based on the Entry Age method, with a closed level percentage of payroll amortization of the unfunded liability (10 years

remaining).

Discount rate The discount rate used to measure the total OPEB liability is 3.13%. There is essentially no prefunding of benefits in an OPEB trust for this plan (i.e., pay as you go), therefore the discount rate is equal to the yield on a 20-year municipal bond Aa index as of June 30, 2019.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS (CONTINUED)

LIBRARY (CONTINUED)

Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Contributions - employer $ - $ 20,359 $ ( 20,359) Service cost 4,597 - 4 ,597 Investment income 2 9,179 4 38 28,741 Difference between expected and actual experience 6 2,704 - 62,704 Changes in assumptions 197,330 - 197,330 Benefit payments, including refunds (20,359) ( 20,359) - Net change in total OPEB liability 273,451 4 38 273,013

Net OPEB obligation, beginning of year 512,905 30,512 482,393 Net OPEB obligation, end of year $ 786,356 $ 30,950 $ 755,406 Changes in the net OPEB liability Sensitivity of the net OPEB liability to changes in the discount rate The following presents the net OPEB liability of the Library, as well as what the net OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current discount

rate:

1% Decrease (2.13%) $ 860,049 Current discount rate (3.13%) $ 755,406 1% Increase (4.13%) $ 668,889 Sensitivity of the net OPEB liability to changes in the healthcare cost trend rate Because the benefits from this plan are a fixed dollar amount based on years of services and there is no implicit subsidy (retirees secure their own health insurance), a change in assumed trend rate will not have an impact on the OPEB liability.

OPEB expense and deferred outflows of resources related to OPEB For the year ended June 30, 2019, the Library recognized an OPEB expense of $65,858. At June 30, 2019, the Library reported deferred outflows of resources related to the OPEB plan from the following sources:

Deferred Outflows of Resources Difference between expected and actual experience $ 54,866 Changes in actuarial assumptions 174,521 Net difference between projected and actual earnings on plan investments 1,757 $ 2 31,144 -115-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 14 - OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)

COMPONENT UNITS (CONTINUED)

LIBRARY (CONTINUED)

Amounts reported as deferred outflows and deferred inflows of resources related to the OPEB plan will be recognized in expense over a period ranging from five to nine years as follows:

Year Ended June 30 Outflows 2020 $ 33,302 2021 33,302 2022 33,302 2023 32,927 2024 32,769 Thereafter 65,542 Total $ 2 31,144 NOTE 15 – VOLUNTEER FIREMAN PENSION PLAN LENGTH OF SERVICE AWARD PROGRAM

(LOSAP)

Plan Description The County established the County Fire and EMS Commission Pension Plan Length of Service Award Program (“LOSAP”) in November 2004. The LOSAP is a single-employer defined benefit length of service award program that covers all volunteer members (“members”) of the County’s Fire and EMS Commission. The LOSAP has no assets accumulated in a trust that meet the criteria in GASB 73, paragraph 4. The LOSAP is funded entirely by the general fund.

Relevant dates  Valuation date: January 1, 2018  Measurement date: December 31, 2018  Reporting date: June 30, 2019 An active member, upon reaching 55 years of age, is eligible to receive $6 per month for each year of eligible service, with a $240 maximum monthly benefit that may be earned. An inactive member that reaches 65 years of age and is vested with 5 years of service is also entitled to the same benefits ($6/month for each year of service, maximum $240 per

month). An inactive life member with 20-plus years of service is entitled to the same benefits at 55 years old. Insured participants’ designated beneficiary shall receive the greater of $25,000 face amount of the life insurance or the present value of the participants’ accrued benefit. Non-insured participants’ designated beneficiary shall receive the lump sum of the present value of the participants’ accrued benefit.

The participant summary as of the January 1, 2018 actuarial valuation is as follows:

Active members 2 85 Vested-terminated 1 23 Retired and beneficiaries 1 54

TOTAL 5 62

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 15 – VOLUNTEER FIREMAN PENSION PLAN LENGTH OF SERVICE AWARD PROGRAM

(LOSAP) (CONTINUED)

Actuarial Assumptions The total LOSAP liability was determined by an actuarial valuation as of January 1, 2018 rolled forward to December 31, 2018 using the following actuarial assumptions, applied to all periods included in the measurement.

Inflation 0.00% Salary increases Not Applicable Investment rate of return 3.71%, net of pension plan investment expense, including inflation Mortality No pre-retirement mortality; post retirement RP2000 projected to 2030 Retirement First eligible Turnover T5 Disability None The 3.71% discount rate is based on a 20 year AA general obligation bond rate as of December 31, 2018.

The above is a summary of key actuarial assumptions. Full description of actuarial assumptions are available in the January 1, 2018 actuarial valuation report.

Sensitivity of Total LOSAP Liability The following presents the total LOSAP liability, calculated using single discount rate of 3.71%, as well as what the total LOSAP liability would be if it were calculated using a discount rate that is 1% point lower and 1% point higher.

DISCOUNT RATE

1% Decrease to Discount Rate 1% Increase to 2.71% 3.71% 4.71% Net LOSAP liability $ 7,148,566 $ 6,669,736 $ 6,180,311 Total LOSAP Liability The components of the total LOSAP liability are as follows:

Plan Total LOSAP Fiduciary Net Net LOSAP Liability Position Liability Balances at 1/1/18 $ 6,829,996 $ - $ 6,829,996 Changes for the year:

Service cost 164,371 - 164,371 Interest 249,496 - 249,496 Changes of benefit terms - - - Differences between expected and actual experience 137,821 - 137,821 Changes of assumptions (491,888) - (491,888) Benefits payments and expenses (220,060) - (220,060) Net changes (160,260) - (160,260) Balances as of 12/31/18 $ 6,669,736 $ - $ 6,669,736 Plan fiduciary net position as a percentage of the total pension liability 0%

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 15 – VOLUNTEER FIREMAN PENSION PLAN LENGTH OF SERVICE AWARD PROGRAM

(LOSAP) (CONTINUED)

LOSAP Expense The components of LOSAP expense are as follows:

LOSAP

Expense Service cost $ 164,371 Interest 249,496 Projected earnings on LOSAP Trust - Changes in benefit terms - Differences between expected and actual earnings - Differences between expected and actual experience 13,782 Changes of assumptions 47,151 Total LOSAP expense $ 474,800 LOSAP Deferred Outflows and Deferred Inflows of Resources The components of LOSAP deferred outflows and deferred inflows are as follows:

Deferred Deferred Outflows Inflows June 30, 2018 $ - $ - Difference between expected and actual experience 124,039 - Changes of assumptions 385,359 (442,699) Net difference between projected and actual earnings - - Amortization of items allowed by GASB 75 - - Contributions subsequent to 12/31/18 - - June 30, 2019 $ 509,398 $ (442,699) Amounts reported as deferred outflows and deferred inflows will be amortized as follows:

Deferred Outflows June 30, (Inflows) 2020 $ 60,933 2021 60,933 2022 60,933 2023 60,932 2024 ( 35,407) Thereafter (141,625) Total $ 66,699 -118-

QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 16 – DEFICIT EQUITY BALANCES

The following Non-Major Governmental Funds ended the year with deficit balances in unassigned fund balance:

Capital Projects – Fire Company Impact Fees Fund The Capital Projects – Fire Company Impact Fees Fund has a negative unassigned fund balance of $28,164 as of June 30, 2019. This negative fund balance is the result of an overpayment to a particular fire department, and will decrease over time as the incoming revenues offset the overpayment.

The following Enterprise Funds ended the year with deficit equity balances:

Bay Bridge Airport Enterprise Fund The Bay Bridge Airport Enterprise Fund has a deficit balance in unrestricted net position of $1,409,322 as of June 30, 2019.

Golf Course Enterprise Fund The Golf Course Enterprise Fund has a deficit balance in unrestricted net position of $747,202 as of June 30, 2019.

The County Commissioners established the guideline that the Enterprise Funds should be self-supporting, to the extent possible. Therefore, a variety of measures are being evaluated in order to attempt the goal of balancing the Enterprise Funds.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

PRIMARY GOVERNMENT

Grants - The County and its component units are recipients of various federal and state grant and/or loan programs, which are governed by various rules and regulations of the grantor agencies. Costs charged to the respective grant programs are subject to audit and adjustment by these grantor agencies. If the County has not complied with the rules and regulations governing the programs, refunds of money received may be required and the collectability of any related receivable as of

June 30, 2019 may be impaired. The County’s management believes that there are no significant contingent liabilities that must be recorded relating to compliance with the rules and regulations governing these programs. No funds were required to be returned in fiscal year 2019.

Further, certain grants for capital projects, such as various park projects funded by the State, must be used for the intended purpose of the grant. If, at any time during the useful lives of these projects, the facilities cease to operate in their intended capacity, the County may be required to reimburse the granting agency that portion of the grant or note that is equal to the percentage of useful life remaining. The County’s Management believes that no such grant

reimbursements will be needed.

In fiscal year 2010, the County’s Department of Housing and Community Services received a grant of $350,000 from the Maryland Department of Housing and Community Development. This Maryland Neighborhood Conservation Initiative (NCI) Grant provided funding to be used for the acquisition and purchase of foreclosed properties for resale to qualifying homebuyers, as well as the issuance of zero percent deferred payment loans to eligible critical service workers. Per the

terms of the agreement, the grantee may reuse funds for these same activities until June 30, 2013. Funds returned to the County from program participants after June 30, 2013 must be returned to the state. Therefore, this grant has been recorded as a pass-through grant, with the County contingently liable for the return of these funds to the state at some point in time after June 30, 2013. During Fiscal Year 2014, the County identified $69,569 in funds that were required to

be returned to the grantor per grant provisions. No funds were required to be returned in fiscal years 2015 thru 2019.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 17 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

PRIMARY GOVERNMENT (CONTINUED)

In accordance with the provisions of GASB Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions, the County has committed certain fund balances for future construction projects. In the General Capital Projects Fund, a total of $2,315,787 has been committed, including $1,048,242 for Economic Development, $707,412 for rubble surcharge, and $560,133 for site improvements pursuant to agreements with local developers. In the Roads

Capital Projects Fund, $574,251 has been contributed by developers and is committed to fund infrastructure improvements.

Income Tax Contingency - On May 18, 2015, the Supreme Court of the United States decided against the State of Maryland in Comptroller of the Treasury of Maryland v. Wynne Et Ux. Under state law, residents who pay income tax to another state for income earned in that other state are allowed a credit against their Maryland state income tax but not against the so-called piggy-back tax of the county or municipality where they reside. Plaintiffs argued that not granting a

credit against the local income tax is a violation of the U.S. Constitution. By a 5 to 4 vote, the Supreme Court found for the plaintiffs holding generally that the state law violates what is known as the Dormant Commerce Clause. This decision means that Maryland counties, including Queen Anne’s County, need to reserve funds against refund claims by certain taxpayers (particularly S corporation shareholders) dating back to Tax Year 2007. The County estimates that it needs to

reserve $801,900 against these potential claims. The County plans to use $801,900 in existing reserves to finance such claims. The County estimates that future loss of revenues as a result of the Wynne Case will be absorbed through the normal budgeting process.

Based on the findings, Queen Anne’s County reduced the receivable from the State for income taxes and the offsetting deferred inflows by the estimated fiscal impact for the County for tax years going back to 2009 which totaled $801,900 including interest. The adjustment does not change the total fund balance for the General Fund. Since the County already received the money in income taxes in prior years, the amount of anticipated liability for the Wynne Case impact on the

County is assigned in the General Fund. When the State begins taking the funds back, the County will release the amount from the assigned fund balance. The amount of anticipated liability is based on assessments provided by the Maryland Comptroller’s Office and the County believes these figures to be within reason.

Under Maryland law, taxpayers are generally eligible for interest on certain tax refunds calculated at an annual rate of interest equal to the greater of (i) three percentage points above the average prime rate of interest or (ii) 13%. In 2014, the Maryland General Assembly adopted legislation that set the annual interest rate for an income tax refund that is a result of the final decision under the Wynne case to a percent equal to the average prime rate of interest. This legislation

substantially lowers the interest rate on tax refunds due as a result of the Wynne decision. Further, the legislation was intended to be effective retroactively. On November 13, 2015, lawyers for Michael J. Holzheid filed a class action complaint, Michael J. Holzheid v. Comptroller of the Treasury of Maryland, et al, in the Circuit Court for Baltimore City challenging the state legislation. Other taxpayers may also file claims or appeals challenging the state legislation. If such

claims or appeals are successful, the estimated amount of interest on refunds owed by the County would increase.

NOTE 18 – JOINT VENTURE

In 1991, the County Commissioners, in conjunction with Talbot, Caroline, and Kent Counties, entered into a regional partnership known as the Midshore Regional Landfill Joint Venture. This venture was formed to provide a long-term, solid waste management solution for the four-county area. As part of the agreement, each of the four Counties agreed to host a solid waste facility for a twenty year period, giving the venture a total duration of eighty years. In 1991, the

Midshore Regional Landfill opened in Talbot County and served the waste management needs of the four-County area for twenty years. This facility, owned and operated by the Maryland Environmental Service (MES), closed on December 31, 2010. The second Midshore facility, Midshore II, opened in Caroline County in January 2011 and is fully operational. After the facility in Caroline County reaches capacity, another landfill will be constructed in Queen Anne's

County, with Kent County to follow in turn. Each County is required to, and has, set aside sufficient land to construct a landfill within their borders. The agreement expires when the last of the four landfills is closed.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 18 – JOINT VENTURE (CONTINUED)

Queen Anne’s County has a 35.69% financial interest in the Midshore Regional Landfill. In the event that expenditures exceed revenues, the County is obligated to cover the deficiency in proportion to its financial interest; however, to date additional funding from the County has not been required nor does management anticipate it.

During fiscal year 2011, the landfill located in Talbot County, Midshore I, was closed. As of June 30, 2019, total closure and post closure costs for Midshore I was estimated at approximately $1.7 million. Midshore II, located in Caroline County, was 22.91% filled. Closure and post closure costs for Midshore II are estimated at approximately $16.9 million.

Therefore, the total closure and post closure costs for both landfills are $18.6 million, with approximately $6.6 million attributable to Queen Anne’s County. These costs are paid from tipping fees of acceptable waste delivered by or for the account of the counties. It is currently expected that sufficient funds will be available from landfill revenues to pay future closure and post closure costs. MES has accrued and reported a long-term liability of $5.6 million as of June 30, 2019,

determined by the estimated useful life of the landfill.

Similar to the post closure costs, each of the participating Counties is contingently liable for the debt related to the new facility, Midshore II. Midshore II was funded with project revenue bonds totaling $26.8 million. As of June 30, 2019, $9.5 million is attributable to Queen Anne’s County in the event of a default.

Each County is required to place its municipal waste in the landfill. The facility is also available to commercial waste disposal firms at the same price per ton as charged to the County governments. Queen Anne's County paid $353,991 in tipping fees to the facility during fiscal 2019.

MES has satisfied its financial assurance requirements based upon the local government financial ratio tests of the project participants as of June 30, 2019. MES expects to satisfy these requirements as of June 30, 2020 using the same criteria.

Due to inflation and changes in technology, laws, and regulations, estimated closure and post closure care costs may change in the future. Financial Statements of the Landfill can be obtained from MES located at 259 Najoles Road, Millersville, MD 21108.

NOTE 19 – POLLUTION REMEDIATION OBLIGATIONS

During fiscal year 2009, the County implemented the provisions of Governmental Accounting Standards Board (GASB) Statement 49, Accounting and Financial Reporting for Pollution Remediation Obligations.

During a prior fiscal year, 2003, the County agreed to a voluntary Methyl Tertiary Butyl Ether (MTBE) testing program for underground fuel tanks located at the County’s Department of Public Works’ fuel depot. This testing program was and still is approved by the Maryland Department of Environment (MDE).

Since the testing program began in 2003, the County has incurred a total of $434 thousand in expenses, including $9 thousand in fiscal year 2019, to comply with the provisions of the program. Costs covered remediation work and consulting fees; the latter for testing, studies, and monitoring. Remediation efforts included demolition and removal of the existing fuel depot at the Public Works Centreville Shop; remediation of the soils via excavation; offsite controlled

disposal and backfill; installation of monitoring wells; in situ chemical oxidation and dual phase extraction; attorney’s fees and miscellaneous environmental consulting services.

In May 2010, MDE requested the County devise a Corrective Action Plan (CAP) to address contamination concerns at the fuel depot site. In August 2010, MDE approved the County’s CAP work which included the installation of additional monitoring wells and one year of monitoring, sampling, testing and furnishing of those reports to MDE.

In December of 2014, a leak was discovered at the 10,000 gallon fuel oil UST for the office building. MDE required the removal of the tank and mitigation of the contaminated soils and ground water. The tank has been replaced with a compliant above ground 1,500 gallon fuel oil storage tank. This work was completed, including compliant disposal of all soils by May 2015. MDE subsequently directed the County to install two additional monitoring wells and to abandon the

former injection wells on-site.

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QUEEN ANNE’S COUNTY, MARYLAND

NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2019

NOTE 19 – POLLUTION REMEDIATION OBLIGATIONS (CONTINUED)

During fiscal year 2019, the County and MDE met to again review the project data. From this meeting, MDE dictated that the County would need to install three additional monitoring wells upstream (NE) to the existing wells, soil sampling and disposal, and initial ground water sampling. These new wells will be monitored quarterly by Chesapeake Geosciences for a period of no less than one year. The presence of LPH in MW-2A continues to be monitored, fluctuates

in depth, and currently appears to be recoverable only in minimal amounts. The County is to continue with the approved MDE monitoring program. In addition, Chesapeake Geosciences will collect samples, test and provide reports both quarterly for the new (3) wells and bi-annual for the existing (9) wells. The County will continue discussions with MDE regarding the project closeout at the end of the first year schedule associated with the new monitoring wells.

The estimated costs over the next year are not material, and thus no liability has been recorded at this time. None of these outlays met the requirements for capitalization noted in GASB Statement 49 and they were not capitalized.

NOTE 20 – PRIOR PERIOD RESTATEMENT

During fiscal year 2019, the County implemented Governmental Accounting Standards Board’s Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That are Not Within the Scope of GASB Statement 68, and in accordance, has applied its effects retroactively.

The following table is a summary of the effects as of June 30, 2019.

PRIMARY GOVERNMENT

General Governmental Business-type Fund Activities Activities Total Fund Balance Net Position Net Position Net Position June 30, 2018, as previously reported $ 29,655,465 $ 70,043,717 $ 92,905,421 $ 162,949,138 GASB No. 73 - LOSAP - (6,829,996) - (6,829,996) GIA LOSAP funds 2,392,793 2,392,793 - 2,392,793 June 30, 2018, as restated $ 32,048,258 $ 65,606,514 $ 92,905,421 $ 158,511,935

COMPONENT UNIT – LIBRARY

The net position as of June 30, 2018 in the government-wide financial statements has been restated due to revisions made to the Library’s OPEB report. There is no effect on the 2019 revenues and expenses.

June 30, 2018 Net position, as previously reported $ 1,619,388 Adjustment to net OPEB liability and related deferred inflows and outflows ( 15,794) Net position, as restated $ 1,603,594 See the financial statements for the Library for further information.

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QUEEN ANNE’S COUNTY, MARYLAND

REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2019

MARYLAND STATE RETIREMENT AND PENSIONS SYSTEMS

SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (as of measurement date) Plan's Fidcuciary Employer's Employer's Proportionate Net Position Proportion Proportion Share Plan's as a (Percentage) Share as a Total Plan's Percentage of the of the Employer's Percentage Fiduciary Total of Total Measurement Collective Collective Covered of Covered Net Pension Pension Date NPL NPL Payroll Payroll Position Liability Liability

A B C (B / C) D E (D / E)

June 30, 2014 0.1038567% $ 18,431,162 $ 19,929,409 92% $ 45,339,988,000 $ 63,086,719,000 72% June 30, 2015 0.1189567% 2 4,721,248 2 1,231,535 116% 45,789,840,000 66,571,552,000 69% June 30, 2016 0.1271511% 3 0,000,070 2 3,160,758 130% 45,365,927,000 68,959,954,000 66% June 30, 2017 0.1232988% 2 6,661,766 2 4,681,589 108% 48,987,184,000 70,610,885,000 69% June 30, 2018 0.1383948% 2 9,037,440 2 6,088,826 111% 51,827,233,000 72,808,833,000 71%

SCHEDULE OF CONTRIBUTIONS (as of fiscal year end) Actual Contribution as a Contractually Contribution Employer's Percentage Fiscal Required Actual Deficiency Covered of Covered Year Contribution Contribution (Excess) Payroll Payroll

A B (A - B) C (B / C)

2015 $ 2,507,287 $ 2,507,287 $ - $ 21,231,535 12% 2016 2,477,009 2,477,009 - 23,160,758 11% 2017 2,509,551 2,509,551 - 24,681,589 10% 2018 2,759,698 2,759,698 - 26,088,826 11% 2019 2,935,378 2,935,378 - 26,185,838 11% Both schedules above are presented to illustrate the requirements to show information for 10 years. However, until full 10-year trends are compiled, pension plans should present information for those years for which the information is

available.

-124-

QUEEN ANNE’S COUNTY, MARYLAND

REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2019

MARYLAND STATE RETIREMENT AND PENSIONS SYSTEMS (CONTINUED)

ACTUARIAL ASSUMPTIONS – PENSION PLAN

Changes in Benefit Terms There were no benefit changes during the year.

Changes in Assumptions Adjustments to the roll-forward liabilities were made to reflect the following assumption change in the 2018 valuation:

Inflation assumption changed from 2.65% to 2.60%.

Actuarial Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 22 years for the State Systems, 23 years for LEOPS Muni, and 30 years for CORS Muni. For ECS Numi: 100 years phasing down to 20 years over 6 years, 100 years remaining.

Asset Valuation Model Five-year smoothed market; 20% collar Inflation In the 2018 actuarial valuation, 2.60% general, 3.10% wage. In the 2017 actuarial valuation, 2.65% general, 3.15% wage.

Salary Increases In the 2018 actuarial valuation, 3.10% to 9.10% including inflation. In the 2017 actuarial valuation, 3.15% to 9.15% including inflation.

Investment Rate of Return In the 2018 actuarial valuation, 7.45%. In the 2017 actuarial valuation, 7.50%.

Retirement Age Experienced-based table of rates that are specific to the type of eligibility condition. Last updated for the 2015 valuation pursuant to an experience study of the period 2010 - 2014.

Mortality RP-2014 Mortality Tables calibrated to MSRPS experience with generational mortality projections using MP-2014 (2-dimensional) mortality improvement scale.

-125-

QUEEN ANNE’S COUNTY, MARYLAND

REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2019

OTHER POST-EMPLOYMENT BENEFITS TRUST

The following required supplementary information relates to the OPEB plan described in Note 14. This information is intended to help users assess the system’s funding status on a going-concern basis; assess progress made in accumulating assets to pay benefits when due; and make comparisons among employers.

SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY

2017 2018 2019 Total OPEB Liability ("TOL") Service cost $ 1 ,097,813 $ 1,130,747 $ 1,164,669 Interest 2,764,491 2,985,530 3,136,157 Changes in benefit terms - - - Difference between expected and actual experience - - 7 35,549 Changes in assumptions - 2 65,899 915,266 Benefit payments (1,291,027) (1,498,005) (1,568,468) Net change in total OPEB liability 2,571,277 2,884,171 4,383,173 Total OPEB liability ‐ beginning of year 48,695,013 51,266,290 54,150,461

Total OPEB liability ‐ end of year $ 51,266,290 $ 54,150,461 $ 58,533,634 Plan Fiduciary Net Position ("PFNP") Contributions ‐ employer $ 2 ,223,474 $ 2,731,447 $ 3,037,243 Contributions ‐ member - - - Net investment income 75,175 207,932 342,827 Benefit payments (1,291,027) (1,498,005) (1,568,468) Admin expenses - (2,452) (39,142) Other - - - Net change in plan fiduciary net position 1,007,622 1,438,922 1,772,460

Plan fiduciary net position ‐ beginning of year 2,804,433 3,812,055 5,250,977 Plan fiduciary net position ‐ end of year $ 3 ,812,055 $ 5,250,977 $ 7,023,437 Net OPEB liability ("NOL") ‐ beginning of year $ 45,890,580 $ 47,454,235 $ 48,899,484 Net OPEB liability ‐ end of year $ 47,454,235 $ 48,899,484 $ 51,510,197 PFNP as a % of TOL 7.4% 9.7% 12.0% Covered employee payroll $ 21,604,888 $ 22,282,543 $ 23,843,440

NOL as a % of covered employee payroll 219.6% 219.5% 216.0% This schedule is presented to illustrate the requirements to show information for 10 years. However, until a full 10-year trend is available, only those years for which information is available, will be presented.

-126-

QUEEN ANNE’S COUNTY, MARYLAND

REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2019

OTHER POST-EMPLOYMENT BENEFITS TRUST (CONTINUED)

SCHEDULE OF ACTUAL EMPLOYER CONTRIBUTION AS A PERCENTAGE OF COVERED-EMPLOYEE

PAYROLL

Actuarially Contribution Determined Actual Contribution Covered as a Fiscal Employer Employer Deficiency / Employee Percent Year Contribution Contribution (Excess) Payroll of Payroll 2010 $ 6,410,934 $ 604,221 $ 5,806,713 $ 23,778,696 2.5% 2011 7,256,495 835,792 6,420,703 20,439,972 4.1% 2012 7,806,661 1,508,144 6,298,517 18,903,632 8.0% 2013 9,024,000 1,668,781 7,355,219 17,640,063 9.5% 2014 9,187,000 1,692,951 7,494,049 17,953,154 9.4%

2015 4,004,722 2,066,819 1,937,903 19,064,280 10.8% 2016 4,189,564 2,121,316 2,068,248 20,650,915 10.3% 2017 3,853,839 2,223,474 1,630,365 21,604,888 10.3% 2018 3,969,454 2,731,447 1,238,007 22,282,543 12.3% 2019 4,377,119 3,037,243 1,339,876 23,843,440 12.7%

ACTUARIAL ASSUMPTIONS – OPEB PLAN

Actuarial assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2019, using the following actuarial assumptions, applied to all periods included in the measurement:

Investment Return: 6.00%, net of investment expense and including inflation Healthcare Trend: 6.75% initially, grading down to 4.25% ultimate Mortality rates are based on the PUB2010G Headcount tables with Scale SSA18 applied on a generational basis.

PUB2010G Headcount Disabled tables are used for those on disability, if applicable.

Changes in Actuarial assumptions There were no changes in actuarial assumptions since the prior year, except the change in discount rate due to an updated fund availability analysis and the change to the Mortality tables.

Actuarial Methods for Determining Employer Contributions The same economic and demographic assumptions are used for both funding and financial reporting purposes under GASB 74/75.

The Entry Age method is used for accounting/GASB purposes, therefore all of the actuarial figures within this Report are based on it. Actuarially Determined Contributions are also based on the Entry Age method, with a closed level percentage of payroll amortization of the unfunded liability (19 years remaining).

-127-

QUEEN ANNE’S COUNTY, MARYLAND

REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2019

LENGTH OF SERVICE AWARD PROGRAM (LOSAP)

SCHEDULE OF CHANGES IN THE NET LOSAP LIABILITY (as of measurement date)

AS OF MEASUREMENT DATE 2017 2018

Total LOSAP liability ("TLL") Service cost $ 206,276 $ 164,371 Interest cost 196,904 249,496 Changes of benefit terms - - Differences between expected and actual experience - 137,821 Changes of assumptions 578,039 (491,888) Benefits payments and admin expenses (190,420) (220,060) Net change in TLL 790,799 (160,260) TLL - beginning of year 6,039,197 6,829,996 TLL - end of year $ 6,829,996 $ 6,669,736

Plan fiduciary net position ("PFNP") Contributions - employer $ - $ - Net investment income - - Benefits payments - - Administrative expense - - Net change in PFNP - - Total PFNP - beginning of year - - Total PFNP - end of year $ - $ - Net LOSAP liability ("NLL") 6,829,996 6,669,736 PFNP as a % of TLL 0% 0% Covered employee payroll - * N/A N/A NLL as a % of covered payroll N/A N/A

* - the NLL is based on volunteer hours and as such has no payroll associated.

Expected average remaining service years of all participants 6 10 This schedule is presented to illustrate the requirements to show information for 10 years. However, until a full 10-year trend is available, only those years for which information is available, will be presented.

NOTES TO THE REQUIRED SUPPLEMENTAL INFORMATION – LOSAP

The LOSAP has no assets accumulated in a trust that meet the criteria in GASB 73, paragraph 4.

Benefit changes – fiscal year 2018 None 2019 None Changes of assumptions – fiscal year 2018 None, other than the discount rate 2019 None, other than the discount rate Discount rate – measurement rate December 31, 2017 3.31% December 31, 2018 3.71% -128-

QUEEN ANNE’S COUNTY, MARYLAND

REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2019

BUDGETARY COMPARISONS FOR THE GENERAL FUND

Required Supplementary Information provides budget-to-actual comparisons for the General Fund. Budgets are adopted using the same method of accounting as that used for reporting purposes, i.e. according to generally accepted accounting principles as used in the United States of America (GAAP).

-129-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

FOR THE YEAR ENDED JUNE 30, 2019

VARIANCE

ORIGINAL FINAL WITH FINAL

BUDGET BUDGET ACTUAL BUDGET

REVENUES

Taxes Local Property Tax $ 69,341,149 $ 70,567,949 $ 70,577,908 $ 9,959 Local Income Tax 51,536,447 5 5,262,625 55,282,162 19,537 Admission and Amusement Taxes 170,000 1 70,000 155,913 (14,087) Recordation Taxes 5,327,551 5 ,802,551 5,806,760 4,209 Hotel Taxes 614,865 6 14,865 650,613 35,748 County Transfer Taxes 2,002,880 2 ,092,880 2,093,502 622 State Shared Taxes 531,866 1 ,116,866 1,121,945 5,079

Franchise Fee 481,992 4 81,992 485,521 3,529 Licenses and Permits 645,200 6 45,200 684,773 39,573 Intergovernmental 1,844,409 2 ,051,775 1,873,567 (178,208) Bond Interest Reimbursement - Build America Bond 315,000 3 15,000 319,362 4,362 Charges for Current Services 2,458,120 2 ,913,120 2,976,554 63,434 Fines and Forfeitures 69,000 69,000 8 1,394 12,394 Investment Income 150,000 1 ,150,000 1,201,645 51,645

Donations - - 860 860 Miscellaneous 841,000 8 12,761 798,670 (14,091) Total Revenues 1 36,329,479 144,066,584 144,111,149 44,565

EXPENDITURES

GENERAL GOVERNMENT

Legislative 470,488 4 73,891 407,055 66,836 Judicial Circuit Court 597,658 6 03,006 476,413 126,593 Orphan's Court 96,039 96,039 8 0,843 15,196 State's Attorney 1,281,027 1 ,299,263 1,255,255 44,008 County Administrator 210,765 2 46,765 245,695 1,070 Board of Elections 755,359 7 55,818 715,911 39,907 Finance Office 1,224,057 1 ,242,262 1,202,017 40,245 Human Resources 574,078 5 83,058 548,914 34,144

Planning and Zoning 1,986,350 2 ,013,408 1,874,529 138,879 Information Technology 1,569,717 1 ,583,122 1,462,935 120,187

QAC-TV 362,764 3 68,565 364,338 4,227

Legal Services 468,840 4 68,840 415,732 53,108 Total General Government 9,597,142 9 ,734,037 9,049,637 684,400

PUBLIC SAFETY

Sheriff's Office 8,221,162 8 ,328,546 7,646,917 681,629 Volunteer Fire and Rescue Services 3,758,617 3 ,758,617 3,704,084 54,533 Detention Center 5,045,757 5 ,104,223 4,580,674 523,549 Emergency Services 8,977,165 9 ,082,157 9,080,539 1,618 Total Public Safety 26,002,701 2 6,273,543 25,012,214 1,261,329

PARKS AND PUBLIC WORKS

Administration 616,927 6 26,177 576,481 49,696 Solid Waste Disposal 1,709,490 1 ,723,705 1,468,406 255,299 Engineering Division 796,979 8 09,549 553,330 256,219 Roads Division 5,008,367 5 ,069,824 4,402,689 667,135 General Services 2,223,602 2 ,250,078 2,248,146 1,932 Parks 3,888,668 3 ,943,123 3,529,332 413,791 Total Parks and Public Works 14,244,033 1 4,422,456 12,778,384 1,644,072

CONTINUED

-130-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

VARIANCE

ORIGINAL FINAL WITH FINAL

BUDGET BUDGET ACTUAL BUDGET

HEALTH, SOCIAL, AND RECREATION

Health Department $ 2,339,103 $ 2 ,340,412 $ 1,832,104 $ 508,308 Social Services 358,589 3 68,907 368,219 688 Recreation 788,927 7 94,386 776,564 17,822 Total Health, Social, and Recreation 3,486,619 3 ,503,705 2,976,887 526,818

EDUCATION AND LIBRARY

Board of Education 56,884,381 5 6,884,381 56,884,381 - Chesapeake College 2,012,987 2 ,012,987 2,012,986 1 Queen Anne's County Free Library 1,833,513 1 ,833,513 1,833,513 - Total Education and Library 6 0,730,881 6 0,730,881 60,730,880 1

CONSERVATION OF NATURAL RESOURCES

Cooperative Extension Service 290,736 2 91,732 290,988 744 Soil Conservation Service 279,972 2 84,646 206,369 78,277 4-H Park 84,350 84,350 8 2,941 1,409 Total Conservation of Natural Resources 655,058 6 60,728 580,298 80,430

ECONOMIC AND COMMUNITY DEVELOPMENT

Economic Development 414,357 4 50,239 448,140 2,099 Community Affairs 199,191 2 02,196 200,346 1,850 Total Economic and Community Development 613,548 6 52,435 648,486 3,949

DEBT SERVICE

School Debt Service - Principal 4,863,417 4 ,895,417 4,895,207 210 School Debt Service - Interest 2,269,951 2 ,244,951 2,243,760 1,191 County Debt Service - Principal 2,907,579 2 ,907,635 2,883,908 23,727 County Debt Service - Interest 2,453,574 2 ,444,391 2,342,627 101,764 Total Debt Service 12,494,521 1 2,492,394 12,365,502 126,892

INTERGOVERNMENTAL

Aid to Municipalities 210,419 2 10,419 197,085 13,334 SDAT Costs from State 424,496 4 24,496 272,610 151,886 Total Intergovernmental 634,915 6 34,915 469,695 165,220

CONTINUED

-131-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL

GENERAL FUND

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

VARIANCE

ORIGINAL FINAL WITH FINAL

BUDGET BUDGET ACTUAL BUDGET

MISCELLANEOUS

Aid to Other Agencies $ 354,783 $ 7 58,542 $ 758,156 $ 386 Insurance & Benefits 2,104,013 2 ,104,013 2,044,220 59,793 Transfer to OPEB Fund 1,468,775 1 ,468,775 1,468,775 - Contingencies 1,106,607 4 98,074 251,496 246,578 Salary Lapse ( 960,000) (960,000) - (960,000) Miscellaneous Non-Departmental 830,425 8 23,252 737,613 85,639 Total Miscellaneous 4,904,603 4 ,692,656 5,260,260 (567,604) Total Expenditures 133,364,021 133,797,750 129,872,243 3,925,507

Excess of Revenues Over Expenditures 2,965,458 1 0,268,834 14,238,906 3,970,072

OTHER FINANCING SOURCES (USES)

Proceeds of Capital Asset Disposals - - 3 6,849 36,849 Transfers In From:

Impact Fees - School 1,050,000 1 ,050,000 - ( 1,050,000) Total Transfers In 1,050,000 1 ,050,000 - ( 1,050,000) Transfers Out To:

General Capital Projects Fund 1,103,000 8 ,303,000 8,303,000 - Department of Aging 1,742,739 1 ,813,714 1,398,544 415,170 Department of Housing and Community Services 828,029 835,808 730,543 105,265 Community Partnerships 417,275 447,765 438,449 9,316 Grants Fund - 19,761 1 9,761 - Impact Fees - Fire Companies/Contingencies 90,000 90,000 3 6,007 53,993 Airport Enterprise Fund 254,998 254,998 195,374 59,624

Golf Course Enterprise Fund 261,344 263,612 143,012 120,600 Total Transfers Out 4,697,385 1 2,028,658 11,264,690 763,968 Total Other Financing (Uses) (3,647,385) (10,978,658) (11,227,841) (249,183) Net Increase (Decrease) in Fund Balance $ (681,927) $ (709,824) 3,011,065 $ 3,720,889 Fund Balances, July 1 before Restatement 29,655,465 Adjustment to Restate Beginning Fund Balances 2,392,793 Fund Balance, July 1 32,048,258

Fund Balance, June 30 $ 35,059,323 -132- -133- Combining and Individual Fund Statements and Schedules The Combining and Individual Fund Statements and Schedules provide detailed information concerning the financial position, results of operations, and budgetary comparisons for the non-major funds, capital projects, and fiduciary funds.

-134- Non-Major Governmental Funds Non-Major Governmental Funds are used to account for the proceeds of specific revenue sources (other than capital projects and debt service funds) that are legally restricted to expenditures for specific purposes.

-135-

NON-MAJOR GOVERNMENTAL FUNDS

Non-major governmental funds are special revenue funds, unless otherwise noted:

Department of Aging – This fund accounts for activities funded primarily by grants to provide services for the elderly and is included in the social services function.

Housing and Community Services – This fund accounts for activities funded mostly by grants and revolving loan funds that support housing rehabilitation and home-ownership and is included in the economic and community development function.

Grants Fund – This fund accounts for activities funded by grants and is included in various governmental functions, depending on the grant.

Revolving Loan Fund – This fund accounts for activities funded by community donations and grants to promote and provide economic development loans to local businesses and is included in the economic and community development function.

Economic Development Incentive Fund – This fund accounts for activities funded with a portion of recordation taxes that support economic development in the County by attracting and investing in new and existing businesses and is included in the economic and community development function.

BRIDGE (Business Reinvestment and Infrastructure Development Grant Enterprise) Fund – This fund accounts for activities funded with a portion of recordation taxes and provides new commercial businesses funding for capital and infrastructure improvements. The BRIDGE Fund is included in the economic and community development function.

Community Partnerships for Children – This fund accounts for activities funded by grants allocated to the County that provide services for children and families and is included in the social services function.

Critical Areas – This fund accounts for activities funded by payments in lieu of performance bonds that support efforts to mitigate and preserve critical areas along the shoreline of tidal waters within the County and is included in the conservation of natural resources function.

Law Library – This fund accounts for activities funded by court fees, fines, and contributions from local attorneys to update legal reference materials housed in the courthouse and is included in the general government function.

Sheriff’s Drug Task Force – This fund accounts for activities funded by drug-related forfeitures that support drug interdiction efforts by a multi-faceted task force and is included in the public safety function.

Inmate Welfare Fund – This fund accounts for activities funded by profits earned from Detention Center inmate-related services that promote the welfare of the inmates and is included in the public safety function.

Agricultural Transfer Tax – This fund accounts for activities funded primarily by the Agricultural Transfer Tax to purchase agricultural easements that preclude development and is included in the conservation of natural resources function.

Rural Legacy – This fund accounts for activities funded primarily by Maryland’s Rural Legacy Program to purchase easements that preclude development and is included in the conservation of natural resources function.

-136- Purchase of Development Rights – This fund accounts for activities funded by Queen Anne’s County to acquire easements to restrict the use of agricultural land and woodland and is included in the conservation of natural resources function.

Dredging Special Assessments – This fund accounts for activities funded by special assessment funds collected to repay loans for specific dredging and erosion projects that benefited Price’s Creek, Grove Creek, and Narrows Pointe and is included in the conservation of natural resources function.

Kent Narrows – This fund accounts for activities funded by tax revenues to improve the Kent Narrows area and is included in the economic and community development function.

Capital Projects – School Impact Fees – This fund accounts for financial resources generated by new residential construction and used for the construction of public school facilities or payment of school debt relating to such construction.

Capital Projects – Fire Company Impact Fees – This fund accounts for activities funded by impact fees specifically earmarked to enhance local volunteer fire company preparedness resulting from new construction and is included in the public safety function.

Capital Projects – Parks and Recreation Impact Fees – This fund accounts for activities funded by impact fees specifically earmarked to enhance parks and recreation and is included in the parks and recreation function.

-137-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING BALANCE SHEET

NON-MAJOR GOVERNMENTAL FUNDS

JUNE 30, 2019

HOUSING AND ECONOMIC

DEPARTMENT COMMUNITY GRANTS REVOLVING DEVELOPMENT BRIDGE

OF AGING SERVICES FUND LOAN FUND INCENTIVE FUND

ASSETS

Cash and Cash Equivalents $ - $ 2,563,090 $ - $ 488,559 $ 404,896 $ 300,880 Receivables Accounts Receivable (Net) - 7,475 4,311 10,662 - - Loans Receivable (Net) - 5,412,350 - 70,283 - - Special Assessments (Net) - - - - - - Due from Other Governments 346,685 52,707 85,176 - - - Total Assets $ 346,685 $ 8,035,622 $ 89,487 $ 569,504 $ 404,896 $ 300,880

LIABILITIES

Accrued Liabilities $ 140,431 $ 33,797 $ 16,322 $ - $ - $ - Due to Other Funds 2,063 - 64,879 - - - Due to Other Governmental Agencies 721 3,136 - - - - Unearned Revenue - 15,595 8,286 - - - Total Liabilities 143,215 52,528 89,487 - - -

DEFERRED INFLOWS OF RESOURCES

Unavailable Benefit Assessments - - - - - - Unavailable Fees - - - - - - Total Deferred Inflows - - - - - - Total Liabilities and Deferred Inflows 143,215 52,528 89,487 - - -

FUND BALANCES

Restricted 1,205 3,017,005 - - - - Committed - 4,966,089 - 569,504 404,896 300,880 Assigned 202,265 - - - - - Unassigned - - - - - - Total Fund Balances 203,470 7,983,094 - 569,504 404,896 300,880 Total Liabilities, Deferred Inflows and Fund Balances $ 346,685 $ 8,035,622 $ 89,487 $ 569,504 $ 404,896 $ 300,880 -138-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING BALANCE SHEET

NON-MAJOR GOVERNMENTAL FUNDS

JUNE 30, 2019

(CONTINUED)

COMMUNITY SHERIFF'S

PARTNERSHIPS DRUG PURCHASE OF

FOR CRITICAL LAW TASK INMATE AGRICULTURAL RURAL DEVELOPMENT

CHILDREN AREAS LIBRARY FORCE WELFARE TRANSFER LEGACY RIGHTS

$ 530,676 $ 220,971 $ 306,146 $ 171,940 $ 2 51,725 $ 91,529 $ 390,638 $ 550 2,594 - - - 3,424 - - -

- - - - - - - -

- - - - - - - -

142,456 - - - - - - - $ 675,726 $ 220,971 $ 306,146 $ 171,940 $ 2 55,149 $ 91,529 $ 390,638 $ 550 $ 214,791 $ - $ 351 $ 19,599 $ 9,169 $ 4,680 $ - $ -

- - - - - - - -

351,515 - - - 24,137 - - - 44,828 - - - - - - - 611,134 - 351 19,599 33,306 4,680 - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

611,134 - 351 19,599 33,306 4,680 - -

- 220,971 - 152,341 2 21,843 86,849 390,638 -

- - - - - - - 550

64,592 - 305,795 - - - - -

- - - - - - - -

64,592 220,971 305,795 152,341 2 21,843 86,849 390,638 550 $ 675,726 $ 220,971 $ 306,146 $ 171,940 $ 2 55,149 $ 91,529 $ 390,638 $ 550

CONTINUED

-139-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING BALANCE SHEET

NON-MAJOR GOVERNMENTAL FUNDS

JUNE 30, 2019

(CONTINUED)

CAPITAL PROJECTS

DREDGING PARKS AND TOTAL

SPECIAL KENT SCHOOL FIRE COMPANY RECREATION NON-MAJOR

ASSESSMENTS NARROWS IMPACT FEES IMPACT FEES IMPACT FEES GOVERNMENTAL

ASSETS

Cash and Cash Equivalents $ 26,251 $ 194,361 $ 8,997,548 $ 285,533 $ 99,041 $ 15,324,334 Receivables Accounts Receivable (Net) 1,000 - - - - 29,466 Loans Receivable (Net) - - 701,258 78,448 76,586 6,338,925 Special Assessments (Net) 820,987 - - - - 820,987 Due from Other Governments - - - - - 627,024 Total Assets $ 848,238 $ 194,361 $ 9,698,806 $ 363,981 $ 175,627 $ 23,140,736

LIABILITIES

Accrued Liabilities $ - $ - $ - $ - $ - $ 439,140 Due to Other Funds - - - 28,164 - 95,106 Due to Other Governmental Agencies - - - - - 379,509 Unearned Revenue - - - - - 68,709 Total Liabilities - - - 28,164 - 982,464

DEFERRED INFLOWS OF RESOURCES

Unavailable Benefit Assessments 820,987 - - - - 820,987 Unavailable Fees - - 701,258 78,448 76,586 856,292 Total Deferred Inflows 820,987 - 701,258 78,448 76,586 1,677,279 Total Liabilities and Deferred Inflows 820,987 - 701,258 106,612 76,586 2,659,743

FUND BALANCES

Restricted 27,251 194,361 - - - 4,312,464 Committed - - 8,997,548 285,533 99,041 15,624,041 Assigned - - - - - 572,652 Unassigned - - - (28,164) - (28,164) Total Fund Balances 27,251 194,361 8,997,548 257,369 99,041 20,480,993 Total Liabilities, Deferred Inflows and Fund Balances $ 848,238 $ 194,361 $ 9,698,806 $ 363,981 $ 175,627 $ 23,140,736 -140- -141-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

HOUSING AND ECONOMIC

DEPARTMENT COMMUNITY GRANTS REVOLVING DEVELOPMENT BRIDGE

OF AGING SERVICES FUND LOAN FUND INCENTIVE FUND

REVENUES

Taxes Local Property Tax $ - $ - $ - $ - $ - $ - Recordation Taxes - 179,900 - - - - State Shared Taxes - - - - - - Intergovernmental 1,144,742 156,288 190,075 - - - Charges for Current Services 91,183 - 510 - - - Fines and Forfeitures - - - - - - Investment Income 3,429 20,243 - 2,722 - - Donations 30,224 - - - - - Miscellaneous 33,831 - 11,920 - 27,100 - Total Revenues 1,303,409 356,431 202,505 2,722 27,100 -

EXPENDITURES

Current General Government - - 26,813 - - - Public Safety - - 87,251 - - - Public Works - - 44,240 - - - Social Services 2,696,253 - - - - - Conservation of Natural Resources - - - - - - Economic/Community Development - 654,391 49,012 - 266,335 - Capital Outlay - - 14,950 - - - Debt Service Principal - - - - - - Total Expenditures 2,696,253 654,391 222,266 - 266,335 - Excess of Revenues Over (Under) Expenditures ( 1,392,844) ( 297,960) ( 19,761) 2,722 (239,235) -

OTHER FINANCING SOURCES (USES)

Insurance Proceeds 14 - - - - - Transfers In 1,398,544 730,543 19,761 - 288,000 - Transfers Out - - - - - (288,000) Other Financing Sources (Uses) 1,398,558 730,543 19,761 - 288,000 (288,000) Net Increase (Decrease) in Fund Balances 5,714 432,583 - 2,722 48,765 (288,000) Fund Balances, July 1 197,756 7,550,511 - 566,782 356,131 588,880 Fund Balances, June 30 $ 203,470 $ 7,983,094 $ - $ 569,504 $ 404,896 $ 300,880

-142-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

COMMUNITY SHERIFF'S

PARTNERSHIPS DRUG PURCHASE OF

FOR CRITICAL LAW TASK INMATE AGRICULTURAL RURAL DEVELOPMENT

CHILDREN AREAS LIBRARY FORCE WELFARE TRANSFER LEGACY RIGHTS

$ - $ - $ - $ - $ - $ - $ - $ -

- - - - - - - -

- - - - - 4 9,723 - -

803,041 - - - 5,072 - 2,118,200 -

- 2 9,113 14,769 - 121,259 - - -

- - 36,646 74,472 - - - -

- - 5,970 3,744 4,788 - 21,711 -

- - - - - - - -

15,746 - - - 10,481 - - - 818,787 2 9,113 57,385 78,216 141,600 4 9,723 2,139,911 -

- - 2,489 - - - - -

- - - 59,673 141,060 - - -

- - - - - - - -

1,257,236 - - - - - - -

- - - - - - 2,127,749 -

- - - - - - - -

- - - - - - - -

- - - - - - - -

1,257,236 - 2,489 59,673 141,060 - 2,127,749 - ( 438,449) 2 9,113 54,896 18,543 540 4 9,723 12,162 -

- - - - - - - -

438,449 - - - - - - -

- - - - - - - -

438,449 - - - - - - -

- 2 9,113 54,896 18,543 540 4 9,723 12,162 -

64,592 1 91,858 250,899 133,798 221,303 3 7,126 378,476 550 $ 64,592 $ 2 20,971 $ 305,795 $ 152,341 $ 221,843 $ 8 6,849 $ 390,638 $ 550

CONTINUED

-143-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

CAPITAL PROJECTS

DREDGING PARKS AND TOTAL

SPECIAL KENT SCHOOL FIRE COMPANY RECREATION NON-MAJOR

ASSESSMENTS NARROWS IMPACT FEES IMPACT FEES IMPACT FEES GOVERNMENTAL

REVENUES

Taxes Local Property Tax $ - $ 3 7,385 $ - $ - $ - $ 37,385 Recordation Taxes - - - - - 179,900 State Shared Taxes - - - - - 49,723 Intergovernmental - - - - - 4,417,418 Charges for Current Services 71,433 - 1,318,609 2 55,242 196,071 2,098,189 Fines and Forfeitures - - - - - 111,118 Investment Income 333 4 ,218 175,714 7 ,975 14,560 265,407 Donations - - - - - 30,224 Miscellaneous - - - - - 99,078

Total Revenues 71,766 4 1,603 1,494,323 2 63,217 210,631 7,288,442

EXPENDITURES

Current General Government (4,618) - - - - 24,684 Public Safety - - - 4 13,493 - 701,477 Public Works - - - - - 44,240 Social Services - - - - - 3,953,489 Conservation of Natural Resources - - - - - 2,127,749 Economic/Community Development - 2 0,000 - - - 989,738 Capital Outlay - - - - - 14,950 Debt Service Principal 76,705 - - - - 76,705 Total Expenditures 72,087 2 0,000 - 4 13,493 - 7,933,032 Excess of Revenues Over (Under) Expenditures (321) 2 1,603 1,494,323 (150,276) 210,631 ( 644,590)

OTHER FINANCING SOURCES (USES)

Insurance Proceeds - - - - - 14 Transfers In - - - 3 6,007 - 2,911,304 Transfers Out - - - - ( 1,364,593) ( 1,652,593) Other Financing Sources (Uses) - - - 3 6,007 ( 1,364,593) 1,258,725 Net Increase (Decrease) in Fund Balances (321) 2 1,603 1,494,323 (114,269) ( 1,153,962) 614,135 Fund Balances, July 1 27,572 1 72,758 7,503,225 3 71,638 1,253,003 19,866,858 Fund Balances, June 30 $ 27,251 $ 1 94,361 $ 8,997,548 $ 2 57,369 $ 99,041 $ 20,480,993

-144- -145-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

DEPARTMENT OF AGING HOUSING AND COMMUNITY SERVICES

VARIANCE VARIANCE

ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE)

REVENUES

Taxes Local Property Tax $ - $ - $ - $ - $ - $ - $ - $ - Recordation Taxes - - - - 200,000 200,000 1 79,900 (20,100) State Shared Taxes - - - - - - - - Intergovernmental 980,128 1 ,056,142 1,144,742 8 8,600 162,028 237,457 1 56,288 (81,169) Charges for Current Services 7 1,100 91,100 91,183 83 350,000 350,000 - (350,000) Fines and Forfeitures - - - - - - - - Investment Income - - 3,429 3 ,429 - - 20,243 20,243

Donations 3 5,000 35,000 30,224 (4,776) - - - - Miscellaneous 3 ,000 3,000 33,831 3 0,831 - - - - Total Revenues 1,089,228 1 ,185,242 1,303,409 118,167 712,028 787,457 3 56,431 (431,026)

EXPENDITURES

Current Operating Expenditures 2,831,967 2 ,998,956 2,696,253 302,703 1,690,057 1,773,265 6 54,391 1,118,874 Capital Outlay - - - - - - - - Debt Service Principal - - - - - - - - Total Expenditures 2,831,967 2 ,998,956 2,696,253 302,703 1,690,057 1,773,265 6 54,391 1,118,874 Excess of Revenues Over (Under) Expenditures ( 1,742,739) (1,813,714) (1,392,844) 420,870 (978,029) (985,808) (297,960) 687,848

OTHER FINANCING SOURCES (USES)

Insurance Proceeds - - 14 14 - - - - Transfers In 1,742,739 1 ,813,714 1,398,544 (415,170) 828,029 835,808 7 30,543 (105,265) Transfers Out - - - - - - - - Total Other Financing Sources (Uses) 1,742,739 1 ,813,714 1,398,558 (415,156) 828,029 835,808 7 30,543 (105,265) Net Increase (Decrease) in Fund Balances $ - $ - 5,714 $ 5,714 $ ( 150,000) $ (150,000) 4 32,583 $ 582,583 Fund Balances, July 1 197,756 7 ,550,511

Fund Balances, June 30 $ 203,470 $ 7 ,983,094 -146-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

GRANTS FUND ECONOMIC DEVELOPMENT INCENTIVE

VARIANCE VARIANCE

ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE)

$ - $ - $ - $ - $ - $ - $ - $ -

- - - - - - - -

- - - - - - - -

251,269 229,408 190,075 (39,333) - - - - 4,057 4,057 510 (3,547) - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

30,907 30,907 11,920 (18,987) - - 27,100 27,100 286,233 264,372 202,505 (61,867) - - 27,100 27,100 286,233 284,133 207,316 76,817 - 524,853 266,335 258,518

- - 14,950 (14,950) - - - -

- - - - - - - -

286,233 284,133 222,266 61,867 - 524,853 266,335 258,518

- (19,761) (19,761) - - (524,853) (239,235) 285,618

- - - - - - - -

- 19,761 19,761 - - 288,000 288,000 -

- - - - - - - -

- 19,761 19,761 - - 288,000 288,000 -

$ - $ - - $ - $ - $ (236,853) 48,765 $ 285,618

- 356,131

$ - $ 404,896

CONTINUED

-147-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

BRIDGE FUND COMMUNITY PARTNERSHIPS FOR CHILDREN

VARIANCE VARIANCE

ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE)

REVENUES

Taxes Local Property Tax $ - $ - $ - $ - $ - $ - $ - $ - Recordation Taxes - - - - - - - - State Shared Taxes - - - - - - - - Intergovernmental - - - - 631,658 881,002 803,041 (77,961) Charges for Current Services - - - - - - - - Fines and Forfeitures - - - - - - - - Investment Income - - - - - - - - Donations - - - - - - - - Miscellaneous - - - - 20,921 21,921 15,746 (6,175) Total Revenues - - - - 652,579 902,923 818,787 (84,136)

EXPENDITURES

Current Operating Expenditures - - - - 1,069,854 1,350,688 1,257,236 93,452 Capital Outlay - - - - - - - - Debt Service Principal - - - - - - - - Total Expenditures - - - - 1,069,854 1,350,688 1,257,236 93,452 Excess of Revenues Over (Under) Expenditures - - - - (417,275) (447,765) (438,449) 9 ,316

OTHER FINANCING SOURCES (USES)

Insurance Proceeds - - - - - - - - Transfers In - - - - 417,275 447,765 438,449 (9,316) Transfers Out - (288,000) (288,000) - - - - - Total Other Financing Sources (Uses) - (288,000) (288,000) - 417,275 447,765 438,449 (9,316) Net Increase (Decrease) in Fund Balances $ - $ ( 288,000) (288,000) $ - $ - $ - - $ - Fund Balances, July 1 588,880 64,592 Fund Balances, June 30 $ 300,880 $ 64,592 -148-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

LAW LIBRARY INMATE WELFARE

VARIANCE VARIANCE

ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE)

$ - $ - $ - $ - $ - $ - $ - $ -

- - - - - - - -

- - - - - - - -

- - - - - - 5,072 5,072

10,000 10,000 14,769 4,769 120,000 120,000 121,259 1,259 15,500 15,500 36,646 21,146 - - - -

- - 5,970 5,970 - - 4,788 4,788

- - - - - - - -

- - - - 22,350 22,350 10,481 (11,869)

25,500 25,500 57,385 31,885 142,350 142,350 141,600 (750) 25,500 25,500 2,489 23,011 137,350 137,350 141,060 (3,710)

- - - - 5,000 5,000 - 5,000

- - - - - - - -

25,500 25,500 2,489 23,011 142,350 142,350 141,060 1,290

- - 54,896 54,896 - - 540 540

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

$ - $ - 54,896 $ 54,896 $ - $ - 540 $ 540 250,899 221,303 $ 305,795 $ 221,843

CONTINUED

-149-

QUEEN ANNE'S COUNTY, MARYLAND QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED) (CONTINUED)

AGRICULTURAL TRANSFER RURAL LEGACY

VARIANCE VARIANCE

ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE)

REVENUES

Taxes Local Property Tax $ - $ - $ - $ - $ - $ - $ - $ - Recordation Taxes - - - - - - - - State Shared Taxes 250,000 250,000 49,723 (200,277) - - - - Intergovernmental - - - - - 2,759,073 2,118,200 (640,873) Charges for Current Services - - - - - - - - Fines and Forfeitures - - - - - - - - Investment Income - - - - - - 21,711 21,711 Donations - - - - - - - - Miscellaneous - - - - - - - - Total Revenues 250,000 250,000 49,723 (200,277) - 2,759,073 2,139,911 (619,162)

EXPENDITURES

Current Operating Expenditures 250,000 250,000 - 250,000 - 2,759,073 2,127,749 631,324 Capital Outlay - - - - - - - - Debt Service Principal - - - - - - - - Total Expenditures 250,000 250,000 - 250,000 - 2,759,073 2,127,749 631,324 Excess of Revenues Over (Under) Expenditures - - 49,723 4 9,723 - - 12,162 12,162

OTHER FINANCING SOURCES (USES)

Insurance Proceeds - - - - - - - - Transfers In - - - - - - - - Transfers Out - - - - - - - - Total Other Financing Sources (Uses) - - - - - - - - Net Increase (Decrease) in Fund Balances $ - $ - 49,723 $ 49,723 $ - $ - 12,162 $ 12,162 Fund Balances, July 1 37,126 378,476 Fund Balances, June 30 $ 86,849 $ 390,638 -150-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

DREDGING SPECIAL ASSESSMENTS KENT NARROWS

VARIANCE VARIANCE

ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE)

$ - $ - $ - $ - $ 38,000 $ 38,000 $ 37,385 $ (615)

- - - - - - - -

- - - - - - - -

- - - - - - - -

72,191 72,191 71,433 (758) - - - -

- - - - - - - -

- - 333 333 - - 4,218 4,218

- - - - - - - -

- - - - - - - -

72,191 72,191 71,766 (425) 38,000 38,000 41,603 3,603

- - (4,618) 4,618 38,000 38,000 20,000 18,000

- - - - - - - -

72,191 72,191 76,705 (4,514) - - - - 72,191 72,191 72,087 104 38,000 38,000 20,000 18,000

- - (321) (321) - - 21,603 21,603

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

$ - $ - (321) $ (321) $ - $ - 21,603 $ 21,603 27,572 172,758 $ 27,251 $ 194,361

CONTINUED

-151-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

CAPITAL PROJECTS - SCHOOL IMPACT FEES

VARIANCE

ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE)

REVENUES

Taxes Local Property Tax $ - $ - $ - $ - Recordation Taxes - - - - State Shared Taxes - - - - Intergovernmental - - - - Charges for Current Services 1,050,000 1,050,000 1,318,609 268,609 Fines and Forfeitures - - - - Investment Income - - 175,714 175,714 Donations - - - - Miscellaneous - - - - Total Revenues 1,050,000 1,050,000 1,494,323 444,323

EXPENDITURES

Current Operating Expenditures - - - - Capital Outlay - - - - Debt Service Principal - - - - Total Expenditures - - - - Excess of Revenues Over (Under) Expenditures 1,050,000 1,050,000 1,494,323 444,323

OTHER FINANCING SOURCES (USES)

Insurance Proceeds - - - - Transfers In - - - - Transfers Out (1,050,000) (1,050,000) - 1,050,000 Total Other Financing Sources (Uses) (1,050,000) (1,050,000) - 1,050,000 Net Increase (Decrease) in Fund Balances $ - $ - 1,494,323 $ 1,494,323 Fund Balances, July 1 7,503,225 Fund Balances, June 30 $ 8,997,548 -152-

QUEEN ANNE'S COUNTY, MARYLAND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

CAPITAL PROJECTS - FIRE COMPANY IMPACT FEES CAPITAL PROJECTS - PARKS & RECREATION IMPACT FEES

VARIANCE VARIANCE

ORIGINAL FINAL POSITIVE ORIGINAL FINAL POSITIVE

BUDGET BUDGET ACTUAL (NEGATIVE) BUDGET BUDGET ACTUAL (NEGATIVE)

$ - $ - $ - $ - $ - $ - $ - $ -

- - - - - - - -

- - - - - - - -

- - - - - - - -

200,000 200,000 255,242 55,242 150,000 261,590 196,071 (65,519)

- - - - - - - -

500 500 7,975 7,475 400 400 14,560 14,160

- - - - - - - -

- - - - - - - -

200,500 200,500 263,217 62,717 150,400 261,990 210,631 (51,359) 290,500 415,166 413,493 1,673 - - - -

- - - - - - - -

- - - - - - - -

290,500 415,166 413,493 1,673 - - - - (90,000) (214,666) (150,276) 64,390 150,400 261,990 210,631 (51,359)

- - - - - - - -

90,000 90,000 36,007 (53,993) - - - -

- - - - (150,400) (1,514,993) (1,364,593) 150,400

90,000 90,000 36,007 (53,993) (150,400) (1,514,993) (1,364,593) 150,400 $ - $ (124,666) (114,269) $ 10,397 $ - $ (1,253,003) (1,153,962) $ 99,041 371,638 1,253,003 $ 257,369 $ 99,041 -153- -154-

NON-MAJOR ENTERPRISE FUNDS

Non-Major Enterprise funds account for activities which are commercial in nature and are primarily or partially intended to be self-supporting. Each fund sets its rates and service charges at a level sufficient to:

(1) meet all of its operating expenses; (2) provide for depreciation from wear and obsolescence of capital

assets; and (3) to the extent that funds are not borrowed, finance the cost of expansion of physical facilities.

-155-

NON-MAJOR ENTERPRISE FUNDS

Non-major enterprise funds include the following funds:

Blue Heron Golf Course – This fund accounts for operation and maintenance of an 18-hole public golf course that is owned and operated by the County.

Public Landings and Marinas – This fund accounts for operation, maintenance, and major repairs of public landings, bulkheads, and public marinas. For a fee, the general public has access to these landings to launch small craft into the many waterways that surround the County and can also access the marinas for temporary mooring.

-156-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF NET POSITION

NON-MAJOR ENTERPRISE FUNDS

JUNE 30, 2019

PUBLIC TOTAL

GOLF LANDINGS NON-MAJOR

ASSETS COURSE AND MARINAS ENTERPRISE

Current Assets Equity in Pooled Cash $ - $ 802,180 $ 802,180 Accounts Receivable (Net) - 4 3,728 43,728 Due from Other Governments - 8 2,000 82,000 Bond Interest Reimbursement Receivable - Build America Bond - 2 ,682 2,682 Inventories 4 ,519 - 4,519 Total Current Assets 4 ,519 930,590 935,109 Capital Assets 2,917,106 6,374,202 9,291,308 Less Accumulated Depreciation (724,311) (1,218,228) (1,942,539)

Total Capital Assets, Net of Depreciation 2,192,795 5,155,974 7,348,769 Total Noncurrent Assets 2,192,795 5,155,974 7,348,769 Total Assets 2,197,314 6,086,564 8,283,878

DEFERRED OUTFLOWS OF RESOURCES

Deferred Outflow for Other Post-Employment Benefit Obligation - 7 ,618 7,618 Deferred Outflow for Pension Contributions 1 3,375 2 6,934 40,309 Deferred Charge on Refunding 5 ,888 1 ,175 7,063 Total Deferred Outflows of Resources 1 9,263 3 5,727 54,990

LIABILITIES

Current Liabilities Accounts Payable 4 7,826 2 3,608 71,434 Accrued Interest Payable 2 ,027 9 ,324 11,351 Due to Other Funds 625,313 - 625,313 Unearned Revenue 3 ,789 - 3,789 Current Portion of Compensated Absences 8 ,066 1 8,651 26,717 Current Portion of Bonds/Notes Payable 8 4,525 5 4,899 139,424 Total Current Liabilities 771,546 106,482 878,028 Noncurrent Liabilities Compensated Absences 5 ,731 1 3,251 18,982

Other Post-Employment Benefit Obligation - 311,537 311,537 Net Pension Liability 6 4,837 131,898 196,735 Bonds/Notes Payable 9 8,155 679,431 777,586 Total Noncurrent Liabilities 168,723 1,136,117 1,304,840 Total Liabilities 940,269 1,242,599 2,182,868

DEFERRED INFLOWS OF RESOURCES

Deferred Inflow for Pension Contributions 7 ,507 1 5,016 22,523 Deferred Inflow for Other Post-Employment Benefit Obligation - 97 9 7 Total Deferred Inflows of Resources 7 ,507 1 5,113 22,620

NET POSITION

Net Investment in Capital Assets 2,016,003 4,422,819 6,438,822 Unrestricted Amounts (Deficit) (747,202) 441,760 (305,442) Total Net Position $ 1,268,801 $ 4,864,579 $ 6,133,380 -157-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

NON-MAJOR ENTERPRISE FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

PUBLIC TOTAL

GOLF LANDINGS NON-MAJOR

COURSE AND MARINAS ENTERPRISE

OPERATING REVENUES

Charges for Services $ 3 73,014 $ 454,071 $ 827,085 Intergovernmental - 877,743 877,743 Bond Interest Reimbursement - Build America Bond - 10,849 10,849 Material Sales 5 1,911 - 51,911 Miscellaneous Revenues 1 ,561 22,071 23,632 Total Operating Revenues 4 26,486 1,364,734 1,791,220

OPERATING EXPENSES

Cost of Sales and Services Recreation 4 89,806 1,159,939 1,649,745 Other Post-Employment Benefit Contributions - 5,372 5,372 Pension Liability Adjustment 6 ,576 14,861 21,437 Depreciation 4 4,846 124,725 169,571 Total Operating Expenses 5 41,228 1,304,897 1,846,125 Operating Income (Loss) (114,742) 59,837 (54,905)

NON-OPERATING (EXPENSES)

Interest Expense (5,573) (37,162) (42,735) (Loss) on Disposal of Capital Assets (37,917) (249) (38,166) Total Non-Operating (Expenses) (43,490) (37,411) (80,901) Income (Loss) Before Contributions and Transfers (158,232) 22,426 (135,806) Transfers In 1 58,232 - 158,232 Change in Net Position - 22,426 22,426 Total Net Position - Beginning of Year 1 ,268,801 4,842,153 6,110,954 Total Net Position - End of Year $ 1 ,268,801 $ 4,864,579 $ 6,133,380

-158-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF CASH FLOWS

NON-MAJOR ENTERPRISE FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

PUBLIC TOTAL

GOLF LANDINGS NON-MAJOR

COURSE AND MARINAS ENTERPRISE

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers and users $ 374,533 $ 466,090 $ 840,623 Receipts from other operating revenues 53,472 829,814 883,286 Receipts from Build America Bond interest reimbursement - 11,007 11,007 Payments to suppliers (334,874) (953,327) (1,288,201) Payments to employees and on behalf of employees (144,609) (206,674) (351,283) Net Cash Provided (Used) by Operating Activities (51,478) 146,910 95,432

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Transfers from other funds 158,232 - 158,232 Receipts from interfund loans 625,313 - 625,313 Principal paid on interfund loans (648,061) - (648,061) Net Cash Provided by Noncapital Financing Activities 135,484 - 135,484

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Principal paid on capital debt (75,124) (52,276) (127,400) Interest paid on capital debt (8,882) (38,081) (46,963) Acquisition and Construction of Capital Assets - (75,500) (75,500) Net Cash (Used) by Capital and Related Financing Activities (84,006) (165,857) (249,863)

CASH FLOWS FROM INVESTING ACTIVITIES

Investment income - - - Net Cash Provided (Used) by Investing Activities - - - Net (decrease) in cash and cash equivalents - (18,947) (18,947) Balances - Beginning of year - 821,127 821,127 Balances - End of year $ - $ 802,180 $ 802,180 Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income (loss) $ (114,742) $ 59,837 $ (54,905) Adjustments to reconcile operating income (loss)

to net cash provided (used) by operating activities:

Depreciation 44,846 124,725 169,571 Changes in assets and liabilities:

Accounts receivable, net - 12,019 12,019 Operating grants receivable - (70,000) (70,000) Build America Bonds Interest receivable - 158 158 Inventories and Prepaid Expenses 1,252 - 1,252 Vendor accounts payable 8,800 (2,162) 6,638 Compensated absences 271 2,100 2,371 Other Post-Employment Benefit Obligation - 5,372 5,372 Net Pension Liability 6,576 14,861 21,437 Deferred revenue collected in advance 1,519 - 1,519

Net Cash Provided (Used) by Operating Activities $ (51,478) $ 146,910 $ 95,432 Noncash investing, capital and financing activities:

Donation of capital assets (infrastructure) by developers $ - $ - $ - -159-

FIDUCIARY FUNDS

Fiduciary funds account for assets held for others, in a trustee or agency capacity, which cannot be used to support other government programs.

Pension and Other Employee Benefit Trust Funds account for resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, other postemployment benefit plans, or other employee benefit plans. The County’s one Other Post-Employment Benefit (OPEB) Trust Fund accounts for retiree benefit plans and is reported as part of the Basic Financial

Statements. Additional combining schedules for the OPEB Trust Fund are included in this section.

Agency Funds account for assets held by the County on behalf of individuals, private organizations, or other governments and/or funds. Additional combining schedules for the County’s Agency Funds are included in this section.

-160-

OTHER POST-EMPLOYMENT BENEFIT (OPEB) TRUST FUND

The County established a Trust entity, entitled “Other Post-Employment Benefit Trust – County Commissioners of Queen Anne's County, County Commissioners of Kent County, and Participating Agencies” (OPEB Trust), to accumulate resources and account for and report retiree benefit plans for the participating agencies.

Participating agencies in the OPEB Trust Fund are as follows:

Queen Anne's County Queen Anne's County Board of Education Queen Anne’s County Library Kent County

AGENCY FUNDS

Agency funds are as follows:

Tax Ditch – This fund accounts for special taxing district revenues that are used to maintain drainage ditches located in parts of the County.

Zoning Deposits – This fund accounts for performance deposits required under various sections of the Zoning Ordinance.

State and Town Tax Collections – This fund accounts for collections received by the County on behalf of the State of Maryland and incorporated towns located within the County. These taxes are collected by the County along with County taxes and are then remitted to the proper jurisdiction.

Motor Vehicle Administration Deposits – This fund accounts for funds collected by the County for State vehicle registration fees.

Escheat – Abandoned Property – This fund accounts for stale-dated County payroll and disbursements checks that are voided by the County and remitted to the State after three years as abandoned property. In accordance with State statutes, these funds are available to be claimed by the original payee or they revert to the State.

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QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF FIDUCIARY NET POSITION

OTHER POST-EMPLOYMENT BENEFIT TRUST FUND

JUNE 30, 2019

QUEEN ANNE'S TOTAL

COUNTY QUEEN ANNE'S OPEB

QUEEN ANNE'S BOARD OF COUNTY KENT TRUST

COUNTY EDUCATION LIBRARY COUNTY FUND

ASSETS

Cash and Cash Equivalents $ 9 10,067 $ 515,829 $ 3 0,950 $ 159,907 $ 1 ,616,753 Investments, at Fair Value Debt Securities 1 ,687,417 - - - 1 ,687,417 Fixed Income Fund 3 42,967 - - - 3 42,967 Mutual and Global Funds 2 ,932,400 - - - 2 ,932,400 International 1 ,159,631 - - - 1 ,159,631 Total Investments 6 ,122,415 - - - 6 ,122,415 Total Assets 7 ,032,482 515,829 3 0,950 159,907 7 ,739,168

LIABILITIES

Accrued Expenses 9 ,045 - - - 9,045 Due to Other Governments - - - 159,907 1 59,907 Total Liabilities 9 ,045 - - 159,907 1 68,952

NET POSITION RESTRICTED FOR

OTHER POST-EMPLOYMENT BENEFITS $ 7 ,023,437 $ 515,829 $ 3 0,950 $ - $ 7 ,570,216 -162-

QUEEN ANNE'S COUNTY, MARYLAND

COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

OTHER POST-EMPLOYMENT BENEFIT TRUST FUND

FOR THE YEAR ENDED JUNE 30, 2019

QUEEN ANNE'S TOTAL

COUNTY QUEEN ANNE'S OPEB

QUEEN ANNE'S BOARD OF COUNTY TRUST

COUNTY EDUCATION LIBRARY FUND

ADDITIONS

Contributions Employers $ 3,037,242 $ 2 ,012,861 $ 2 0,359 $ 5,070,462 Members 3 61,078 637,197 - 998,275 Total Contributions 3,398,320 2 ,650,058 2 0,359 6,068,737 Investment Earnings Interest 207,464 7,297 438 215,199 Net Increase in the Fair Value of Investments 123,420 - - 123,420 Total Investment Gain 330,884 7,297 438 338,619 Less Investment Expenses ( 3,115) - - ( 3,115) Net Investment Gain 327,769 7,297 438 335,504

Total Additions 3,726,089 2 ,657,355 2 0,797 6,404,241

DEDUCTIONS

Claims Paid 1,929,546 2 ,650,058 2 0,359 4,599,963 Administrative Expenses 24,083 - - 2 4,083 Total Deductions 1,953,629 2 ,650,058 2 0,359 4,624,046 Change in Assets 1,772,460 7,297 438 1,780,195

NET POSITION RESTRICTED FOR OTHER POST-EMPLOYMENT BENEFITS

Net Position - Beginning of Year 5,250,977 508,532 3 0,512 5,790,021 Net Position - End of Year $ 7,023,437 $ 5 15,829 $ 30,950 $ 7,570,216 -163-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF ASSETS AND LIABILITIES

AGENCY FUNDS

JUNE 30, 2019

STATE MOTOR

TAX & TOWN VEHICLE ESCHEAT - TOTAL

DITCH ZONING TAX ADMIN ABANDONED AGENCY

FUND DEPOSITS COLLECTIONS DEPOSITS PROPERTY FUNDS

ASSETS

Cash and Cash Equivalents $ 170,243 $ 4 19,335 $ 2 31,867 $ - $ 4 ,253 $ 825,698 Total Assets $ 1 70,243 $ 4 19,335 $ 2 31,867 $ - $ 4 ,253 $ 825,698

LIABILITIES

Due to Other Governments $ - $ - $ 2 31,867 $ - $ 4 ,253 $ 236,120 Deposits and Escrows 1 70,243 4 19,335 - - - 589,578 Total Liabilities $ 170,243 $ 4 19,335 $ 2 31,867 $ - $ 4 ,253 $ 825,698 -165-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

Cash and Miscellaneous Total Cash Equivalents Receivables Assets

TAX DITCH FUND

Balance 7-1-18 $ 146,133 $ - $ 1 46,133 Additions 25,970 - 2 5,970 Deductions (1,860) - (1,860) Balance 6-30-19 $ 170,243 $ - $ 1 70,243

ZONING DEPOSITS

Balance 7-1-18 $ 376,129 $ - $ 3 76,129 Additions 148,544 - 1 48,544 Deductions (105,338) - (105,338) Balance 6-30-19 $ 419,335 $ - $ 4 19,335

STATE AND TOWN TAX COLLECTIONS

Balance 7-1-18 $ 33,042 $ - $ 3 3,042 Additions 13,383,795 - 1 3,383,795 Deductions (13,184,970) - (13,184,970) Balance 6-30-19 $ 231,867 $ - $ 2 31,867

MOTOR VEHICLE ADMIN DEPOSITS

Balance 7-1-18 $ - $ - $ - Additions 273,368 - 2 73,368 Deductions (273,368) - (273,368) Balance 6-30-19 $ - $ - $ -

ESCHEAT - ABANDONED PROPERTY

Balance 7-1-18 $ 8,232 $ - $ 8 ,232 Additions 4,253 - 4 ,253 Deductions (8,232) - (8,232) Balance 6-30-19 $ 4,253 $ - $ 4 ,253

TOTAL AGENCY FUNDS

Balance 7-1-18 $ 563,536 $ - $ 5 63,536 Additions 13,835,930 - 1 3,835,930 Deductions (13,573,768) - (13,573,768) Balance 6-30-19 $ 825,698 $ - $ 8 25,698 -166-

QUEEN ANNE'S COUNTY, MARYLAND

STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUNDS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

Due to Accrued Liabilities Other and Total Governments Deposits and Escrows Liabilities $ - $ 146,133 $ 146,133

- 25,970 25,970

- (1,860) ( 1,860)

$ - $ 170,243 $ 170,243 $ - $ 376,129 $ 376,129

- 148,544 148,544

- (105,338) ( 105,338)

$ - $ 419,335 $ 419,335 $ 33,042 $ - $ 33,042 13,383,795 - 13,383,795 (13,184,970) - ( 13,184,970) $ 231,867 $ - $ 231,867 $ - $ - $ - 273,368 - 273,368 (273,368) - ( 273,368) $ - $ - $ - $ 8,232 $ - $ 8,232 4,253 - 4,253 (8,232) - ( 8,232) $ 4,253 $ - $ 4,253 $ 41,274 $ 522,262 $ 563,536 13,661,416 174,514 13,835,930 (13,466,570) (107,198) ( 13,573,768) $ 236,120 $ 589,578 $ 825,698 -167- Community Partnerships for Children

Community Partnerships for Children is reported as a Non-Major Special Revenue Fund in the County’s financial statements. In lieu of preparing separate audited financial statements for the Partnership, additional schedules have been added to the County’s financial statements to meet requirements of the Partnership’s grantor agencies.

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QUEEN ANNE'S COUNTY

COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND

COMBINING BALANCE SHEETS

BY GRANTOR

JUNE 30, 2019 (with Summarized Totals as of June 30, 2018) Fed/State Total Returned 2018 GOCCP Community Reinvestment 2019 Summarized Admin GOC Partnerships Fund Total Total

ASSETS

Cash and cash equivalents $ 133,772 $ 388,248 $ 522,020 $ 8,656 $ 530,676 $ 244,262 Accounts receivable - 2,594 2,594 - 2,594 7,019 Due from State governmental agencies - 108,494 108,494 - 108,494 530,672 Due from Federal governmental agencies - 33,962 33,962 - 33,962 38,868 Total Assets $ 133,772 $ 533,298 $ 667,070 $ 8,656 $ 675,726 $ 820,821

LIABILITIES AND FUND BALANCES

LIABILITIES

Accounts payable and accrued expenditures $ 16,627 $ 198,164 $ 214,791 $ - $ 214,791 $ 294,741 Due to State governmental agencies 61,353 290,162 351,515 - 351,515 314,150 Unearned revenue 1,682 43,146 44,828 - 44,828 147,338 Total Liabilities 79,662 531,472 611,134 - 611,134 756,229

FUND BALANCES

Assigned 54,110 1,826 55,936 8,656 64,592 64,592 Total Fund Balances 54,110 1,826 55,936 8,656 64,592 64,592 Total Liabilities and Fund Balances $ 133,772 $ 533,298 $ 667,070 $ 8,656 $ 675,726 $ 820,821 -169-

QUEEN ANNE'S COUNTY

COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

BY COMMUNITY PARTNERSHIP AGREEMENTS (CPA) and NON-COMMUNITY PARTNERSHIP AGREEMENTS (NON-CPA) FOR THE YEAR ENDED JUNE 30, 2019 (with Summarized Totals for the Year Ended June 30, 2018) Federal/State GOCCP/GOC Healthy MD CASA Local Chesapeake Fam/Home Family After School Administrative Start Care Team Helps Visiting Navigators Opportunity

REVENUES

CPA

Intergovernmental

GOC $ 43,860 $ 60,319 $ 22,760 $ 48,387 $ 64,611 $ 41,943 $ -

Subtotal CPA 4 3,860 60,319 22,760 48,387 64,611 41,943 - Non-CPA Intergovernmental Federal GOCCP Youth Strategies - 78,688 - - - - - GOC - non-CPA - - - - - - - Other State Grant Funding - - - - 296,372 - - Investment Income - - - - - - - Miscellaneous 1 ,822 - - 920 - - - Subtotal Non-CPA 1 ,822 78,688 - 920 296,372 - - Total Revenues 4 5,682 139,007 22,760 49,307 360,983 41,943 -

EXPENDITURES

CPA

Program Contracted Services - - - 35,990 - 33,720 - Other Expenditures Salaries 4 3,725 - 19,437 - - - - Fringe Benefit Costs 1 35 - 3,323 - - - - Auditing - - - - - 390 - Consultants - - - 9,066 38 - - Professional Groups - - - - 33 - - Equipment Rental - - - - - - - Postage - - - 31 - 90 - Office Supplies - - - 1,787 2,917 546 - Program Supplies - - - 844 3,075 1,952 - Printing and Publishing - - - - - 198 -

Repairs and Equipment - - - - 219 1,320 - Equipment Operation - - - - 14 - - Uniforms and Apparel - - - - 507 - - Business Travel - 544 - - 1 1,989 - Subscriptions and Dues - - - 180 - - - Meetings & Conferences - - - - - 350 - Training - - - - 290 - - Advertising - - - 409 1,452 - - Marketing/Promotions - - - - - - - Communications - - - 80 1,148 788 - Rent - - - - 200 600 - Other Charges - 59,775 - - 54,717 - -

Subtotal CPA Expenditures 4 3,860 60,319 22,760 48,387 64,611 41,943 - Non-CPA Program Contracted Services - 77,221 - - 296,372 - - Other Expenditures Salaries 8 6,452 - - - - - - Fringe Benefit Costs 4 4,785 - - - - - - Auditing 2,988 - - - - - - Consultants 11,735 - - - - - - Professional Groups - - - - - - - Equipment Rental 3 ,260 - - - - - - Other Contracted Services - - - - - - - Postage 2 04 - - - - - -

Office Supplies 1 ,469 1,142 - - - - - Program Supplies 12,000 - - - - - - Printing and Publishing - - - - - - - Business Travel 4 35 325 - - - - - Subscriptions and Dues 6 02 - - - - - - Meetings & Conferences 2 ,000 - - - - - - Training 2 ,270 - - - - - - Board's Expenditures 6 ,766 - - - - - - Advertising 751 - - - - - - Marketing/Promotions - - - - - - - Communications 1 ,810 - - - - - - Insurance - - - 920 - - -

Other Charges 1 2,000 - - - - - 231,250 Subtotal Non-CPA Expenditures 1 89,527 78,688 - 920 296,372 - 231,250 Total Expenditures 2 33,387 139,007 22,760 49,307 360,983 41,943 231,250 Excess of Revenues Over (Under) Expenditures (187,705) - - - - - (231,250)

OTHER FINANCING SOURCES

Transfers In for:

Program Contracted Services 1 87,705 - - - - - 231,250 Net Increase (Decrease) in Fund Balances $ - $ - $ - $ - $ - $ - $ - Fund Balances, July 1 Fund Balances, June 30 -170-

QUEEN ANNE'S COUNTY

COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

BY COMMUNITY PARTNERSHIP AGREEMENTS (CPA) and NON-COMMUNITY PARTNERSHIP AGREEMENTS (NON-CPA) FOR THE YEAR ENDED JUNE 30, 2019 (with Summarized Totals for the Year Ended June 30, 2018)

(CONTINUED)

Federal/State GOCCP/GOC State Federal GOCCP/GOC State GOC GOCCP GOCCP Community Character Operating Fund All Programs CPA Non-CPA Non-CPA Youth Mentoring Counts RDEF Total Subtotal Subtotal Subtotal Subtotal Strategies $ 4 1,041 $ - $ - $ 279,061 $ 322,921 $ 322,921 $ - $ - $ - 4 1,041 - - 279,061 322,921 322,921 - - -

- - - 78,688 78,688 - - - 78,688

- - 105,060 105,060 105,060 - 105,060 - -

- - - 296,372 296,372 - - - -

- - - - - - - - -

- 13,004 - 13,924 15,746 - - - -

- 13,004 105,060 494,044 495,866 - 105,060 - 78,688

4 1,041 13,004 105,060 773,105 818,787 322,921 105,060 - 78,688

- - - 69,710 69,710 69,710 - - -

2 0,516 - - 39,953 83,678 83,678 - - - 6 ,577 - - 9,900 10,035 10,035 - - -

- - - 390 390 390 - - -

- - - 9,104 9,104 9,104 - - -

- - - 33 33 33 - - -

3 75 - - 375 375 375 - - -

- - - 121 121 121 - - -

1 ,299 - - 6,549 6,549 6,549 - - - 3 ,150 - - 9,021 9,021 9,021 - - - 3 50 - - 548 548 548 - - - 2 55 - - 1,794 1,794 1,794 - - -

- - - 14 14 14 - - -

- - - 507 507 507 - - -

- - - 2,534 2,534 2,534 - - -

- - - 180 180 180 - - -

8 17 - - 1,167 1,167 1,167 - - - 2 ,730 - - 3,020 3,020 3,020 - - - 2 50 - - 2,111 2,111 2,111 - - - 2 ,455 - - 2,455 2,455 2,455 - - -

- - - 2,016 2,016 2,016 - - -

- - - 800 800 800 - - -

2 ,267 - - 116,759 116,759 116,759 - - - 4 1,041 - - 279,061 322,921 322,921 - - -

- - - 373,593 373,593 - - - 77,221

6 ,655 18,102 - 24,757 111,209 - - - - 2 ,360 1,482 - 3,842 48,627 - - - -

- - - - 2,988 - - - -

- - 11,250 11,250 22,985 - 11,250 - -

- - - - - - - - -

- - - - 3,260 - - - -

- - 78,374 78,374 78,374 - 78,374 - -

- - - - 204 - - - -

- - - 1,142 2,611 - - - 1,142

- - - - 12,000 - - - -

- - - - - - - - -

- - - 325 760 - - - 325

- - - - 602 - - - -

- 1,000 11,936 12,936 14,936 - 11,936 - -

- - - - 2,270 - - - -

- - - - 6,766 - - - -

- - - - 751 - - - -

- 2,865 - 2,865 2,865 - - - -

- - - - 1,810 - - - -

- - - 920 920 - - - -

- 34 3,500 234,784 246,784 - 3,500 - -

9 ,015 23,483 105,060 744,788 934,315 - 105,060 - 78,688 5 0,056 23,483 105,060 1,023,849 1,257,236 322,921 105,060 - 78,688 (9,015) ( 10,479) - ( 250,744) (438,449) - - - -

- - - -

9 ,015 10,479 - 250,744 438,449 - - - - $ - $ - $ - $ - - - - - - 55,936 606,662 (5,612) 3 ,491 (25,474) $ 55,936 $ 606,662 $ (5,612) $ 3 ,491 $ (25,474)

CONTINUED

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QUEEN ANNE'S COUNTY

COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

BY COMMUNITY PARTNERSHIP AGREEMENTS (CPA) and NON-COMMUNITY PARTNERSHIP AGREEMENTS (NON-CPA) FOR THE YEAR ENDED JUNE 30, 2019 (with Summarized Totals for the Year Ended June 30, 2018)

(CONTINUED)

Total Other Community Returned 2018 Non-CPA Partnerships Reinvestment 2019 Summarized State Grants Other Operating Funds Fund Total Total

REVENUES

CPA

Intergovernmental

GOC $ - $ - $ 322,921 $ - $ 322,921 $ 365,535

Subtotal CPA - - 322,921 - 322,921 3 65,535 Non-CPA Intergovernmental Federal GOCCP Youth Strategies - - 78,688 - 78,688 1 07,918 GOC - non-CPA - - 105,060 - 105,060 - Other State Grant Funding 296,372 - 296,372 - 296,372 2 95,376 Investment Income - - - - - 2 48 Miscellaneous - 1 5,746 15,746 - 15,746 2 3,491 Subtotal Non-CPA 296,372 1 5,746 495,866 - 495,866 4 27,033 Total Revenues 296,372 1 5,746 818,787 - 818,787 7 92,568

EXPENDITURES

CPA

Program Contracted Services - - 69,710 - 69,710 1 33,100 Other Expenditures Salaries - - 83,678 - 83,678 1 05,980 Fringe Benefit Costs - - 10,035 - 10,035 1 2,380 Auditing - - 390 - 390 4,941 Consultants - - 9,104 - 9,104 1 1,582 Professional Groups - - 33 - 33 - Equipment Rental - - 375 - 375 375 Postage - - 121 - 121 97 Office Supplies - - 6,549 - 6,549 1,997 Program Supplies - - 9,021 - 9,021 3,791

Printing and Publishing - - 548 - 548 295 Repairs and Equipment 1,794 - 1,794 - Equipment Operation - - 14 - 14 1,009 Uniforms and Apparel 507 - 507 - Business Travel - - 2,534 - 2,534 6,578 Subscriptions and Dues 180 - 180 - Meetings & Conferences - - 1,167 - 1,167 5,197 Training - - 3,020 - 3,020 1 2,228 Advertising - - 2,111 - 2,111 894 Marketing/Promotions - - 2,455 - 2,455 3,304 Communications - - 2,016 - 2,016 2,611

Utilities - - 800 - 800 8 Other Charges - - 116,759 - 116,759 5 9,168 Subtotal CPA Expenditures - - 322,921 - 322,921 3 65,535 Non-CPA Program Contracted Services 296,372 - 373,593 - 373,593 3 93,042 Other Expenditures Salaries - 1 11,209 111,209 - 111,209 8 7,375 Fringe Benefit Costs - 4 8,627 48,627 - 48,627 4 6,770 Auditing - 2,988 2,988 - 2,988 2,988 Consultants - 1 1,735 22,985 - 22,985 - Professional Groups - - - - - 2,400

Equipment Rental - 3 ,260 3,260 - 3,260 3 ,250 Other Contracted Services - - 78,374 - 78,374 512 Postage - 2 04 204 - 204 3 38 Office Supplies - 1 ,469 2,611 - 2,611 2 ,063 Program Supplies - 1 2,000 12,000 - 12,000 9,934 Printing and Publishing - - - - - 738 Business Travel - 4 35 760 - 760 9 5 Subscriptions and Dues 6 02 602 - 602 - Meetings & Conferences - 3 ,000 14,936 - 14,936 2 ,339 Training - 2 ,270 2,270 - 2,270 2 ,663

Board's Expenditures - 6 ,766 6,766 - 6,766 4 ,644 Advertising - 751 751 - 751 - Marketing/Promotions - 2 ,865 2,865 - 2,865 - Communications - 1 ,810 1,810 - 1,810 1 ,808 Insurance - 920 920 - 920 - Other Charges - 2 43,284 246,784 - 246,784 2 89,448 Subtotal Non-CPA Expenditures 296,372 4 54,195 934,315 - 934,315 8 50,407 Total Expenditures 296,372 4 54,195 1,257,236 - 1,257,236 1 ,215,942 Excess of Revenues Over (Under) Expenditures - (438,449) ( 438,449) - (438,449) (423,374)

OTHER FINANCING SOURCES

Transfers In for:

Program Contracted Services - 4 38,449 438,449 - 438,449 4 22,226 Net Increase (Decrease) in Fund Balances - - - - - (1,148) Fund Balances, July 1 - (523,131) 55,936 8,656 64,592 6 5,740 Fund Balances, June 30 $ - $ (523,131) $ 55,936 $ 8,656 $ 64,592 $ 64,592 -172-

QUEEN ANNE'S COUNTY

COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

FOR THE YEAR ENDED JUNE 30, 2019

COMMUNITY PARTNERSHIPS FOR CHILDREN RETURNED REINVESTMENT FUND

Variance with Variance with Final Budget Final Budget Original Final Positive Original Final Positive Budget Budget Actual (Negative) Budget Budget Actual (Negative)

REVENUES

Intergovernmental GOC - CPA and Non-CPA $ 335,286 $ 505,942 $ 427,981 $ (77,961) $ - $ - $ - $ - Federal GOCCP Youth Strategies - 78,688 78,688 - - - - - Other 296,372 296,372 296,372 - - - - - Miscellaneous 20,921 21,921 15,746 ( 6,175) - - - - Total Revenues 652,579 902,923 818,787 ( 84,136) - - - -

EXPENDITURES

Program Contracted Services 394,700 473,059 443,303 29,756 - - - - Other Expenditures Salaries 203,942 228,728 194,887 33,841 - - - - Fringe Benefit Costs 59,798 64,324 58,662 5,662 - - - - Auditing 2,988 2,988 3,378 ( 390) - - - - Consultants 10,000 21,250 32,089 ( 10,839) - - - - Professional Groups - - 3 3 (33) - - - - Equipment Rental 3,375 3,875 3,635 240 - - - - Other Contracted Services - 100,000 78,374 21,626 - - - -

Postage 600 6 00 3 25 275 - - - - Office Supplies 3,089 3,089 9,160 ( 6,071) - - - - Program Supplies 2,091 14,091 21,021 ( 6,930) - - - - Repairs and Equipment 255 2 55 1,794 ( 1,539) - - - - Printing and Publishing 250 2 50 5 48 ( 298) - - - - Equipment Operation 250 - 1 4 (14) - - - - Uniforms and Apparel - - 5 07 ( 507) - - - - Business Travel 2,226 3,155 3,294 ( 139) - - - - Subscriptions and Dues - 6 40 7 82 ( 142) - - - -

Meetings & Conferences 5,569 23,419 16,103 7,316 - - - - Training 2,500 2,500 5,290 ( 2,790) - - - - Board's Expenditures 6,500 6,500 6,766 ( 266) - - - - Advertising 50 7 38 2,862 ( 2,124) - - - - Marketing/Promotions 5,790 5,790 5,320 470 - - - - Communications 1,780 1,780 3,826 ( 2,046) - - - - Utilities - - 8 00 ( 800) - - - - Insurance - - 9 20 ( 920) - - - - Other Charges 364,101 393,657 363,543 30,114 - - - -

Total Expenditures 1,069,854 1,350,688 1,257,236 93,452 - - - - Excess of Revenues Over (Under) Expenditures (417,275) ( 447,765) ( 438,449) 9,316 - - - -

OTHER FINANCING SOURCES

Program Contracted Services 417,275 447,765 438,449 ( 9,316) - - - - Net Increase (Decrease) in Fund Balances $ - $ - - $ - $ - $ - - $ - Fund Balances, July 1 55,936 8 ,656 Fund Balances, June 30 $ 55,936 $ 8,656 -174-

QUEEN ANNE'S COUNTY

COMMUNITY PARTNERSHIPS FOR CHILDREN SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGETARY BASIS

FOR THE YEAR ENDED JUNE 30, 2019

(CONTINUED)

TOTAL

Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) $ 335,286 $ 505,942 $ 427,981 $ (77,961)

- 78,688 78,688 -

296,372 296,372 296,372 - 20,921 21,921 15,746 (6,175) 652,579 902,923 818,787 (84,136) 394,700 473,059 443,303 29,756 203,942 228,728 194,887 33,841 59,798 64,324 58,662 5,662 2,988 2,988 3,378 (390) 10,000 21,250 32,089 (10,839)

- - 3 3 ( 33)

3,375 3,875 3,635 240

- 100,000 78,374 21,626

600 600 3 25 275 3,089 3,089 9,160 (6,071) 2,091 14,091 21,021 (6,930) 255 255 1,794 (1,539) 250 250 5 48 (298) 250 - 1 4 ( 14)

- - 5 07 (507)

2,226 3,155 3,294 (139)

- 640 7 82 (142)

5,569 23,419 16,103 7,316 2,500 2,500 5,290 (2,790) 6,500 6,500 6,766 (266) 50 738 2,862 (2,124) 5,790 5,790 5,320 470 1,780 1,780 3,826 (2,046)

- - 8 00 (800)

- - 9 20 (920)

364,101 393,657 363,543 30,114 1,069,854 1,350,688 1,257,236 93,452 (417,275) (447,765) ( 438,449) 9,316 417,275 447,765 438,449 (9,316) $ - $ - - $ - 64,592 $ 64,592 -175-

STATISTICAL SECTION

The Statistical Section, which fully incorporates information mandated by Governmental Accounting Standards Board (GASB) Statement No. 44, Economic Condition Reporting: The Statistical Section, presents detailed information for the primary government in the following areas, as a context for understanding what the information in the Financial Section says about the County’s overall financial health:

FINANCIAL TRENDS – Information to help the reader understand how the County’s financial performance and well-being have changed over time.

REVENUE CAPACITY – Information to help the reader assess the County’s most significant local revenue sources – the property tax and income tax.

DEBT CAPACITY – Information to help the reader assess the affordability of the County’s current levels of outstanding debt and the County’s ability to issue additional debt in the future.

DEMOGRAPHIC AND ECONOMIC INFORMATION – Indicators to help the reader understand the environment within which the County’s financial activities take place.

OPERATING INFORMATION – Service and infrastructure data to help the reader understand how the information in the County’s financial report relates to the services the County provides and the activities it performs.

Many of these tables cover more than two fiscal years and present data from outside the accounting records. Therefore, the Statistical Section is unaudited.

-177-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

NET POSITION BY COMPONENT - GOVERNMENT-WIDE

(GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES)

LAST TEN FISCAL YEARS

Table 1 2010 2011 2012 2013 2014 Governmental Activities:

Net Investment in Capital Assets $ 1 21,702,025 $ 1 18,274,533 $ 1 18,564,684 $ 1 21,246,426 $ 127,369,959 Restricted 22,290,307 22,399,514 5,982,041 15,691,080 1 7,616,132 Unrestricted (deficit) (1) (45,795,597) (61,193,944) (44,686,543) (66,089,615) (71,169,310) Total Governmental Activities Net Position 98,196,735 79,480,103 79,860,182 ( 2) 70,847,891 (3) 7 3,816,781 Business-type Activities:

Net Investment in Capital Assets 79,032,373 78,069,061 76,763,695 78,693,078 7 9,783,160 Restricted 18,180,809 16,821,905 3,513,948 3,176,328 3,110,033 Unrestricted - - 12,591,302 11,031,281 8,721,212 Total Business-type Activities Net Position 97,213,182 94,890,966 92,868,945 ( 2) 92,900,687 9 1,614,405 Primary Government:

Net Investment in Capital Assets 2 00,734,398 1 96,343,594 1 95,328,379 1 99,939,504 2 07,153,119 Restricted 40,471,116 39,221,419 9,495,989 18,867,408 2 0,726,165 Unrestricted (deficit) (1) (45,795,597) (61,193,944) (32,095,241) (55,058,334) (62,448,098) Total Primary Government Net Position $ 1 95,409,917 $ 1 74,371,069 $ 1 72,729,127 ( 2) $ 1 63,748,578 (3) $ 165,431,186

NOTES:

* Government-wide net position information is reported on the accrual basis of accounting.

* Accounting standards require that net position be reported in three components in the financial

statements: net investment in capital assets, restricted; and unrestricted. Net position is considered restricted when (1) an external party, such as the state or federal government, places a restriction on how the resources may be used, or (2) enabling legislation is enacted by the County.

* Source: Statement of Net Position

(1) In the government-wide financial statements, the County has reported negative unrestricted amounts for some years.

This is due to the fact that the County issues general obligation bonded debt for purposes of capital construction on behalf of the Queen Anne's County Board of Education. Absent the effect of this relationship, the County would have reported the following:

Government-wide unrestricted (deficit) net position would have been:

Unrestricted (deficit) net position reported above $ (45,795,597) $ (61,193,944) $ (32,095,241) $ (55,058,334) $ (62,448,098) Debt issued for capital on behalf of others 57,677,186 72,437,047 68,278,842 63,283,726 6 7,651,486 County (deficit) net position absent the effect of this relationship $ 1 1,881,589 $ 1 1,243,103 $ 3 6,183,601 $ 8,225,392 $ 5 ,203,388

(2) In fiscal year 2013, the County consolidated two Enterprise funds into the General Fund. This consolidation resulted in a total net position change of $539,220 between Governmental Activities

and Business-type Activities. The FY2012 Net Position has been reclassified to show this change.

(3) FY2013 Net Position of Governmental Activities was restated in fiscal year 2014.

(4) FY2014 Net Position of Governmental and Business-Type Activities was restated in fiscal year 2015.

-178-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

NET POSITION BY COMPONENT - GOVERNMENT-WIDE

(GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES)

LAST TEN FISCAL YEARS

Table 1

(CONTINUED)

2015 2016 2017 2018 2019 $ 1 25,434,538 $ 1 23,466,319 $ 1 20,249,244 $ 1 14,794,226 $ 1 15,143,089 20,464,486 21,063,295 13,094,534 13,275,244 18,962,289 (73,475,567) (78,567,505) (67,189,342) (58,025,753) (61,637,321)

(4) 72,423,457 65,962,109 66,154,436 70,043,717 72,468,057

80,787,152 80,909,015 86,163,078 84,386,291 85,916,730 3,061,534 1,699,914 1,700,836 1,060,134 2,234,440 8,486,063 10,240,161 4,116,300 7,458,996 10,087,649

(4) 92,334,749 92,849,090 91,980,214 92,905,421 98,238,819

206,221,690 204,375,334 206,412,322 199,180,517 201,059,819 23,526,020 22,763,209 14,795,370 14,335,378 21,196,729 (64,989,504) (68,327,344) (63,073,042) (50,566,757) (51,549,672)

(4) $ 1 64,758,206 $ 1 58,811,199 $ 1 58,134,650 $ 1 62,949,138 $ 1 70,706,876

$ (64,989,504) $ (68,327,344) $ (63,073,042) $ (50,566,757) $ (51,549,672) 66,219,608 63,271,304 59,207,136 58,625,356 58,007,072 $ 1,230,104 $ (5,056,040) $ (3,865,906) $ 8,058,599 $ 6,457,400 -179-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

CHANGES IN NET POSITION - GOVERNMENT-WIDE (GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES)

LAST TEN FISCAL YEARS

Table 2-a 2010 2011 2012 2013 2014 Expenses Governmental Activities:

General Government $ 14,089,387 $ 15,968,633 $ 13,421,531 $ 13,639,728 $ 14,133,149 Public Safety 25,361,341 25,413,678 25,469,721 26,174,144 26,666,211 Public Works 9 ,432,489 9 ,098,949 10,373,286 11,891,013 12,365,647 Health 1 ,663,321 1 ,701,677 1 ,642,723 1 ,812,920 2 ,083,201 Social Services 5 ,554,667 5 ,001,240 4 ,526,166 5 ,560,196 5 ,040,139 Education 53,491,659 57,506,341 53,693,309 49,459,783 54,882,430

Parks & Recreation (3) 3 ,618,427 3 ,090,228 - - - Library 1 ,473,689 1 ,457,336 1 ,302,163 1 ,304,076 1 ,336,098 Conservation of Natural Resources 5 ,281,372 3 ,811,748 2 ,802,337 8 38,775 2 ,395,762 Economic/Community Development 2 ,001,306 1 ,893,570 8 87,837 1 ,108,912 1 ,528,035 Interest and Fiscal Charges 3 ,510,678 4 ,078,105 4 ,196,072 4 ,042,236 3 ,987,943 Total Governmental Activities Expenses 125,478,336 129,021,505 118,315,145 115,831,783 124,418,615

Business-type Activities:

Water and Sewer 10,610,705 10,905,989 10,711,211 11,783,515 11,059,306 Golf Course (4) 2 ,789,901 4 ,099,507 2 ,269,933 5 38,420 5 15,325 Public Landings and Marinas (5) 96,739 67,395 1 10,884 5 35,837 5 44,945 Airport 1 ,017,780 1 ,167,655 1 ,457,087 9 13,845 8 07,226 Total Business-type Activities Expenses 14,515,125 16,240,546 14,549,115 13,771,617 12,926,802 Total Primary Government Expenses 139,993,461 145,262,051 132,864,260 129,603,400 137,345,417

Program Revenues Governmental Activities:

General Government Charges for Services 1 ,261,230 1 ,086,641 1 ,081,808 1 ,272,807 1 ,500,273 Operating Grants and Contributions 5 46,176 6 94,347 7 42,205 6 97,712 6 06,649 Capital Grants and Contributions 44,743 1 18,100 1 16,710 1 35,032 5 89,988 Total Revenue 1 ,852,149 1 ,899,088 1 ,940,723 2 ,105,551 2 ,696,910 Public Safety Charges for Services 1 ,263,212 1 ,090,545 1 ,320,647 1 ,387,591 1 ,286,945

Operating Grants and Contributions 1 ,891,120 1 ,461,080 1 ,113,018 1 ,328,493 1 ,081,577 Capital Grants and Contributions 3 03,566 82,885 1 91,223 2 49,594 2 82,139 Total Revenue 3 ,457,898 2 ,634,510 2 ,624,888 2 ,965,678 2 ,650,661 Public Works Charges for Services 7 91,796 8 72,352 1 ,107,426 1 ,636,604 1 ,425,012 Operating Grants and Contributions 6 32,923 5 46,719 4 88,027 6 24,653 7 12,550 Capital Grants and Contributions 2 64,078 9 01,289 5 41,887 1 ,687,783 2 ,221,299

Total Revenue 1 ,688,797 2 ,320,360 2 ,137,340 3 ,949,040 4 ,358,861 Social Services Charges for Services 67,423 69,382 71,655 71,973 65,537 Operating Grants and Contributions 2 ,666,917 2 ,050,062 2 ,076,096 2 ,613,905 2 ,026,675 Capital Grants and Contributions 2 ,688,245 2 15,748 18,691 51,023 67,392 Total Revenue 5 ,422,585 2 ,335,192 2 ,166,442 2 ,736,901 2 ,159,604 Education Charges for Services 8 52,201 7 55,443 1 ,169,425 1 ,052,691 1 ,721,379

Operating Grants and Contributions 4 33,000 - - - - Capital Grants and Contributions - - - - - Total Revenue 1 ,285,201 7 55,443 1 ,169,425 1 ,052,691 1 ,721,379 Library Charges for Services - - - - - Operating Grants and Contributions - - - - - Capital Grants and Contributions - - - - - Total Revenue - - - - - Parks & Recreation Charges for Services 1 77,568 1 87,901 - - - Operating Grants and Contributions 1 23,336 1,868 - - -

Capital Grants and Contributions 6 31,504 1 99,698 - - - Total Revenue 9 32,408 3 89,467 - - - Conservation of Natural Resources Charges for Services 1 01,019 75,354 98,593 63,105 73,279 Operating Grants and Contributions 93,002 1 ,006,138 36,872 4 00,193 1 03,892 Capital Grants and Contributions 4 ,191,024 1 ,923,471 9 98,757 - 75,820 Total Revenue 4 ,385,045 3 ,004,963 1 ,134,222 4 63,298 2 52,991

Economic/Community Development Charges for Services - 4,236 1 59,492 2 34,100 5 08,000 Operating Grants and Contributions - 2 39,893 2 45,143 1 76,216 2 55,100 Capital Grants and Contributions - 1 10,561 81,867 5 75,440 (69,569) Total Revenue - 3 54,690 4 86,502 9 85,756 6 93,531 Total Governmental Activities Program Revenues 19,024,083 13,693,713 11,659,542 14,258,915 14,533,937 -180-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

CHANGES IN NET POSITION - GOVERNMENT-WIDE (GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES)

LAST TEN FISCAL YEARS

Table 2-a

(CONTINUED)

2015 2016 2017 2018 2019 $ 10,849,277 $ 13,936,312 $ 13,177,254 $ 15,833,152 $ 16,493,064 25,297,450 27,525,712 27,997,262 27,130,890 31,231,182 14,363,603 19,522,534 20,753,117 17,665,141 19,118,090 1,856,158 2,032,657 2,006,219 1,996,939 1,865,300 4,775,440 5,300,871 5,418,152 5,152,409 5,804,131 65,633,331 60,752,025 59,211,517 62,296,920 62,579,905

- - - - -

1,458,348 1,622,848 1,710,668 1,785,580 1,858,711 587,147 1,799,234 616,237 2,567,600 2,696,971 1,763,024 3,391,547 1,860,222 2,477,129 1,808,000 4,039,622 4,345,527 4,150,101 4,294,929 4,712,864 130,623,400 140,229,267 136,900,749 141,200,689 148,168,218 10,412,432 10,615,466 11,818,087 12,297,109 11,232,955 496,065 505,085 540,504 509,150 584,718 537,823 529,943 572,360 534,966 1,342,308 1,014,491 966,896 1,053,899 1,077,168 1,434,031

12,460,811 12,617,390 13,984,850 14,418,393 14,594,012 143,084,211 152,846,657 150,885,599 155,619,082 162,762,230 1,505,857 1,565,170 1,552,164 1,669,311 1,769,520 644,297 582,571 563,016 660,790 716,683 9 6,684 (30,000) - 1,080,084 480,500 2,246,838 2,117,741 2,115,180 3,410,185 2,966,703 1,244,752 1,354,350 1,350,626 1,505,267 1,415,187 1,052,666 1,088,597 1,037,879 1,294,733 1,161,505 119,118 175,653 5 ,406 166,001 176,970

2,416,536 2,618,600 2,393,911 2,966,001 2,753,662 1,275,538 1,337,358 1,472,664 1,779,206 1,784,040 527,538 1,029,019 980,075 822,659 1,155,251 8 0,000 108,880 161,084 282,028 1,353,948 1,883,076 2,475,257 2,613,823 2,883,893 4,293,239 6 8,187 7 6,404 7 3,066 7 1,131 9 1,183 2,056,111 1,834,000 1,893,648 2,018,289 2,120,065 4 0,527 140,400 5 8,500 5 8,500 175,960 2,164,825 2,050,804 2,025,214 2,147,920 2,387,208

1,249,332 1,230,994 1,319,433 1,272,301 1,318,609

- - - - -

- - - - -

1,249,332 1,230,994 1,319,433 1,272,301 1,318,609

- - - - -

- - - - -

- - - - 4 3,059

- - - - 4 3,059

- - - - -

- - - - -

- - - - -

- - - - -

7 2,688 7 0,708 6 0,826 110,655 126,940 9 6,195 6 8,152 186,333 131,321 9 4,814 3 ,637 573,003 - 1,439,284 2,118,200 172,520 711,863 247,159 1,681,260 2,339,954 8 0,558 311,000 620,000 316,500 - 285,344 156,804 231,360 810,319 205,300

- - - - -

365,902 467,804 851,360 1,126,819 205,300 10,499,029 11,673,063 11,566,080 15,488,379 16,307,734

CONTINUED

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QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

CHANGES IN NET POSITION - GOVERNMENT-WIDE (GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES)

LAST TEN FISCAL YEARS

Table 2-a

(CONTINUED)

2010 2011 2012 2013 2014 Business-type Activities:

Water and Sewer Charges for Services $ 8,224,428 $ 8,192,471 $ 7,977,667 $ 8,181,434 $ 8,341,848 Operating Grants and Contributions 98,492 - 55,728 1 61,600 90,000 Capital Grants and Contributions 2 08,115 8 37,426 3 47,573 2 ,048,768 6 65,268 Total Revenue 8 ,531,035 9 ,029,897 8 ,380,968 10,391,802 9 ,097,116 Golf Course (4) Charges for Services 1 ,633,203 1 ,568,227 1 ,501,550 3 13,364 2 97,293

Operating Grants and Contributions 41,838 39,572 52,915 - - Capital Grants and Contributions 2 89,895 1 96,487 28,680 - - Total Revenue 1 ,964,936 1 ,804,286 1 ,583,145 3 13,364 2 97,293 Public Landings and Marinas (5) Charges for Services 62,600 84,987 1 02,290 4 40,270 4 23,478 Operating Grants and Contributions 29,017 16,241 14,183 42,914 36,439 Capital Grants and Contributions 5 45,123 5 88,326 78,314 18,692 -

Total Revenue 6 36,740 6 89,554 1 94,787 5 01,876 4 59,917 Airport Charges for Services 50,585 37,955 58,589 48,072 49,061 Operating Grants and Contributions 33,922 3,715 47,412 2,621 2,420 Capital Grants and Contributions 1 ,519,810 4 48,600 6 93,162 2 ,472,782 7,457 Total Revenue 1 ,604,317 4 90,270 7 99,163 2 ,523,475 58,938 Total Business-type Activities Program Revenues 12,737,028 12,014,007 10,958,063 13,730,517 9 ,913,264

Total Primary Government Program Revenues 31,761,111 25,707,720 22,617,605 27,989,432 24,447,201 Net (Expense) Revenue (1) Governmental activities (106,454,253) (115,327,792) (106,655,603) (101,572,868) (109,884,678) Business-type activities (1,778,097) (4,226,539) (3,591,052) (41,100) (3,013,538) Total Primary Government Net Expense $ (108,232,350) $ (119,554,331) $ (110,246,655) $ (101,613,968) $ (112,898,216)

General Revenues and Other Changes in Net Position Governmental Activities:

Taxes (2) $ 90,469,883 $ 96,093,533 $ 105,693,926 $ 107,978,036 $ 112,123,625 Investment income 1 44,553 1 36,523 1 26,650 1 07,095 95,286 Gain on Sale of Capital Assets 26,731 2 81,158 27,627 1 63,426 3 46,765 Miscellaneous 7 86,719 7 11,868 1 ,254,255 1 ,051,760 8 77,629 Transfers In (Out) (559,331) (611,922) (605,996) (337,843) (589,737) Total Governmental Activities 90,868,555 96,611,160 106,496,462 108,962,474 112,853,568

Business-type Activities:

Investment income 4 36,045 4 07,629 3 74,665 3 56,374 3 43,568 Gain on Sale of Capital Assets - - - - - Miscellaneous 9 62,540 8 84,772 1 ,127,590 8 55,504 7 93,951 Transfers In (Out) 5 59,331 6 11,922 6 05,996 3 59,277 5 89,737 Total Business-type Activities 1 ,957,916 1 ,904,323 2 ,108,251 1 ,571,155 1 ,727,256 Total Primary Government 92,826,471 98,515,483 108,604,713 110,533,629 114,580,824 Change in Net Position

Governmental activities (15,585,698) (18,716,632) (159,141) 7 ,389,606 2 ,968,890 Business-type activities 1 79,819 (2,322,216) (1,482,801) 1 ,530,055 (1,286,282) Total Primary Government $ (15,405,879) $ (21,038,848) $ (1,641,942) $ 8,919,661 $ 1,682,608

NOTES:

* Government-wide net position information is reported on the accrual basis of accounting.

* Source: Statement of Activities.

(1) Net (expense)/revenue is the difference between the expenses and program revenues of a function or program. It indicates

the degree to which a function or program is supported with its own fees and program-specific grants versus its reliance upon funding from taxes and general revenues. Numbers in parentheses indicate that expenses were greater than program revenues and therefore general revenues were needed to finance that function or program. Numbers without parentheses mean that program revenues were more than sufficient to cover expenses.

(2) See Table 2-b for detail of General Tax Revenues.

(3) Beginning in FY12, Parks & Recreation governmental activities are included in public works.

(4) Prior to FY13, this section included data for the Golf Course, Recreation Programs, Public Landings,

and Property Management Funds. Beginning in FY13, this section only includes Golf Course Fund data.

(5) Prior to FY13, this section only included data for the Public Marinas Funds. Beginning in FY13, this section includes

data for both Public Marinas and Public Landings, as these funds were combined to form one fund.

-182-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

CHANGES IN NET POSITION - GOVERNMENT-WIDE (GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES)

LAST TEN FISCAL YEARS

Table 2-a

(CONTINUED)

2015 2016 2017 2018 2019 $ 8,840,213 $ 8,956,360 $ 8,222,317 $ 9,214,383 $ 10,524,474 9 0,000 8 5,099 9 0,000 9 0,000 520,000 1,862,257 1,958,051 2,222,796 4,198,378 3,626,906 10,792,470 10,999,510 10,535,113 13,502,761 14,671,380 295,955 305,528 318,599 340,123 373,014

- - - - -

- - - - -

295,955 305,528 318,599 340,123 373,014 423,723 423,427 443,176 451,524 454,071 4 3,304 3 6,781 3 3,542 104,829 888,592

- - - - -

467,027 460,208 476,718 556,353 1,342,663 5 3,200 4 5,916 3 3,256 2 5,857 2 4,710 7 3,311 5 2,837 245,738 6 0,858 725,109

- - - - -

126,511 9 8,753 278,994 8 6,715 749,819 11,681,963 11,863,999 11,609,424 14,485,952 17,136,876 22,180,992 23,537,062 23,175,504 29,974,331 33,444,610 (120,124,371) (128,556,204) (125,334,669) (125,712,310) (131,860,484) (778,848) (753,391) (2,375,426) 6 7,559 2,542,864 $ (120,903,219) $ (129,309,595) $ (127,710,095) $ (125,644,751) $ (129,317,620) $ 116,821,607 $ 121,011,135 $ 123,299,031 $ 131,444,679 $ 137,285,550

9 4,092 174,691 444,063 978,955 1,772,464 1,098,632 161,106 5 3,936 8 7,734 2 5,823 1,076,893 949,046 2,065,465 630,895 979,201 (360,177) (201,122) (335,499) (183,026) (1,341,011) 118,731,047 122,094,856 125,526,996 132,959,237 138,722,027 323,585 320,443 361,840 439,716 550,691

- - - - 3 3,100

815,430 746,167 809,211 865,879 865,732 360,177 201,122 335,499 183,026 1,341,011 1,499,192 1,267,732 1,506,550 1,488,621 2,790,534 120,230,239 123,362,588 127,033,546 134,447,858 141,512,561 (1,393,324) (6,461,348) 192,327 7,246,927 6,861,543 720,344 514,341 (868,876) 1,556,180 5,333,398 $ (672,980) $ (5,947,007) $ (676,549) $ 8,803,107 $ 12,194,941 -183-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

GENERAL TAX REVENUES - GOVERNMENTAL ACTIVITIES

LAST TEN FISCAL YEARS

Table 2-b 2010 2011 2012 2013 2014 Local Property Taxes $ 59,267,240 $ 60,070,368 $ 65,937,415 $ 65,591,225 $ 64,712,683 Local Income Tax 25,715,247 30,624,679 34,028,234 35,769,303 40,899,804 Other Local Taxes 5,487,396 5,398,486 5,728,277 6,617,508 6,511,138 Total Taxes - Governmental Activities $ 90,469,883 $ 96,093,533 $ 105,693,926 $ 107,978,036 $ 112,123,625 2015 2016 2017 2018 2019 Local Property Taxes $ 64,672,721 $ 65,185,546 $ 66,487,004 $ 67,736,404 $ 70,670,569

Local Income Tax 44,643,870 47,928,725 48,624,679 55,211,695 57,728,293 Other Local Taxes 7,505,016 7,896,864 8,187,348 8,496,580 8,886,688 Total Taxes - Governmental Activities $ 116,821,607 $ 121,011,135 $ 123,299,031 $ 131,444,679 $ 137,285,550

NOTES:

* Government-wide general tax revenue information is reported on the accrual basis of accounting.

* Source: Statement of Activities.

-184-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

FUND BALANCES - GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS

Table 3 2010 2011 2012 2013 2014 General Fund:

Reserved $ 7 ,734,692 $ - $ - $ - $ - Unreserved 6 ,296,418 - - - - Nonspendable - 4,000 555,215 626,122 480,385 Restricted - 333,798 340,670 8,111,614 8,375,368 Committed - 657,068 695,944 - 1,157,360 Assigned - 70,000 - 1,284,657 1,284,875 Unassigned - 4,753,656 11,207,265 5,965,003 7,123,519 Total General Fund 1 4,031,110 5,818,522 12,799,094 15,987,396 18,421,507 All Other Governmental Funds:

Reserved 1 5,153,381 - - - - Unreserved, reported in:

Capital Projects Fund 1 2,538,916 - - - - Special Revenue Funds 7 ,842,939 - - - - Nonspendable - 4,401,483 5,136,024 5,406,512 5,470,608 Restricted - 22,065,716 12,255,292 12,724,859 21,824,970 Committed - 1,820,818 2,054,749 3,480,382 4,097,033 Assigned - 14,745,215 18,654,017 24,665,235 25,939,319 Unassigned - (172,381) ( 157,828) (135,515) (115,800) Total All Other Governmental Funds 3 5,535,236 42,860,851 37,942,254 46,141,473 57,216,130

Total All Governmental Funds $ 4 9,566,346 $ 48,679,373 $ 50,741,348 $ 62,128,869 $ 75,637,637 2015 2016 2017 2018 2019 General Fund:

Nonspendable $ 6 87,777 $ 586,481 $ 754,921 $ 1,001,610 $ 1,616,447 Restricted 8 ,681,112 9,002,389 10,626,394 10,999,800 14,361,899 Committed 2 ,000,000 3,000,000 4,000,000 5,027,897 6,000,000 Assigned 2 ,034,875 1,926,782 1,998,415 1,483,827 1,224,503 Unassigned 7 ,793,085 8,468,591 8,830,530 11,142,331 11,856,474 Total General Fund (1) 2 1,196,849 22,984,243 26,210,260 29,655,465 35,059,323 All Other Governmental Funds:

Nonspendable 5 ,919,048 6,146,072 7,552,462 7,583,553 - Restricted 1 7,794,372 21,316,088 8,900,465 6,815,341 12,598,139 Committed 4 ,209,177 3,425,701 13,447,283 15,202,215 18,514,079 Assigned 2 3,093,224 18,029,073 16,045,167 19,618,643 23,573,581 Unassigned (108,185) (115,129) ( 53,665) (48,758) (28,164) Total All Other Governmental Funds (1) 5 0,907,636 48,801,805 45,891,712 49,170,994 54,657,635

Total All Governmental Funds $ 7 2,104,485 $ 71,786,048 $ 72,101,972 $ 78,826,459 $ 89,716,958

NOTES:

* Fund balance information for governmental funds is reported on the modified accrual basis of accounting.

* Source: Balance Sheet, Governmental Funds.

(1) As of June 30, 2011, fund balance classifications changed due to the implementation of GASB 54.

-185-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS

Table 4 2010 2011 2012 2013 2014 Revenues Taxes Local Property Taxes $ 59,242,742 $ 60,097,959 $ 65,918,832 $ 65,554,079 $ 64,701,622 Local Income Taxes 29,647,125 29,527,496 35,969,879 39,438,906 40,326,921 Other Local Taxes 5,487,396 5,398,486 5,728,277 6,617,508 6,511,137 State Shared Taxes 508,138 230,401 306,235 510,726 749,366 Licenses and Permits 863,782 919,663 877,365 1,004,774 1,080,891 Intergovernmental 12,061,066 8,777,729 5,867,211 7,588,691 5,588,984

Bond Interest Reimbursement - Build America Bond 193,567 438,022 432,212 406,337 383,777 Charges for Current Services 3,396,080 3,143,846 3,908,998 4,594,240 5,357,919 Fines and Forfeitures 258,937 78,345 222,683 119,857 141,615 Capital Contributions - Developer - - - - 102,316 Investment Income 144,553 136,523 126,650 107,095 95,286 Donations 140,731 109,342 46,332 36,332 39,055 Miscellaneous 786,719 708,455 1,254,255 1,051,760 877,629

Total Revenues 112,730,836 109,566,267 120,658,929 127,030,305 125,956,518 Expenditures Current General Government (1) 10,608,976 10,397,457 9,171,830 9,282,310 10,649,489 Public Safety 21,344,575 21,127,321 20,985,077 21,275,229 22,266,458 Public Works 7,671,352 7,277,767 7,733,226 9,615,805 9,967,363 Health 1,637,101 1,670,222 1,604,462 1,811,402 2,030,740 Social Services 4,767,647 4,098,650 3,533,022 4,051,741 3,474,886

Education 53,545,597 57,566,865 53,755,497 48,418,107 59,752,944 Parks and Recreation 3,055,335 2,521,175 - - - Library 1,424,078 1,433,725 1,277,993 1,278,228 1,310,250 Conservation of Natural Resources 5,263,577 3,872,916 2,794,262 890,480 2,363,254 Economic/Community Development 1,847,195 1,715,524 758,089 898,129 1,306,516 Miscellaneous 1,373,090 4,699,452 3,704,702 4,862,189 3,202,417 Capital Outlay 7,868,741 4,838,581 2,755,949 3,370,909 8,669,375

Debt Service Principal 4,948,144 6,964,558 7,095,307 7,069,406 7,210,561 Debt Issuance Costs 145,884 129,671 162,021 ( 94) 196,870 Interest and Fiscal Charges 3,114,505 3,629,426 4,116,939 3,675,628 3,501,230 Total Expenditures 128,615,797 131,943,310 119,448,376 116,499,469 135,902,353 Excess (Deficiency) of Revenues over (under) Expenditures (15,884,961) (22,377,043) 1,210,553 10,530,836 (9,945,835)

Other Financing Sources (Uses) Issuance of Debt 29,299,154 21,897,570 8,010,000 564,068 22,405,542 Other Financing Use - Proceeds of Refunding Bonds - - - - - Bond Premiums 157,800 139,136 713,235 ( 101) 1,118,097 Payments to Bond Refunding Agent - - (8,557,455) - - Other Financing Use - Debt Service - Principal - - - - - Proceeds of Capital Asset Disposals 30,861 582,601 47,396 308,856 458,759 Insurance Proceeds 15,826 99,028 11,631 20,070 61,942

Transfers In 18,184,911 5,386,256 9,635,881 10,851,904 5,861,261 Transfers Out (18,744,242) (6,614,521) (10,369,909) (11,228,409) (6,450,998) Total Other Financing Sources (Uses) 28,944,310 21,490,070 (509,221) 516,388 23,454,603 Special Item - - 1,360,643 - - Net Increase (Decrease) in Fund Balances $ 13,059,349 $ (886,973) $ 2,061,975 $ 11,047,224 $ 13,508,768 Debt service as a percentage of non-capital expenditures (2, 3) 6.69% 8.34% 9.66% 9.54% 8.44%

NOTES:

* Governmental fund information is reported on the modified accrual basis of accounting.

* Source: Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds

and the Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities.

(1) For all fiscal years, "General Government" includes amounts previously classified as "Miscellaneous," "Intergovernmental" and/or "Contingency."

(2) Only the principal and interest components of debt service expenditures are included in the calculation of the ratio of total debt service expenditures to noncapital expenditures.

(3) Noncapital expenditures represents Total Expenditures above, less the Net Increase in Capital Assets from the Reconciliation between the Government-Wide Statement of Activities

and the Statement of Revenues, Expenditures, and Changes in Fund Balance. Only the assets acquired (not included assets transferred or donated) from the reconciliation are used in the calculation.

-186-

QUEEN ANNE'S COUNTY, MARYLAND

FINANCIAL TRENDS

CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS

Table 4

(CONTINUED)

2015 2016 2017 2018 2019 $ 64,672,292 $ 64,946,443 $ 66,501,901 $ 67,944,730 $ 70,615,293 4 2,889,715 4 6,424,552 4 8,578,044 5 1,834,189 5 5,282,162 7 ,505,016 7 ,896,865 8 ,187,348 8 ,496,580 8 ,886,688 5 57,834 6 23,256 7 08,566 8 36,677 1 ,171,668 1 ,062,917 1 ,078,144 1 ,123,072 1 ,167,444 1 ,224,381 4 ,030,576 4 ,696,561 3 ,987,308 7 ,539,052 8 ,284,699 3 75,323 3 64,799 3 50,254 3 34,858 3 19,362

4 ,251,835 4 ,617,730 5 ,114,605 5 ,298,701 5 ,088,123 1 82,160 2 50,110 2 11,102 2 58,226 1 92,975

- - - - -

94,092 1 74,691 4 44,063 9 78,955 1 ,772,464 41,391 45,773 60,217 57,635 31,084 1 ,076,893 9 49,045 2 ,065,465 6 30,895 9 79,201 126,740,044 132,067,969 137,331,945 145,377,942 153,848,100 8 ,833,255 9 ,817,062 1 0,382,078 1 0,640,065 1 0,542,151 2 3,133,608 2 3,523,103 2 3,866,030 2 5,049,431 2 6,804,113 1 2,041,969 1 5,080,454 1 5,506,684 1 5,235,104 1 6,163,026 1 ,822,856 1 ,992,208 1 ,967,956 1 ,971,460 1 ,832,104

3 ,602,146 3 ,835,730 4 ,013,664 4 ,129,134 4 ,377,273 6 5,683,908 6 0,808,143 5 9,266,025 6 2,352,046 6 2,640,409

- - - - -

1 ,432,500 1 ,597,000 1 ,684,820 1 ,765,190 1 ,833,513 5 65,289 1 ,744,260 5 65,938 2 ,577,735 2 ,717,738 1 ,616,784 3 ,188,928 1 ,710,899 2 ,433,171 1 ,638,265 3 ,535,585 4 ,766,722 4 ,185,652 5 ,348,568 5 ,729,955 8 ,733,509 1 1,050,384 1 4,591,632 1 2,311,551 9 ,323,882 7 ,444,611 7 ,667,316 8 ,074,013 7 ,149,537 7 ,855,820 4 03,572 2 18,799 1 96,150 2 29,894 2 11,447 3 ,846,823 3 ,696,719 4 ,104,254 4 ,280,553 4 ,586,387

142,696,415 148,986,828 150,115,795 155,473,439 156,256,083 (15,956,371) (16,918,859) (12,783,850) (10,095,497) (2,407,983) 2 5,384,493 1 5,484,639 1 2,775,926 1 6,000,000 1 1,000,000

- 8 ,042,773 - - -

1 ,901,240 1 ,650,448 6 18,681 9 08,973 1 ,011,998 (14,881,834) - - - -

- (8,446,336) - - -

1 ,331,608 18,100 55,189 54,097 2 31,588 57,916 1 53,534 12,241 39,940 3,114 5 ,079,641 9 ,941,051 6 ,331,482 8 ,220,201 1 2,588,897 (6,449,845) (10,243,787) (6,693,745) (8,403,227) (13,929,908) 1 2,423,219 1 6,600,422 1 3,099,774 1 6,819,984 1 0,905,689

- - - - -

$ (3,533,152) $ (318,437) $ 3 15,924 $ 6 ,724,487 $ 8 ,497,706 8.43% 8.16% 8.99% 8.00% 8.47% -187-

QUEEN ANNE'S COUNTY, MARYLAND

REVENUE CAPACITY

ASSESSED VALUE OF TAXABLE AND EXEMPT PROPERTY

LAST TEN FISCAL YEARS

Table 5 Real Property (2) Personal Property Total Total Total Public Utility Taxable Taxable and Fiscal Commercial Residential (1) Total Direct Assessed Assessed Exempt Exempt Year Assessed Value Assessed Value Assessed Value Tax Rate (3) Value (2) (4) Value Property Property 2010 $ 1,606,785,131 $ 5,911,287,556 $ 7 ,518,072,687 $ 0.7700 $ 62,858,590 $ 7,580,931,277 $ 5 96,219,654 $ 8 ,177,150,931

2011 1,625,886,760 6,054,844,995 7 ,680,731,755 0.7671 59,364,960 7,740,096,715 6 44,654,739 8 ,384,751,454 2012 1,485,091,345 6,139,645,414 7 ,624,736,759 0.8471 60,635,440 7,685,372,199 6 94,372,116 8 ,379,744,315 2013 1,567,115,297 5,990,170,828 7 ,557,286,125 0.8471 63,194,130 7,620,480,255 7 32,300,804 8 ,352,781,059 2014 1,540,562,905 5,935,284,963 7 ,475,847,868 0.8471 64,411,900 7,540,259,768 6 96,880,673 8 ,237,140,441

2015 1,526,533,795 5,971,094,589 7 ,497,628,384 0.8471 71,076,850 7,568,705,234 7 08,231,797 8 ,276,937,031 2016 1,536,236,637 6,015,729,665 7 ,551,966,302 0.8471 74,544,230 7,626,510,532 7 13,843,531 8 ,340,354,063 2017 1,578,390,091 6,136,189,107 7 ,714,579,198 0.8471 77,685,020 7,792,264,218 7 71,576,578 8 ,563,840,796 2018 1,619,626,376 6,277,865,272 7 ,897,491,648 0.8471 76,903,490 7,974,395,138 7 84,345,727 8 ,758,740,865

2019 1,668,339,027 6,485,471,694 8 ,153,810,721 0.8471 110,703,740 8,264,514,461 8 10,049,666 9 ,074,564,127

NOTES:

* Tax exempt property is included for purposes of calculating total assessed value, which is used on Table 12-a.

(1) Residential real property includes single-family homes, townhouses, condominiums, and apartment dwellings. The assessed value shown

above has been reduced for the Homestead Credit assessment.

(2) Real property and personal property assessments are done every three years and every year, respectively, by the State

Department of Assessments and Taxation at 100% of estimated fair value.

(3) See Table 6-a for real property direct tax rates. Tax Rates are applied per $100 of assessed value.

(4) The personal property tax rate for Queen Anne's County is zero.

Source: State of Maryland, Department of Assessments and Taxation.

-189-

QUEEN ANNE'S COUNTY, MARYLAND

REVENUE CAPACITY

REAL PROPERTY TAX RATES - COUNTY DIRECT RATE

LAST TEN FISCAL YEARS

Table 6-a County Fiscal Direct Year Rate (1) 2010 $ 0 .7700 2011 0 .7671 2012 0 .8471 2013 0 .8471 2014 0 .8471 2015 0 .8471 2016 0 .8471 2017 0 .8471 2018 0 .8471 2019 0 .8471

NOTES:

* No discounts are allowed.

* Taxes are levied as of July 1, are due by September 30, and become delinquent October 1.

* Owner occupied properties may elect to pay on an annual basis. If no election is made,

taxes are paid on a semi-annual basis with payment due by September 30 and December 31

* Non-owner occupied properties must pay on an annual basis.

* Interest at one percent per month is assessed on delinquent tax bills.

* Revised tax bills based upon certifications from the State received after September 1

may be paid within thirty days without interest.

* Delinquent taxes on real property are collected by sale.

* Costs of tax sale, which vary, are added to the redemption.

* Tax sale date: Third Tuesday in May.

* The personal property tax rate for Queen Anne's County is zero.

(1) Tax Rates are applied per $100 of assessed value.

-190-

QUEEN ANNE'S COUNTY, MARYLAND

REVENUE CAPACITY

REAL PROPERTY TAX RATES - COUNTY SPECIAL TAXING DISTRICTS

LAST TEN FISCAL YEARS

Table 6-b Kent Narrows Commercial Management Fiscal and Waterfront Year Improvement District 2010 $ 0 .0600 2011 0 .0600 2012 0 .0600 2013 0 .0600 2014 0 .0600 2015 0 .0600 2016 0 .0600 2017 0 .0600 2018 0 .0600 2019 0 .0600

NOTES:

* Tax rates are per $100 of assessed value.

* The personal property tax rate for Queen Anne's County is zero.

-191-

QUEEN ANNE'S COUNTY, MARYLAND

REVENUE CAPACITY

REAL PROPERTY TAX RATES - OVERLAPPING GOVERNMENTS - TOWNS

LAST TEN FISCAL YEARS

Table 6-c Fiscal Town of Town of Town of Town of Town of Year Centreville Barclay Church Hill Millington Queen Anne 2010 $ 0 .3800 $ 0 .1000 $ 0 .3400 $ 0 .2800 $ 0 .1800 2011 0 .3800 0 .1000 0 .3400 0 .2800 0 .1800 2012 0 .3800 0 .2000 0 .3400 0 .2800 0 .1800 2013 0 .3800 0 .2000 0 .3400 0 .2800 0 .1800 2014 0 .3800 0 .2000 0 .3400 0 .2800 0 .1800 2015 0 .3800 0 .2000 0 .3400 0 .2800 0 .1800 2016 0 .3800 0 .2000 0 .3400 0 .2800 0 .1800

2017 0 .4100 0 .2000 0 .3400 0 .2800 0 .1800 2018 0 .4050 0 .2000 0 .3400 0 .2800 0 .1800 2019 0 .4050 0 .2000 0 .3400 0 .2800 0 .1800

NOTES:

* Tax rates are per $100 of assessed value.

* The personal property tax rate for Queen Anne's County is zero.

* Taxes collected by the County for other fiscal units, including overlapping governments, are remitted

based on actual collections.

-192-

QUEEN ANNE'S COUNTY, MARYLAND

REVENUE CAPACITY

REAL PROPERTY TAX RATES - OVERLAPPING GOVERNMENTS - TOWNS

LAST TEN FISCAL YEARS

Table 6-c

(CONTINUED)

Town of Town of Town of Queenstown Sudlersville Templeville $ 0 .1810 $ 0 .1670 $ 0 .3600 0 .1904 0 .1670 0 .3600 0 .1890 0 .1670 0 .3600 0 .1890 0 .1670 0 .3600 0 .1890 0 .1670 0 .3600 0 .1895 0 .1670 0 .3600 0 .1850 0 .1670 0 .3600 0 .1810 0 .1670 0 .5788 0 .1773 0 .1670 0 .3600 0 .1726 0 .1670 0 .3600 -193-

QUEEN ANNE'S COUNTY, MARYLAND

REVENUE CAPACITY

TEN HIGHEST COMMERCIAL PROPERTY TAXPAYERS

CURRENT FISCAL YEAR AND NINE YEARS AGO

Table 7 For the Fiscal Year Ended June 30, 2019 Ratio:

Taxpayer Base to Total Assessable Base Assessable Base Second Horizon Group Limited Partnership $ 74,919,500 0.94 % KRM Development Corporation 29,424,900 0.37 Aspen Institute for Humanistic Studies 23,918,700 0.30 Kent Island LLC 16,885,163 0.21 Maryland General Land Co LLC 15,395,067 0.19 Great American Life Insurance Co 14,461,733 0.18 Beach Harbor Campers Co-Operative 12,711,100 0.16 Anne Arundel Real Estate Holding 11,248,033 0.14

Shore Health System Inc 10,246,700 0.13 Mears Point Association 10,051,200 0.13 Total $ 219,262,096 2.75 % Total Assessable Base $ 7,974,395,138 100.00 % For the Fiscal Year Ended June 30, 2010 Ratio:

Taxpayer Base to Total Assessable Base Assessable Base Second Horizon Group Limited Partnership $ 51,790,100 0.68 % KRM Development Corporation 36,943,231 0.49 White's Heritage Partners 23,804,738 0.31 Great American Life Insurance Company 17,689,900 0.23 Washington Brick and Terra Cotta Company 14,609,400 0.19 Waterford Centreville, LLC 14,047,640 0.19 Beach Harbor Campers Cooperative Inc 13,815,890 0.18

Mears Point Association 13,525,310 0.18 Reliable Development Company 12,996,983 0.17 JSE Investment 12,639,680 0.17 Total $ 211,862,872 2.79 % Total Assessable Base $ 7,580,931,277 1 00.00 % Source: State of Maryland Department of Assessments and Taxation -194-

QUEEN ANNE'S COUNTY, MARYLAND

REVENUE CAPACITY

PROPERTY TAX LEVIES AND COLLECTIONS

LAST TEN FISCAL YEARS

Table 8 Collected within the Taxes Levied Fiscal Year of the Levy Collections in Total Collections to Date Fiscal for the Percentage of Subsequent Percentage of Year Fiscal Year Amount Original Levy Years Amount Original Levy 2010 $ 57,788,231 $ 57,720,564 99.88% $ 61,985 $ 57,782,549 99.99% 2011 58,758,234 58,696,129 99.89% 55,435 58,751,564 99.99% 2012 64,549,671 64,459,862 99.86% 80,384 64,540,246 99.99%

2013 63,904,147 63,596,067 99.52% 55,677 63,651,744 99.61% 2014 63,184,321 62,834,349 99.45% 86,529 62,920,878 99.58% 2015 63,338,629 63,231,601 99.83% 69,696 63,301,297 99.94% 2016 63,799,184 63,647,404 99.76% 81,393 63,728,797 99.89% 2017 65,217,648 65,107,115 99.83% 108,618 65,215,733 99.83% 2018 66,768,776 66,721,619 99.93% 30,434 66,752,053 99.97% 2019 68,887,556 68,778,389 99.84% - 68,778,389 99.84%

NOTES:

* This table includes data for all property taxes billed applicable to all funds for Queen Anne's County, Maryland to include General,

Special Revenue, and Enterprise Funds. Property taxes billed for the State of Maryland and various municipalities are excluded.

-195-

QUEEN ANNE'S COUNTY, MARYLAND

DEBT CAPACITY

RATIOS OF OUTSTANDING DEBT BY TYPE

LAST TEN FISCAL YEARS

Table 9 Governmental Activities General Total Fiscal Obligation Notes Capital Governmental Year Bonds Payable Leases Activities 2010 $ 87,967,432 $ 1,652,082 $ 105,884 $ 8 9,725,398 2011 102,791,729 1,070,632 54,089 1 03,916,450 2012 97,127,263 889,256 - 9 8,016,519 2013 90,092,100 1,146,755 - 9 1,238,855 2014 107,883,563 958,156 - 1 08,841,719 2015 112,060,053 784,785 - 1 12,844,838 2016 118,977,909 1,913,199 - 1 20,891,108

2017 123,519,157 1,698,425 - 1 25,217,582 2018 132,567,304 1,417,461 - 1 33,984,765 2019 135,985,079 1,098,323 - 1 37,083,402 Business-type Activities Ratios Debt to General Total Total Total Outstanding Fiscal Obligation Notes Capital Business-type Primary Personal Debt per Year Bonds Payable Leases Activities Government Income (1) Capita (1) 2010 $ 3,445,366 $ 18,166,367 $ - $ 2 1,611,733 $ 111,337,131 6.47% $ 2,289

2011 3,458,828 16,692,171 - 2 0,150,999 124,067,449 7.20% 2,590 2012 2,936,543 15,238,959 - 1 8,175,502 116,192,021 6.95% 2,431 2013 2,490,475 13,767,769 - 1 6,258,244 107,497,099 6.12% 2,210 2014 2,053,736 12,584,475 - 1 4,638,211 123,479,930 6.97% 2,538 2015 3,540,295 11,388,918 - 1 4,929,213 127,774,051 6.89% 2,618 2016 3,520,859 10,471,639 - 1 3,992,498 134,883,606 7.24% 2,780 2017 3,217,479 16,296,744 - 1 9,514,223 144,731,805 7.64% 2,960

2018 2,976,195 25,484,821 - 2 8,461,016 162,445,781 8.39% 3,322 2019 2,725,011 29,419,756 - 3 2,144,767 169,228,169 8.22% 3,335

NOTES:

(1) See Table 14 for personal income and population data, which are used in calculating these ratios.

-196-

QUEEN ANNE'S COUNTY, MARYLAND

DEBT CAPACITY

RATIOS OF GENERAL BONDED DEBT OUTSTANDING

LAST TEN FISCAL YEARS

Table 10 Percentage of Fiscal General Total Taxable Per Year Bonded Debt (1) Assessable Base (2) Capita (3) 2010 $ 91,412,798 1.21% $ 1,879 2011 106,250,557 1.37% 2,218 2012 100,063,806 1.30% 2,093 2013 92,582,575 1.21% 1,903 2014 109,937,299 1.46% 2,260 2015 115,600,348 1.53% 2,369 2016 122,498,768 1.61% 2,525 2017 126,736,636 1.63% 2,592 2018 135,543,499 1.70% 2,772 2019 138,710,090 1.68% 2,733

NOTES:

* General Bonded Debt includes all general obligation debt, regardless of

purpose or repayment source, and other bonded debt financed with general government resources. Other debt is excluded because it is not in the form of bonds.

(1) General Bonded Debt is comprised of both governmental and businesstype activities from Table 9.

(2) See Table 5 for taxable assessable base.

(3) See Table 14 for population data.

-197-

QUEEN ANNE'S COUNTY, MARYLAND

DEBT CAPACITY

COMPUTATION OF NET DIRECT AND OVERLAPPING DEBT

AS OF JUNE 30, 2019

Table 11 Name of Jurisdiction Gross Debt Queen Anne's County:

County Government Total Net Direct Debt (1) $ 137,083,402 Towns: (2) Centreville (100%) 17,392,933 Millington (100%) 1,129,000 Queenstown (100%) 5 ,432,993 Sudlersville (100%) 4,648,000 Total Net Overlapping Debt 28,602,926 Total Net Direct and Overlapping Debt $ 165,686,328

NOTES:

(1) Net direct debt of the County includes Governmental Activities general obligation bonds, notes payable, and capital leases. See Table 9.

Overlapping debt is the debt of other governmental entities located within the County that is payable in whole or in part by taxpayers of the County.

(2) Entities are located wholly within Queen Anne's County. Debt information reported by municipalities.

-199-

QUEEN ANNE'S COUNTY, MARYLAND

DEBT CAPACITY

COMPUTATION OF LEGAL DEBT MARGIN

LAST TEN FISCAL YEARS

Table 12-a 2010 2011 2012 2013 2014 Computation of Legal Debt Margin - for Queen Anne's County Other than Debt related to the Sanitary District:

Authorized debt limit under Title 5 (Subtitle 4) (1) $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 Authorized bonded debt under specific public laws Enterprise Funds, excluding Sanitary District (4) 1,862,866 2,340,495 2,304,876 2,160,475 2,053,736 General Obligation Debt (4) 87,967,432 102,791,729 97,127,263 90,092,100 107,883,563 Subtotal 89,830,298 105,132,224 99,432,139 92,252,575 109,937,299

Total authorized debt under Title 5 and specific public laws 97,830,298 113,132,224 107,432,139 100,252,575 117,937,299 LESS Outstanding bonds, notes payable, and capital leases (5) 111,337,131 124,067,449 116,192,021 107,497,099 123,479,930 Less: Sanitary District debt (4) 19,735,239 17,803,690 15,870,626 14,097,769 12,584,475 Subtotal 91,601,892 106,263,759 100,321,395 93,399,330 110,895,455 Legal Debt Margin - Other than the Sanitary District $ 6,228,406 $ 6,868,465 $ 7,110,744 $ 6,853,245 $ 7,041,844

Debt related to the Sanitary District Proprietary Fund:

Total taxable assessed value (3) $ 7,580,931,277 $ 7,740,096,715 $ 7,685,372,199 $ 7,620,480,255 $ 7,540,259,768 Plus exempt property (3) 596,219,654 644,654,739 694,372,116 732,300,804 696,880,673 Total assessed value $ 8,177,150,931 $ 8,384,751,454 $ 8,379,744,315 $ 8,352,781,059 $ 8,237,140,441 Debt Limit - 6% of total assessed value (2) $ 490,629,056 $ 503,085,087 $ 502,784,659 $ 501,166,864 $ 494,228,426

LESS Sanitary District 19,735,239 17,803,690 15,870,626 14,097,769 12,584,475 Less: Restricted Cash and Investments in the Debt Service Fund available for payment of principal 3,925,026 3,658,194 3,244,564 2,840,468 2,763,304 15,810,213 14,145,496 12,626,062 11,257,301 9,821,171 Legal Debt Margin - Sanitary District $ 474,818,843 $ 488,939,591 $ 490,158,597 $ 489,909,563 $ 484,407,255

NOTES:

(1) Title 5, Subtitle 4 (1), of the Code of Public Local Laws of Queen Anne's County authorizes the County to borrow up to $8,000,000 for

general operating and capital improvement expenditures. This authority is in addition to any bonded debt authorized under specific public local laws.

(2) Title 24, Subtitle 1, Section 24-146(A) of the Code of Public Local Laws of Queen Anne's County authorizes the County to borrow an amount not to

exceed 6% of the total value of property assessed. The proceeds of such borrowings must be used for sewer and water system construction payments.

(3) See Table 5.

(4) See Note 9, Section B.

(5) See Note 9.

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QUEEN ANNE'S COUNTY, MARYLAND

DEBT CAPACITY

COMPUTATION OF LEGAL DEBT MARGIN

LAST TEN FISCAL YEARS

Table 12-a

(CONTINUED)

2015 2016 2017 2018 2019 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 3,540,295 3,520,859 3,217,479 2,976,195 2,725,011 112,060,053 118,977,909 123,519,157 132,567,304 135,985,079 115,600,348 122,498,768 126,736,636 135,543,499 138,710,090 123,600,348 130,498,768 134,736,636 143,543,499 146,710,090 127,774,051 134,883,606 144,731,805 162,445,781 169,228,169 11,388,918 10,471,639 16,296,744 25,484,821 29,419,756

116,385,133 124,411,967 128,435,061 136,960,960 139,808,413 $ 7,215,215 $ 6,086,801 $ 6,301,575 $ 6,582,539 $ 6,901,677 $ 7,568,705,234 $ 7,626,510,532 $ 7,792,264,218 $ 7,974,395,138 $ 8,264,514,461 708,231,797 713,843,531 771,576,578 784,345,727 810,049,666 $ 8,276,937,031 $ 8,340,354,063 $ 8,563,840,796 $ 8,758,740,865 $ 9,074,564,127 $ 496,616,222 $ 500,421,244 $ 513,830,448 $ 525,524,452 $ 544,473,848

11,388,918 10,471,639 16,296,744 25,484,821 29,419,756 2,695,383 1,120,775 9 47,445 1,060,045 1,259,440 8,693,535 9,350,864 15,349,299 24,424,776 28,160,316 $ 487,922,687 $ 491,070,380 $ 498,481,149 $ 501,099,676 $ 516,313,532 -201-

QUEEN ANNE'S COUNTY, MARYLAND

DEBT CAPACITY

COMPUTATION OF LOCAL DEBT LIMIT

LAST TEN FISCAL YEARS

Table 12-b 2010 2011 2012 2013 2014 Computation of Local Debt Limit, as Authorized under Article 95, Section 22F of the Annotated Code of Maryland and per criteria established by Queen Anne's County Resolution No. 13-04, as adopted May 2013.

CALCULATION PER FIRST FINANCIAL CRITERIA:

The sum of all outstanding and new general obligation and/or bonded debt is 2.5% or less of the total taxable assessed base.

Total Taxable Assessed Base (1) $ 7 ,580,931,277 $ 7 ,740,096,715 $ 7 ,685,372,199 $ 7,620,480,255 $ 7,540,259,768 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% of Total Taxable Assessed Base $ 189,523,282 $ 1 93,502,418 $ 1 92,134,305 $ 190,512,006 $ 188,506,494 LESS Outstanding and New General Obligation Debt applicable to limit (2) (3) Enterprise Funds' Debt - Bonds $ 3,445,366 $ 3,458,828 $ 2,936,543 $ 2,490,475 $ 2 ,053,736

General Obligation Debt - Bonds and Notes 89,619,514 103,862,361 98,016,519 91,238,855 108,841,719 Total Outstanding and New General Obligation Debt $ 93,064,880 $ 1 07,321,189 $ 1 00,953,062 $ 93,729,330 $ 110,895,455 2.5% of Total Taxable Assessed Base in Excess of Total Outstanding and New General Obligation Debt $ 96,458,402 $ 86,181,229 $ 91,181,243 $ 96,782,676 $ 77,611,039

CALCULATION PER SECOND FINANCIAL CRITERIA:

The sum of all outstanding and new general obligation and/or bonded debt is $3,000 or less per capita.

Total County Population (4) 48,650 47,899 47,798 48,650 48,650 $3,000 Per Capita $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 1 45,950,000 $ 1 43,697,000 $ 1 43,394,000 $ 145,950,000 $ 145,950,000 LESS Outstanding and New General Obligation Debt (1) $ 93,064,880 $ 1 07,321,189 $ 1 00,953,062 $ 93,729,330 $ 110,895,455 $3,000 Per Capita in Excess of Total Outstanding and New General Obligation Debt $ 52,885,120 $ 36,375,811 $ 42,440,938 $ 52,220,670 $ 35,054,545

NOTES:

(1) See Table 5 - Total Taxable Assessed Value.

(2) See Note 9 A - Changes in Noncurrent Liabilities.

(3) General Obligation Debt includes debt relating to the Sanitary District, because such debt is backed by the full faith

and credit of the County, but excludes all capital leases, which are collateralized by the equipment purchased with such leases.

(4) See Table 14 - Population.

In May, 2013, as described in Note 9 E, Queen Anne’s County adopted Resolution No. 13-04, thereby continuing a local debt policy in compliance with Article 95, Section 22F of the Annotated Code of Maryland.

This policy requires that the County’s Director of Budget, Finance and Information Technology take the following steps:

(a) prepare a six-year capital project plan each year;

(b) propose an amount to be transferred from the General Fund operating balance to the General Capital Projects

Fund to serve as pay-as-you-go funding in the latter Fund, in order to lessen the need for future County debt;

(c) limit the County’s non-bonded indebtedness to $8.0 million for general operating expenses or capital

improvements;

(d) certify that the sum of outstanding general bonded debt and any new general obligation debt is 2.5% or less

of the total taxable assessed base and is $3,000 or less per capita; and This policy also stipulates that although there is some flexibility as to the acceptable percentage of debt service to general fund expenditures, and no absolute limit has been established by the rating agencies or the Government Finance Officers Association, anything above 12% of total general fund expenditures would be a cause to carefully monitor debt service.

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QUEEN ANNE'S COUNTY, MARYLAND

DEBT CAPACITY

COMPUTATION OF LOCAL DEBT LIMIT

LAST TEN FISCAL YEARS

Table 12-b

(CONTINUED)

2015 2016 2017 2018 2019 $ 7 ,568,705,234 $ 7,626,510,532 $ 7,792,264,218 $ 7,974,395,138 $ 8 ,264,514,461 2.5% 2.5% 2.5% 2.5% 2.5% $ 1 89,217,631 $ 190,662,763 $ 194,806,605 $ 199,359,878 $ 206,612,862 $ 3,540,295 $ 3,520,859 $ 3,217,479 $ 2,976,195 $ 2,725,011 112,844,838 120,891,108 125,217,582 133,984,765 137,083,402 $ 1 16,385,133 $ 124,411,967 $ 128,435,061 $ 136,960,960 $ 139,808,413 $ 72,832,498 $ 66,250,796 $ 66,371,544 $ 62,398,918 $ 66,804,449

48,804 48,517 48,904 48,904 50,750 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 1 46,412,000 $ 145,551,000 $ 146,712,000 $ 146,712,000 $ 152,250,000 $ 1 16,385,133 $ 124,411,967 $ 128,435,061 $ 136,960,960 $ 139,808,413 $ 30,026,867 $ 21,139,033 $ 18,276,939 $ 9,751,040 $ 12,441,587 -203-

QUEEN ANNE'S COUNTY, MARYLAND

DEMOGRAPHIC AND ECONOMIC INFORMATION

PRINCIPAL EMPLOYERS

CURRENT FISCAL YEAR AND NINE YEARS AGO

Table 13 For the Fiscal Year Ended June 30, 2019 Percentage of Total County Employer Employees Rank Employment Queen Anne's County Board of Education 942 1 8.22% Queen Anne's County Government 511 2 4.46% Chesapeake College 445 3 3.88% REEB Millwork 300 4 2.62% Paul Reed Smith Guitars 255 5 2.22% Federal Resources Supply 245 6 2.14% S.E.W. Friel 200 7 1.74% Tidewater Direct 165 8 1.44% AZZ Enclosures 135 9 1.18%

Genesis Healthcare 135 10 1.18% Total 3,333 29.08% For the Fiscal Year Ended June 30, 2010 Percentage of Total County Employer Employees Rank Employment Queen Anne's County Board of Education 9 82 1 9.31% Queen Anne's County Government 5 07 2 4.81% S.E.W. Friel 2 75 3 2.61% Paul Reed Smith Guitars 2 44 4 2.31% Chesapeake College 2 25 5 2.13% Safeway 1 80 6 1.71% River Plantation 1 75 7 1.66% Genesis Healthcare 1 50 8 1.42%

Harris Seafood Company 1 50 9 1.42% Acme Markets 1 49 10 1.41% Total 3,037 28.79% Source: Queen Anne's County Economic Development Office; Table 15.

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QUEEN ANNE'S COUNTY, MARYLAND

DEMOGRAPHIC AND ECONOMIC INFORMATION

DEMOGRAPHIC STATISTICS

LAST TEN FISCAL YEARS

Table 14 Average Total Registered Fiscal Personal Per Capita Unemployment Number of Year Population (1) Income (2) Income (3) Rate (3) Pupils (4) 2010 48,650 $ 1,721,674,850 $ 3 5,389 7.00% 7 ,723 2011 47,899 1,722,448,040 3 5,960 7.20% 7 ,722 2012 47,798 1,672,547,616 3 4,992 6.50% 7 ,757 2013 48,650 1,757,238,000 3 6,120 6.40% 7 ,717 2014 48,650 1,771,687,050 3 6,417 5.10% 7 ,720 2015 48,804 1,854,356,784 3 7,996 4.90% 7 ,752

2016 48,517 1,862,664,664 3 8,392 3.90% 7 ,738 2017 48,904 1,894,198,632 3 8,733 3.80% 7 ,799 2018 48,904 1,936,256,072 3 9,593 3.90% 7 ,768 2019 50,750 2,058,064,750 4 0,553 3.70% 7 ,767

NOTES:

(1) Source: Queen Anne's County Division of Land Use and Zoning

(2) Personal income derived by multiplying population by per capita income.

(3) Source: Maryland Department of Labor, Licensing, and Regulation - as of June.

(4) Source: Queen Anne's County Board of Education.

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QUEEN ANNE'S COUNTY, MARYLAND

OPERATING INFORMATION

COUNTY GOVERNMENT EMPLOYEES - FULL-TIME EQUIVALENTS

LAST TEN FISCAL YEARS

Table 15 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Number of Exempt Employees 29 26 26 28 29 30 32 35 34 32 Number of Full Time Employees 450 400 386 391 393 416 431 439 450 479 Number of Part Time Employees (FTE) 17 10 9 8 7 3 3 4 3 3 Total County Government Employees 496 436 421 427 429 449 466 478 487 514

NOTES:

Source: Queen Anne's County Office of Budget, Finance and Information Technology.

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QUEEN ANNE'S COUNTY, MARYLAND

OPERATING INFORMATION

COUNTY GOVERNMENT EMPLOYEES - FULL-TIME ONLY BY FUNCTION

LAST TEN FISCAL YEARS

Table 16 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Governmental Activities:

General Government 87 77 74 82 77 81 83 87 76 75 Public Safety:

Police 50 49 53 56 58 58 59 61 62 69 Fire - Emergency Management Services 67 64 61 64 67 71 72 73 75 82 Detention Center 42 41 42 41 41 41 41 45 41 42 Animal Services 8 10 10 6 3 3 2 2 2 2 Public Works 79 61 51 51 54 58 61 59 75 80 Health 1 1 1 1 1 1 1 1 1 1 Social Services 37 32 36 32 36 38 42 41 39 39 Parks (1) 45 31 27 27 29 39 42 44 43 46 Conservation of Natural Resources 3 3 3 4 4 3 4 4 4 4 Economic/Community Development 9 7 3 6 2 3 6 5 10 11

Total Governmental Activities 428 376 361 370 372 396 413 422 428 451 Business-Type Activities:

Sanitary District 45 44 45 45 46 46 46 48 51 55 Bay Bridge Airport 3 3 3 1 1 1 1 1 2 2 Golf - - - 1 1 1 1 1 1 1 Public Landings 3 3 3 2 2 2 2 2 2 2 Total Business-Type Activities 51 50 51 49 50 50 50 52 56 60 Total Full-Time County Employees 479 426 412 419 422 446 463 474 484 511

NOTES:

(1) Due to the consolidation of the Property Management and Recreation enterprise funds with the General Fund in

fiscal year 2013, the respective employees of those funds are now reported with the Parks function of the Governmental Activities.

- Only full-time County employees are represented in this Table; data relating to full-time equivalents

for part-time employees is not available at this time.

- Employees of the County's component units have been excluded from this table.

Source: Queen Anne's County Office of Budget, Finance and Information Technology.

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QUEEN ANNE'S COUNTY, MARYLAND

OPERATING INFORMATION

OPERATING INDICATORS BY FUNCTION

LAST TEN FISCAL YEARS

Table 17 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Governmental Activities:

General Government:

Planning & Zoning:

Number of commercial permits issued 35 27 99 75 51 52 50 47 55 30 Number of residential permits issued:

Single Family Permits 153 106 119 161 133 123 84 124 145 155 Multi Family Permits 28 4 20 21 12 - 1 29 - 37 Renovations and Additions Permits 304 295 207 312 327 270 303 323 339 359 Total residential permits issued 485 405 346 494 472 393 388 476 484 551 Public Safety:

Fire and Rescue:

Number of volunteer members 689 689 689 689 689 683 500 400 500 450 Police:

Uniformed Police Officers 54 55 59 61 61 64 64 64 68 69 Number of law violations:

Physical arrests 917 1,216 848 1,144 1,239 1,055 903 914 1,097 930 Traffic violations 6,183 5,760 5,818 5,915 6,514 6,030 8,002 7,183 12,384 10,474 Detention Center:

Detention Center Officers 39 40 38 40 41 41 39 38 42 41 Average yearly prison population 102 103 86 128 138 123 115 133 115 105 Public Works:

Wastewater Treated - Daily (mgd) 2.1 1.7 1.9 2.0 2.0 2.1 2.0 2.0 2.2 2.2 Education:

Number of Personnel Teachers 533 530 537 546 550 575 575 572 569 572 Administrators 37 37 39 39 41 40 40 38 37 37 Support 336 310 300 294 344 295 296 304 300 301 Other 76 64 47 47 37 34 34 34 34 32 Number of Students 7,723 7,722 7,757 7,717 7,720 7,752 7,738 7,799 7,768 7,767 Number of High School Graduates 562 566 598 537 605 589 532 550 552 521

NOTES:

Source: Various County departments.

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QUEEN ANNE'S COUNTY, MARYLAND

OPERATING INFORMATION

CAPITAL ASSET STATISTICS BY FUNCTION

LAST TEN FISCAL YEARS

Table 18 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Governmental Activities:

Public Safety:

Fire and Rescue:

Number of volunteer stations 10 10 10 9 9 9 9 9 9 9 Equipment:

Engines 17 17 17 18 17 16 16 16 16 15 Tankers 9 9 9 9 8 8 8 8 8 7 Aerial Units 5 5 5 5 4 4 5 5 4 5 Rescue Units 7 7 7 8 6 7 6 6 5 5 Brush Units 8 8 8 8 7 7 7 7 7 7 Air Units (MD State Police) - - - - - - - - - - Boats 5 5 5 5 6 6 6 6 3 4 Ambulance/Medic Units 17 17 17 17 13 14 12 13 13 11 Cars/Other 22 22 22 22 25 25 25 16 14 28 Police:

Number of Stations 1 1 1 1 1 1 1 1 1 1 Number of Vehicles Patrol 60 53 62 62 68 68 71 70 70 71 Other 17 21 3 3 12 15 10 9 14 14 Detention Center Capacity 148 148 148 148 148 148 148 148 148 148 Public Works:

County Maintained Roads and Streets Paved (miles) 540 540 540 541 543 543 540 549 549 549 Unpaved (miles) 12 12 12 12 12 12 12 12 12 12 County Owned Water and Wastewater Facilities Water Miles of Mains 58 59 59 61 62 62 64 65 67 68 Water Treatment Plants 11 11 11 11 11 11 11 11 11 11 Booster Stations 2 2 2 2 2 2 2 2 2 2 Wastewater Miles of Mains 117 118 118 120 121 122 128 136 151 153 Wastewater Treatment Plants 1 1 1 1 1 1 1 1 1 1

Wastewater Collection, Lift, and Pumping Stations 31 31 31 31 31 31 31 32 32 32 Education:

Number of Schools High Schools 2 2 2 2 2 2 2 2 2 2 Middle Schools 4 4 4 4 4 4 4 4 4 4 Elementary Schools 8 8 8 8 8 8 8 8 8 8 Parks and Recreation:

Parks 33 33 33 33 33 33 32 32 32 32 Park Acreage 2,915 2,915 2,915 2,915 2,915 2,915 2,915 2,915 3,085 3,085 Public Landings 20 21 21 19 20 20 19 20 20 20 Library:

Number of Libraries 3 3 3 3 3 3 3 3 3 3

NOTES:

Source: Various County departments.

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