COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2008_part4 doc

GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


In the governmental fund financial statements, reservations or restrictions of fund balance
represent amounts that are not appropriable or are legally segregated for a specific purpose.
Designations of fund balance represent tentative management plans that are subject to change.

State law [G.S. 159-l3(b)(16)] restricts the appropriation of fund balance to an amount not to
exceed the sum of cash and investments minus the sum of liabilities, encumbrances and deferred
revenues arising from cash receipts as those amounts stand at the close of the fiscal year
proceeding the budget year.

The governmental fund types classify fund balances as follows:

Reserved

Reserved for inventories and prepaids - represents the portion of fund balance not available for
appropriation because it represents the year-end balance of inventories and prepaid items, which
are not expendable, available resources.

Reserved for encumbrances - represents the portion of fund balance available to pay for any
commitments related to purchase orders and contracts which remain unperformed at year-end.

Reserved by State statute - represents the portion of fund balance, in addition to reserves for
encumbrances and reserves for inventories, which is not available for appropriation under State
law [G.S. 159-8(a)]. This amount is usually comprised of accounts receivable and interfund
receivables, which are not offset by deferred revenues.

Reserved for Medicaid maximization - represents unexpended funds at fiscal year-end for the
Gaston County Health Department that are required to be utilized in the area in which they were
earned.

Reserved for Gaston County Schools capital projects - represents net unexpended half-cent
sales tax revenue, which is required to be expended on school capital outlays.

Reserved for Gaston County Schools bonds - represents unexpended proceeds of general
obligation school bonds.

Reserved for Gaston County Schools deficit reduction - represents unexpended County funds
approved for School Capital expenditures.

Reserved for Volunteer Fire Districts - represents property tax assessed on and collected from
residents of various fire districts in the County.

Reserved for Police asset forfeitures - represents the unexpended portion of funds obtained via
judicial confiscation of assets of persons convicted of federal drug offenses which are restricted to
nonoperating expenditures of the County Police Department.

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


Reserved for Sheriff civil processing fees - represents unexpended balances and unappropriated

revenues that are reserved for the enhancement of civil processing services provided by the
Sheriff’s Office.

Reserved for Department of Tourism - includes the portion of the local hotel/motel occupancy
tax which has been collected, but not expended, and which is restricted by statute solely for use in
promoting tourism efforts within the County.

Reserved for Gaston County Schools Installment purchase contract - represents unexpended
proceeds of an installment contract for the construction of a new school.

Reserved for Visitors’ Center - represents unexpended hotel/motel tax revenues dedicated to the
construction of a new Visitors’ Center.

Reserved for Register of Deeds automation funds - represents the unexpended portion of the
Register of Deeds’ revenues that are restricted by State statute to meet the department’s
automation needs.

Unreserved

Designated for future healthcare benefits - represents the unexpended portion of fund balance
designated for payment of future healthcare benefits.

Designated for insurance reserves - represents the unexpended portion of fund balance
designated for payment of self-insured claims and future catastrophic events.

Designated for subsequent year’s expenditures - represents the portion of total fund balance
available for appropriation which has been designated for the adopted 2008-2009 budget
ordinance.

Designated for Gaston County Library - represents unexpended donations and contributions

from various library patrons designated for specific projects.

Undesignated - represents the portion of total fund balance available for appropriation which is
uncommitted at year-end.

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


F. Management Estimates

The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenditures/expenses during the reporting period. Actual results could differ from those
estimates.

G. Other Resources

The General Fund provides the basis of local resources for other governmental funds. These
transactions are recorded as “transfers out” in the General Fund and “transfers in” in the receiving
fund.

2. Detail Notes on all Funds

A. Deposits

All of the County’s deposits are either insured or collateralized by using one of two options.
Under the Dedicated Method, all deposits over the federal depository insurance coverage are
collateralized with securities held by the County’s agent in the County’s name. Under the
Pooling Method, all uninsured deposits are collateralized with securities held by the State
Treasurer’s agent in the name of the State Treasurer. Since the State Treasurer is acting in a
fiduciary capacity for the County, these deposits are considered to be held by the County’s agent
in the County’s name. The amount of collateral is based on an approved averaging method for
noninterest- bearing deposits and the actual current balance for interest-bearing deposits.
Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled
collateral covering uninsured deposits. The State Treasurer does not confirm this information
with the County or the escrow agent. Because of the inability to measure the exact amount of
collateral provided for the County under the Pooling Method, the potential exists for under-
collateralization, and this risk may increase in periods of high cash flows. However, the State
Treasurer of North Carolina enforces strict standards of financial stability for each depository that
collateralizes public deposits under the Pooling Method. The State Treasurer enforces standards
of minimum capitalization for all pooling method financial institutions. The County relies on the
State Treasurer to monitor those financial institutions. The County analyzes the financial
soundness of any other financial institution used by the County. The County complies with the
provisions of G.S. 159-31 when designating official depositories and verifying that deposits are
properly secured.

At June 30, 2008, the carrying amount of the County’s deposits was $12,769,006 and the related
bank balance was $13,575,225. Of the bank balance, $300,000 was covered by federal depository
insurance and $13,275,225 in deposits was covered by collateral held under the Pooling Method.
The County had $10,315 cash on hand.

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


B. Investments

At June 30, 2008, the County had the following investments and maturities:

Within 1-3 Over
Investment Type
Fair Value 12 Months Years 3 Years
US Government Agencies 10,985,050$ 10,985,050$ -$ -$
North Carolina State Agencies 4,200,000 4,200,000 - -
Commercial Paper 19,929,120 19,929,120 - -
Bankers Acceptances 8,957,860
8,957,860 - -
Total 44,072,030
44,072,030 - -
NC Capital Management Trust -
Cash Portfolio 124,236,702
124,236,702 - -
Total 168,308,732$
168,308,732$ -$ -$

Interest Rate Risk: The County does not have a formal investment policy that limits investment
maturities as a means of managing its exposure to fair value losses arising from increasing

interest rates.

Credit Risk: State law limits investments in commercial paper to the top rating issued by
nationally recognized statistical rating organizations (NRSROs); however, the County had no
formal policy on managing credit risk. As of June 30, 2008, the County’s investments in
commercial paper were rated A+ by Standard & Poor’s, E1 by Fitch Ratings, and A1 by Moody’s
Investor Service. The County’s investments in the NC Capital Management Trust Cash Portfolio
carried a credit rating of AAAm by Standard & Poor’s as of June 30, 2008. The County’s
investments in US Agencies (Federal Home Loan Bank and Federal Farm Credit Bank) are rated
AAA by Standard & Poor’s and Aaa by Moody’s Investors Service. The County’s investments in
North Carolina State Agencies (North Carolina State Education Assistance Authority) are rated
AAA by Fitch Ratings and by Moody’s Investor Service.

Concentration of Credit Risk: The County does not have a policy that places a limit on the
amount that the County may invest in any one issuer. More than five percent of the County’s
investments are in Discount Federal Home Loan Bank, Interest-bearing Federal Home Loan
Bank, General Electric Capital Corporation Commercial Paper, UBS Finance Commercial Paper,
American General Finance Commercial Paper, American Express Commercial Paper, Wachovia
Banker’s Acceptances, NC State Education, Assistance Authority Bonds, and a Certificate of
Deposit/Money Market account with BB&T. These investments are 16.89%, 6.41%, 6.33%,
6.33%, 10.59%, 10.62%, 19.01%, 8.97%, and 6.41%, respectively, of the County’s total
investments.

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008

C. Property Tax Use-Value Assessment on Certain Lands

In accordance with the general statutes, agriculture, horticulture, and forestland may be taxed by
the County at the present use-value as opposed to market value. When the property loses its
eligibility for use-value taxation, the property tax is recomputed at market value for the current
year and the three preceding fiscal years, along with the accrued interest from the original due
date. This tax is immediately due and payable. The following are property taxes that could
become due if present use-value eligibility is lost:

Year Levied Tax Interest Total
2004 1,224,094$ 290,722$ 1,514,816$
2005 1,107,573 163,367 1,270,940
2006 1,031,579 59,316 1,090,895
2007 1,448,506
83,289 1,531,795
Total 4,811,752$ 596,694$ 5,408,446$


D. Accounts Receivable

Accounts receivable at the government-wide level at June 30, 2008 were as follows:

Governmental Business-Type
Activities
Activities
Emergency management (GEMS), net 1,831,971$ -$
Landfill fees, net - 652,800
Health department fees, net 452,709 -

Accrued sales tax distribution 11,154,035 -
Due from other governments, Public Assistance 2,736,746 -
Due from other governments, Capital Improvement 579,655 -
Due from other governments, other 121,589 -
Sales tax paid 860,449 -
Interest income 278,979 -
Other 1,818,282
-
Accounts receivable 19,834,415$
652,800$

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


E. Capital Assets

Capital asset activity for the year ended June 30, 2008, was as follows:

Balance Balance

July 1, 2007
Increases Decreases Transfers June 30, 2008
Governmental Activities:
Capital Assets Not Being Depreciated:

Land 19,713,831$ -$ -$ -$ 19,713,831$
Construction in progress
144,975
1,818,238 - (1,423,119) 540,094
Total capital assets not being depreciated
19,858,806
1,818,238 - (1,423,119) 20,253,925
Capital Assets Being Depreciated:
Buildings and improvements 115,768,773 220,623 - 1,423,119 117,412,515
Equipment 15,435,261 287,686 - - 15,722,947
Vehicles and motorized equipment
11,839,337
2,273,775 (1,037,357) - 13,075,755
Total capital assets being depreciated
143,043,371
2,782,084 (1,037,357) 1,423,119 146,211,217

Less Accumulated Depreciation For:
Buildings and improvements 28,118,920 3,410,225 - - 31,529,145
Equipment 11,131,829 1,314,371 - - 12,446,200
Vehicles and motorized equipment
9,526,640
1,062,211 (1,032,575) - 9,556,276
Total accumulated depreciation
48,777,389
5,786,807 (1,032,575) - 53,531,621

Total capital assets being depreciated, net
94,265,982
92,679,596

Governmental activities capital assets, net
114,124,788$
112,933,521$

Depreciation expense was charged to functions/programs of the primary government as follows:
General government 1,714,859$
Public safety 2,563,793
Economic and physical development 274,498
Human services 881,575
Cultural and recreational
352,082

Total depreciation expense
5,786,807$


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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


Balance Balance
July 1, 2007
Increases Decreases June 30, 2008
Business-Type Activities:
Capital Assets Not Being Depreciated:

Land
1,135,881$ -$ -$ 1,135,881$
Construction in progress
-
1,322,834 - 1,322,834
Total capital assets not being depreciated
1,135,881
1,322,834 - 2,458,715
Capital Assets Being Depreciated:
Buildings and improvements
9,475,555 - - 9,475,555
Equipment
357,143 32,245 - 389,388
Vehicles and motorized equipment
2,464,684
507,591 - 2,972,275
Total capital assets being depreciated
12,297,382
539,836 - 12,837,218
Less Accumulated Depreciation For:
Buildings and improvements
3,468,284 459,575 - 3,927,859
Equipment
169,224 37,281 - 206,505
Vehicles and motorized equipment
2,258,485
108,265 - 2,366,750
Total accumulated depreciation 5,895,993
605,121 - 6,501,114
Total capital assets being depreciated, net

6,401,389
6,336,104
Business-type activities capital assets, net 7,537,270$
8,794,819$

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


Construction Commitments

A summary of the remaining commitments on the County’s open construction projects is as
follows:

Remaining
Project
Commitment
Administration Building Renovation 93,556$
Visitor's Center Construction 7,380
Health Department Renovation 2006 8,088
Health Department Renovation 2007 247,053
Health Department Renovation 2008 5,000,000
Senior Center 83,523
York-Chester Square Renovation Phase II 9,166
Animal Shelter Constuction 67,802

Landfill FY07 Cell Expansion 1,913
Landfill FY08 Cell Expansion 1,293,983
Total 6,812,464$


F. Payables

Payables at the government-wide level at June 30, 2008, were as follows:

Accrued
Vendors
Expenses Total
Governmental Activities:
General 3,371,192$ 5,008,130$ 8,379,322$
Accrued interest - 250,000 250,000
Public assistance 1,845,063 639,683 2,484,746
Capital improvement 4,232,355 - 4,232,355
Nonmajor special revenue
8,471
17,035 25,506
Total governmental activities
9,457,081$
5,914,848$ 15,371,929$
Business-Type Activities:
Landfill
1,146,584$
36,742$ 1,183,326$


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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


G. Closure and Postclosure Costs

In October 1991, the U.S. Environmental Protection Agency issued its rule entitled “Solid Waste
Disposal Facility Criteria” (the “EPA rule”). The effect of the EPA rule is to obligate all
municipal solid waste landfill owners and operators to perform certain closing functions and
certain postclosure monitoring and maintenance functions as a condition for the right to continue
operating existing landfill sites. Beginning in April 1995, owners and operators were also
required to provide assurance that financial resources would be available to provide for the
closure and postclosure care costs.

The County is continuing to develop and modify closure plans and assess postclosure monitoring
methods and strategies. Engineering cost estimates continue to be refined consistent with current
regulatory requirements and anticipated rule changes. Such costs, which are to include the cost of
all equipment and facilities, the cost of providing final cover and the cost of monitoring and
maintaining the landfill area during the 30-year postclosure period, are likely to be significant.

State and federal laws and regulations required the County to close by December 31, 1997 the last
remaining unlined landfill cell in which the County was burying solid waste. Just prior to
January 1, 1998, as required by law, the County opened its first landfill cell containing a synthetic
liner to capture any leach ate from the solid waste. The County obtained approval for an
operating permit for only the one cell in which the liner was installed. Much of the 300 acres of
the original tract purchased for landfill purposes will remain unpermitted until the need for

additional cells arises. Consequently, the County considers only the cell currently in use to
calculate its estimate of landfill closure and postclosure care costs for this landfill.

The County’s current landfill cell and the one closed in December 1997 are subject to the new
regulations. Although closure and postclosure care costs will be paid only near or after the date
that the individual landfill cells stop accepting waste, a portion of these closure and postclosure
care costs are reported as a liability within the Proprietary Fund based on landfill capaCounty
used as of each balance sheet date. The closure and postclosure care costs accrued at June 30,
2008 amount to $4,563,767. This estimated amount is based on what it would cost to perform all
closure and postclosure care in 2008. Actual costs may differ due to inflation, changes in
technology, or changes in regulations. The County will recognize the remaining estimated costs
of closure and postclosure care of each new cell as it is permitted and begins to accept waste. The
County is currently using two lined cells, which were opened in January 1998 and March 2003,
and expects to close both of those concurrently in approximately four years once another cell has
been permitted.

The County has three additional landfills, which have not received solid waste since October 9,
1991 and are, therefore, not subject to the most recent EPA requirements. The Biggerstaff
Landfill was closed during the 1992 fiscal year. The Cramerton and Auten Road Landfills were
closed during the 1995 fiscal year. These landfills are subject to the 1986 EPA rule requiring
certain closure functions and postclosure monitoring for five years. The five-year period for
monitoring the landfills closed under the 1986 EPA rule has expired; therefore, the County has
accrued no costs for those landfills at June 30, 2008.

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2008


H. Deferred / Unearned Revenues

The balance in deferred and unearned revenues composed on the fund and government-wide
statements at year-end is composed of the following elements:

Deferred Unearned
Revenue
Revenue
Prepaid taxes not yet earned (General Fund) 338,023$ 338,023$
Prepaid rent not yet earned (General Fund) 2,258,472 2,258,472
Taxes receivable, net (General Fund) 5,264,302 -
Taxes receivable, net (Special Revenue Fund) 260,607 -
Other (General Fund) 855,002
-
Total 8,976,406$
2,596,495$


I. Long-Term Obligations

Capital Leases

The County has entered into agreements to lease certain equipment. The lease agreements
qualify as capital leases for accounting purposes and, therefore, have been recorded at the present
value of the future minimum lease payments as of the date of their inception.

At June 30, 2008, the County leased vehicles and equipment as follows:

Governmental Activities:
Accumulated Net Book
Classes of Property
Cost Depreciation Value
Equipment 3,307,321$ 1,216,860$ 2,090,461$
Vehicles 2,315,874
525,719 1,790,155
Total 5,623,195$
1,742,579$ 3,880,616$
Business-Type Activities:
Accumulated Net Book
Classes of Property
Cost Depreciation Value
Equipment 471,736$ 47,174$ 424,562$
Vehicles 22,426
11,213 11,213
494,162$
58,387$ 435,775$



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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008

For the County, the future minimum lease payments as of June 30, 2008, were as follows:

Governmental Activities:
Year Ending
June 30
Principal Interest
2009 1,555,922$ 76,979$
2010 922,945 24,185
2011 186,908
3,473
Total 2,665,775$
104,637$
Business-Type Activities:
Year Ending
June 30
Principal Interest
2009 162,802$ 7,166$
2010 87,671 1,414
2011 2,388
64
Total 252,861$
8,644$




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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


Installment Purchase Obligations

90,210$
6,066,667
5,076,966
3,285,250
1,014,595

Total 15,533,688$

3.75% note, payable in annual installments ranging from $174,691, including
interest; final payment due in 2009; secured by vehicles and equipment
5.09% note, payable in annual installments of $365,430, including interest;
final payment due in 2008; secured by Agriculture Center and a library branch
4.11% note, payable in annual installments ranging from $625,367 to $899,641,
including interest; final payment due in 2018; secured by real estate
4.09% note, payable in annual installments ranging from $464,456 to $819,124,
including interest; final payment due in 2019; secured by real estate
4.36% note, payable in annual installments ranging from $197,463 to $277,507,
including interest; final payment due in 2016; secured by real estate


For the County, the future minimum payments for all installment purchase obligations as of June

30, 2008, are as follows:

Year Ending
June 30
Principal Interest Total
2009 2,324,076$ 613,790$ 2,937,866$
2010 1,788,330 524,901 2,313,231
2011 1,443,800 459,830 1,903,630
2012 1,443,800 399,614 1,843,414
2013 1,443,800 339,398 1,783,198
2014-2018 6,639,250 806,382 7,445,632
2019-2022 450,632
13,823 464,455
Total 15,533,688$
3,157,738$ 18,691,426$

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


General Obligation Indebtedness

At June 30, 2008, there was $0 in bonds authorized, but unissued, and the County had a legal debt
margin of $934,494,129. General obligation bonds are collateralized by the full faith, credit and
taxing power of the County. Principal and interest requirements will be provided by

appropriation in the year in which they become due.

$17,925,000 2001 Refunding Bonds:
Principal due in annual installments through March 1, 2014.
Installments range from $440,000 to $1,760,000. Interest payable
semi-annually (March and September) is at 4.0% to 5.5%. 9,810,000$
$3,170,000 2001 School Bonds:
Principal due in annual installments through June 1, 2019.
Installments range from $150,000 to $600,000. Interest payable
semi-annually (June and December) is at 4.5% to 5.0%. 2,120,000

$3,800,000 2006 Public Improvement Bonds:
Principal due in annual installments through March 2025.
Installments range from $208,000 to $354,000. Interest payable
semi-annually (March and September) is at 4.00% to 5.00%. 3,400,000
$10,005,000 2006 Refunding Bonds:
Principal due in annual installments through March 1, 2017.
Installments range from $446,469 to $2,121,600. Interest payable
semi-annually (March and September) is at 3.50%to 4.00%. 9,880,000
$14,000,000 2002 School Bonds:
Principal due in annual installments through June 1, 2020.
Installments range from $500,000 to $2,000,000. Interest payable
semi-annually (June and December) is at 3.5% to 5.25%. 11,500,000
$24,900,000 2007 Community College Bonds:
Principal due in annual installments through February 1, 2028.
Installments range from $800,000 to $1,700,000. Interest payable
semi-annually (February and August) is at 4.25% to 4.75%. 24,900,000

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FOR THE YEAR ENDED JUNE 30, 2008


$18,500,000 General Obligation School Bonds, Series 2004:
Principal due in annual installments through March 1, 2022.
Installments range from $600,000 to $2,300,000. Interest
payable semi-annually (March and September) ranges from
3.5 to 5.0%. 16,700,000
$33,880,000 General Obligation Refunding Bonds, Series 2004:
Principal due in annual installments through May 1, 2017.
Installments range from $270,000 to $4,350,000. Interest
payable semi-annually (May and November) ranges from
3.0 to 5.0%. 28,815,000

$56,500,000 General Obligation Bonds, Series 2006:
Principal due in annual installments through April 1, 2017.
Installments range from $1,750,000 to $4,000,000. Interest
payable semi-annually (April and October) ranges from
4.0% to 5.0%. 54,750,000

Total 161,875,000$

Annual debt service requirements to maturity for the County’s general obligation bonds are as
follows:

Year Ending
June 30
Principal Interest Total
2009 9,680,000$ 6,891,921$ 16,571,921$
2010 9,595,000 6,525,646 16,120,646
2011 9,500,000 6,163,866 15,663,866
2012 9,405,000 5,801,960 15,206,960
2013 9,315,000 5,438,605 14,753,605
2014-2018 49,310,000 20,758,175 70,068,175
2019-2023 42,170,000 10,189,750 52,359,750
2024-2028
22,900,000
2,572,750 25,472,750
Total
161,875,000$
64,342,673$ 226,217,673$


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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008

Certificates of Participation

$12,390,000 2005 Certificates of Participation:
Principal due in annual installments through December 1, 2016.
Installments range from $570,494 to $1,646,294. Interest payable
semi-annually (June and December) is at 3.00% to 5.00%. 12,135,000

Total 12,135,000$



For the County, the annual debt service requirements to maturity as of June 30, 2008 for the
County’s Certificates of Participation are as follows:

Year Ending
June 30
Principal Interest Total
2009 1,140,000$ 503,500$ 1,643,500$
2010 1,190,000 453,438 1,643,438
2011 1,245,000 401,294 1,646,294
2012 1,290,000 352,150 1,642,150
2013 1,335,000 299,650 1,634,650
2014-2017 5,935,000
579,675 6,514,675
Total 12,135,000$
2,589,706$ 14,724,706$


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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


Long-Term Obligation Activity

The following is a summary of changes in the County’s long-term obligations for the fiscal year
ended June 30, 2008:

Balance Balance Current
July 1, 2007
Increases Decreases June 30, 2008 Portion
Governmental Activities:
General obligation bonds 145,910,000$ 24,900,000$ (8,935,000)$ 161,875,000$ 9,680,000$
Certificates of participation 13,220,000 - (1,085,000) 12,135,000 1,140,000
Capitalized leases of equipment 4,969,512 - (2,303,737) 2,665,775 1,555,922
Installment purchases payable 18,127,999 - (2,594,311) 15,533,688 2,324,076
Compensated absenses 4,230,852 442,529 - 4,673,381 3,100,000
Other post-employment benefits - 6,195,082 (1,584,692) 4,610,390 -
Net pension obligation
1,270,924
417,313 (357,326) 1,330,911 -
Total governmental activities
187,729,287$
31,954,924$ (16,860,066)$ 202,824,145$ 17,799,998$
Business-Type Activities:
Compensated absences 49,729$ 6,213$ -$ 55,942$ 31,000$

Other post-employment benefits - 96,258 (24,623) 71,635 -
Landfill postclosure and closure costs 3,940,078 623,689 - 4,563,767 350,000
Capitalized leases of equipment
413,939
- (161,078) 252,861 162,802
Total business-type activities
4,403,746$
726,160$ (185,701)$ 4,944,205$ 543,802$

Compensated absences and net pension obligation of the governmental activities are generally
liquidated by the General Fund. At June 30, 2008, Gaston County had no bonds authorized, but
unissued, and a legal debt margin of $934,494,129.

Conduit Debt Obligation

The County of Gaston, North Carolina has issued recreational facilities lease revenue bonds
(Series 1998) to provide financing to the Gaston County Family YMCA (YMCA) to construct
new recreational facilities to be owned by the YMCA. These bonds are secured by the property
financed. Neither the County, the State, nor any political subdivision thereof is obligated in any
manner for the repayment of the bonds. Accordingly, the bonds are not reported as liabilities in
the accompanying financial statements. As of June 30, 2008, the YMCA– Series 1998 is
outstanding, with an aggregate principal amount payable of $3,800,000.

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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008

J. Interfund Balances and Activity

The composition of Interfund transfers during the year ended June 30, 2008 is as follows:

From To Purpose Amount
General Fund Health Services Fund Salary Market Adjustments FY2008
541,156$
General Fund Health Services Fund
County Amount Transferred to Balance
Budget for FY2008 for Various Expenditures
5,811,365
General Fund Public Assistance Fund
County Amount Transferred to Balance
Budget for FY2008 for Various Expenditures
23,458,183
General Fund Public Assistance Fund Salary Market Adjustments FY2008
1,518,381
General Fund Public Assistance Fund
Transfer to Cover Increase in Fuel
Expenditures for FY2008
4,700
General Fund Regional Library Fund Salary Market Adjustments FY2008
15,783
General Fund
Property Revaluation
Fund To Fund the Revaluation
250,000
General Fund

Emergency Telephone
Fund Salary Market Adjustments FY2008
5,661
General Fund Debt Service Fund
To Fund All Non-School Debt Service
Payments
8,252,142
General Fund
Debt Service Fund
Schools
To Fund All Non-School Debt Service
Payments
8,194,797
General Fund
Capital Improvements
Fund Renovations and Equipment
6,778,766
General Fund
Capital Improvements
Fund
Appropriate Water and Sewer Line Investment
Recovery Fees
21,651
General Fund
Capital Improvements
Fund
Gaston College Public Safety Driving Track
Funding
200,000
General Fund

Capital Improvements
Fund
EDC: Purchase of 50 Acres Adjacent to
Southridge Business Park for Future
Economic Development
1,375,000
General Fund
Capital Improvements
Fund
Appropriate Funds for Schools' Shortfall in
the $89 Million Bond Issue
2,000,000
General Fund
Capital Improvements
Fund
Appropriate Parks and Recreation Donations:
Engineering Services
200
General Fund
Capital Improvements
Fund
Purchase New Desks, Workstations, Chairs,
and File Cabinets for Nine New Employees in
the Gaston County Clerk of Court Office
40,000
Public Assistance Fund
Capital Improvements
Fund
Transfer Medicaid Funds to Schools for Lost
Adm Funds

800,000
Emergency Telephone
Fu
nd
Capital Improvements
Fund
Transfer Landline Fees as Allowed by HB
1775
1,582,025
60,849,810$
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GASTON COUNTY, NORTH CAROLINA

NOTES TO BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008


Benefit Payments Issued by the State:

The amounts listed below were paid directly to recipients by the State from federal and State
monies on behalf of the County. County personnel are involved with certain functions, primarily
eligibility determinations that cause benefit payments to be issued by the State. These amounts
disclose this additional aid to County recipients, which do not appear in the general purpose
financial statements because they are not revenues and expenditures of the County.

Federal State
Medical Assistance Program (Medicaid) 161,272,637$ 82,784,961$
Food Stamp Program 29,011,319 -

Temporary Assistance for Needy Families 1,802,380 (60)
Special Supplemental Food Program for
Women, Infants and Children 4,021,335 -
Special Assistance to Adults - 2,206,463
Other 829,076
464,356
Total 196,936,747$ 85,455,720$


4. Other Information

A. 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; injuries to employees; and natural disasters. The County carries
commercial insurance coverage for all risks of loss with the exception of certain vehicle
coverages. The County is self-insured for (1) any collision damage to County-owned, on-road
vehicles as a result of at-fault accidents and (2) any window breakage, vandalism or theft of
vehicles typically included in comprehensive commercial coverage. This self-insurance program
is funded by annual appropriation. There have been no significant reductions in insurance
coverage from the previous years and settled claims from these risks have not exceeded
commercial insurance coverage in any of the last three fiscal years.

The County carries flood insurance because the County is in an area of the State that has been
mapped and designated an “A” area (an area close to a river, lake or stream) by the Federal
Management Agency; the County is eligible to purchase coverage of $1,000,000. The County
also purchases coverage for commercial flood insurance for areas designated a “C” for another
$25,000,000 of coverage.

In accordance with G.S. 159-29, the County’s employees that have access to $100 or more at any

given time of the County’s funds are performance-bonded through a commercial surety bond.
The Finance Director and Tax Collector are each individually bonded for $100,000 each. The
remaining employees that have access to funds are bonded under a blanket bond for $500,000.

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