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R E P O R T

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1

DECEMBER 31,2012

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1

REPORT INDEX

DECEMBER 31, 2012

PAGE

INDEPENDENT AUDITORS REPORT 1 - 3

MANAGEMENT'S DISCUSSION AND ANALYSIS 4 - 7

BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements:

Statement of Net Position 8

Statement of Activities 9

Fund Finmicial Statements:

Balance Sheet - Govemmental Fund 10

Statement of Revenues, Expenditures and Changes in Fund Balances - Govemmental Fund 11

Reconciliation ofthe Statement of Revenues, Expenditures and Changes in Fund Balances ofthe Govemmental Fund to the Statement of Activities 12

Notes to Fin^icial Statements 13 - 22

REQUIRED SUPPLEMENTARY INFORMATION:

Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual - General Fund 23

OTHER SUPPLEMENTARY INFORMATION:

Schedule of Goveming Board Per Diem 24

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 25 - 26

D U P L A N T I E R , H R A P M A N N , H O G A N & M A H E R , L L P .

WILLIAM G. ST.\MM, C.P.A. ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ MICHAEL J. O'ROURKE, C.P.A. LINDSAY J. CALVB, C.P.A., L.L.C. ^ ^ ^ ^ ^ H ^ ^ k ^ ^ DA\~ID A. BURGARD, C.P.A. GL'YL.DUPLA>TiER,c.p.A. ^ ^ ^ H H ^ ^ ^ | CERTIFIED PUBLIC ACCOUNTANTS C U F F O R D j . G I F F I N , J R . , C P A IVnCHELLE H. CUNNIXGH.4]VI, C.P.A | I H I I I HENRY L. SILMA, C.P.A. DENNIS AY. DILLON, C.P.A. GRADY C. LLOYD, HI, C.P.A. MEMBERS

AMERICAN INSTITUTE OF A.J. DUPLANTIER JR, C.P.A. <1919-1985) CERTIFffiD PUBLIC ACCOUNTANTS ^ 1 ^ = ^ J HRAP\L\NN, JR, C.P.A. (1919-1990)

SOCIETY OF LA C P 4 'S \VILLIAM R. HOGAN, JR., CPA (1920-1996) ANN H. HEBERT, C.P.A. JAMES MAHER,JR, C.P.A. (1921-1999) HEATHER M. JOVANOMCH, C.P.A. TERRIL. K i r r O , C.P.A.

INDEPENDENT AUDITOR'S REPORT

March 25, 2013

To the Board of Commissioners St. Tammany Parish Communication District No. 1 Covington, Louisiana 70431

We have audited the accompanying financial statements of the govemmental activities and the major fund of St. Tammany Parish Communication District No. 1 (the "District"), as of and for the year ended December 31, 2012, which collectively comprise the District's basic finmicial statements as listed in XtiQ report index, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

1615 Poydras Street, Suite 2100 • New Orleans, LA 70112 • (504) 586-8866 • Fax (504) 525-5888 1670 Old Spanish Trail • SlidelL LA 70458 • (985) 649-9996 • Fax (985) 649-9940 247 Corporate Drive • Homna, LA 70360 • (985) 868-2630 • Fax (985) 872-3833

5047 Higliway 1, P. O. Box 830 • Napoleonville, LA 70390 • (985) 369-6003 • Fax (985) 369-9941 www.dlihincpa.com

http://www.dlihincpa.com

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers intemal 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 ofthe entity's intemal 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 ofthe financial statements.

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

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective fmancial position ofthe govemmental activities and the major fund ofthe District as of December 31, 2012, and the respective changes in financial position for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information, as listed in the report index, be presented to supplement the basic financial statements. Such information, although not a part ofthe basic financial statements, is required by the Govemmental 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 Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's financial statements as a whole. The schedule of goveming board is presented for purposes of additional analysis and is not a required part of tiie basic financial statements. The schedule of governing board is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepaiQ the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 25, 2013 on our consideration ofthe District's intemal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of intemal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on intemal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance.

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ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 MANAGEMENT'S DISCUSSION AND ANALYSIS

AS OF AND FOR THE YEAR ENDED DECEMBER 31. 2012

The following discussion and analysis of fiscal operations for the year is intended to supplement the annual financial audit completed by Duplantier, Hrapmann, Hogan & Maher, LLP. The discussion will supplement the audit information and provide MI explanation of the finmicial operation of St. Tammany Parish Communication District No. 1 (the District). This document is not intended as a replacement ofthe financial statements, nor is it intended to be a duplication of that report. Rather, it is an attempt to restate various components ofthe audit in laymen's terms and offer understanding ofthe District's financial posture.

The Statement of Net Position provides insight into the financial condition of a govemment entity by indicating the organization's assets and debts. This statement shows capital assets (less the accumulated depreciation taken on these assets) included in total assets. The Balance Sheet -Govemmental Fund shows the value of cash, receivables, and investments, but does not reflect the value of other assets. This Balance Sheet - Govemmental Fund is provided to show a clearer picture of the short-term financial position and is very similar to what is commonly referred to as govemment fimd accounting. The Balmice Sheet - Govemmental Fund shows the potential fimds that the District has at its disposal, along with the various restrictions placed on some of these funds, to assist in planning future actions that will require the expenditure of funds.

The fimd balance marked "Unassigned" is the classification that includes amounts that have not been assigned to other fimds based on constraints detailed by GASB 54, Fund Balance Reporting and Governmental Fund Type Definitions. The Board is continuing its practice of intemally dedicating a portion of the fimd balance to be set aside and reserved for unplanned contingencies should they occur. The dedication, which is twenty-five percent ofthe projected operating expenses for the yem , is included in the "Unassigned" fund balance. The District's fimd balance decreased by $48,502 during the y e ^ ended December 31, 2012. The decrease in fimd balance was primarily attributable to the fact that revenues less public safety expenses could not fully cover the costs of performing the system upgrades in 2012. The system upgrades are fiirther discussed below.

Funds that are invested in capital assets, such as fiimiture, computer equipment, the 911 telephone system, or real estate, ^ e not fimds that are readily available for use, and the doUm" amount listed for capital assets does not necessarily reflect the current market value of these assets. For example, if the District were to sell the 911 equipment or computers, there is a likelihood these would not bring the amount paid to purchase and install the equipment (less the depreciation deducted since the purchase). Conversely, the value of the real estate could well have appreciated in value mid be worth more than the amount reflected on the financial statements. In any case, these values ^ e not something that can be readily converted into cash and that cash then be used to purchase other assets, such as equipment for the new communications center. For these reasons, the Bal^ice Sheet - Govemmental Fund is provided to show more clearly the fiinds that are available to the District that could perhaps be used for such purchases.

Please note on the Balance Sheet - Govemmental Fund that some of the funds are listed as committed for certain uses. The fimds marked "Committed for System Upgrade" are resources limited by the Board to be used for upgrades to the 911 system itself. With the completion ofthe construction of the communications center in March 2007, the Board considered it prudent to once again begin setting aside funds for equipment upgrades. At fiscal year end, the total amount committed for system upgrades was $1,850,000.



As with all technology related systems, there are rapid changes occurring with the nation's 911 systems. The next generation of 911 software and equipment, known as NG 911, is currently under development and is expected to be implemented in phases. The equipment purchased in 2007 had been in use twenty-four hours a day since install mid was nearing the end of its lifecycle. The decision was made to replace all dispatcher workstations in 2012. Several other key changes were implemented as part of this upgrade. Previously the system relied on three 911 servers located at various locations in the Parish, with each PSAP connected to a different ser\'er. In 2012, an IP based network was implemented throughout the Parish. This effectively linked all agencies through a network that has proven more reliable mid stable during our recent hurricmies. This new network, along with a major software upgrade, gave us the ability to have only two 911 servers with either server capable of providing emergency telephone service to all PSAP's in the event one ofthe servers failed. This softwrn^e upgrade required the replacement of some servers and the repurposing of other servers. Also in conjunction with the upgrade the recording equipment for the entire system was replaced with state-of-the-art equipment. As indicated in previous years, we have anticipated a "rolling upgrade" where only needed equipment would be replaced and this is what occurred in 2012. All of the above upgrades were accomplished for under $600,000, which is approximately half of the cost ofthe original system. These upgrades mean that we have equipment that will be fiiUy compatible with NG 911 programs as they become available.

We continue to press the telephone service providers and equipment manufacturers to provide us with new programs as they become available, in an effort to provide the best possible 911 service to the citizens of St. Tammany Parish. As indicated above, the Board of Directors has wisely set aside dedicated fimds to cover the costs of these NG 911 upgrades and any major equipment outages we may incur in the future.

The following is a summary ofthe statement of net position:

Condensed Statement of Net Position As of December 31, 2012 and 2011

Current assets Non-current assets:

Capital assets, net

Total assets

Current liabilities

Total liabilities

Net position: Net investment in capital assets Unrestricted

Total net position

2012

$ 3,556,442

2.584.331

6,140,773

49,328

49.328

2,584,331 3,507,114

$6,091,445

2011

$3,611,489

2,521.000

6,132,489

55,872

55.872

2,521,000 3,555,616

$6,076,616

Chaise

$ (55,047)

63.331

8,284

(6,544)

(6.544)

63,331 (48,502)

$ 14.829



Net investment in capital assets increased by $63,331. This was the result of capital asset additions of $575,744 primarily related to a system upgrade performed in 2012 mid was offset by depreciation expense of $512,413.

The Statement of Activities is a summarized income statement where interest on the bond issue is shown as one entry and all other expenses related to the operation ofthe 911 system (Public Safety) are listed as a combined item. These expense and revenue items are then shown as a net change for the year, along with the beginning and ending value ofthe net position that reflect the impact ofthe year's activity.

The following is a summary ofthe statement of activities:

Condensed Statement of Activities As of December 31, 2012 and 2011

2012 2011 Change General revenues:

Fees $ 3,419,981 $ 3,436,836 $ (16,855) Miscellaneous 1,247 27,283 (26,036) Interest income 8,863 7,741 1,122 Special item - transfer from other govemment z 6.000 (6.000)

Total revenues 3.430.091 3.477.860 (47.769)

Expenses: Public safety 3,415,262 3,359,390 55,872 Interest on long-term debt ^ 2,888 (2,888)

Total expenses 3,415,262 3,362,278 52.984

Change in net position 14,829 115,582 (100,753)

Total net position, beginning of year 6.076.616 5,961.034 115.582

Total net position, end of year $6.091.445 $6.076.616 $ 14.829

The Statement of Revenues, Expenditures and Changes in Fund Balance - Govemmental Fund is an income statement in a format that more closely resembles that ofthe annual budget. It shows expenses detailed by various categories, and shows the Parish reimbursements as income items rather thmi as a reduction in expense.



In conclusion, the accompanying audit provides a detailed examination ofthe financial practices of St. Tammany Parish Communication District No. 1, and the various financial statements indicate that the District has a solid financial foundation. They demonstrate that the Commissioners have taken the proper steps to maintain financial stability as the District moves forward in assisting the Parish in a major upgrade of ftie emergency communications, and that adequate fimding is available to complete the projects as planned. The District Commissioners, working through their staff, have clearly demonstrated the existence of a sound plan for the mmiagement ofthe District's fiscal resources.

Questions conceming miy of the information provided in this report or requests for additional information should be addressed to the Executive Director, 510 East Boston Street, Suite 200, Covington, LA 70433.

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 STATEMENT OF NET POSITION

DECEMBER 31. 2012

Govemmental Activities

ASSETS Cash and cash equivalents Receivables Capital assets, net of accumulated depreciation

3,057,226 499,216

2,584,331

Total Assets 6,140,773

LIABILITIES Accounts payable Payroll liabilities

18,120 31,208

Total Liabilities 49,328

NET POSITION Net investment in capital assets Unrestricted

2,584,331

3,507,114

Total Net Position $ 6,091,445

The accompanying notes arc an integral part of these financial statements.

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED DECEMBER 31, 2012

GOVERNMENTAL ACTIVITIES Public safety

Expenses

$ 3,415,262

Program Revenue Net (Expenses) Operating Revenues and Grants and Changes

Contributions in Net Assets

$ - $ (3,415,262)

Total Expenses $ 3,415,262 (3,415,262)

GENERAL REVENUES Fees:

Cellular line Land line Prepaid cellulm Voice over IP

Miscellaneous revenue Interest income

Total General Revenues

1,825,824 1,336,645

237,925 19,587

1,247 8,863

3,430,091

Change in Net Position

Net Position, Beginning of Yem

14,829

6,076,616

Net Position, End of Year 6,091,445

The accompanying notes aiQ an integral part of these financial statements.

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 BALANCE SHEET

GOVERNMENTAL FUND

DECEMBER 31, 2012

PAGE 10

General

Fund

ASSETS Cash and cash equivalents Receivables

$ 3,057,226

499,216

Total Assets $ 3,556,442

LIABILITIES Accounts payable Payroll liabilities

$ 18,120 31,208

Total Liabilities 49,328

FUND BALANCE Committed for system upgrade Unassigned

1,850,000 1,657,114

Total Fund Balance 3,507,114

Total Liabilities and Fund Balance $ 3,556,442

RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET TO THE STATEMENT OF NET POSITION

Total Fund Balance

Capital assets used in govemmental activities are not financial resources and, therefore, are not reported in the governmental fimds

$ 3,507,114

2,584,331

Net Position of Govemmental Activities $ 6,091,445

The accompanying notes aiQ mi integral part of these financial statements.

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUND FOR THE YEAR ENDED DECEMBER 31, 2012

General Fund

REVENUES Fees:

Cellular line Land line Prepaid cellular Voice over IP

Interest income Miscellaneous revenue

Total Revenues

1,825,824 1,336,645

237,925 19,587 8,863 1,247

3,430,091

EXPENDITURES Public Safety:

911 System Personnel General govemment

Capital outlay

2,264,531 476,659 161,659 575,744

Total Expenditures 3,478,593

Net Change in Fund Balance

Fund Balance, Beginning of Year

(48,502)

3,555,616

Fund Balance, End of Year $ 3,507,114

The accompanying notes me mi integral part of these financial statements.

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

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

FOR THE YEAR ENDED DECEMBER 31. 2012

Net Change in Fund Balances - Total Govemmental Fund $ (48,502)

Amounts reported for govemmental activities in the Statement of Activities are different because:

Govemmental fimds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated usefiil lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period. 63,331

Change in Net Positon of Govemmental Activities $ 14,829

The accompanying notes me mi integral part of these financial statements.

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 NOTES TO FINANCIAL STATEMENTS

DECEMBER 31. 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The mission of St. Tammany Parish Communication District No. 1 (the District) is to shorten the time required for a citizen to request mid receive emergency aid. The District is mandated to take whatever actions are necessary to accomplish this task. The accoimting mid reporting policies of the District conform to accounting principles generally accepted in the United States of America applicable to govemmental entities. The following is a summary of significant accounting policies:

Reporting Entitv:

The District was created in 1986 by Ordinance 687 ofthe St. Tammany Parish Council. The District is govemed by a Board of Commissioners, which are appointed by the St. Tammany Parish Council. The Board is composed of seven members. Bomd members me nominated for selection by the St. Tammany Parish Council as follows: one member nominated by the Parish Council, one member nominated by the St. Tammany Parish Sheriffs Office, one member nominated by the Parish hospitals, two members nominated by the Municipal Law Enforcement Agencies and two members nominated by the Fire Protection Districts. A chairman is elected by the Board Members for a period of one yem.

The District is not considered a component unit ofthe St. Tammany Parish Council. The Parish appoints a majority of the bomd members but does not have the ability to impose its will on the District. Based on the criteria set forth in Section 2100 of GASB's codification of Governmental Accounting and Financial Reporting Standards, the District has no component units.

Basis of Presentation:

The accompanying basic financial statements ofthe St. Tammany Parish Communication District No. 1 have been prepared in conformity with govemmental accounting principles generally accepted in the United States of America. The Govemmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing govemmental accounting and financial reporting principles. The accompanying basic financial statements have been prepared in conformity with GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis -for State and Local Governments.

During the year ended December 31, 2012, the District adopted the provisions of GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. GASB Statement No. 63 provided financial reporting guidance for deferred outflows of resources and deferred inflows of resources and also redefined the residual of all other elements presented in a statement of financial position as net position.


DECEMBER 31. 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Govemment-Wide Financial Statements:

The govemment-wide financial statements (i.e., the statement of net position and statement of activities) report information on the govemmental activities using the fiiU accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations.

The statement of activities demonstrates the degree to which the direct expenses of a given fimction or segment me offset by program revenues. Direct expenses me those that are clemly identifiable with a specific fimction or segment. Program revenues include: (1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given fimction or segment; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for the govemmental fimds.

Fund Financial Statements:

The District uses funds to maintain its financial records during the yem. Fund accounting is designed to demonstrate legal compliance and to aid management by segregating transactions related to certain District fimctions and activities. A fimd is defined as a separate fiscal and accounting entity with a self-balancing set of accoimts. The only fimd ofthe District is classified as govemmental. The emphasis on fund financial statements is on major fimds, each displayed in a separate column. A fund is considered major if it is the primary operating fund ofthe District or the total assets, liabilities, revenues, or expenditures of the individual govemmental fimd is at least ten percent ofthe corresponding total for all govemmental fimds.

The General Fund is the primary operating, and sole, fimd ofthe District. It accounts for all the financial transactions and is classified as govemmental fund type. The focus of the govemmental funds' measurement is upon the determination of fmmicial position and changes in financial position rather thmi upon net income.

Measurement Focus/Basis of Accounting:

The amounts reflected in the govemmental fimd financial statements are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities me generally included on the balance sheet. The statement of revenues, expenditures and changes in fimd balance reports on the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current resources. This approach is then reconciled, through adjustment, to the govemment-wide financial statements.


DECEMBER 31. 2012


Measurement Focus/Basis of Accounting: (Continued)

The amounts reflected in the govemmental fimd financial statements use the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measureable and available). Measurable means the amount of the transaction can be determined and available means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The District considers all revenues available if they me collected within 60 days after the fiscal year-end. Expenditures are recorded when the related fimd liability is incurred, except for interest and principal payments on long-term debt, which are recognized when payment is made, and certain compensated absences and claims and judgments, which are recognized when the obligations are expected to be liquidated with expendable available financial resources.

The govemment-wide financial statements are accounted for using an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net position and financial position. All assets and liabilities (whether current or noncurrent) associated with their activities are reported.

The govemment-wide financial statements are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when eamed and expenses me recorded when the liability is incurred or economic asset used, regmdless of the timing of related cash flows.

Pursuant to LRS 33:9106 and Act 1029 ofthe 1999 Regular Session ofthe Louisiana Legislature, the District is authorized to collect the following service charges per subscriber per device per month within the District:

Residential $1.00 Voice Over IP $1.00 Commercial $2.00 Wireless $0.85

Service charges are collected by the District on a monthly basis and me considered measurable at the month of collection. Accordingly, service charges incurred in December 2012, and remitted in 2013, have been reported as a receivable.


DECEMBER 31. 2012


Budgets and Budgetarv Accounting:

The District has adopted a budget for its General Fund. The budgetary practices include notice ofthe proposed budget, public inspection ofthe proposed budget and public hearings on the budget prior to adoption. An amendment involving increase in expenditures must be approved by the District. Budgeted amounts in the accompanying financial statements include all amendments. All budgeted amounts which are not expended or obligated through contracts lapse at year-end.

Cash mid Cash Equivalents:

Cash includes amounts in interest-bearing demand deposits. Cash equivalents include amounts in time deposits and those investments with original maturities of 90 days or less. Under state law, the municipality may deposit funds in demand deposits, interest-bearing demand deposits, money market accounts or time deposits with state banks organized under Louisiana law and national banks having their principal offices in Louisimia.

Under state law, the municipality may invest in United States bonds, treasury notes or certificates. These are classified as investments if their original maturities exceed 90 days; however, if the original maturities me 90 days or less, they are classified as cash equivalents.

Accounts Receivable:

Accounts receivable at December 31, 2012, consisted of service chmges due from telephone companies. These receivables are considered to be fiiUy collectible.

Capital Assets:

All capital assets of the District me recorded at historical cost mid are reported in the govemmental column in the govemment-wide financial statements. Depreciation of all exhaustible fixed assets is charged as an expense against their operations. The District constructed a building that serves as an emergency backup center and training center for 911 operations. This building was built in the later 1980s and, through a calculation using a square footage formula, a reasonable estimate ofthe building's value was calculated at $540,000.

In the fimd financial statements, capital assets used in govemmental fimd operations are accounted for as capital outlay expenditures ofthe govemmental fimd upon acquisition.


DECEMBER 31. 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTE^JG POLICIES: (Continued)

Capital Assets: (Continued)

The cost of normal maintenance and repairs that do not add value to the asset or materially extend its usefiil life me not capitalized. Improvements are capitalized and depreciated over the remaining usefiil lives ofthe related fixed assets, as applicable. The District capitalizes equipment and fumiture in excess of $1,000. The following estimated usefiil lives and methods me used to compute depreciation:

Buildings 30 yems Straight-Line Leasehold improvements 15 yems Straight-Line Fumiture, fixtures and equipment 5 - 7 years Straight-Line Computers 3 - 7 years Straight-Line Vehicles 5 years Straight-Line

Depreciation expense amounted to $512,413 for the year ended December 31, 2012.

Use of Estimates:

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

Net Position Classifications:

Govemment-wide equity is classified as net position and displayed in two components:

a. Net investment in capital assets - consist of capital assets including restricted capital assets, net of accumulated depreciation, and reduced by the outstanding balances of bonds or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

b. Unrestricted net position - consist of all other net assets that do not meet the defmition of "net investment in capital assets."


DECEMBER 31. 2012

1. SUMMARY OF SIGNIFICANT ACCOUNTE^JG POLICIES: (Continued)

Net Position Classifications: (Continued)

When an expense is incurred for purposes for which both restricted and unrestricted net positions me available, the District's policy is to apply restricted net position first.

Govemmental Fund Balances

In the govemmental fimd financial statements, fimd balances me classified as follows:

a. Committed fund balance - resources that are limited to a particulm purpose specified by the goveming bomd through formal resolution.

b. Unassigned fimd balance - all amounts included in stabilization arrangements mid all amounts not included in otiier spendable classifications.

When an expense is incurred for purposes for which are committed, the District's policy is to first apply unassigned fimd balance.

Stabilization Arrangements:

The District has formally set aside amounts for use in emergency situations or to offset anticipated revenue shortfalls should they occur. The stabilization arrangement was authorized through formal resolution of the bomd mid was set at twenty-five percent of the projected operating expenses for the yem. The stabilization balance as of December 31, 2012 was $760,175 and was included in the unassigned fimd balance.

2. CASH AND CASH EQUIVALENTS:

The District had cash and cash equivalents (carry values) at December 31, 2012 totaling $3,057,226. These deposits are stated at cost, which approximates market. Under state law, deposits (or the resulting bank balance) must be secured by federal deposit insurance or the pledge of securities owned by the fiscal agent bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the fiscal agent. These securities me held in the name of the pledging fiscal agent bank in a holding or custodial bank that is mutually acceptable to both pmties.


DECEMBER 31. 2012

2. CASH AND CASH EQUIVALENTS: (Continued)

Custodial credit risk - Deposits. Custodial credit risk is the risk that, in the event of a bank failure, the District's deposits may not be returned to it. The District does not have a deposit policy for custodial credit risk. As of December 31, 2012, the District's bmik balance was $2,996,573. Deposits in the mnount of $250,000 were secured by federal deposit insurmice coverage and were therefore not exposed to custodial credit risk. The remaining deposits were collateralized by the pledge of securities in the amount of $2,746,573 that were held by the bank but were not in tiie District's name.

3. CAPITAL ASSETS:

Capital asset activity for the yem ended December 31, 2012 was as follows:

Beginning Ending

Balance Increases Decreases Balance

$ - S 2,643,051 581,192

92,569 99,511

186,035 -_ 2.052.235

Capital Assets Equipment and 911 System Building Vehicles Computers Fumiture Leasehold Improvements

Total Capital Assets

Less Accumulated Depreciation Equipment and 911 System Building Vehicles Computers Fumiture Leasehold Improvements

Total Accumulated Depreciation

Total Capital Assets, Net

$ 2,075,155 581,192

92,569 91,663

186,035 2.052.235

5.078.849

(1,218,278) (382,119)

(66,395) (76,322)

(144,857) (669.878)

(2.557.849)

S 2.521.000

$ 567,896 --

7,848 --

575,744

(322,465) (19,373)

(8,226) (6,797)

(21,988) (133.564)

(512.413)

S 63.331

5.654.593

(1,540,743) (401,492)

(74,621) (83,119)

(166,845) (803.442)

-_ (3,070.262)

S S 2,584.331

All depreciation expense was charged to the public safety govemmental fimction.


DECEMBER 31. 2012

4. PENSION PLAN:

The District contributes to a cost-sharing, multiple-employer defined benefit pension plan administered by the Parochial Employees' Retirement System of Louisiana (the Plan). The Plan provides retirement, disability and death benefits to Plan members and beneficimies. The Plan was established by the Louisimia Legislature as of January 1, 1953 by Act 205 of 1952. The Plan is administered by a Board of Trustees consisting of seven members. The Plan issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to P.O. Box 14619, Baton Rouge, LA 70898-4619, or by calling 225-928-1361.

All permanent District employees who work at least 28 hours a week shall become members on the date of employment. New employees meeting the age mid social security criteria have up to 90 days from the date of hire to elect to participate.

The retirement benefit is generally 1% ofthe member's final compensation plus $2 per month for each year of service credited prior to January 1, 1980, and 3% of final average compensation for each year of credited service after that date. Final average compensation is defined as the employee's average salary over the 36 consecutive or joined months which produce the highest average.

Employee contributions are established by state statute at 9.5% of their annual covered salary. Employer contributions are established by state statute and are required to contribute at an actumially determined rate. The employer contribution rate for the year ended December 31, 2012 was 15.75% of annual covered payroll. The District's contributions to the Plan for the year ended December 31, 2012 was $54,890.

The schedule of actuarially required conttibution and percentage contributed for the yems ended December 31, 2012 through 2010 is noted below:

Schedule of Emplover Contributions Fiscal Actuarial Year Required Percentage

Ended Contribution Contributed

12/31/2010 $46,074 115% 12/31/2011 58,028 99% 12/31/2012 58,270 94%


DECEMBER 31. 2012

5. COMMITMENTS:

The District reimburses the St. Tammany Parish Sheriff at $350,000 per yem for the operation and maintenance ofthe 800MHz EDACS Communication System pursuant to an Intergovemmental Agreement which expires on June 30, 2013. During 2012, the District paid the Sheriff $350,000. As of December 31, 2012, the total estimated remaining payments required under the contract are $175,000.

On July 11, 2007, the District entered into inter-governmental agreements with the St. Tammany Pmish Sheriff, the City of Covington, the City of Mandeville, the City of Slidell, mid the Town of Pearl River, whereby the District would pay an amount to help offset their 911 call t^er expense. Each agreement calls for a five percent (5%) per annum increase in the fee during the term of the agreement. The term of each agreement is five years from the date of execution. After five years, an automatic renewal will follow unless there is an objection from either party. Effective Jmiuary 1, 2013, new agreements were executed and no longer call for an automatic 5% annual increase, however the increase, if miy, will be determined by the District mmually. In 2012, the District's call taker expense totaled $903,895. The total estimated remaining payments required under these contracts as of December 31, 2012 are as follows:

2013 $ 903,895 2014 903,895 2015 903,895 2016 903,895 2017 451.947

$ 4.067.527

On May 21, 2007, the District entered into an inter-governmental agreement with the St. Tammany Parish Fire Protection District No. 12 (Fire District 12), whereby the District will pay Fire District 12 an annual sum of $300,000 for providing dispatchers to respond to E-911 calls reporting a fire or the need for emergency medical assistance. The term of the agreement is five yems from the date of execution with an automatic renewal unless there is an objection from either party. On December 31, 2009, an addendum to the aforementioned agreement was made and entered into by both parties to increase the fee payable by the District by 5% making the annual sum $315,000. In 2012, the District paid Fire District 12 $315,000 under the agreement. The total estimated remaining payments required under this agreement as of December 31 2012 was as follows:

2013 $ 315,000 2014 315,000 2015 315,000 2016 315,000 2017 131.250

Total $ 1,391.250


DECEMBER 31. 2012

5. COMMITMENTS: (Continued)

In 2004, the District entered into an inter-governmental agreement with the St. Tmnmany Parish Council, whereby the District leases a portion of a Parish building beginning May 1, 2004 for a period of four years with the option to renew for ten additional four-yem periods. On May 1, 2012, the District exercised their second option to renew extending the terms to May 1, 2016. The agreement calls for the District to pay for 30% of the renovations to the building and the monthly operating costs ofthe building. In 2012, the total rent expense paid to the St. Tammany Parish Council was $188,853. The fiiture minimum lease payments as of December 31, 2012 for the lease are as follows:

2013

2014

2015

2016

Total

$ 185,673

185,673

185,673

61,891

$618,910

6. RISK MANAGEMENT:

The District is exposed to various risks of loss related to torts; theft of, damage to, and destiuction of assets; errors and omissions; injuries to employees; and natural disasters. During the year ended December 31, 2012, the District carried insurance through vmious commercial carriers to cover all risks of loss. The District has no settled claims resulting from these risks that exceeded its commercial coverage in any ofthe past three fiscal years.

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND

FOR THE YEAR ENDED DECEMBER 31, 2012

REVENUES Line Income

Cellulm line Land line Prepaid cellular Voice over IP

FEMA Reimbursements Interest income Miscellaneous revenue

Total Revenues

EXPENDITURES Public Safety

911 System Personnel General govemment

Capital outlay

Original Final Actual

$ 2,000,000 $ 1,861,000 $ 1,825,824 1,320,000

215,000 20,000

-

7,000 8,000

3,570,000

2,257,300 501,500 193,000 614,000

1,312,000 226,000

20,000 7,800 8,800 2,000

3,437,600

2,229,800 481,740 174,400 641,000

1,336,645 237,925

19,587 -

8,863 1,247

3,430,091

2,264,531 476,659 161,659 575,744

Variance with Final Budget

Favorable (Unfavorable)

$ (35,176) 24,645 11,925

(413) (7,800)

63 (753)

(7,509)

(34,731) 5,081

12,741 65,256

Total Expenditures 3,565,800 3,526,940 3,478,593 48,347

Net Change in Fund Balance 4,200 $ (89,340) (48,502) $ 40,838

Fund Balance, Beginning of Yem 3,555,616

Fund Balmice, End of Year $ 3,507,114

ST. TAMMANY PARISH COMMUNICATION DISTRICT NO. 1 OTHER SUPPLEMENTARY INFORMATION

SCHEDULE OF GOVERNE JG BOARD PER DIEM DECEMBER 31, 2012

The bomd of commissioners receive $75.00 for each day of a regularly scheduled meeting that they attend. Total amount of per diem paid to commissioners for the yem ended December 31, 2012 is as follows:

COMMISSIONERS AMOUNT

TomBuell $825

John Evans 900

Eml Gorondonna 900

Freddy Drennan 300

Jim Laurent 375

Marlin Peachey 900

Randy Smith 375

JohnO'Neil -0-

Gene Bellismio -0-

WILLIAM G. ST.\MM, C.P.A. LENDSAY J. CALIB, C.P.A., L.L.C. GL'Y L. DUPLANTIER, C.P..A. AnCHELLE H. CUNNE\'GH.\M, C.P.A DENNIS AY. DILLON, C.P.A. GRADY C. LLOYD, m , C.P.A.

ANN H. HEBERT, C.P.A. HEATHER M. JOVANOMCH, C.P.A. TERRI L. KFTTO, C.P.A.

D U P L A N T I E R , H R A P M A N N , H O G A N & M A H E R , L L P .

CERTIFIED PUBLIC ACCOUNTANTS

MEMBERS AMERICAN INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTANTS SOCIETY OF LA C.P.A.'S

MICHAEL J. O'ROURKE, C.P.A. DA\TD A. BURGARD, C.P.A.

CLIFFORD J. GIFFIN, JR., CPA HENRY L. SIL\1A, C.P.A.

A. J. DUPLANTIER JR, C.P..A. <1919-1985) FELIX J. HRAPMANN, JR, C.P.A. (1919-1990) \VILLIiM R. HOGAN, JR., CPA (1920-1996)

JAMES MAHER, JR, C.P.A. (1921-1999)

REPORT ON INTERNAL CONTROL OVER FINACIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

March 25, 2013 To the Bomd of Commissioners St. Tammany Pmish Communication District No. 1 Covington, Louisiana

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the govemmental activities and the major fiind of St. Tammany Parish Communication District No. 1 (the District), as of and for the yem ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the District's basic financial statements, and have issued our report thereon dated March 25, 2013.

Intemal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the District's intemal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness ofthe District's intemal control. Accordingly, we do not express an opinion on the effectiveness ofthe District's intemal control

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned fimctions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in intemal control, such that there is a reasonable possibility that a material misstatement ofthe entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with govemmice.

1615 Poydras Street, Suite 2100 • New Orleans, LA 70112 • (504) 586-8866 • Fax (504) 525-5888 1670 Old Spanish Trail • Slidell, LA 70458 • (985) 649-9996 • Fax (985) 649-9940 247 Corporate Drive • Houma, LA 70360 • (985) 868-2630 • Fax (985) 872-3833

5047 Highway 1, P. O. Box 830 • Napoleonville, LA 70390 • (985) 369-6003 • Fax (985) 369-9941 www.dlihincpa.coin

http://www.dlihincpa.coin

Our consideration of intemal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in intemal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in intemal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the District's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of intemal control and compliance and the results of that testing, mid not to provide an opinion on the effectiveness of the entity's intemal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's intemal control mid compliance. Accordingly, this communication is not suitable for any other purpose.

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