BOARD OF DIRECTORS SPECIAL MEETING

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BOARD OF DIRECTORS

SPECIAL MEETING

Wednesday, June 24, 2020 at 5:00 pm

Call In: 877-273-4202

Conference Room Number: 703950889#

Per Governor Whitmer’s Executive Order 2020-129 Due to The Coronavirus Pandemic

AGENDA

Page

1. CALL TO ORDER & ROLL CALL

2. PUBLIC INPUT (3 Minute Maximum Per Person)

3. FINANCIAL STATEMENT AUDIT FOR FISCAL YEAR 2019

2-54

3.1 Consideration of motion to accept the financial statement audit report for fiscal year ending

September 30, 2019 – See pages 2-54

4. COMPLIANCE EXAM FOR FISCAL YEAR 2019

55-73

4.1 Consideration of motion to accept the compliance exam for fiscal year ending September 30, 2019 –

See pages 55-73

5. JULY MEETING SCHEDULE & APPLICABLE EXECUTIVE ORDERS

6. ADJOURNMENT

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March 18, 2020

Management and the Board of Directors Bay-Arenac Behavioral Health Authority Bay City, Michigan

We have audited the financial statements of the governmental activities and the major fund of Bay-Arenac Behavioral Health Authority (the Authority) as of and for the year ended September 30, 2019, and have issued our report dated March 18, 2020. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America, Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated September 1, 2019. Professional standards also require that we communicate to you the following information related to our audit.

We discussed these matters with various personnel in the Authority during the audit including management. We would also be pleased to meet with you to discuss these matters at your convenience.

Significant Audit Matters

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Authority are described in the footnotes of the financial statements. The Authority has adopted the following Governmental Accounting Standards Board Statements effective October 1, 2018:

• Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements improves the information that is disclosed in notes to the financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities should be included when disclosing information related to debt. It requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. It will also require that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt.

We noted no transactions entered into by the Authority during the year for which there is lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statement in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the Authority’s financial statements were:

• _{The useful lives of its capital assets. Useful lives are estimated based on the expected length of time} during which the asset is able to deliver a given level of service.

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• Net pension liability, and related deferred outflows of resources and deferred inflows of resources. The estimate is based on an actuarial report.

• Net OPEB asset, and related deferred outflows of resources and deferred inflows of resources. The estimate is based on an actuarial report.

We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole and free from bias.

The financial statement disclosures are neutral, consistent and clear. Accounting Standards

The Governmental Accounting Standards Board has released additional Statements. Details regarding these Statements are described in Note 1 of the financial statements.

Regulatory Update

Pension and OPEB Reporting – Form 5572

Public Act 202 of 2017 required governments to prepare additional reporting for pension and OPEB plans using Form 5572 (due 6 months after the end of your fiscal year). A memo was issued October 21, 2019 by Treasury regarding the application of uniform assumptions. For the purpose of reporting Form 5572, Treasury requires uniform assumptions to be included on Form 5572 for fiscal years ending 2019, if the audited financial statements were based on an actuarial valuation issued after December 31, 2018. Reporting of pension and OPEB liabilities under the uniform assumptions is required no later than fiscal years ending 2020 in all other cases. The full memo can be found at the following address:

https://www.michigan.gov/documents/treasury/FY_2020_Uniform_Assumptions-Treasurer_Approved_669313_7.pdf

Uniform assumptions will be used by Treasury to increase comparability of pension and OPEB plans from one municipality to the next. Treasury recommends all actuarial valuations issued after December 31, 2018 include the provisions of the uniform assumptions. It is important to consider whether using the uniform assumptions for the measurement of your municipality’s pension or OPEB liabilities are appropriate under GAAP, or whether the liabilities should be calculated using two sets of assumptions. If using two sets of assumptions is appropriate, both amounts will be reported to Treasury.

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3

Treasury has issued the following as the uniform assumptions for 2020:

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial. Management has corrected all such misstatements.

In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.

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There were no uncorrected misstatements that were more than trivial. Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations

We have requested certain representations from management that are included in the management representation letter dated as of the date of the audit report.

Management’s Consultations with Other Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Authority’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Authority’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

Other Reports

Other information that is required to be reported to you is included in the: Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Please read all information included in that report to ensure you are aware of relevant information.

Report on Required Supplementary Information

We applied certain limited procedures to the management’s discussion and analysis, municipal employees retirement system schedules, other postemployment benefit schedules, and budgetary comparison information, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.

Report on Other Supplementary Information

We were engaged to report on other supplementary information as described in the table of contents of the financial statements, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.

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5 Restriction on Use

This information is intended solely for the information and use of the Board of Directors and management of the Authority and is not intended to be, and should not be, used by anyone other than these specified parties.

Saginaw, Michigan

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Bay-Arenac Behavioral Health Authority

Financial Statements

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Table of Contents

4 Required Supplementary Information

Budgetary Comparison Schedule – General Fund Bay County Employees’ Retirement System

Schedule of Employer Contributions

Schedule of Changes in Net Pension Liability (Asset) and Related Ratios

Bay County Voluntary Employees’ Beneficiary Association – Other Postemployment Benefits Schedule of Employer Contributions

Schedule of Changes in Net OPEB Asset and Related Ratios Schedule of Investment Returns

4 – 1 4 – 3 4 – 4 4 – 5 4 – 6 4 – 7 Section Page

1 Independent Auditors’ Report 1 – 1

2 Management’s Discussion and Analysis 2 – 1

3 Basic Financial Statements

Government-wide Financial Statements

Statement of Net Position 3 – 1

Statement of Activities 3 – 3

Fund Financial Statements Governmental Funds

Balance Sheet 3 – 4

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 3 – 5 Statement of Revenues, Expenditures and Changes in Fund Balance 3 – 6 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of

Governmental Funds to the Statement of Activities 3 – 8

Notes to the Financial Statements 3 – 9

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Section Page 5 Other Supplementary Information

Supporting Schedule of Personnel Costs

Supporting Schedule of Operating Expenditures 5 – 1 5 – 2

6 Other Reports

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards -

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1 - 1

Independent Auditors’ Report

Management and the Board of Directors Bay-Arenac Behavioral Health Authority Bay City, Michigan

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities and the major fund of Bay-Arenac Behavioral Health Authority, as of and for the year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the Authority’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.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. 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 auditors’ 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.

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1 - 2

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, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of Bay-Arenac Behavioral Health Authority, as of September 30, 2019, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, pension and other postemployment benefit schedules, as identified in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information, because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Bay-Arenac Behavioral Health Authority’s basic financial statements. The other supplementary information, as identified in the table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The other supplementary information, as identified in the table of contents, is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The other supplementary 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 supplementary information, as identified in the table of contents, is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

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1 - 3 Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 18, 2020 on our consideration of Bay-Arenac Behavioral Health Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Bay-Arenac Behavioral Health Authority’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 Bay-Arenac Behavioral Health Authority’s internal control over financial reporting and compliance.

Saginaw, Michigan March 18, 2020

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Management’s Discussion and Analysis

For the Year Ended September 30, 2019

2 - 1

This section of the Bay-Arenac Behavioral Health Authority (the “Authority”) annual financial report presents management’s discussion and analysis of financial performance for the year ended September 30, 2019. This discussion and analysis is designed to assist the reader in focusing on significant financial issues and activities, and to identify significant changes in financial position and results of operati ons. Please read this section in conjunction with the auditor’s report and with our financial statements, notes to financial statements and supplemental information taken as a whole.

During fiscal year 2014, the Authority became a member of Mid-State Health Network (MSHN), the newly formed, designated Prepaid Inpatient Health Plan (PIHP) for a twenty-one county region consisting of Arenac, Bay, Clare, Clinton, Eaton, Gladwin, Gratiot, Hillsdale, Huron, Ingham, Ionia, Isabella, Jackson, Mecosta, Midland, Montcalm, Newaygo, Osceola, Saginaw, Shiawassee and Tuscola counties. The Authority subcontracts for Medicaid services and supports through an agreement with MSHN while State General Fund revenue and other grants and earned contracts continue to be sourced directly from the State and are exclusively related to Arenac and Bay counties.

Effective October 1, 2015, MSHN no longer subcontracted with the Authority for the provision of substance use disorder services in a twelve-county area which included, Arenac, Bay, Clare, Gladwin, Huron, Isabella, Mecosta, Midland, Montcalm, Osceola, Shiawassee and Tuscola counties. MSHN began contracting directly with substance use disorder providers for those services.

OVERVIEW OF FINANCIAL STATEMENTS

Basic financial statements, in accordance with generally accepted accounting principles (GAAP) according to GASB 34, require the presentation of two types of financial statements. These are government-wide financial statements and fund financial statements.

Government-wide financial statements include the statement of net position and the statement of activities. These provide both long-term and short-term information and present a broad view of the overall financial status in a manner similar to a private sector business. Information presented in these statements is on the accrual basis of accounting. Long-term assets are capitalized and depreciated. Long-term debt is recorded as a liability. Revenues are recorded when “earned” and expenses recorded when “incurred”, without regard to the timing of cash receipts or disbursement.

The statement of net position includes all assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between those reported as net position. Over time, increases or decreases in net assets may serve as a useful indicator of improving or deteriorating financial position. The statement of activities presents information showing how net assets changed during the year as a result of operating activity.

Fund financial statements contain individual groups of related accounts and are used to report current assets, current liabilities, fund balance, revenues and expenditures for specific activities or funds segregated for legal requirements or other governmental objectives . These are presented in more detail as compared to the government-wide statements. The fund financial statements are reported on the modified accrual basis of accounting. Only those assets that are “measurable” and “currently available” are reported. Liabilities are recognized only to the extent that they are normally expected to be paid with current financial resources. Purchased capital assets are reported as expenditures in the year of acquisition.

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Management’s Discussion and Analysis

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Issuance of debt is recorded as a financial resource with current year payment of principal and interest recorded as expenditures. Governmental fund financial statements show how the community mental health supports and services programs were financed in the short term as well as what remains for future spending.

SUMMARY OF NET POSITION

The following summarizes the assets, liabilities and net position on an authority-wide basis as of September 30, 2019 and 2018. Summary of Net Position

As of September 30, 2019 & 2018 (In $000s) 2019 2018 Assets Current assets $ 6,771 $ 6,553 Restricted assets 1,266 1,142

Net OPEB asset 7,120 8,398

Net Pension asset 0 4,120

Capital assets 3,597 3,834

Total assets 18,754 24,047

Deferred outflows of resources 6,444 2,337

Total assets and deferred outflows of resources 25,198 26,384 Liabilities

Current liabilities $ 5,126 $ 5,587

Noncurrent liabilities 3,291 616

Total liabilities 8,417 6,203

Deferred inflows of resources 965 4,799

Total liabilities and deferred inflows of resources 9,382 11,002 Net Position

Investment in capital assets 3,066 3,159

Restricted for net pension asset 7,082 2,419

Restricted for net OPEB asset 8,188 7,636

Unrestricted (2,520) 2,168

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Management’s Discussion and Analysis

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Total Net Position increased $400 thousand primarily as a result of GASB 68 and 75 reporting requirements which were implemented in fiscal years 2015 and 2018, respectively.

Current financial position is defined as the excess of current assets over current liabilities. When current assets exceed current liabilities, this is an indicator of financial strength and an increase in current financial position is an indicator of improving financial position.

The current financial position (excess of current assets over current liabilities) was a positive $1.6 million, an increase of $700 thousand from the prior year.

Current assets consist of cash and investments, accounts receivable, amounts due from others and prepaid expenses. These are available for current operations and to pay current obligations. Current liabilities include accounts payable, accrued payroll, related taxes and benefits, amounts due to others and deferred revenue.

Restricted assets consist of cash, investments and accrued interest receivable. These assets are restricted for payment of compensated absences and restricted for capital purposes. Restricted assets of $1.3 million have increased 11.0% from the prior year.

Assets restricted for capital purposes (funded depreciation) was established in fiscal 2003. Annual funding of this account is optional and is not to exceed the amount of depreciation expense recorded for the fiscal year. The maximum amount of this account is not to exceed the total of accumulated depreciation on capital assets. For fiscal 2019, the Authority’s annual depreciation expense was $187 thousand, which represents depreciation expense on assets purchased after October 1, 2002. The Authority did not fully fund this amount for fiscal 2019.

Capital assets consist of property and equipment having an estimated useful life of more than one year. In fiscal 2019, $389 thousand was expended for capital acquisitions. Depreciation expense on previously existing and newly acquired capital assets was $187 thousand. The net change in capital assets was a decrease of $133 thousand for the year. When capital expenditures exceed depreciation expense, the net increase represents an investment or expansion of capital resources. Conversely, a net decrease represents a reduction in capital resources available for the future.

As of year-end, the net book value of capital assets was 54.7% of the original book value, as compared to 57.1% in the prior year. This percentage is a measure of the relative age of property and equipment. If property and equipment is relatively new, this percentage will be high. Conversely, if the percentage is low, it means that property and equipment is relatively old.

Noncurrent liabilities consist of the liability for compensated absences and long-term debt. Compensated absences include vested earned time off obligations. Long-term debt consists of a mortgage obtained to purchase and renovate property on Madison Avenue.

Unrestricted net position at the end of the year was $(2.5) million, as compared to $2.2 million from the prior year. Unrestricted net position was (13.4%) of total assets, down from 9.0% in the prior year. GASB 68 and 75 reporting requirements have a large impact on unrestricted net position.

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Management’s Discussion and Analysis

2 - 4 SUMMARY OF ACTIVITIES

The following summarizes the revenue, expenses and change in net position on a government-wide basis for the years ended September 30, 2019 and 2018.

Summary of Activities

For the years ended September 30, 2019 and 2018 (In $000s)

2019 2018

Revenue

Medicaid specialty supports and services

Arenac & Bay counties $ 42,175 $ 42,117

Autism 5,354 4,104

State general fund priority populations 1,332 1,276

Program service revenue 330 289

Grants and earned contracts 1,865 1,896

County appropriation 787 787

Interest revenue 71 52

Other local income $ 357 $ 398

Total revenue 52,271 50,919

Expense

Personnel expense 15,839 15,792

Operating expense 34,827 32,507

Local funds contributed to State 545 545

Sale of Capital Asset 439 0

Depreciation 187 170

Total expense 51,837 49,014

Change in net position $ 434 $ 1,905

Excess of revenue over expenses from activities for the current year was $434 thousand or .8% of revenue. Revenue for the year was $52.3 million, an increase of $1.4 million or 2.7% from the prior year.

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Management’s Discussion and Analysis

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Medicaid specialty supports and services revenue of $47.5 million represents 91.0% of total revenue and increased $1.3 million or 2.8% compared to the prior.

State general fund priority population revenue (formula funding) of $1.3 million represents 2.5% of total revenue and increased $56 thousand or 4.4% compared to the prior year. This funding is established by the Michigan Department of Health and Human Services (MDHHS) as a part of the legislative appropriation process under the Michigan Mental Health Code and is used to provide supports and services to indigent priority populations, including state facility utilization and other allowable expenses. There was a lapse of state general funds to MDHHS in the current year of $50,129 and carry-forward of sate general funds was $69,299.

Program service revenue of $330 thousand includes charges for services for consumers not covered by Medicaid risk contracts or state general fund revenue sources. These represent .6% of total revenue and have increased $41 thousand or 13.8% from the prior year.

Grants and earned contract revenue of $1.9 million includes revenue sources for which the use of funds is restricted to a specific purpose. These represent 3.6% of total revenue and have decreased $31 thousand over the prior year.

County appropriation revenue, interest income and other local income of $1.2 million are available to meet state matching fund requirements. These revenues have remained constant from the prior year

Total expense of $51.8 million has increased $2.8 million or 5.8% compared to the prior year.

Personnel expense of $15.8 million is 30.6% of total expense and has increased $47 thousand 0.3%. Operating expense of $34.8 million is 67.2% of total expense and has increased $2.3 million or 7.1%. BUDGETARY HIGHLIGHTS

The original Medicaid revenue budget was a conservative estimate at $43.4M as compared to $44.3 in the final budget. The final budget reflected revenue based on actuarial issued rates whereas the original budget was based on trending from the prior year. Medicaid Autism revenue was originally budgeted at $3.0M with a final budget of $3.5M. The final budget reflected actuarial rates along with an increase in those served, eligible for this benefit.

FUTURE OUTLOOK

The Executive budget proposal for Fiscal Year 2021 has proposed policy initiatives that will strengthen and improve the public behavioral health system by protecting safety net programs and integrating behavioral and physical health care payments and clinical services. MDHHS has proposed supporting this effort through development of a specialty integrated plan (SIP) model that builds on the current behavioral health system and transfers the responsibility for both primary and behavioral health care for persons with mental illness, deve lopmental disabilities, serious emotional disturbances and substance use disorders from the Medicaid health Plans and Pre-paid Inpatient Health Plans directly to the SIPs. The

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Management’s Discussion and Analysis

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public Community Mental Health Service Program (CMHSP) safety net would be encouraged to develop the new SIPs in partnership with other health care entities focusing on the specialty behavioral health population to encourage service innovation, provider choice, competition and financial integration. MDHHS intends to move in this direction through transparently public collaborative efforts, implementing the first SIPs in October 2022.

Bay-Arenac Behavioral Health Authority (BABHA) supports integrated care measures at the service delivery level that improves the health care outcomes for all populations. MDHHS and the 46 CMHSPs have a shared history of building effective community-based supports for the most vulnerable citizens and has strong non-market protections including a guaranteed recipient rights process, consumer/family participation in board governance and direct accountability to elected county representatives that exceed any other health care system. As these initiatives progress, BABHA will continue to encourage MDHHS and the legislature to support improvements in the current public system that preserve the state and county partnership and will continue to implement strategic actions that balance the requirements of all funds including Medicaid, Healthy Michigan and State General Funds with the needs of the residents of Bay and Arenac Counties.

* * * * * * *

As always, questions, comments and suggestions are welcomed from interested parties and the general public. These can be directed to Marci Rozek, Chief Financial Officer, at 201 Mulholland, Bay City, MI 48708. Marci Rozek can be reached at (989) 895-2228.

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Assets

Current assets

Cash and cash equivalents $ 4,993,902

Accounts receivable, net 375,869

Loan receivable 196,220

Due from other governmental units 857,445

Prepaid items 349,043

Total current assets 6,772,479

Noncurrent assets

Cash and cash equivalents - restricted 1,264,926

Net OPEB asset 7,120,627

Capital assets - nondepreciable 482,151

Capital assets - depreciable, net 3,114,659

Total noncurrent assets 11,982,363

Total assets 18,754,842

Deferred outflows of resources

Deferred amount relating to the net pension liability 5,327,191

Deferred amount relating to the net OPEB asset 1,116,883

Total deferred outflows of resources 6,444,074

Statement of Net Position

September 30, 2019

See Accompanying Notes to the Financial Statements 3 - 1

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Statement of Net Position

September 30, 2019

Liabilities

Current liabilities

Accounts payable $ 2,675,103

Accrued wages and other payroll liabilities 515,702

Unearned revenue 71,306

Due to other governmental units 713,207

Current portion of noncurrent liabilities 1,151,051

Total current liabilities 5,126,369

Noncurrent liabilities

Long term-debt, net of current portion 379,660

Compensated absences 241,465

Net pension liability 2,670,105

Total noncurrent liabilities 3,291,230

Total liabilities 8,417,599

Deferred inflows of resources

Deferred amount relating to net pension liability 915,561

Deferred amount relating to net OPEB asset 49,437

Total deferred inflows of resources 964,998

Net position

Net investment in capital assets 3,066,099

Restricted for the net pension liability 7,081,735

Restricted for the net OPEB asset 8,188,073

Unrestricted (2,519,588)

Total net position $ 15,816,319

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Net (Expense) Operating Revenue and Charges Grants and Changes in Expenses for Services Contributions Net Position Functions/programs

Governmental activities

Health & welfare - mental health $ 51,813,474 $ 49,350,220 $ 2,492,819 $ 29,565

Interest on long-term debt 24,107 - - (24,107)

Total governmental activities $ 51,837,581 $ 49,350,220 $ 2,492,819 5,458 General revenues

Unrestricted investment earnings 71,333

Other 356,932

Total general revenues 428,265

Change in net position 433,723

Net position - beginning of year 15,382,596

Net position - end of year $ 15,816,319

Program Revenues Statement of Activities

For the Year Ended September 30, 2019

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Assets

Cash and cash equivalents $ 4,993,902

Accounts receivable, net 375,869

Loan receivable 196,220

Due from other governmental units 857,445

Prepaid items 349,043

Cash and cash equivalents - restricted 1,264,926

Total assets $ 8,037,405

Liabilities

Accounts payable $ 2,675,103

Accrued wages and other payroll liabilities 515,702

Unearned revenue 71,306

Due to other governmental units 713,207

Total liabilities 3,975,318 Fund balances Non-spendable Prepaid items 349,043 Assigned Compensated absences 1,241,465 Unassigned 2,471,579

Total fund balances 4,062,087

Total liabilities and fund balances $ 8,037,405

Bay-Arenac Behavioral Health Authority

Governmental Funds

Balance Sheet

September 30, 2019

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Total fund balances for governmental funds $ 4,062,087 Total net position for governmental activities in the statement of net position is different because:

Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds

Capital assets not being depreciated 482,151

Capital assets net of accumulated depreciation 3,114,659

Deferred inflows of resources relating to the net pension liability (915,561)

Deferred outflows of resources relating to the net pension liability 5,327,191

Deferred inflows of resources relating to the net OPEB asset (49,437)

Deferred outflows of resources relating to the net OPEB asset 1,116,883

Long-term liabilities applicable to the governmental activities are not due and payable in the current period and, accordingly, are not reported as fund liabilities.

Net OPEB asset 7,120,627

Net pension liability (2,670,105)

Long-term debt (530,711)

Compensated absences (1,241,465)

Net position of governmental activities $ 15,816,319

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position

September 30, 2019

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Revenues

State and federal funding

Department of Health and Human Services Contract - General Fund $ 1,332,339

Other state and federal funding 373,426

Total state and federal funding 1,705,765

Contributions - local units

County appropriations 787,054

Charges for services

Medicaid - subcontract 42,045,244

Medicaid - other 129,762

Autism 5,354,196

Client and third party pay 329,381

Other earned contract revenue 1,491,637

Total charges for services 49,350,220

Interest 71,333

Interest

Other revenue 356,932

Total revenues 52,271,304

Governmental Funds

Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended September 30, 2019

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Governmental Funds

Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended September 30, 2019

Expenditures

Health & Welfare - Mental Health Current Personnel costs $ 15,838,810 Operating expenditures 35,066,342 Debt service Principal 144,131 Interest 24,107 Capital outlay 388,645 Total expenditures 51,462,035

Excess of revenues over expenditures 809,269

Fund balance, beginning of year 3,252,818

Fund balance, end of year $ 4,062,087

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Net change in fund balances - total governmental funds $ 809,269 Total change in net position reported for governmental activities in the statement of activities is different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense.

Capital outlay 388,645

Depreciation expense (186,916)

Sale of capital assets (net book value) (439,237)

The statement of net position reports the net pension liability and the net OPEB asset and deferred outflows and deferred inflows of resources related to the net pension liability and net OPEB asset and pension and OPEB expense. However, the amount recorded on the governmental funds equals actual pension and OPEB contributions.

Net change in the net pension liability (6,789,743)

Net change in the deferred inflows of resources relating to the net pension liability 3,122,397 Net change in the deferred outflows of resources relating to the net pension liability 2,989,656

Net change in the net OPEB asset (1,277,086)

Net change in the deferred inflows of resources relating to the net OPEB asset 712,075 Net change in the deferred outflows of resources relating to the net OPEB asset 1,116,883 Expenses are recorded when incurred in the statement of activities.

Compensated absences (156,351)

Bond proceeds are reported as financing sources in the governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position.

Principal repayments 144,131

Change in net position of governmental activities $ 433,723

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities

For the Year Ended September 30, 2019

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Bay-Arenac Behavioral Health Authority

Notes to the Financial Statements

September 30, 2019

3 - 9 Note 1 – Summary of Significant Accounting Policies

The accounting policies of Bay-Arenac Behavioral Health Authority (the Authority) conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the significant accounting policies used by the Authority. Reporting Entity

The Authority operates under the provisions of Act 258 – Public Acts of 1974 (the Michigan Mental Health Code), as amended. The Authority arranges for and provides supports and services for persons with developmental disability, adults with severe mental illness, and children with serious emotional disturbance. These supports and services are made available to residents of Arenac and Bay counties who meet eligibility and other criteria. As the community mental health services program for Arenac and Bay counties, the Authority also serves to represent community members, assuring local access, organizing and integrating the provision of services, coordinating care, implementing public policy, ensuring interagency collaboration, and preserving the public interest.

The Authority is a member of the Mid-State Health Network (MSHN). This affiliation is composed of the community mental health services programs serving Arenac, Bay, Clare, Clinton, Eaton, Gladwin, Gratiot, Hillsdale, Huron, Ingham, Ionia, Isabella, Jackson, Mecosta, Midland, Montcalm, Newaygo, Osceola, Saginaw, Shiawassee and Tuscola counties and was formed under the authority of the Intergovernmental Transfer of Functions and Responsibilities Act.

In accordance with U.S. GAAP these financial statements present all of the Authority’s funds. The criteria established by the GASB for determining the reporting entity include oversight responsibility,

fiscal dependency, and whether the financial statements would be misleading if data were not included. The Authority has no component units.

Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e. the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the Authority. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, 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.

The statement of activities demonstrates the degree to which the direct expenses of a function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include charges to consumers who purchase, use or directly benefit from services provided by a given function. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Other items not properly included among program revenues are reported instead as general revenues. Resources that are dedicated internally are reported as general revenues rather than as program revenues.

Net position is restricted when constraints placed on them are either externally imposed or are imposed by constitutional provisions or enabling legislation. Internally imposed designations of resources are not presented as restricted net position.

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 10 Measurement Focus, Basis of Accounting and Financial Statements Presentation

Government-Wide Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental Fund Financial Statements – The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they 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. For this purpose, the Authority considers revenues not related to charges for service to be available if they are collected within 60 days of the end of the current fiscal year end. Charges for service revenues are considered available upon the occurrence of the event. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.

Modifications to the accrual basis of accounting include:

• _{Employees’ vested annual leave is recorded as expenditures} when utilized. The amount of accumulated annual leave unpaid at September 30 has been reported only in the government-wide financial statements.

• _{Interest on general long-term obligations is recognized when} paid.

• _{Debt service expenditures and claims and judgments are} recorded when payment is due.

Fund Accounting

The financial statements of the Authority are recorded in individual funds, each of which is deemed to be a separate accounting entity.

The Authority uses fund accounting to report on its financial position and results of operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts.

The Authority reports the following major governmental funds:

General Fund – This fund is the Authority’s primary operating fund. It accounts for all financial resources of the Authority, except those required to be accounted for in other funds.

Adoption of New Accounting Standards

Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements improves the information that is disclosed in notes to the financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities should be included when disclosing information related to debt. It requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. It will also require that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt.

Upcoming Accounting and Reporting Changes

Statement No. 84, Fiduciary Activities improves the guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The focus of the criteria includes the following: (1) is the government controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. The four

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 11 fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial funds generally will report fiduciary activities that are not held in a trust or similar arrangement that meets specific criteria. The requirements of this Statement are effective for the fiscal year ending September 30, 2020.

Statement No. 87, Leases is to improve accounting and financial reporting for leases. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. The effective date is for the fiscal year ending September 30, 2021.

The Authority is evaluating the impact that the above GASB Statements will have on its financial reporting.

Budgetary Data

The Authority’s General Operating Fund budget is under formal budgetary control and follows both the Authority’s and Michigan Department of Health and Human Services’ annual budget process in establishing the budgetary data presented in the financial statements. The annual fiscal budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America and the requirements of Michigan Department of Health and Human Services. All appropriations lapse at year-end.

Use of 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, deferred outflows, liabilities, deferred inflows and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

Deposits and Investments

The Authority’s cash and cash equivalents are considered to be cash on hand, money market funds, demand deposits and/or certificates of deposit which mature within 90 days. The Authority considers all highly liquid investments with original maturities of 180 days or less to be cash equivalents.

A specific amount of cash has been restricted for future payments of compensated absences, depreciation reserve and risk management reserve.

Statutory Authority

Michigan law authorizes the Authority to deposit and invest in:

a) Bonds, securities, other obligations and repurchase agreements of the United States, or an agency or instrumentality of the United States.

b) Certificates of deposit, savings accounts, deposit accounts or depository receipts of a qualified institution.

c) Commercial paper rated at the time of purchase within the two highest classifications established by not less than two standard rating services and that matures not more than 270 days after the date of purchase.

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 12 d) Banker’s acceptances of United States banks.

e) Obligations of the State of Michigan and its political subdivisions that, at the time of purchase are rated as investment grade by at least one standard rating service.

f) Mutual funds registered under the investments company act of 1940 with the authority to purchase only investment vehicles that are legal for direct investment by a public corporation. g) External investment pools as authorized by Public Act 20 as

amended through December 31, 1997.

The Authority’s investment policy allows for all of these types of investments.

Receivables

Accounts receivable in all funds report amounts that have arisen in the ordinary course of business and are stated net of allowances for uncollectible amounts of $0 as of September 30, 2019.

Due from other governmental entities consist primarily of amounts due from the Mid-State Health Network.

Inventories

The Authority does not recognize as an asset inventories of supplies. The cost of these supplies is considered immaterial to the financial statements and the quantities are not prone to wide fluctuation from year to year. The costs of such supplies are expensed when purchased.

Prepaid Items

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

Restricted Assets

Cash and cash equivalents have been restricted for future payment of the compensated absences liability and other capital purposes. Capital Assets

Capital assets, which include property, plant and equipment, are reported in the governmental column in the government-wide financial statements. Capital assets are defined by the Authority as individual assets with an initial cost equal to or more than $5,000 for acquisitions on or after October 1, 2002 and $1,000 for acquisitions before October 1, 2002 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. The Authority does not have infrastructure type assets.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction of capital assets is not capitalized. No interest expense was incurred during the current year.

Capital assets utilized in the governmental funds are recorded as expenditures in the governmental fund financial statements. Depreciation expense is recorded in the government-wide financial statements.

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 13 Capital assets of the Authority are depreciated using the straight-line method over the following estimated useful lives:

Category Useful Lives

Equipment and furnishings 5 years

Computers 3 - 5 years

Vehicles 5 years

Leasehold improvements 7 - 30 years

Buildings 40 years

Software development 3 years Deferred Outflows of Resources

A deferred outflow of resources is a consumption of net position by the Authority that is applicable to a future reporting period. The Authority reports deferred outflows of resources as a result of pension and OPEB earnings. This amount is the result of a difference between what the plan expected to earn from plan investments and what is actually earned. This amount will be amortized over the next four years and included in pension and OPEB expense. Changes in assumptions and experience differences relating to the net pension liability and net OPEB asset are deferred and amortized over the expected remaining services lives of the employees and retirees in the plan. The Authority also reported deferred outflows of resources for pension contributions made after the measurement date. This amount will reduce net pension liability in subsequent years.

Incurred but Not Reported Claims Liability

The amounts recorded in current liabilities include amounts for incurred inpatient, residential and community provider claims liability based on management’s estimate. The Authority may not be billed for these until several months after the date of service. Therefore, the liability is not liquidated within the normal 60-day period after year-end. Also, the actual cost may vary from the estimated amount for a variety of reasons that include, but are not limited to, retroactive consumer eligibility or cost recovery from other third-party payers.

Unearned Revenue

Unearned revenue arises when resources are received by the Authority before it has a legal claim to them. In subsequent periods, when the revenue recognition criterion is met, or when the Authority has a legal claim to the resources, the liability for unearned revenue is removed from the fund financial statements and government-wide financial statements, and revenue is recognized.

Compensated Absences

The Authority’s policy allows full time employees to accumulate earned time off at various rates, depending on the employees’ length of service with the Authority. Governmental fund financial statements record expenditures when employees are paid for these compensated absences. The government-wide financial statements record expenditures and the related liability when these compensated absences are earned by employees.

Long-term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities statement of net position.

The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position the Bay County Employees’ Retirement System (BCERS) and additions to/deductions from BCERS’ fiduciary net position have been determined on the same basis as they are reported to the plan. For

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 14 this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 15 Note 2 – Budgetary Information

The budget presented does not include principal payments on debt, which was $144,131 or capital outlays, which was $388,645. Although the Authority does not budget principal and payments on debt, actual spending did not exceed anticipated expenditures.

Note 3 – Deposits and Investments

The Authority’s deposits and investments were reported in the basic financial statements in the following categories:

Cash and cash equivalents $ 4,993,902 Cash and cash equivalents - restricted 1,264,926

Total $ 6,258,828

The breakdown between deposits and investments for the Authority is as follows:

Deposits $ 6,256,138

Cash on hand 2,690

Total $ 6,258,828

Interest rate risk – State law limits the allowable investments and the maturities of some of the allowable investments as identified in Note 1 of the summary of significant accounting policies. The Authority’s investment policy does not have specific limits in excess of State law on investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The maturity periods for each investment are identified above for investments held at year end.

Credit risk – State law limits investments to specific government securities, certificates of deposits and bank accounts with qualified financial institutions, commercial paper with specific maximum

maturities and ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and qualified external investment pools as identified in Note 1 of the summary of significant accounting policies. The Authority’s investment policy does not have specific limits in excess of State law on investment credit. The ratings for each investment are identified above for investments held at year end.

Custodial credit risk – deposits – Custodial credit risk is the risk that in the event of a bank failure, the Authority’s deposits may not be returned. State law does not require, and the Authority does not have a policy for deposit custodial credit risk. As of September 30, 2019, $6,669,807 of the Authority’s bank balance of $7,257,221 was exposed to custodial credit risk because it was uninsured and uncollateralized.

Custodial credit risk – investments – For an investment, this is the risk that, in the event of the failure of the counterparty, the Authority will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State law does not require, and the Authority does not have a policy for investment custodial credit risk. As of September 30, 2019, there were no amounts exposed to custodial credit risk because it was uninsured and uncollateralized.

Concentration of credit risk – State law limits allowable investments but does not limit concentration of credit risk as identified in Note 1 of the summary of significant accounting policies. The Authority’s investment policy requires diversification by security type and institution. With the exception of U.S. Treasury securities and authorized investment pools, no more than one-third of the total investment portfolio will be invested in a single security type or with a single financial institution. All investments held at year end are reported above.

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 16 Note 4 – Due from Other Governmental Units

As of September 30, this receivable consisted of the following: State of Michigan $ 105,340

Affiliates 47,936

Other governmental units 704,169

857,445 $

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 17 Note 5 – Capital Assets

A summary of changes in capital assets is as follows:

Beginning Ending

Balance Increases Decreases Balance

Capital assets not being depreciated

Land $ 768,737 $ 95,000 $ 439,237 $ 424,500

Construction in progress - 57,651 - 57,651

Total capital assets not being depreciated 768,737 152,651 439,237 482,151 Capital assets being depreciated

Equipment and furniture 199,399 - - 199,399

Buildings 2,263,754 - - 2,263,754

Building improvements 1,336,950 - - 1,336,950

Vehicles 677,544 235,994 81,503 832,035

Leasehold improvements 606,494 - - 606,494

Computers 859,683 - - 859,683

Total capital assets being depreciated 5,943,824 235,994 81,503 6,098,315 Less accumulated depreciation for

Equipment and furniture 199,399 - - 199,399

Buildings 622,060 62,240 - 684,300

Building improvements 271,846 41,396 - 313,242

Vehicles 602,740 45,368 81,503 566,605

Leasehold improvements 322,515 37,912 - 360,427

Computers 859,683 - - 859,683

Total accumulated depreciation 2,878,243 186,916 81,503 2,983,656 Net capital assets being depreciated 3,065,581 49,078 - 3,114,659 Capital assets, net $ 3,834,318 $ 201,729 $ 439,237 $ 3,596,810 Depreciation expense was charged to the Health & Welfare – Mental Health Program.

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Bay-Arenac Behavioral Health Authority

September 30, 2019

3 - 18 Note 6 – Due to Other Governmental Units

As of September 30, this liability consists of the following:

State of Michigan $ 281,892

Mid-State Health Network 431,315

713,207 $

Note 7 – Long Term Liabilities

The September 30, 2019 balance of long-term debt was comprised of mortgages payable and compensated absences. The mortgages are secured by real property acquired with the proceeds of the mortgages. The obligations are as follows:

Beginning Ending Due Within Balance Additions Decreases Balance One Year Governmental activities

Notes from direct borrowings and direct placements

Mortgages payable $ 674,842 $ - $ 144,131 $ 530,711 $ 151,051 Compensated absences 1,085,114 1,231,631 1,075,280 1,241,465 1,000,000 Total governmental activities $ 1,759,956 $ 1,231,631 $ 1,219,411 $ 1,772,176 $ 1,151,051

Annual debt service requirements to maturity for the mortgage payable are as follows:

Year Ending

September 30, Principal Interest 2020 $ 151,051 $ 17,183 2021 85,652 10,655 2022 15,211 9,169 2023 15,704 8,676 2024 16,213 8,167 2025 - 2029 89,295 32,907 2030 - 2034 104,734 17,234 2035 - 2037 52,851 1,992 530,711 $ $ 105,983 Governmental Activities

Notes from Direct Borrowings and Direct Placements

The Authority is required to maintain debt coverage ratio of not less than 1.25 times. As of September 30, 2019 the Authority is in compliance with their debt covenant.

Note 8 – Leases

The Authority has entered into various operating leases for the use of real and personal property. Operating leases do not give rise to property rights or lease obligations, and therefore, the lease agreements are not reflected in the

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