Pima County, Arizona For the Fiscal Year Ended June 30, 2016 PIMA COUNTY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016 BOARD OF SUPERVISORS Sharon Bronson Chair District #3 Richard Elías Vice Chair District #5 Ally Miller District #1 Ray Carroll District #4 Ramón Valadez District #2 COUNTY ADMINISTRATOR C. H. Huckelberry Prepared by the Department of Finance and Risk Management Keith Dommer, Director Michelle Campagne, Deputy Director Ellen Moulton, Deputy Director Andy Welch, Division Manager Financial Control & Reporting Supervisors Emilia Eveningred Pete Rodriguez Blanca Rossetti Accountants Lin Baldazo Valentin R. Dominguez, CPA Jessica Espinoza Linda House Chih-Yu Lee, CPA Janet Mabon Ryan Maese Lorraine Nuñez Elizabeth Partlow Janet Peete Alex Ramires Jennifer Serrano Jennifer Sia Phillip Summersett James D. Weingart, CGFM, CMA PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2016 TABLE OF CONTENTS Exhibit I. INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart 1-7 8 9 II. FINANCIAL SECTION Independent Auditors' Report A. MANAGEMENT'S DISCUSSION AND ANALYSIS (required supplementary information) B. BASIC FINANCIAL STATEMENTS C. Government-Wide Financial Statements Statement of Net Position Statement of Activities Governmental Fund Financial Statements (Major and Other) Balance Sheet Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Proprietary Fund Financial Statements (Major and Other) Statement of Net Position Statement of Revenues, Expenses and Changes in Fund Net Position Statement of Cash Flows Fiduciary Fund Financial Statements Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Page 11 - 13 15 - 33 A-1 A-2 35 36 - 37 A-3 38 A-4 39 A-5 40 A-6 41 A-7 42 A-8 A-9 43 44 - 45 A-10 A-11 46 47 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2016 Table of Contents (continued) Exhibit Notes to Financial Statements Note 1: Summary of Significant Accounting Policies Note 2: Change in Accounting Principle Note 3: Cash and Investments Note 4: Fund Balance Classifications of the Governmental Funds Note 5: Capital Assets Note 6: Claims, Judgments and Risk Management Note 7: Long-Term Liabilities Note 8: Short-Term Liabilities Note 9: Landfill Liabilities Note 10: Operating Leases Note 11: Pension and Other Postemployment Benefits Note 12: Due from Other Governments Note 13: Interfund Transactions Note 14: Construction and Other Significant Commitments Note 15: Deficit Fund Balances/Net Position Note 16: Subsequent Events C. 48 - 54 55 55 - 60 61 62 - 63 64 - 66 66 - 76 76 77 78 79 - 96 97 98 99 99 100 - 101 REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT'S DISCUSSION AND ANALYSIS Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund B-1 Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund Schedule of the County’s Proportionate Share of the Net Pension Liability – Cost-Sharing Pension Plans 103 104 B-2 Schedule of Changes in the County’s Net Pension Liability – and Related Ratios – Agent Pension Plans Schedule of County Pension Contributions Notes to Pension Plan Schedules Schedule of Agent OPEB Plan’s Funding Progress D. Page 105 106 - 107 108 109 110 COMBINING STATEMENTS AND OTHER SCHEDULES Other (Nonmajor) Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Other Governmental Funds Capital Projects Fund Debt Service Fund Transportation - Special Revenue Fund Health - Special Revenue Fund Regional Flood Control - Special Revenue Fund Other - Special Revenue Fund Other Grants - Special Revenue Fund OEM Radio System – Special Revenue Fund School Reserve - Special Revenue Fund Environmental Quality - Special Revenue Fund Waste Tire - Special Revenue Fund Library District - Special Revenue Fund Stadium District - Special Revenue Fund Street Lighting Districts C-1 112 - 113 C-2 114 - 115 C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 C-13 C-14 C-15 C-16 117 118 119 120 121 122 123 124 125 126 127 128 129 130 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2016 Table of Contents (continued) Exhibit Page C-17 131 C-18 C-19 132 133 - 134 C-20 135 C-21 C-22 136 137 - 138 C-23 139 C-24 C-25 140 141 C-26 142 Financial Trends Information Net Position by Component Changes in Net Position Fund Balances - Governmental Funds Changes in Fund Balances - Governmental Funds D-1 through 4 143 - 147 Revenue Capacity Information Taxable Assessed Value and Estimated Actual Value of Property Direct and Overlapping Property Tax Rates Direct and Overlapping Property Tax Rates - School Districts Principal Property Taxpayers Real Property Tax Levies and Collections Assessed, Limited and Full Cash (Secondary) Value of Taxable Property Comparative Net Valuations and Tax Rates Historical Collections - Hotel Excise Tax, Car Rental Surcharges and Recreational Vehicle Tax Streets and Highways Revenues D-5 through 12 149 - 160 Other (Nonmajor) Enterprise Funds Combining Statement of Position Combining Statement of Revenues, Expenses and Changes in Fund Net Position Combining Statement of Cash Flows Internal Service Funds Combining Statement of Net Position Combining Statement of Revenues, Expenses and Changes in Fund Net Position Combining Statement of Cash Flows Fiduciary Funds Combining Statement of Fiduciary Net Position - Investment Trust Funds Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds Combining Statement of Fiduciary Net Position - Agency Funds Combining Statement of Changes in Fiduciary Net Position - Agency Funds III. STATISTICAL SECTION PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2016 Table of Contents (continued) Exhibit Page Debt Capacity Information Ratios of Outstanding Debt by Type to Personal Income and Per Capita Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Ratio of Direct and Overlapping Debt to Property Values and Per Capita Computation of Direct and Overlapping Governmental Activities Debt Outstanding Legal Debt Margin Regional Wastewater Reclamation Pledged Sewer Revenue Debt Coverage Transportation Revenue Bonds - Pledged Revenue Bond Coverage Lease, Lease-purchase Installment Notes Payable and Purchase Agreements Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures D-13 through 19 161 - 169 Demographic and Economic Information Demographic and Economic Statistics Principal Employers Population and Employment Transportation and Real Estate Economic Indicators by Calendar Year Population Statistics Average annual Jail Population D-20 through 26 171 - 178 Operating Information Employees by Function Operating Indicators by Program Capital Assets and Infrastructure by Program D-27 through 29 179 - 181 PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2016 INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart FINANCIAL SECTION STATISTICAL SECTION INTRODUCTORY SECTION The purpose of the Introductory Section in a comprehensive annual financial report (CAFR) is to familiarize readers with the organizational structure of the government, the nature and scope of the services it provides, and the specifics of its legal operating environment. COUNTY ADMINISTRATOR’S OFFICE PIMA COUNTY GOVERNMENTAL CENTER 130 W. CONGRESS, TUCSON, AZ 85701-1317 (520) 740-8661 FAX (520) 740-8171 C.H. HUCKELBERRY County Administrator December 6, 2016 To the Honorable Board of Supervisors and Citizens of Pima County, Arizona: We are pleased to submit the Comprehensive Annual Financial Report (CAFR) of Pima County for the fiscal year ended June 30, 2016. This report presents comprehensive financial and operating information about the County’s activities for the fiscal year. We believe that the financial information, as presented, is accurate in all material aspects; that it is presented in a manner designed to openly disclose the financial position and results of operations of the County as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain the maximum understanding of the County’s financial affairs have been included. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The State of Arizona Office of the Auditor General is required to audit financial transactions and accounts kept by counties. The Auditor General has issued an unmodified (“clean”) opinion on the Pima County financial statements for the year ended June 30, 2016. The Auditor General’s report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. The Comprehensive Annual Financial Report consists of three sections: • The INTRODUCTORY section describes the organizational structure of the County, the nature and scope of its services, and the specifics of its legal operating environment. • The FINANCIAL section includes the Auditor General’s report, the MD&A, the audited basic financial statements, the notes to the statements, and required supplementary information necessary to fairly present the financial position and results of operations of the County in conformity with generally accepted accounting principles. • The STATISTICAL section contains comprehensive statistical data on the County’s financial, physical, economic, and demographic characteristics. 1 Pima County Profile Covering an area of approximately 9,200 square miles, Pima County is one of the oldest continuously inhabited areas of the United States. It is situated in the southern part of Arizona with a portion of its southern boundary bordering Mexico. Created in 1864, Pima County includes a large portion of southern Arizona acquired from Mexico by the Gadsden Purchase of 1854. Pima County has purchased thousands of acres of open space and ranches to preserve and protect the stunning landscapes and historic and cultural sites. The County’s population has grown from 395 in 1820 to an estimated population of 1,016,743 in 2016, according to the Arizona Department of Administration, Office of Employment and Population Statistics. The County has a vibrant multicultural diversity. A major commercial and academic hub, Pima County is home to Tucson, the second largest city in Arizona. Although the County has five incorporated cities and towns, more than a third of the population lives outside of any incorporated cities or towns. A five-member Board of Supervisors is responsible for implementing the County’s governmental and administrative affairs. Each member is elected from a designated district to serve a four-year term. The chairman is selected by the Board from among its members. The Board is responsible for establishing the policies of the County, which provide guidance to the various County constitutional officers and departments. The Board has the legal authority and responsibility to establish spending limits and approve the budgets of all County departments, and also sets the amount of taxes to be levied. The Board appoints a County Administrator who is responsible for the general administrative and overall operations of the various departments of the County. The County has several other elected officials including the Assessor, County Attorney, Recorder, Sheriff, Clerk of the Superior Court, the Constables, Superintendent of Schools, Treasurer, and Judges for the Superior Courts, Juvenile Courts, and Justice Courts. Pima County includes in its financial statements all funds, agencies, boards, commissions, and authorities for which the Pima County Board of Supervisors is financially accountable. As the primary government, Pima County is financially accountable if it appoints a voting majority of an organization’s governing body and either it is able to impose its will on that organization or a potential exists for that organization to provide specific benefits to, or impose specific financial burdens on, Pima County. Additionally, the County may be financially accountable if an organization is fiscally dependent on the County. Pima County offers a wide variety of governmental services that are organized into the following functional areas: • General Government Services primarily provides internal administrative and support services to County departments directly serving the public. The departments comprising this function include the Assessor; Board of Supervisors; Clerk of the Board; Communications Office; County Administrator; Elections; Facilities Management; Finance and Risk Management; Fleet Services; General Government Services Administration; Human Resources; Information Technology; Non Departmental; Procurement; Recorder; and Treasurer. • Community Resources provides educational, cultural, social, economic development and recreational programs to the public. The departments in this functional area are Attractions and Tourism; Community and Economic Development Administration; Community Development and Neighborhood Conservation; Community Services, Employment and Training; County Free Library; Kino Sports Complex; Natural Resources, Parks and Recreation; School Superintendent; and the Stadium District. • Justice and Law provides public safety, felony and misdemeanor investigation and prosecution, and services for victims, witnesses, and those needing fiduciary assistance. Services are also provided in the areas of indigent defense, civil representation, correctional housing, and juvenile detention. The departments within this area are the Clerk of the Superior Court; Constables; County Attorney; Forensic Science Center; Justice Courts; Juvenile Court; Public Defense Services; Sheriff; and Superior Court. • Health Services provides various public health, sanitation, and animal control services, as well as medical assistance to indigents. The component departments are Behavioral Health; Environmental Quality; Health; and Office of Emergency Management and Homeland Security. 2 • Public Works provides construction, operations, and maintenance services related to the County’s infrastructure and related planning and environmental issues. The departments within this area are Capital Projects; Development Services; Office of Sustainability and Conservation, Public Works Administration; Real Property; Regional Flood Control District; Regional Wastewater Reclamation; and Transportation. Pima County is responsible for reporting the financial activities of its component units. These units are either discretely presented or blended. Although they are separate legal entities, blended component units are substantially a part of the County’s financial activities and are combined with data for the County. The County’s component units include the following: • The Pima County Stadium District, the Regional Flood Control District, the Library District, and the Street Lighting Districts are reported as blended component units in special revenue funds in the accompanying financial statements. • The Southwestern Fair Commission is reported as a separate component unit (discrete presentation) in the accompanying financial statements. Additional information on the legally separate entities and the blended component units can be found in the notes to the financial statements (see Note 1). The County also has various independently governed school districts, irrigation districts, fire districts, a health district (Ajo-Lukeville), and other entities for which the County is not financially accountable. These entities include the Industrial Development Authority, Pima Association of Governments, Pima Council on Aging, the Workforce Investment Board, Regional Transportation Authority, and Sun Corridor, Inc. The financial statements of such districts and entities are not included in the accompanying financial statements except to reflect amounts held in a fiduciary capacity by the County Treasurer. Following receipt of the County Administrator’s Recommended Budget and public discussion of the Recommended Budget, the Board of Supervisors historically adopts a budget in June. A budget must be adopted on or before the first Monday in August. The Adopted Budget sets a ceiling on expenditures that may be incurred for the County as a whole. This annual budget serves as the foundation for Pima County’s financial planning and control. Pima County has implemented a program-oriented presentation of its budget. All departments are budgeted on a cost unit/object line item basis. Departments may modify line item amounts within their own budgets provided the total program budgeted amount remains unchanged. Changes to the adopted budget that require a transfer between funds are evaluated by the County Administrator prior to recommendation of approval to the Board of Supervisors. Should the County Administrator recommend the change to the Board of Supervisors, the recommendation will be considered at a regularly scheduled, open meeting of the Board. On an annual basis, the County Administrator’s office prepares a five-year Capital Improvement Plan and a one-year Capital Improvement Budget. Economic Outlook Pima County’s major employers are the University of Arizona, Raytheon Missile Systems, State of Arizona, and Davis-Monthan Air Force Base. Major manufacturers include Ventana Medical Systems, IBM and several aerospace and aircraft companies including Raytheon Missile Systems, Bombardier Aerospace, and Honeywell Aerospace. Employment by industry is led by government; educational and health services; trade, transportation and utilities; professional and business services; and leisure and hospitality. The Pima County unemployment rate has decreased from 8.5% in 2011 to 5.6% in 2015. The decline in Pima County’s unemployment rate has been slightly less than the decrease in the national unemployment rate, which was 8.9% in 2011 and had fallen to 5.3% in 2015. Nearly half of Pima County’s population is in the prime working age range of 18 to 54. 3 A sunny, mild, dry climate with an average temperature of 71°F and a unique desert location help promote travel and tourism as a major industry in Pima County. Spending by visitors generates sales in lodging, food services, recreation, transportation, and retail businesses. These sales support jobs for Pima County residents and contribute tax revenues to local and state governments. According to recent research data released by the Arizona Office of Tourism, Pima County direct travel spending generated approximately $2.77 billion (13.2% of Arizona direct travel spending) in 2015. This direct travel spending generated 24,060 direct jobs, $674 million in direct earnings and over $197 million in local and state tax revenues. Unlike other industries, taxes generated by travel industry spending are paid by visitors rather than residents. These visitors bring new money into Pima County’s economy and generate revenue in the County. Some of the best world-class attractions in Arizona are found in Pima County, such as the Arizona-Sonora Desert Museum and the Pima Air and Space Museum. There are several signature events which draw many tourists to the area and have a significant economic impact on the County, including the following: • The area’s largest annual event is the two-week Tucson Gem, Mineral and Fossil Showcase, the largest event of its kind in the world, which attracts an estimated 50,000 people to Tucson and has an estimated economic impact of $120 million in direct spending and nearly $11 million in sales, bed, and rental car tax revenues. • The annual El Tour de Tucson is Southern Arizona’s largest bicycling event, attracting more than 9,000 cyclists and 30,000 spectators. El Tour’s annual economic impact is estimated to be $17 to $25 million on ride weekend alone and $65 to $175 million year-round. Please refer to the MD&A beginning on page 15 for additional information regarding the County’s economic outlook. Long-term Financial Planning Pima Prospers is Pima County’s ten-year comprehensive plan establishing a vision and overarching principles for the County in areas such as land use, physical infrastructure, human infrastructure, and economic development. The County’s annual budget, capital improvement plan, and debt management strategies are aligned with this comprehensive plan. Pima Prospers, including the planning for its financial impacts, can be found at www.pimaprospers.com. Pima County’s Economic Development Plan is a shorter term plan focusing on the County’s future actions to help create new jobs, protect our existing jobs, improve transportation, promote tourism, and enhance relationships with our economic partners. Regional infrastructure investment is a significant component of the County’s Economic Development Plan. Some of these economic development projects and financing can be seen in the Capital Improvement Plan and Debt Management sections below. Capital Improvement Plan The Adopted Budget for fiscal year 2016-2017 includes $157 million for its Capital Improvement Plan (CIP). Under this plan, four departments comprise 92% of the total CIP budget as follows: • Transportation, with a budget of $51 million • Regional Wastewater Reclamation, with a budget of $47 million • Facilities Management, with a budget of $31 million • Regional Flood Control District, with a budget of $16 million Regional Wastewater Reclamation – The Regional Wastewater Reclamation Department (RWRD) projects are predominantly funded by Sewer Revenue Obligations. RWRD has a total fiscal year 2016-2017 budget of $47 million dollars with the following major projects included: 4 • • • Minor Rehabilitation Projects are budgeted for $10.0 million. North Rillito Interceptor Rehabilitation project is budgeted for $6.8 million. Southeast Interceptor Augmentation project is budgeted for $9.2 million. • Continental Ranch Regional Pump Station Modification project is budgeted for $4.5 million. Transportation - The Department of Transportation projects are funded by highway user revenues, vehicle license tax revenues and from funding received from the Pima County Regional Transportation Authority, a taxing entity distinct from Pima County. Transportation has three major projects included in the fiscal year 2016-2017 budget: • Sunset Road: Silverbell Road to I-10 project is budgeted for $10.6 million. • Wilmot Road North of Sahuarita Road project is budgeted for $8.4 million. • Colossal Cave road: Success Drive and Ruthrauff Culvert project is budgeted for $5.5 million. Facilities Management –Facilities Management is budgeted for several ongoing projects. Two of the major projects included in the fiscal year 2016-2017 are the following: • Pima Animal Care Center project is budgeted for $12.8 million. • World View project is budgeted for $9.2 million. Regional Flood Control District – The Regional Flood Control District has active projects with a total budget of $15.6 million. Major projects include: • Pantano Wash: Ft. Lowell Park to Tanque Verde Road project is budgeted for $3.7 million. • El Corazon de los Tres Rios Del Norte project is budgeted for $3.0 million. Debt Management Bond ratings for Pima County range from A+ to AA-. Pima County maintains a sound financial profile, with healthy operating reserves while its debt burden is manageable and debt repayment is rapid. Pima County continues to utilize debt authorized by Pima County voters in elections from 1997, 2004, 2006 and 2014. At June 30, 2016, $1.3 million from the May 20, 1997, $6.4 million from the May 18, 2004, $0.1 million from the May 16, 2006 and $17.9 from the November 4, 2014 bond elections remained unissued. The County issues Certificates of Participation for building construction and Sewer Revenue Obligations to fund the construction and improvement of the County’s wastewater conveyance systems and treatment facilities. Bond sales anticipated for fiscal year 2016-2017 include $45.0 million of Sewer Obligations and $25.7 million of General Obligation bonds. The County’s conservative debt management principles play a critical role in the decision regarding when to issue new debt. The County has set an aggressive debt repayment schedule, retiring 80 percent of its debt within 11 years with 100 percent retired at or before 15 years. The state constitution sets a cap on general obligation debt at 15 percent of the County’s net secondary assessed valuation. In fiscal year 2015-2016 the constitutional debt limit was $1.2 billion. The actual bonded indebtedness was $345 million, far below the constitutional debt limit. Please refer to the MD&A beginning on page 15 and Note 7 beginning on page 66 for specific details on debt issuances, defeasances, and refundings. 5 Expenditure Limitation Pima County, like all counties and cities in Arizona, is subject to numerous budgetary and related legal requirements. Article 9, Section 20, of the Arizona Constitution sets limits on the County’s legal budget capacity. In general, the Board of Supervisors, as the governing body of the County, cannot authorize expenditures from local revenues in excess of the expenditure limitation determined annually for Pima County by the Arizona Economic Estimates Commission. The expenditure limitation is determined each year by adjusting the amount of actual payments of local revenues received by the County during fiscal year 1979-1980 to reflect inflation and subsequent population growth for the County. Not subject to this limitation are items such as bond proceeds, related debt service, interest earnings, special voter approved districts, certain highway user revenue funds, federal grant and aid funds, monies received pursuant to intergovernmental agreements, and state grants which are to be used for specific purposes. As in previous years, the County’s expenditures for fiscal year 2015-2016 are expected to be under the limit of $541.5 million. Single Audit As a recipient of federal and state financial assistance, the County is required to ensure adequate internal controls are in place to comply with applicable laws and regulations related to administration of these programs. This internal control structure is subject to periodic evaluation by management of Pima County. An important part of management’s periodic evaluation is having the County’s federal financial assistance programs audited annually under the federal Single Audit Act. As a part of the County’s Single Audit, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs and whether the County has complied with applicable laws and regulations. A complete Single Audit report for fiscal year 2014-2015 can be found at: http://www.pima.gov/finance/reports.shtml The Single Audit for Pima County for the fiscal year ended June 30, 2016 was not complete at the time of publication of this CAFR. As demonstrated by the statements and schedules included in the financial section of this report, Pima County continues to meet its responsibility for sound financial management. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Pima County, Arizona, for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2015. Pima County has received this prestigious award for thirty years from fiscal years ended June 30, 1984 through 2015, except for fiscal years ended June 30, 1990 and June 30, 1999, due to missing the filing deadline. In order to be awarded a Certificate of Achievement, the County had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable program requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Pima County also received the GFOA’s Distinguished Budget Presentation Award for its fiscal year 2015-2016 budget document. This was the eighteenth consecutive year that Pima County has achieved this award. To qualify for the 6 Distinguished Budget Presentation Award, Pima County’s budget had to be judged proficient as a policy document, a financial plan, an operations guide, and a communications device. Acknowledgments The preparation of this report could not have been possible without the skill, effort, and dedication of the entire staff of the County’s Finance and Risk Management Department. We wish to thank all government departments for their assistance in providing the data necessary to prepare this report. Credit is also due to the Board of Supervisors for its unfailing support for maintaining the highest standards of professionalism in the management of Pima County’s finances. Respectfully submitted, C. H. Huckelberry County Administrator Tom Burke Deputy County Administrator Keith Dommer Director, Finance and Risk Management 7 8 PIMA COUNTY ORGANIZATIONAL CHART RESIDENTS OF PIMA COUNTY Elected Officials Elected Officials BOARD OF SUPERVISORS ASSESSOR RECORDER CLERK OF THE SUPERIOR COURT CLERK OF THE BOARD SCHOOL SUPERINTENDENT 9 CONSTABLES COUNTY ADMINISTRATOR SHERIFF COUNTY ATTORNEY SUPERIOR/ JUVENILE COURT DEPUTY COUNTY ADMINSTRATORS JUSTICE COURTS TREASURER GENERAL GOVERNMENT SERVICES COMMUNITY RESOURCES HEALTH SERVICES JUSTICE & LAW ENFORCEMENT PUBLIC WORKS (This page is intentionally blank) 10 PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2016 INTRODUCTORY SECTION FINANCIAL SECTION Independent Auditors' Report Management’s Discussion and Analysis Basic Financial Statements Required Supplementary Information Other than Management’s Discussion and Analysis Combining Statements and Other Schedules STATISTICAL SECTION FINANCIAL SECTION The Financial Section contains government-wide, combined, combining, and individual fund financial statements and schedules, which present a financial “overview” of Pima County. Independent auditors’ report Members of the Arizona State Legislature The Board of Supervisors of Pima County, Arizona Report on the financial statements We have audited the accompanying financial statements of the governmental activities, business-type activities, discretely presented component unit, each major fund, and aggregate remaining fund information of Pima County as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; 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 did not audit the financial statements of certain departments, one major fund, and the component unit, which account for the following percentages of the assets and deferred outflows, liabilities and deferred inflows, revenues, and expenses or expenditures of the opinion units affected. Opinion Unit/Department Government-Wide Statements Governmental Activities: Stadium District School Reserve Fund Office of Emergency Management’s Radio System Self-Insurance Trust Health Benefit Trust Business-Type Activities: Regional Wastewater Reclamation Department Development Services Discretely Presented Component Unit: Southwestern Fair Commission Fund Statements Major Fund: Regional Wastewater Reclamation Department Enterprise Fund Assets and Deferred Outflows Liabilities and Deferred Inflows Revenues Expenses/ Expenditures 1.63% 0.07% 0.08% 3.03% 1.28% 0.68% 0.16% 0.02% 2.90% 0.83% 0.49% 0.21% 0.36% 2.22% 7.84% 0.70% 0.24% 0.32% 3.19% 7.00% 98.18% 0.20% 98.81% 1.08% 96.27% 3.05% 94.51% 4.41% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 2910 NORTH 44 th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051 Opinion Unit/Department Aggregate Remaining Fund Information: Stadium District School Reserve Fund Office of Emergency Management’s Radio System Development Services Self-Insurance Trust Health Benefit Trust Assets and Deferred Outflows Liabilities and Deferred Inflows 0.10% 0.22% 0.33% 0.48% 12.81% 5.40% 1.10% 0.06% 0.16% 3.65% 21.99% 6.30% Revenues 0.29% 0.07% 0.12% 0.24% 0.72% 2.54% Expenses/ Expenditures 0.31% 0.07% 0.10% 0.28% 1.04% 2.28% Those statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as they relate to the amounts included for those entities, are based solely on the other auditors’ reports. We conducted our audit in accordance with U.S. generally accepted auditing standards 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 auditors consider internal control relevant to the County’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 County’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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, discretely presented component unit, each major fund, and aggregate remaining fund information of Pima County as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with U.S. generally accepted accounting principles. Emphasis of matter As discussed in Notes 1 and 2 to the financial statements, for the year ended June 30, 2016, the County adopted new accounting guidance, Governmental Accounting Standards Board Statement (GASB) Statement No. 72, Fair Value Measurement and Application, and GASB Statement No. 82, Pension Issues. Our opinions are not modified with respect to this matter. Other matters Required supplementary information U.S. generally accepted accounting principles require that the management’s discussion and analysis on pages 15 through 33, the budgetary comparison schedules on pages 103 and 104, schedule of the County’s proportionate share of the net pension liability—cost-sharing pension plans on page 105, schedule of changes in the County’s net pension liability and related ratios—agent pension plans on pages 106 and 107, schedule of county pension contributions on page 108, and schedule of agent OPEB plans’ funding progress on page 110 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 U.S. generally accepted auditing standards, 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. Supplementary and other information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The combining and individual fund statements and schedules and the introductory and statistical sections listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules are management’s responsibility and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Compliance over the use of highway user revenue fund and other dedicated state transportation revenue monies In connection with our audit, nothing came to our attention that caused us to believe that the County failed to use highway user revenue fund monies the County received pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues the County received solely for the authorized transportation purposes, insofar as they relate to accounting matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the County’s noncompliance with the use of highway user revenue fund monies and other dedicated state transportation revenues, insofar as they relate to accounting matters. The communication related to compliance over the use of highway user revenue fund and other dedicated state transportation revenue monies in the preceding paragraph is intended solely for the information and use of the members of the Arizona State Legislature, the Board of Supervisors, management, and other responsible parties within the County and is not intended to be and should not be used by anyone other than these specified parties. Other reporting required by Government Auditing Standards In accordance with Government Auditing Standards, we will issue our report on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. Debbie Davenport Auditor General December 6, 2016 Management’s Discussion and Analysis Pima County, Arizona Management’s Discussion and Analysis For the Year Ended June 30, 2016 Our discussion and analysis of the County’s financial performance provides an overview of the County’s financial activities for the year ended June 30, 2016. Please read it in conjunction with the transmittal letter, which begins on page 1 and the County’s basic financial statements, which begin on page 35. All dollar amounts are expressed in thousands (000’s) unless otherwise noted. Financial Highlights  The County’s total net position increased $46,378, primarily due to an increase of $20,656 in property tax revenues, in combination with a decrease of $28,979 in business-type activities expenses, specifically in the Regional Wastewater Reclamation (RWR) enterprise fund.  The County’s primary sources of revenue come from property taxes, grants and contributions, charges for services, and state shared taxes as displayed below: 15  The County’s total net position at June 30, 2016, is $1,830,236. Composition of net position is illustrated in the following chart.  Governmental Activities total net position at June 30, 2016, is $1,045,632, an increase of $5,217 (0.5%) from the prior fiscal year primarily because of the previously mentioned increase in property tax revenues. Business-type Activities total net position of $784,604 increased by $41,161 (5.5%) in the current fiscal year primarily because of the previously mentioned decreases in RWR enterprise fund costs. 16  The General Fund unassigned fund balance increased by $29,672 (62%) to $77,550, from $47,878 in the prior fiscal year, primarily because of the previously mentioned increase in property tax revenues. The unassigned fund balance comprises 96.1% of the total fund balance of $80,682. General Fund - Unassigned Fund Balance FY2015 FY2016 $77,550 $- $47,878 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 The County issued $43,935 in Certificates of Participation to finance sewer system facilities ($19,110), construction of building facilities ($15,185), and refund a portion of existing certificates ($9,640). During the current fiscal year, the County did not issue new bonds, which in combination with continued payments on outstanding debt, resulted in long-term liabilities decreasing by $64,063 to $2,062,738 from $2,126,801 in the prior year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements consist of three components: (1) Government-wide Statements, (2) Fund Statements, and (3) Notes to the Financial Statements. Required supplementary information is included in addition to the basic financial statements. Government-wide financial statements are designed to provide readers with a broad overview of County finances in a manner similar to a private-sector business. The statement of net position presents information on all County assets, deferred outflows of resources, liabilities and deferred inflows of resources. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation or sick leave). Both of these government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) in contrast to other functions that are intended to recover all or a portion of their costs through user fees and charges (business-type activities). The governmental activities of the County include general government, public safety, highways and streets, sanitation, health, welfare, culture and recreation, and education and economic opportunity. The business-type activities of the County include: Regional Wastewater Reclamation (RWR), Development Services, and the County’s downtown parking garages. The Southwestern Fair Commission is presented as a discretely presented component unit and is included in the basic financial statements. The Commission, which operates the County Fairgrounds and annual Pima County Fair, is a legally separate entity for which the County is financially accountable. The government-wide financial statements can be found on pages 35-37. 17 Fund financial statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance with applicable state statutes and Federal Office of Management and Budget budgeting guidelines. All of the funds can be divided into three categories: (1) governmental funds, (2) proprietary funds, and (3) fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating the County’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains fifteen individual governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances for the General, Capital Projects, and Debt Service funds, which are reported as major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements. The governmental fund financial statements can be found on pages 38-41. The combining statements for nonmajor governmental funds can be found on pages 112-115. Proprietary funds are maintained in two ways. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for sewer systems maintenance and operation, real estate-related development services, and parking garage operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County’s various functions. The County uses internal service funds to account for employee health and health related benefits, risk management, automotive fleet maintenance and operations, printing services, telecommunications, wireless, and information technology network infrastructure. Because these services predominantly benefit governmental rather than business-type functions, all of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources of these services have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The RWR Enterprise Fund is considered to be a major fund of the County. Data from the other enterprise funds are combined into a single, aggregated presentation. Similarly, the County’s internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the other enterprise and internal service funds are provided in the form of combining statements. The proprietary fund financial statements can be found on pages 42-45. The combining statements for other enterprise and internal service funds can be found on pages 131-134. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s programs. The fiduciary fund financial statements can be found on pages 46-47. Notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found on pages 48-101. Required Supplementary Information (RSI) is presented concerning the County’s General Fund budgetary schedule and the schedule of the County’s Proportionate Share of the Net Pension Liability for Cost Sharing Plans, 18 the Schedule of Changes in the County’s Net Pension Liability and Related Ratios for Agent Pension Plans, the Schedule of County Pension Contributions, and the Schedule of Agent OPEB Plans’ Funding Progress. Required supplementary information can be found on pages 103-110. Combining Statements and Other Schedules referred to earlier provide information for non-major governmental, enterprise, internal service, and fiduciary funds and are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 112-142. Government-Wide Financial Analysis As noted earlier, net position may serve as a useful indicator of a government’s financial position over time. An analysis of the results of operations is also useful. The schedule below identifies variances in the results of operations. Schedule of Results of Operations and Net Position For the Years Ended June 30, 2016 and 2015 Charges for services Operating grants and contributions Capital grants and contributions Total program revenues 2016 2015 Variance $ 238,309 127,571 $ 245,000 126,897 48,424 420,321 (6,691) 674 4,452 (1,565) Total general revenues and transfers 617,434 592,725 24,709 Total program and general revenues 1,036,190 1,013,046 23,144 988,680 973,479 15,201 52,876 418,756 Total expenses Change in net position $ 47,510 $ 39,567 $ $ 7,943 Total program revenues decreased by $1,565; however total general revenues and transfers increased by $24,709, resulting in an increase of $23,144 for total program and general revenues. This increase in total program and general revenues was offset by an increase of $15,201 in total expenses, resulting in a $7,943, or 20%, increase in net position to $47,510. An explanation of each of these changes is discussed further in the following governmental and business-type activities sections. 19 The graph presented below illustrates at a summary level the changes in the elements of the Statement of Net Position for the County at June 30, 2016, and June 30, 2015. A general discussion of significant variances between fiscal years follows. For a more detailed discussion, please see the governmental activities and business-type activities sections immediately following this section. Total County assets at June 30, 2016, were $3,908,348, representing a decrease of $46,493 (1.2%) from the prior year, while total liabilities decreased by $80,819 (3.6%) from the prior year, ending at a balance of $2,140,140. Deferred outflows of resources decreased by $19,252 (15.1%) to $108,613, while deferred inflows of resources decreased by $31,304 (40.2%) to $46,585. The result of these changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources was an increase in net position of $46,378 (2.6%), to $1,830,236 in the current fiscal year from $1,783,858 in the prior fiscal year. The largest portion of the County’s net position is reflected in its net investment in capital assets (i.e., land, buildings, infrastructure, and equipment) less any related outstanding debt used to acquire those assets. At June 30, 2016, net investment in capital assets totaled $2,013,130, an increase of $34,783 (1.8%) from the prior year, primarily due to the increase of $44,018 in net investment in capital assets for business-type activities. The County uses a portion of these capital assets to provide services to its citizens, with the other portion available to its citizens for use; consequently, these assets are not available for future spending. Although the County’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Resources subject to external restrictions on how they may be used comprise the restricted net position of $222,595 which is a decrease of $3,033 (1.3%) from the prior year and approximately 12.2% of total net position. 20 The following schedule presents, on a comparative basis, both governmental activities and business-type activities within the Statement of Net Position. Schedule of Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position At June 30, 2016 and 2015 Governmental Activities FY2016 Current and other assets Capital assets (net): Land, buildings, equipment, infrastructure & other assets $ Total assets Total deferred outflows of resources Current and other liabilities Long-term liabilities Total liabilities Net position: Net investment in capital assets $ 478,797 $ Variance 7,114 FY2016 $ 215,233 FY2015 $ Variance FY2016 Total FY2015 Variance 223,188 $ (7,955) $ 701,144 $ 701,985 $ (841) (3,508) 3,207,204 3,252,856 (45,652) 106,479 2,134 125,007 2,858 127,865 (18,528) (724) (19,252) 1,969,092 2,011,236 (42,144) 1,238,112 1,241,620 1,464,808 (11,463) 102,101 2,134 104,235 119,381 2,858 122,239 (17,280) (724) 4,378 5,626 (1,248) (18,004) 4,378 5,626 (1,248) 60,392 1,411,130 72,501 1,429,188 (12,109) (18,058) 17,010 651,608 21,657 697,613 (4,647) (46,005) 77,402 2,062,738 94,158 2,126,801 (16,756) (64,063) 42,084 42,084 70,168 70,168 (28,084) (28,084) 4,501 4,501 7,721 7,721 (3,220) (3,220) 46,585 46,585 77,889 77,889 (31,304) (31,304) 1,376,761 1,385,996 (9,235) 636,369 592,351 44,018 2,013,130 1,978,347 34,783 743,443 $ 41,161 2,490,033 1,471,522 Deferred inflows of resources Pension Total deferred inflows of resources Total net position $ 2,455,003 Deferred outflows of resources Pension Deferred charges on refunding Restricted Unrestricted (deficit) 485,911 FY2015 Business-type Activities 163,266 (494,395) 1,045,632 1,501,689 $ 161,546 (507,127) 1,040,415 $ (35,030) 1,453,345 (30,167) 1,720 12,732 5,217 668,618 $ 59,329 88,906 784,604 719,270 $ 64,082 87,010 (50,652) (4,753) 1,896 3,908,348 108,613 2,140,140 222,595 (405,489) 3,954,841 2,220,959 225,628 (420,117) $ 1,830,236 $ 1,783,858 $ Analysis of Net Position for Governmental activities The current year capital assets balance of $1,969,092 in governmental activities decreased $42,144 (2.1%) from the prior year. This decrease is primarily due to the $70,948 decrease in the construction in progress balance as projects were concluded and fewer new projects were started in the current fiscal year. This decrease was partially offset by increases of $5,270 in land, $5,036 in buildings and improvements and $19,484 in infrastructure asset types as assets were acquired and certain projects were completed and capitalized. Total liabilities decreased $30,167 (2.0%) to $1,471,522 primarily because the County did not issue any new general obligation or transportation revenue bonds during the current year and continued paying off existing debt. The decreases in deferred outflows of resources of $18,004 (14.7%), and deferred inflows of resources of $28,084 (40.0%), are due to changes in actuarial estimates related to the net pension liability for the various retirement plans that the County contributes to for its employees within the governmental activities. These changes resulted in an overall increase of $12,732 in unrestricted net position in the County’s governmental activities, which ended at a deficit balance of $494,395. 21 (46,493) (80,819) (3,033) 14,628 46,378 Analysis of Net Position for Business-type activities Current and other assets of $215,233 represents a decrease of $7,955 (3.6%), primarily due to the $4,670 decrease in internal balances due from governmental activities, from $7,852 last year to $3,182 in current year. The County’s governmental activities owed less funding to the business-type activities’ capital projects at the end of the current year than at the end of the prior year. Total liabilities decreased by $50,652 (7.0%), primarily due to a decrease of $46,005 (6.6%) in long-term liabilities because the County did not issue any new business-type activity debt during the current year and continued paying off existing debt. The decreases of $1,248 (22.2%) in deferred outflows of resources and $3,220 (41.7%) in deferred inflows of resources are due to changes in actuarial estimates related to the net pension liability for the Arizona State Retirement System plan that the County contributes to for its employees within the business-type activities. The large decrease in long-term liabilities mentioned above resulted in an increase in net investment in capital assets of $44,018 (7.4%), primarily because the outstanding debt had been issued to fund capital assets. This change is also primarily responsible for the increase in total net position of $41,161 (5.5%) in the current year. 22 Governmental activities The following table shows details of the changes in net position for governmental activities: Governmental Activities Schedule of Revenues, Expenses, and Changes in Net Position For the Years Ended June 30, 2016 and 2015 Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Property taxes State-shared taxes Investment earnings Other general revenues Total general revenues Total revenues Expenses: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization Interest on long-term debt Total expenses Excess before transfers Transfers out Change in net position Beginning net position, as restated * Ending net position FY2016 $ 62,032 127,536 45,579 235,147 FY2015 $ 63,808 126,862 42,570 233,240 Variance Amount Percent $ (1,776) 674 3,009 1,907 -2.8% 0.5% 7.1% 0.8% 444,194 134,268 3,268 33,735 615,465 423,538 130,498 1,931 35,306 591,273 20,656 3,770 1,337 (1,571) 24,192 4.9% 2.9% 69.2% -4.4% 4.1% 267,658 201,759 102,461 3,089 38,386 88,515 65,770 35,833 (6,862) 27,464 824,073 259,734 188,189 85,618 (4,882) 38,219 93,524 62,981 35,051 (6,237) 27,696 779,893 7,924 13,570 16,843 7,971 167 (5,009) 2,789 782 (625) (232) 44,180 3.1% 7.2% 19.7% 163.3% 0.4% -5.4% 4.4% 2.2% 10.0% -0.8% 5.7% 26,539 44,620 (18,081) -40.5% 850,612 824,513 (20,190) 6,349 1,039,283 $ 1,045,632 26,099 (17,133) 27,487 $ 1,012,928 1,040,415 $ 3.2% (3,057) (21,138) 17.8% -76.9% 5,217 0.5% 26,355 2.6% *Beginning net position as restated July 1, 2015, due to the provisions of GASB 82 Revenues Total revenues of $850,612 increased $26,099 (3.2%) from the prior year, primarily due to an increase of $20,656 (4.9%) in property taxes because of a higher primary property tax rate and slightly higher property valuations. Total program revenues increased by $1,907 (0.8%) over the prior year, primarily because the County received more capital and operating grants compared to the prior year. 23 The chart below presents general and program revenues, as a percentage to total revenues. The amount provided from each revenue source for governmental activities, as a percentage to total revenue for governmental activities, has not changed significantly from the prior fiscal year. Property taxes, operating grants, and state-shared taxes account for approximately 83.0% of the County’s revenues. General and Program Revenues - Governmental Activities Property Taxes 52.2% State-shared taxes 15.8% Capital grants & contributions 5.3% Investment Earnings 0.4% Operating grants 15.0% Charges for Services 7.3% Other general revenue 4.0% Expenses Total expenses increased $44,180 or 5.7% over the prior year, primarily due to the increase of $16,843 (19.7%) in highways and streets expenses, an increase of $13,570 (7.2%) in public safety expenses, an increase of $7,924 (3.1%) in general government expenses, and an increase of $7,971 (163.3%) in sanitation expenses. The explanations for these increases are as follows:     The highways and streets increase is due largely in part to the County’s continued collaboration with other local governments on numerous transportation projects with increased activity in the current year. The increase in public safety is primarily due to ongoing flood control projects, in addition to increased contributions to the Public Safety Personnel Retirement System due to pension reform changes instituted by the State legislature. The general government increase is primarily due to an increase in contributions to the various retirement plans that the County contributes to for its employees, the largest of which is the Arizona State Retirement System. The increase in sanitation expenses is mostly due to an ongoing project to permanently close and monitor the Tangerine Landfill as required by the Arizona Department of Environmental Quality. 24 The following chart presents expenses by function as a percentage to total expenses. The amount of each expense by function as a percentage to total expenses has not changed significantly from the prior fiscal year. General government, public safety, and highways and streets account for over two-thirds of the County’s total expenses. The current year’s change in net position of $6,349 decreased by $21,138 from the prior year’s change of $27,487 primarily because expenses increased more than revenues as described above. At July 1, 2015, the governmental activities beginning net position was restated due to the implementation of the provisions of GASB 82, Pension Issues. The restatement decreased prior year-end net position by $1,132 for amounts the County contributed on behalf of employees participating in the Public Safety Personnel Retirement System, resulting in a restated governmental activities net position balance of $1,039,283. 25 Business-type activities Business-type activities, which are composed exclusively of enterprise funds, are intended to recover all or a significant portion of their costs through user fees and charges. The following schedule shows changes in the net position for business-type activities. Business-type Activities Schedule of Revenues, Expenses, and Changes in Net Position For the Years Ended June 30, 2016 and 2015 Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Investment earnings Other general revenues Total general revenues Total revenues Expenses: Regional Wastewater Reclamation Development Services Parking Garages Total expenses Excess before transfers Transfers in Change in net position Beginning net position Ending net position FY2016 FY2015 $ 176,277 35 7,297 183,609 $ 181,192 35 5,854 187,081 1,291 678 1,969 903 549 1,452 Variance Amount Percent $ (4,915) 1,443 (3,472) 388 129 517 185,578 188,533 (2,955) 155,566 6,691 2,350 164,607 184,884 6,888 1,814 193,586 (29,318) (197) 536 (28,979) 20,190 17,133 3,057 743,443 731,363 20,971 41,161 $ 784,604 (5,053) 12,080 $ 743,443 26,024 -2.7% 0.0% 24.6% -1.9% 43.0% 23.5% 35.6% -1.6% -15.9% -2.9% 29.5% -15.0% 515.0% 29,081 17.8% 240.7% $ 41,161 5.5% 12,080 1.7% Revenues Total revenues for business-type activities decreased $2,955 (1.6%) mainly due to a decrease in charges for services of $4,915 (2.7%) resulting from a decrease in the RWR sewer user and connection fees. Expenses Total expenses for business-type activities decreased by $28,979 (15.0%), primarily due to the decrease of $29,318 (15.9%) in RWR expenses. RWR’s prior year expenses had been unusually high mainly due to the $27,554 loss from the closure of the Randolph Park Reclamation Facility in the prior year. 26 Financial Analysis of the County’s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements and generally accepted accounting principles (GAAP). Governmental funds The County’s general government functions are accounted for in the General, Capital Projects, Debt Service, and Special Revenue funds. Included in these funds are special districts governed by the Board of Supervisors (i.e. Flood Control, Library and Stadium Districts) acting as the Board of Directors for each district. The focus of the County's governmental funds is to provide information on near-term inflows, outflows and balances of expendable resources. Such information is useful in assessing the County's financing requirements. In particular, unassigned fund balances may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Major Governmental Funds General Fund The General Fund is the chief operating fund of the County. Property taxes revenues for the General Fund increased $12,064 as a result of a higher primary property tax rate and slightly higher property valuations. Intergovernmental revenues increased $3,448 primarily due to increases in the state-shared sales tax and state-shared vehicle license tax associated with an anticipated gradual recovery in the local economy. Charges for services increased $3,212 mostly due to higher General Fund administrative overhead charges, and increasing Recorder’s general government fees from administering the presidential and other special elections. Overall, revenues for the General Fund increased $18,989. General fund expenditures decreased $8,695 primarily due to:   A decrease of $13,497 in culture and recreation expenditures primarily as a result of two property acquisitions in the prior year for the Stardust and Painted Hills properties. A decrease of $5,094 in welfare expenditures, which includes a $2,500 current year funding reduction to Banner – University Medical Center South, a $1,200 decrease due to the final contract payment to Banner – University Medical Center South in the prior year, and the remainder of the expenditure decrease primarily associated with the switch from the State designated Regional Behavioral Health Authority to the County’s own administration process.  An increase of $4,636 in public safety expenditures primarily due to higher public safety retirement contributions and additional costs related to the County’s information technology leases for hardware, software, and storage servers.  An increase of $2,949 in debt service – principal, mainly as a result of two notes payable principal payments: $1,242 towards the Stardust property, and $1,704 towards the Painted Hills property. The other financing source - installment note, decreased $11,500 from two notes payable in the prior year, one for financing $7,000 towards the acquisition of the Stardust property, and the other financing $4,500 towards the acquisition of the Painted Hills property. Transfers (out) decreased $7,814, primarily due to a funding reduction of $3,000 to the transportation fund for the pavement preservation due to lower state diversions and an improving economy, and transfers out of $6,117 to the information technology fund in the prior year to provide capital and operating costs in support of the County’s information technology infrastructure. The $18,989 increase in revenues, the $8,695 decrease in expenditures, and a total net increase of $3,062 in other financing uses yielded an increase of $24,622 in net change in fund balance, which ended the year at $80,682. 27 Budget to Actual Comparison for the General Fund Overall, actual revenues were lower than budgeted revenues by $42 and actual expenditures were less than budgeted expenditures by $61,159. Actual expenditures for the General Fund were less than budgeted, primarily because the County did not need to spend $43,628 of the amount budgeted for contingencies within General government- County Administration. No variances between the budget to actual amounts at the departmental level were significant enough to affect the County’s ability to provide future services. Capital Projects Fund The County’s Capital Projects Fund is used to account for financial resources that are restricted, committed, or assigned for capital outlays to acquire or construct capital assets. Revenues for the Capital Projects Fund increased $3,436, primarily due to an increase of $4,212 in State revenues for the Hughes Access Road Relocation project. Expenditures decreased $30,315, because the new Public Service Center project was completed in 2015. Prior year expenditures to complete the Public Service Center totaled $26,007. The $34,295 face amount of long-term debt issued represents a decrease of $37,730 from the prior fiscal year, as the County did not issue any general obligation or transportation revenue bonds in the current year. All proceeds received were from certificates of participation. Transfers out decreased by $3,936 primarily because less transfers were necessary to fund various capital projects and related financing. The $3,436 increase in revenues, the $30,315 decrease in expenditures and a total decrease of $38,432 in other financing sources yield a decrease of $4,681 in net change in fund balance in the current year. Debt Service Fund This major fund accounts for the accumulation of resources for the payment of principal and interest of long-term debt. Revenues for the Debt Service Fund remained relatively constant with a decrease of only $360 primarily because the secondary property taxes rate remained the same as the prior year and property valuations remained relatively consistent. Expenditures for the Debt Service Fund increased $776 mainly from an increase in principal payments of $2,060 offset by a decrease in interest payments of $909. Please see Note 7 beginning on page 66 for more information on bond and certificate of participation details. Premium on bonds decreased to $1,662 as the only premium consisted of $1,662 from the issuance of Certificates of Participation Series (COPS) 2016. Issuance of refunding debt decreased to $9,640, as the COPS 2016 included a refunding portion in the amount of $9,640. Payments to escrow agents decreased to $11,010 because this amount was deposited into a trust account as of the refunding. The resulting fund balance of $6,656 reflects a $1,768 decrease from prior year. 28 Major Proprietary Fund The County’s Regional Wastewater Reclamation Enterprise (RWR) Fund is a major enterprise fund. Significant changes in the Fund’s net position during the fiscal year include a drop in total expenses of $29,318 and an increase in net transfers in of $13,804 compared to the prior fiscal year. The drop in total expenses is primarily due to the prior fiscal year loss of $27,554 incurred on the closure of the Randolph Park Wastewater Reclamation Facility. The increase in net transfers in is primarily due to an increase of transfers in from Capital Projects of $15,638 for improvements to the sewer conveyance system. The net position increased by $42,529 in the current fiscal year resulting in a total net position of $766,066 at fiscal year-end. Capital Assets and Debt Administration Capital Assets The County’s investment in capital assets consists of land, buildings and improvements, sewage conveyance systems, infrastructure, equipment, and construction in progress. Capital assets for the governmental and business-type activities are presented below to illustrate changes from the prior year: Governmental and Business-type Activities Capital Assets As of June 30, 2016 and 2015 Governmental Activities FY2016 FY2015 Variance Business-type Activities FY2016 FY2015 Variance FY2016 Land $ 526,319 $ 521,049 $ 5,270 $ 13,999 $ 13,994 $ 5 $ 540,318 Construction in progress 33,327 104,275 (70,948) 39,135 50,204 (11,069) 72,462 Buildings and improvements 598,750 593,714 5,036 602,681 624,068 (21,387) 1,201,431 Infrastructure 694,519 675,035 19,484 694,519 Sewage conveyance systems 485,043 457,524 27,519 485,043 Equipment 116,177 117,163 (986) 97,254 95,830 1,424 213,431 Total $ 1,969,092 $ 2,011,236 $ (42,144) $ 1,238,112 $ 1,241,620 $ (3,508) $ 3,207,204 Total FY2015 Variance $ 535,043 $ 5,275 154,479 (82,017) 1,217,782 (16,351) 675,035 19,484 457,524 27,519 212,993 438 $ 3,252,856 $ (45,652) The County’s total capital assets decreased by $45,652 (1.4%) in the current fiscal year. The most significant changes were as follows:     Construction in progress decreased by $82,017 (53.1%), primarily from governmental activities. Sewage and conveyance systems increased by $27,519 (6.0%), entirely from business-type activities. Infrastructure increased by $19,484 (2.9%), entirely from governmental activities. Buildings and improvements decreased by $16,351 (1.3%), entirely from business-type activities, offset by an increase of $5,036 (0.8%) in governmental activities. Governmental activities Capital assets of Governmental activities decreased by $42,144 (2.1%), with the decrease resulting largely from the $70,948 (68.0%) decrease in construction in progress, offset by the increase in infrastructure mentioned above. The reduction in construction in progress is due to projects being completed and capitalized as shown by the increase in infrastructure. In addition to these decreases, there were other decreases resulting from transportation projects that were started and incurred planning and design costs, but were subsequently cancelled due to changes in prioritization of funding pertaining to other projects. 29 The most significant changes in construction in progress were as follows:     Completion of a transportation project for Magee Road between La Canada Drive and Oracle Road totaling $15,313, of which $7,068 belongs to the Town of Oro Valley. Completion of a transportation project for Valencia Road between Alvernon Way and Kolb Road totaling $36,442, of which $22,234 belongs to the City of Tucson. Completion of flood control improvements for the Arroyo Chico Detention Basin totaling $14,964, of which $1,975 belongs to the City of Tucson. Cancellation of various other projects totaling $3,853. Business-type activities Capital assets of business-type activities decreased by $3,508 (0.3%), due to a decrease in building and improvements of $21,387 (3.4%) and construction in progress of $11,069 (22.0%), offset by an increase of $27,519 (6.0%) in sewage conveyance systems all primarily within RWR. The decrease in buildings and improvements is due to current year depreciation expense exceeding the amount of building and improvements additions. The decrease in construction in progress is primarily due to the increase in the amount of sewage conveyance systems that were completed and capitalized during the year. The project that makes up the majority of the sewage conveyance systems increase is the sewage conveyance rehabilitation program, which is responsible for $25,623 of the total increase. 30 Long-term Debt Significant, comparative long-term debt entered into during the last two fiscal years is presented below: Long-Term Debt For the Years Ended June 30, 2016 and 2015 2016 Bonds issued (at face value): General Obligation Street and Highway Revenue Certificates of Participation (COPs) Capital leases Installment note payable $ $ Total $ 43,935 149 44,084 $ 2015 15,000 13,685 57,025 11,500 97,210 During the year, the County issued Certificates of Participation Series 2016A for $28,750, $19,110 of the proceeds to expand and improve the County’s existing sewer system facilities and $9,640 to refund portion of Certificates of Participation Series 2007A. This refunding resulted in an economic gain of $1,061 and a reduction in debt service payments of $1,169. In addition, the County issued Certificates of Participation Series 2016B for $15,185 to develop, design and construct a manufacturing and administrative headquarters to be used by World View Enterprises, Inc., which will lease the facility from the County over a 20-year period. The County also acquired computer network storage arrays under contract agreements at a total capital leases payable amount of $149. The most recent ratings for Pima County’s bonds and COPs are: Credit Ratings Standard & Poor's Certificates of Participation (COPs) General Obligation Street and Highway Revenue Sewer Revenue Bonds Sewer Revenue Obligations Rating A+ AAAA AA AA Date May-2016 May-2016 May-2016 May-2016 May-2016 Fitch Ratings Rating AAAA AA AA AA- Date May-2016 May-2016 May-2016 May-2016 May-2016 The State of Arizona Constitution limits the amount of general obligation debt a governmental entity may issue to 6.0% of its net assessed valuation without voter approval. However, Pima County has voter approval for general obligation debt up to 15.0%. The current debt limitation for Pima County is $1,185,929, which is significantly in excess of Pima County’s outstanding general obligation debt. Additional information regarding the County’s debt can be found in Note 7 of the financial statements, on pages 6676. 31 Economic Factors and Next Year’s Budget Pima County is still contending with a slow, and at times, uneven recovery from the Great Recession. Like all governments in Arizona, Pima County has necessarily adjusted to reduced revenues and increased service demands during this time. The current fiscal year 2016-17 budget is based largely on the County’s response to a set of unique challenges from a variety of outside sources. Primary among these is the decision by the Arizona Legislature to balance the State Budget by continuing to transfer $82.4 million of fiscal year 2016-17 State costs to Pima County. These additional costs imposed by the State continue to cause significant uncertainties in the development of the County budget and impact all of Pima County’s existing service priorities and programs, including law enforcement, healthcare and economic development. Recognizing this, the budget that was adopted by the Board of Supervisors for fiscal year 2016-17 is primarily a “maintenance of effort” budget, which will sustain the County’s existing service priorities. The following discussion identifies other significant activities that are expected to impact the County in fiscal year 2016-17. State Budget Cost Shifts In attempts to balance the State Budget, the Governor and Legislature continue to transfer significant amounts of State costs to the 15 counties throughout the State. The total of these cost transfers to Pima County is $82.4 million for fiscal year 2016-17, or nearly 25% of Pima County’s primary property tax levy. Successful Litigation of State Aid to Education Cost Shifts A significant portion of the state cost transfers to Pima County in fiscal year 2015-16 were related to the State Aid to Education tax credit, which had been paid for by the State for the last 36 years. In response to this unprecedented transfer of state costs, the County mounted a legal challenge to this portion of the State budget. Based on the decision of the Maricopa County Superior Court, the County prevailed in the litigation against the State of Arizona regarding this unconstitutional transfer of property tax liability. As a result of the successful litigation, the County was able to reduce its fiscal year 2016-17 primary property tax rate by $0.0981. Property Taxes As previously mentioned, the fiscal year 2016-17 Adopted Budget includes a $0.0981 decrease in the primary property tax rate for the General Government from the fiscal year 2015-16 tax rate. The Library District and Debt Service secondary property tax rates remain unchanged from fiscal year 2015-16 and the Regional Flood Control District secondary property tax rate increases by $0.0200. The total property tax rate for Pima County (excluding the State mandated Fire District Assistance Tax) decreased from $5.9165 to $5.8384 per $100 of net taxable value, a net decrease of $0.0781. State Shared Revenues State shared sales tax revenue is projected to increase by $3.6 million in fiscal year 2016-17. This increase reflects a gradual recovery in the local economy and continued statewide economic growth. Employee Benefits Costs Over the years, Pima County has continued to change and upgrade its benefits package for employees. Over time, the cost to provide these benefits has steadily increased. As a comparison, the actual cost to the County for employee benefits in fiscal year 2003-04 totaled $65 million whereas the budgeted benefit costs in fiscal year 2016-17 totals $145 million; resulting in an increase that is more than double the fiscal year 2003-04 amount. A significant portion of this increase is due to higher cost of employee medical insurance, retirement contributions and other benefit costs. Fiscal year 2016-17 aggregate benefits will increase more than $6 million over fiscal year 2015-16. The County will have to absorb these increases in the face of other budgetary challenges. Employee Medical Insurance Benefits Costs Prior to fiscal year 2013-14, Pima County purchased medical insurance for its employees from an independent provider. Over the five years prior to fiscal year 2013-14, the County’s employee medical insurance premiums increased by an average of 15 to 20 percent yearly. In order to control the rate of increase of employee medical insurance costs, the County moved to a self-insured medical plan run by a third-party administrator starting in fiscal 32 year 2013-14. Under this new model, year-to-year medical insurance costs have increased in the range of 5 to 7 percent annually. It is anticipated that the rate of medical costs increases will continue to be better controlled in future years. Rainy Day Funds Maintaining a budget reserve has given the County a favorable bond rating, which in turn has yielded substantial savings from lower interest payments on County bonds. The reserve has also enabled the County to minimize the negative fiscal impacts of a variety of unforeseen events over which the County has had little or no control. The General Fund Reserve for fiscal year 2016-17 totals $61,240,853. This reserve represents 10.8% of projected revenues for fiscal year 2016-17 compared to the ending fund balance of 5.6% of revenue last fiscal year. The reserve increase reflects the savings resulting from the County’s successful litigation ruling against the State of Arizona State Aid to Education Cost Shifts and is in the middle of the range of reserves recommended by the Government Finance Officers Association. If this reserve is not spent, it will represent the base ending fund balance for fiscal year 201617. Requests for Information This financial report is designed to provide a general overview of the County’s finances. Any questions concerning the information provided in this report or requests for additional financial information should be addressed to the Finance and Risk Management Department, 130 W. Congress, 6th Floor, Tucson, AZ, 85701. 33 (This page is intentionally blank) 34 Basic Financial Statements PIMA COUNTY, ARIZONA Statement of Net Position June 30, 2016 Exhibit A-1 (in thousands) Assets Cash and cash equivalents Property taxes receivable (net) Interest receivable Internal balances Due from other governments Accounts receivable (net) Inventories Prepaids Restricted assets: Cash and cash equivalents Loans receivable Capital assets not being depreciated: Land Construction in progress Capital assets being depreciated (net): Buildings and improvements Sewage conveyance system Equipment Infrastructure Governmental Activities $ Deferred outflows of resources Pension Deferred charge on refunding Total deferred outflows of resources Liabilities Accounts payable Interest payable Contract retentions Employee compensation Due to other governments Deposits and rebates Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Total liabilities Deferred inflows of resources Pension Total deferred inflows of resources 57 2,821 75,889 75,946 2,821 526,319 33,327 13,999 39,135 540,318 72,462 598,750 602,681 485,043 97,254 1,201,431 485,043 213,431 694,519 3,321 2,455,003 1,453,345 3,908,348 7,355 102,101 2,134 104,235 4,378 106,479 2,134 108,613 43,577 3 1,863 9,028 24 183 5,714 14,699 252 1,159 58,276 255 1,863 9,819 133 183 6,873 110,854 1,300,276 1,471,522 55,508 596,100 668,618 166,362 1,896,376 2,140,140 42,084 42,084 4,501 4,501 46,585 46,585 1,376,761 636,369 2,013,130 3,733 58,269 8,269 36,666 65,826 19,223 34,342 (405,489) 1,830,236 $ 3,229 6,962 62,386 $ 34,342 (494,395) 1,045,632 $ 87 3,182 835 17,031 2,621 285 791 109 36,666 3,440 19,223 See accompanying notes to financial statements 35 $ 47,887 24,889 4,660 11,741 4,378 88,906 784,604 519,363 13,570 267 Component Unit SW Fair Commission 115,303 58,269 8,269 $ Total 404,060 $ 13,570 180 (3,182) 47,052 7,858 2,039 11,456 116,177 694,519 Total assets Net Position Net investment in capital assets Restricted for: Facilities, justice, library, community development, and tax stabilization Highways and streets Debt service Capital projects Regional wastewater Healthcare Unrestricted (deficit) Total net position Primary Government Business-type Activities $ 2,295 32 27 69 1,199 412 286 37 67 3 393 PIMA COUNTY, ARIZONA Statement of Activities For the Year Ended June 30, 2016 (in thousands) Program Revenues Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization - unallocated Interest on long-term debt Total governmental activities Business-type activities: Regional Wastewater Reclamation Development Services Parking Garages Total business-type activities Total primary government Component unit: Southwestern Fair Commission Total component unit Expenses $ Operating Grants and Contributions Charges for Services 267,658 $ 201,759 102,461 3,089 38,386 88,515 65,770 35,833 (6,862) 27,464 824,073 27,149 12,733 5,263 13,437 50 2,855 545 31,658 7,363 57,241 1,215 11,218 350 430 18,061 62,032 127,536 45,579 35 7,297 $ 35 127,571 $ 120 120 $ 155,566 6,691 2,350 164,607 988,680 $ 167,856 6,212 2,209 176,277 238,309 $ 6,150 6,150 $ 6,364 6,364 $ General revenues: Property taxes, levied for general purposes Property taxes, levied for regional flood control district Property taxes, levied for library district Property taxes, levied for debt service Hotel/motel taxes, levied for sports facility and tourism Other taxes, levied for stadium district Unrestricted share of state sales tax Unrestricted share of state vehicle license tax Grants and contributions not restricted to specific programs Interest and penalties on delinquent taxes Investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net position Net position at beginning of year, as restated Net position at end of year See accompanying notes to financial statements 36 Capital Grants and Contributions $ 82 723 42,724 159 1,779 112 $ 7,297 52,876 Exhibit A - 2 Net (Expense) Revenue and Changes in Net Position Governmental Activities $ Primary Government Business-type Activities (208,769) (180,940) 2,767 (1,874) (13,572) (88,115) (60,706) (17,115) 6,862 (27,464) (588,926) $ $ (588,926) 19,622 (479) (141) 19,002 19,002 Total Component Unit SW Fair Commission (208,769) (180,940) 2,767 (1,874) (13,572) (88,115) (60,706) (17,115) 6,862 (27,464) (588,926) Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization - unallocated Interest on long-term debt Total governmental activities 19,622 (479) (141) 19,002 (569,924) Business-type activities: Regional Wastewater Reclamation Development Services Parking Garages Total business-type activities Total primary government $ $ 331,173 21,450 38,962 52,609 6,620 1,614 107,966 26,302 4,199 5,590 3,268 15,712 (20,190) 595,275 6,349 1,039,283 1,045,632 $ 1,291 678 20,190 22,159 41,161 743,443 784,604 $ 334 334 331,173 21,450 38,962 52,609 6,620 1,614 107,966 26,302 4,199 5,590 4,559 16,390 34 110 617,434 47,510 1,782,726 1,830,236 144 478 6,484 6,962 $ Component unit: Southwestern Fair Commission Total component unit General revenues: Property taxes, levied for general purposes Property taxes, levied for regional flood control district Property taxes, levied for library district Property taxes, levied for debt service Hotel/motel taxes, levied for sports facility and tourism Other taxes, levied for stadium district Unrestricted share of state sales tax Unrestricted share of state vehicle license tax Grants and contributions not restricted to specific programs Interest and penalties on delinquent taxes Investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net position Net position at beginning of year, as restated Net position at end of year See accompanying notes to financial statements 37 PIMA COUNTY, ARIZONA Balance Sheet - Governmental Funds June 30, 2016 Exhibit A - 3 (in thousands) General Assets Cash and cash equivalents Property taxes receivable (net) Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expenditures Loan receivable Restricted cash and cash equivalents Total assets $ 74,117 10,030 50 6,210 23,048 2,044 Capital Projects $ 118,660 Debt Service $ 25 642 3,990 2,132 2,880 1,300 6,104 1,655 36 Other Governmental Funds Total Governmental Funds $ 70,655 1,885 38 455 19,997 3,580 1,369 909 1,521 45 $ 269,536 13,570 149 7,307 47,049 7,756 1,369 3,789 2,821 57 14 12 $ 119,679 $ 125,461 $ 7,809 $ 100,454 $ 353,403 $ 12,085 $ 9,620 $ 2 $ 17,050 3 $ 2,169 6,663 13 5 3,707 38,757 3 1,863 8,791 10,518 24 183 5,714 2 29,610 65,853 1,151 8,500 1,294 432 23,138 9,318 1,161 Liabilities, deferred inflows of resources and fund balances Liabilities Accounts payable Interest payable Contract retentions Employee compensation Due to other funds Due to other governments Deposits and rebates Unearned revenue 1,863 6,622 452 11 166 1,807 3,403 12 200 Total liabilities 21,143 15,098 Deferred inflows of resources Unavailable revenue - intergovernmental Unavailable revenue - property taxes Unavailable revenue - other 10,252 6,873 729 4,386 Total deferred inflows of resources 17,854 4,386 1,151 10,226 33,617 Total liabilities and deferred inflows of resources 38,997 19,484 1,153 39,836 99,470 2,323 57,141 6,962 3,289 (9,097) 5,254 161,415 8,470 10,341 68,453 60,618 253,933 Fund balances Nonspendable Restricted Committed Assigned Unassigned 201 77,550 Total fund balances 80,682 Total liabilities, deferred inflows of resources and fund balances 2,931 $ 119,679 $ 104,274 1,508 195 6,656 105,977 6,656 125,461 $ 7,809 See accompanying notes to financial statements 38 $ 100,454 $ 353,403 PIMA COUNTY, ARIZONA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2016 Exhibit A - 4 (in thousands) Fund balances - total governmental funds $ 253,933 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Governmental capital assets Less accumulated depreciation Long-term liabilities, such as pension liabilities and bonds payable are not due and payable in the current period and, therefore, are not reported in the governmental funds. Bonds payable Certificates of participation payable Leases and notes payable Compensated absences liability Landfill liability Pollution remediation liability Net pension liability Deferred outflows and inflows of resources related to pensions and deferred charges on debt refundings are applicable to future periods and, therefore, are not reported in the governmental funds. Deferred outflows of resources related to pensions Deferred inflows of resources related to pensions Deferred outflows for bond refunding Some receivables are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the governmental funds. Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets, deferred outflow of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the Statement of Net Position. Net position of governmental activities $ 3,001,330 (1,078,789) (454,096) (179,054) (8,869) (29,404) (10,584) (71) (673,849) 101,248 (41,207) 2,134 1,922,541 (1,355,927) 62,175 33,617 129,293 $ 1,045,632 See accompanying notes to financial statements 39 PIMA COUNTY, ARIZONA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2016 Exhibit A - 5 (in thousands) Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous General $ Total revenues 336,904 3,135 145,907 44,465 3,401 389 6,510 Capital Projects $ $ 540,711 Expenditures: Current: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt Service - principal - interest - miscellaneous Debt Service 52,726 Other Governmental Funds Total Governmental Funds $ $ 27,250 3,988 14 812 890 226 43 60,424 5,689 141,747 13,805 5,019 385 9,392 32,940 53,009 236,461 863,121 36,517 25,933 45,625 1,032 34,833 319 41,292 23,029 255,639 169,292 45,625 2,237 38,390 88,436 58,710 35,121 70,473 86,957 26,279 488 219,122 143,359 1,205 3,557 88,117 17,418 12,092 70,473 3,098 762 Total expenditures Excess (deficiency) of revenues over (under) expenditures 83,765 25,515 488 94 2 450,054 8,824 314,918 62,258 8,420 1,812 16,835 488,730 70,473 109,768 208,676 877,647 51,981 (37,533) (56,759) 27,785 (14,526) 149 Other financing sources (uses): Proceeds from capital lease agreements Premium on bonds Issuance of refunding debt Payments to escrow agent Face amount of long-term debt issued Proceeds from sale of capital assets Transfers in Transfers (out) 1 10,171 (33,596) 25,807 (47,317) 56,299 (1,600) 88 22,081 (50,352) 149 2,552 9,640 (11,010) 34,295 89 114,358 (132,865) Total other financing sources (uses) (23,424) 13,675 54,991 (28,034) 17,208 Net change in fund balances 28,557 (23,858) (1,768) (249) 2,682 Fund balances at beginning of year 52,125 129,835 8,424 60,989 251,373 6,656 (110) (12) 60,618 (110) (12) 253,933 Changes in nonspendable resources: Change in inventory Change in prepaids Fund balances at end of year 890 $ 80,682 1,662 9,640 (11,010) 34,295 $ 105,977 $ See accompanying notes to financial statements 40 $ $ PIMA COUNTY, ARIZONA Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2016 Exhibit A - 6 (in thousands) Net change in fund balances - total governmental funds $ 2,682 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is depreciated over their estimated useful lives and reported as depreciation expense. Expenditures for capital assets Less current year depreciation $ 33,539 (76,735) (43,196) (34,295) (2,552) (9,640) 86,957 11,010 (149) 6,862 (1,185) 57,008 4,574 (982) (270) (1,168) 2,154 (381) 4,491 223 (2,013) (122) 2,198 45,366 (63,072) (17,706) Debt proceeds provide current financial resources to governmental funds but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of the principal of debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. Also, governmental funds report the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Face amount of long-term debt issued Premium on bonds Proceeds from issuance of refunding bonds Debt service - principal payments Payments to escrow agent Proceeds from capital lease agreements Amortization of premiums/discounts Amortization of deferred charge on refunding Some revenues reported in the Statement of Activities do not represent the collection of current financial resources and therefore are not reported as revenues in the governmental funds. In addition, collections of some revenues in the governmental funds exceeded revenues reported in the Statement of Activities. Donations of capital assets Intergovernmental Property tax revenues Other Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. Change in compensated absences Change in landfill liability Pollution remediation liability Net book value of capital asset disposals Other County pension contributions are reported as expenditures in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the reported net pension liability is measured a year before the County's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related to pensions is reported in the Statement of Activities. Pension contributions Pension expense Internal service funds are used by management to charge the costs of certain activities to individual funds. The incorporation of the external activities of these funds, and the elimination of profit/loss generated by primary government customers results in net revenue (expense) for governmental activities. Change in net position of governmental activities 3,209 $ See accompanying notes to financial statements 41 6,349 PIMA COUNTY, ARIZONA Statement of Net Position - Proprietary Funds June 30, 2016 Exhibit A- 7 (in thousands) Business-type Activities Enterprise Funds Regional Wastewater Reclamation Assets Current assets: Cash and cash equivalents Restricted cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expense Total current assets Noncurrent assets: Restricted cash and cash equivalents Loan receivable Capital assets: Land Buildings and improvements Sewage conveyance system Equipment Less accumulated depreciation Construction in progress Total capital assets (net) Total noncurrent assets $ $ 4,852 Total Enterprise Funds $ 115,303 26,777 87 3,411 835 17,031 2,621 285 166,350 2 18 8 100 12 4,992 49,112 Total assets Deferred outflows of resources Pension Total deferred outflows of resources Liabilities Current liabilities: Accounts payable Employee compensation Interest payable Due to other funds Due to other governments Unearned revenue Current sewer revenue bonds and obligations payable Current portion of wastewater loans payable Current portion reported but unpaid losses Current portion incurred but not reported losses Total current liabilities Noncurrent liabilities: Compensated absences payable Loan payable Contracts and notes payable Sewer revenue bonds and obligations payable Wastewater loans payable Reported but unpaid losses Incurred but not reported losses Net pension liability Total noncurrent liabilities 12,231 745,587 791,058 148,423 (519,400) 39,007 1,216,906 1,266,018 Deferred inflows of resources Pension Total deferred inflows of resources Net position Net investment in capital assets Restricted for: Debt service Capital projects Healthcare Regional wastewater reclamation Unrestricted $ Governmental ActivitiesInternal Service Funds $ 1,768 27,608 134,524 31 43 3 102 670 7,667 143,040 49,112 6,700 2,296 (10,594) 128 21,206 21,206 13,999 773,195 791,058 150,719 (529,994) 39,135 1,238,112 1,287,224 53,378 (26,795) 550 46,551 53,251 1,427,376 26,198 1,453,574 196,291 3,772 3,772 606 606 4,378 4,378 853 853 14,091 692 252 64 2 1,158 53,879 1,629 608 99 14,699 791 252 229 109 1,159 53,879 1,629 4,820 237 71,767 980 72,747 2,338 348 2,686 165 107 1 1,577 531,301 14,934 Total liabilities Total net position 110,451 26,777 85 3,393 827 16,931 2,621 273 161,358 Other Enterprise Funds 449 18,969 14 5,465 6,284 16,820 593 6,700 1,577 531,301 14,934 39,287 589,437 6,315 6,663 45,602 596,100 22,658 11,317 8,886 50,154 661,204 7,643 668,847 66,974 3,878 3,878 623 623 4,501 4,501 877 877 615,163 21,206 636,369 46,551 36,666 3,440 36,666 3,440 19,223 91,574 19,223 88,906 766,066 (2,668) $ 18,538 $ See accompanying notes to financial statements 42 784,604 20,137 62,605 $ 129,293 PIMA COUNTY, ARIZONA Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2016 Exhibit A - 8 (in thousands) Business-type Activities Enterprise Funds Regional Wastewater Reclamation Operating revenues: Charges for services Other Total net operating revenues $ Operating expenses: Employee compensation Operating supplies and services Utilities Sludge and refuse disposal Repair and maintenance Incurred losses Insurance premiums General and administrative Consultants and professional services Depreciation Total operating expenses Operating income (loss) 157,132 615 157,747 Other Enterprise Funds $ $ 165,553 678 166,231 $ 121,687 2,385 124,072 5,030 77 79 34,915 7,441 6,761 1,623 9,116 15,406 11,677 51,376 133,129 3,009 149 697 9,041 18,415 11,826 52,073 142,170 1,791 67,838 10,024 10,859 6,458 4,756 120,700 24,061 3,372 (557) 832 1,259 10,724 (20,890) (1,547) (9,622) Income (loss) before contributions and transfers 8,421 63 8,484 Governmental ActivitiesInternal Service Funds 29,885 7,364 6,761 1,623 9,037 24,618 Nonoperating revenues (expenses): Intergovernmental revenue Investment earnings Sewer connection fees Interest expense Gain/(loss) on disposal of capital assets Total nonoperating revenues (expenses) Total Enterprise Funds 32 832 1,291 10,724 (20,890) (1,547) (9,590) (525) 14,471 4,892 (843) 6,500 44,295 (24,105) 958 (2,641) 32 14,996 11,829 7,145 1,456 64 1,520 Capital contributions Transfers in Transfers (out) 6,500 44,295 (23,262) Change in net position 42,529 (1,368) 41,161 3,209 723,537 19,906 743,443 126,084 Net position at beginning of year Net position at end of year $ 766,066 $ 18,538 See accompanyimg notes to financial statements 43 $ 784,604 $ 129,293 PIMA COUNTY, ARIZONA Statement of Cash Flows - Proprietary Funds For the Year Ended June 30, 2016 Exhibit A - 9 (in thousands) Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from customers for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments for incurred losses Cash payments to employees for services Regional Wastewater Reclamation $ 158,724 615 (32,593) (19,302) Business-Type Activities Enterprise Funds Other Enterprise Funds $ (31,698) Net cash provided by operating activities Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds Intergovernmental revenues $ $ 124,201 (1,038) (1,942) 167,411 615 (33,631) (21,244) (5,380) (37,078) 2,455 (33,999) (5,500) (53,491) (12,008) 327 76,073 21,658 44,295 (23,262) 4,524 832 (843) 146 44,295 (24,105) 4,670 832 1,005 (2,673) 8 26,389 (697) 25,692 (1,660) (40,271) (28,169) 10,294 Net cash used for capital and related financing activities Governmental ActivitiesInternal Service Funds 75,746 Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Principal paid on bonds and loans Interest paid on bonds and loans Sewer connection fees Proceeds from sale of capital assets Purchase of capital assets 8,687 Total Enterprise Funds (40,271) (28,169) 10,294 (45,752) (1,055) (46,807) 291 (3,474) (103,898) (1,055) (104,953) (3,183) Cash flows from investing activities: Interest received on cash and investments 1,260 34 1,294 1,440 Net cash provided by investing activities 1,260 34 1,294 1,440 (1,894) 18,255 Net increase (decrease) in cash and cash equivalents (503) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (1,391) 186,843 $ 186,340 6,243 $ 4,852 (continued) See accompanying notes to financial statements 44 193,086 $ 191,192 116,269 $ 134,524 PIMA COUNTY, ARIZONA Statement of Cash Flows - Proprietary Funds For the Year Ended June 30, 2016 Exhibit A - 9.1 (in thousands) (continued) Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) Business-Type Activities Enterprise Funds Regional Other Total Wastewater Enterprise Enterprise Reclamation Funds Funds $ 24,618 $ (557) $ 24,061 Governmental ActivitiesInternal Service Funds $ 3,372 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization 51,376 Changes in assets and deferred outflows of resources: Decrease (increase) in assets: Accounts receivable Due from other governments Inventory and other assets Prepaid expense Decrease in deferred outflows of resources: Pension plans Changes in liabilities and deferred inflows of resources: Increase (decrease) in liabilities: Accounts payable Due to other governments Reported but unpaid losses Incurred but not reported losses Net pension liability Other liabilities Decrease in deferred inflows of resources: Pension plans Net cash provided by operating activities 697 2,009 (417) (238) (183) 204 (2) 14 2,213 (419) (238) (169) 1,074 173 1,247 213 107 610 104 397 (3) $ 52,073 4,756 2,509 75 35 (4,045) 243 1,246 (1,359) 202 (278) 1,448 (1,637) 792 (4) 11,887 2,460 281 (75) (2,774) (446) (3,220) (628) 75,746 - $ 327 - $ 76,073 - $ 21,658 - Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2016: Regional Wastewater Reclamation Enterprise Fund received developer-built conveyance systems with an estimated fair value of $6,494. These contributions were recorded as an increase in capital assets and capital contributions. Regional Wastewater Reclamation Enterprise Fund retired capital assets with a net book value of $1,547. Regional Wastewater Reclamation Enterprise Fund retired expired Sewer Credit Agreements totaling $6. These transactions were recorded as a decrease in unearned revenue and an increase in capital contributions. Other Enterprise Funds retired fully depreciated capital assets with an original cost of $195 and transferred out assets with an original cost of $19 to General Government. Internal Service Funds sold capital assets with a net book value of $203 and retired capital assets with a net book value of $11. Internal Service Funds transferred out an asset with a net book value of $13 to General Government. See acommpanying notes to financial statements 45 PIMA COUNTY, ARIZONA Statement of Fiduciary Net Position - Fiduciary Funds June 30, 2016 Exhibit A - 10 (in thousands) Investment Trust Funds Assets Cash and cash equivalents Interest receivable Due from other governments $ Total assets $ 197,452 62 $ 197,514 $ 83,398 $ 1,463 52,289 29,646 $ 83,398 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities Net position Held in trust for pool participants $ 197,514 See accompanying notes to financial statements 46 Agency Funds 81,890 1,508 PIMA COUNTY, ARIZONA Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Year Ended June 30, 2016 Exhibit A - 11 (in thousands) Investment Trust Funds Additions Contributions from participants Total contributions $ Investment earnings Total investment earnings 2,170,414 2,170,414 926 926 Total additions 2,171,340 Deductions Distributions to participants Total deductions 2,203,157 2,203,157 Change in net position (31,817) Net position held in trust July 1, 2015 229,331 Net position held in trust June 30, 2016 See accompanying notes to financial statements 47 $ 197,514 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 1: Summary of Significant Accounting Policies Pima County’s accounting policies conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). For the year ended June 30, 2016, the County implemented the provisions of GASB Statement No. 72, Fair Value Measurement and Application; GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain provisions of GASB Statements 67 and 68; GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. GASB Statement No. 72 establishes standards for measuring fair value and applying fair value to certain investments and disclosures related to all fair value measurements. GASB Statement No. 73 amended GASB Statement No. 68 requirements related to note disclosures for pension related required supplementary information and payables to defined benefit pension plans. GASB Statement No. 76 establishes the hierarchy of sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with generally accepted accounting principles. The County also early implemented the provisions of GASB Statement No. 82, Pension Issues. GASB Statement No. 82 amends certain provisions of GASB Statements No. 67, No. 68 and No. 73. A. Reporting Entity The County is a general purpose local government that is governed by a separately elected board of supervisors. The accompanying financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered to be financially accountable. Blended component units, although legally separate entities, are so intertwined with the County that they are in substance part of the County’s operations. Therefore, data from these units is combined with data of the County. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize they are legally separate from the County. Each blended and discretely presented component unit discussed below has a June 30 year-end. The following describes the County’s component units: The Pima County Stadium District, a legally separate entity, was created in 1991 when the County Board of Supervisors adopted a resolution to create the Stadium District to manage Kino Sports Complex. The District is a tax-levying, public improvement district and political taxing subdivision of the state of Arizona. The Stadium District, in conjunction with Pima County government, maintains the fiscal resources of the entire complex including facilities, grounds, personnel and the various services provided at the venue. Kino Sports Complex, which covers 155 acres, is the largest professional sports and entertainment venue of its kind in Pima County. The facility hosts youth athletics, amateur and professional sports, concerts and community events on its fields. The County Board of Supervisors serves as the Board of Directors and has operational responsibility for the District. Acting in the capacity of the Board of Directors, the County Board of Supervisors is able to impose its will on the District. The Board of Directors levies the car rental surcharge rates and the recreation vehicle (RV) park tax for the District. The District is reported as a special revenue fund (blended component unit) in these financial statements. Complete financial statements for the District can be obtained from the Pima County Department of Finance and Risk Management located at 130 West Congress Street, Tucson, Arizona 85701. 48 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) The Pima County Library District was established in 1986 when legislation allowed full taxing authority and the ability to enter into agreements with other jurisdictions for the provision of library services. The Library District provides and maintains library services for the County’s residents. The Pima County Board of Supervisors is the Board of Directors and has operational responsibility for the District. The Library District is reported as a special revenue fund (blended component unit) in these financial statements. Separate financial statements for the District are not available. The Pima County Regional Flood Control District was established in 1978. The District is responsible for floodplain management activities for the unincorporated areas of Pima County (except national forests, parks, monuments and Native American Nations), the City of South Tucson, and the Town of Sahuarita. The Pima County Board of Supervisors is the Board of Directors and has operational responsibility for the Flood Control District. The Regional Flood Control District is reported as a special revenue fund (blended component unit) in these financial statements. Separate financial statements for the District are not available. The Pima County Street Lighting Districts (SLDs) operate and maintain street lighting for specific regions in areas outside local city jurisdictions. The Pima County Board of Supervisors serves as the Board of Directors and has operational responsibility for the Districts. SLDs are reported as a special revenue fund in these financial statements and meet substantively the same criteria as blended component units. Separate financial statements for the SLDs are not available. The Southwestern Fair Commission, Inc. (SFC) is a nonprofit corporation which manages and maintains the fairgrounds owned by the County and conducts annual fair and other events at the fairgrounds. The Commission’s members are appointed and can be removed at any time by the Pima County Board of Supervisors. Based on these factors, and because SFC does not provide services entirely, or almost entirely to the County, but rather to the general citizenry, SFC is reported as a separate component unit (discrete presentation) in these financial statements. Complete financial statements for SFC can be obtained from the Pima County Department of Finance and Risk Management located at 130 West Congress Street, Tucson, Arizona 85701. Related Organization: The Industrial Authority of Pima County (Authority) is a legally separate entity that was created to promote economic development and the development of affordable housing. The Authority fulfills its function through the issuance of tax-exempt bonds. The County Board of Supervisors appoints the Authority’s Board of Directors. The Authority’s operations are completely separate from the County and the County is not financially accountable for the Authority. Therefore, the financial activities of the Authority have not been included in the accompanying financial statements. B. Basis of Presentation The basic financial statements include both government-wide statements and fund financial statements. The government-wide statements focus on the County as a whole, while the fund financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the information’s usefulness. Government-wide statements - Provide information about the primary government (the County) and its component units. The statements include a statement of net position and a statement of activities. These statements report the 49 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) overall government’s financial activities except for fiduciary activities. The statements also distinguish between the governmental and business-type activities of the County and between the County and its discretely presented component units. Governmental activities generally are financed through taxes and intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County’s governmental activities and segment of its business-type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The County does not allocate indirect expenses to programs or functions. Program revenues include: • • • charges to customers or applicants for goods, services, or privileges provided; operating grants and contributions; and capital grants and contributions, including special assessments. Revenues that are not classified as program revenues, including internally dedicated resources and all taxes the County levies or imposes, are reported as general revenues. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double-counting of internal activities. However, charges for interfund services provided and used are not eliminated if the prices approximate their external exchange values. Fund financial statements - Provide information about the County’s funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Fiduciary funds are aggregated and reported by fund type. Proprietary fund revenues and expenses are classified as either operating or nonoperating. Operating revenues and expenses generally result from transactions associated with the fund’s principal activity. Accordingly, revenues, such as user charges, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues result from transactions in which the parties do not exchange equal values and are considered nonoperating revenues such as connection fees, intergovernmental revenues, along with investment earnings and revenues ancillary activities generate. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. Other expenses, such as interest expense, are considered nonoperating expenses. The County reports the following major governmental funds: The General Fund is the County’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The General Fund revenues are primarily from property taxes and intergovernmental revenues. The Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of capital facilities and other capital assets, other than those financed by proprietary funds. Capital Projects Fund revenues and other financing sources are primarily from intergovernmental, face amount of long-term debt, and transfers in. The Debt Service Fund accounts for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Revenues and other financing sources are primarily from property taxes, proceeds from refunding debt, and transfers in. 50 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) The County reports the following major enterprise fund: Regional Wastewater Reclamation (RWR) accounts for the management and operation of wastewater treatment and water pollution control programs. Revenues are primarily from charges for services and connection fees. The County also reports the following fund types: Internal Service Funds account for fleet maintenance and operation, insurance, printing services, and telecommunications services provided to the County’s departments or to other governments on a costreimbursement basis. The County transitioned to a medical self-insurance model on July 1, 2013 that is funded by employee and employer premium rates. Investment Trust Funds account for pooled assets and individual investment accounts the County Treasurer holds and invests on behalf of other governmental entities. Agency Funds account for assets the County holds as an agent for the State, cities, towns, and other parties. C. Basis of Accounting The government-wide, proprietary fund and fiduciary fund financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. The agency funds are custodial in nature and do not have a measurement focus but utilize the accrual basis of accounting for reporting its assets and liabilities. Revenues are recorded when earned, and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements the provider imposed have been met. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expenses are incurred, there are both restricted and unrestricted resources available to finance the program. The County applies grant resources to such programs before using general revenues. Governmental funds in the fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when they become both measurable and available. The County recognizes property taxes to be available if collected within 30 days. In addition, other taxes that are reported as intergovernmental revenues, i.e. state shared sales tax, highway user revenues and vehicle license tax, recreational vehicle taxes, car rental surcharges, and hotel excise taxes are also recognized if collected within 30 days. Grant funded intergovernmental revenues are considered available if collected within 60 days after fiscal year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, compensated absences, landfill closure and postclosure care costs, and pollution remediation obligations, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Issuances of general long-term debt and acquisitions under capital lease agreements are reported as other financing sources. D. Cash and Investments For the statement of cash flows, the County’s cash and cash equivalents are considered to be cash on hand, demand deposits, cash and investments held by the County Treasurer, investments in the State Treasurer’s Local 51 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) Government Investment Pool, and only those highly liquid investments with a maturity of 3 months or less when purchased. All investments are stated at fair value. E. Inventories and Prepaids Inventories in the government-wide and proprietary funds’ financial statements are recorded as assets when purchased and expensed when consumed. The County accounts for its inventories in the OEM Radio System Fund using the purchases method. Inventories of the OEM Radio System Fund consist of spare parts for the fixed network equipment held for consumption and are recorded as expenditures at the time of purchase. These inventories are stated at cost using the first-in, first-out method or average cost method. Inventories of the Transportation Fund are recorded as assets when purchased and expensed when used. They are valued at lower of cost or market, cost being determined using the moving average method. Inventories of RWR, an enterprise fund, are valued at lower of cost or market, cost being determined using the moving average method. Inventories of Internal Service Funds are valued at lower of cost or market, cost being determined using the moving average method. Prepaid expenses/expenditures are accounted for using the consumption method, except for the School Reserve Fund reported as an Other Governmental Fund, which uses the purchase method. F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets are reported at actual cost or estimated historical cost if historical records are not available. Donated assets are reported at acquisition value at the time received. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods, and estimated useful lives of capital assets are as follows: 52 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) Land Land improvements (Reported in buildings and improvements) Buildings and improvements Equipment Infrastructure/Sewer conveyance systems Intangible (Reported in land and infrastructure) Software (Reported in equipment) Capitalization Threshold All Depreciation Method N/A Estimated Useful Life N/A All $100 $5 $100 $100 $5,000 Straight Line Straight Line Straight Line Straight Line Straight Line Straight Line 20 - 30 Years 10 - 50 Years 4 - 25 Years 10 - 50 Years Varies Varies Discretely presented component unit: The Southwestern Fair Commission, Inc. capital assets are reported at actual cost. Depreciation is calculated using the straight-line method over the assets’ estimated useful life, which range from 3 to 40 years. H. Deferred Outflows and Inflows of Resources The statement of net position and balance sheet include separate sections for deferred outflows of resources and deferred inflows of resources. Deferred outflows of resources represent a consumption of net position that applies to future periods that will be recognized as an expense or expenditure in future periods. Deferred inflows of resources represent an acquisition of net position or fund balance that applies to future periods and will be recognized as a revenue in future periods. I. Fund Balance Classifications The governmental funds’ fund balances are reported separately within classifications based on a hierarchy of the constraints placed on those resources’ use. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. The nonspendable fund balance classification includes amounts that cannot be spent because they are either not in spendable form, such as inventories, or are legally or contractually required to be maintained intact. Restricted fund balances are those that have externally imposed restrictions on their usage by creditors (such as through debt covenants), grantors, contributors, or laws and regulations. The unrestricted fund balance category is composed of committed, assigned, and unassigned resources. Committed fund balances are self-imposed limitations that the County’s Board of Supervisors, the highest level of decisionmaking authority within the County, approved by formal action (ordinance). Only the Board can remove or change the constraints placed on committed fund balances. This approval must be given at a regular supervisory meeting by taking the same type of action it employed to previously commit those amounts. Assigned fund balances are resources constrained by the County’s intent to be used for specific purposes, but are neither restricted nor committed. The Board of Supervisors has authorized the County Administrator to make assignments of resources for a specific purpose. Modifications or rescissions of the constraints can also be removed by the same action that limited the funds. 53 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) The unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not reported in the other classifications. Also, deficits in fund balances of the other governmental funds are reported as unassigned. When an expenditure is incurred that can be paid from either restricted or unrestricted fund balances, it is the County’s policy to use restricted fund balance first. For the disbursement of unrestricted fund balances, the County will use committed amounts first, followed by assigned amounts, and lastly unassigned amounts. J. Investment Earnings Investment earnings are composed of interest, dividends, and net changes in the fair value of applicable investments. K. Compensated Absences Compensated absences consist of annual leave and a calculated amount of sick leave earned by employees based on services already rendered. Employees may accumulate up to 240 hours of annual leave depending upon years of services, but they forfeit any annual leave hours in excess of the maximum amount that are unused at year-end. Upon termination of employment, all unused and unforfeited annual leave benefits are paid to employees. Accordingly, annual leave benefits are accrued as a liability in the government-wide and proprietary funds’ financial statements. A liability for these amounts is reported in the governmental funds’ financial statements only if they have matured, for example, as a result of employee resignations and retirements by fiscal year-end. Employees may accumulate up to 1,920 hours of sick leave. Generally, sick leave benefits provide for ordinary sick pay and are cumulative but most employees forfeit them upon terminating employment. However, employees who have accumulated greater than 240 hours of sick leave and are eligible to retire will receive some benefits. Employees who are eligible to retire from County service into the Arizona State Retirement System, Public Safety Personnel Retirement System, or Corrections Officer Retirement Plan may request sick leave to be converted to annual leave on a predetermined conversion basis. An estimate of those retirement payouts is accrued as a liability in the government-wide and proprietary funds’ financial statements in Employee Compensation for the current portion and under Noncurrent Liabilities for the noncurrent portion. In addition, since annual and sick leave used by employees within the first two pay periods after fiscal year-end is paid for with current financial resources, a compensated absences liability for these amounts is reported in the governmental funds’ financial statements within Employee Compensation. L. 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 pension plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For 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. 54 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 2: Change in Accounting Principle Net Position as of July 1, 2015, has been restated as follows for the implementation of GASB Statement No. 82, Pension Issues. Governmental Activities Net Position as previously reported at June 30, 2015 $ 1,040,415 Prior period adjustment - Implementation of GASB 82: Deferred outflows - employer-paid member contributions made during fiscal year 2015 Net position as restated, July 1, 2015 (1,132) $ 1,039,283 Note 3: Cash and Investments Primary Government Arizona Revised Statutes (A.R.S.) authorize the County to invest public monies in the State Treasurer’s investment pool; obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds, notes, and other evidences of indebtedness; interest-earning investments such as savings accounts, certificates of deposit, and repurchase agreements in eligible depositories; specified commercial paper issued by corporations organized and doing business in the United States; specified bonds, debentures, notes, and other evidences of indebtedness that are denominated in United States dollars; and certain open-end and closed-end mutual funds, including exchange traded funds. In addition, the County Treasurer may invest trust funds in certain fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk—The State statutes have the following requirements for credit risk: 1. Commercial paper must be of prime quality and be rated within the top two ratings by a nationally recognized rating agency. 2. Corporate bonds, debentures, notes and other evidence of indebtedness that are denominated in United States dollars must be rated ̎ A ̎ or better by at least two nationally recognized rating agencies at the time of purchase. 3. Fixed income securities must carry one of the two highest ratings by Moody’s Investors Service and Standard and Poor’s rating service. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. 55 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 3: Cash and Investments (continued) Custodial credit risk—Statutes require a pooled collateral program for public deposits and a Statewide Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of the pooled collateral program is to ensure that governmental entities’ public deposits placed in participating depositories are secured with collateral of 102 percent of the public deposits, less any applicable deposit insurance. An eligible depository may not retain or accept any public deposit unless it has deposited the required collateral with a qualified escrow agent or the Administrator. The Administrator manages the pooled collateral program, including reporting on each depository’s compliance with the program. Concentration of credit risk—Statutes do not include any requirements for concentration of credit risk. Interest rate risk—Statutes require that public monies invested in securities and deposits have a maximum maturity of 5 years. Investments in repurchase agreements must have a maximum maturity of 180 days. Foreign currency risk—Statutes do not allow foreign investments unless the investment is denominated in United States dollars. Deposits—At June 30, 2016, the carrying amount of the County’s deposits was $73,941, and the bank balance was $57,802. Custodial credit risk—Custodial credit risk is the risk that the County will not be able to recover its deposits if a financial institution fails. The County does not have a formal policy with respect to custodial credit risk. As of June 30, 2016, $2,906 of County’s bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. Investments—At June 30, 2016, the County’s investments consisted of $324,721 invested in marketable securities and $475,943 invested in the State Treasurer’s Investment Pool. Cash from the County and from externally legally separate governments are pooled to purchase the investments in marketable securities and the State Treasurer’s Pool. The State Board of Investment provides oversight for the State Treasurer’s pools. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares and the participant’s shares are not identified with specific investments. 56 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 3: Cash and Investments (continued) Credit risk—Credit risk is the risk that an issuer or counterparty to an investment will not fulfill its obligations. The County does not have a formal investment policy with respect to credit risk. At June 30, 2016, credit risk for the County’s investments was as follows: Investment Type Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association Money market mutual fund State Treasurer Investment Pool 5 State Treasurer Investment Pool 500 State Treasurer Investment Pool 7 Rating A-1/P-1 BBB+/Baa2 AA+/Aa1 AA+/Aaa AA+/Aaa AA+/Aaa AA+/Aaa AAAm/Aaa-mf AAA f/S1+ Unrated Unrated Total Rating Agency S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's Marketable Securities $ S&P Amount 9,954 243,401 7,197 5,011 15,019 5,006 5,010 29,111 319,709 267,904 106,434 101,605 475,943 State Treasurer's Investment Pool $ 795,652 Custodial credit risk—For an investment, custodial risk is the risk that, in the event of the counterparty’s failure, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County has no formal policy with respect to custodial credit risk. Of the County’s $800,664 of investments, $295,610, consisting of the commercial paper, corporate bonds, municipal bonds, Federal Farm Credit Bank, Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association and U.S. Treasury notes, is uninsured and held by a counterparty in the County’s name in book entry form. Concentration of credit risk—The County has no formal policy with respect to limiting the amount the Treasurer may invest in any one issuer. The County’s exposure as of June 30, 2016 is less than 5% per issuer. 57 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 3: Cash and Investments (continued) Interest rate risk—Interest rate risk is the risk that changes in interest rates will adversely affect an investment’s fair value. The County does not have a formal investment policy with respect to interest rate risk. As of June 30, 2016, the County had the following investments: Investment Type State Treasurer Investment Pool 5 State Treasurer Investment Pool 500 State Treasurer Investment Pool 7 Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association U.S. Treasury Notes Money market mutual fund Total Amount 267,904 106,434 101,605 9,954 243,401 7,197 5,011 15,019 5,006 5,010 5,012 29,111 $ 800,664 $ Weighted Average Maturity (Years) 0.07 4.61 0.19 0.56 1.25 0.74 0.34 0.47 1.40 2.36 1.01 0.12 A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Position follows: Cash, deposits and investments: Statement of Net Position Cash and cash equivalents Restricted cash and cash equivalents Total Cash on Hand $ 46 Amount of Deposits $ 73,941 Amount of Investments $ 800,664 $ Governmental Activities Business-Type Activities Investment Trust Funds $ $ $ 197,452 $ 81,890 $ $ 197,452 $ 81,890 $ $ 404,060 57 404,117 115,303 75,889 191,192 $ Agency Funds Total 874,651 Totals 798,705 75,946 874,651 County Treasurer’s Investment Pool—Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The County Treasurer has a fiduciary responsibility to administer those and the County monies under her stewardship. The County Treasurer invests, on a pool basis, all monies not specifically invested for a fund or program. In addition, the County Treasurer determines the fair value of those pooled investments annually at June 30. The County Treasurer’s Investment Pool is not registered with the Securities and Exchange Commission as an investment 58 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 3: Cash and Investments (continued) company and there is no regulatory oversight of its operations. The structure of the Pool does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the value of the participants’ investments. The County Treasurer allocates interest earnings to each of the Pool’s participants. Substantially, all deposits and investments of the County’s primary government are included in the County Treasurer’s investment pool. Therefore, the deposit and investment risks of the Treasurer’s investment pool are substantially the same as the County’s deposit and investment risks disclosed above. The Pool’s assets consist of the following: Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association U.S. Treasury Notes State Treasurer Investment Pool 5 Deposits Interest receivable Total assets Interest Rates 0.61-0.98% 0.88-6.25% 0.58-1.50% 0.70% 0.50% 0.80% 1.13% 0.75% N/A N/A N/A Principal $ 10,000 244,988 7,060 5,000 15,000 5,000 5,000 5,000 217,359 20,180 62 Maturities 12/16-02/17 07/16-04/19 11/16-07/17 11/16 11/16-12/16 11/17 10/18 06/17 N/A N/A N/A Fair Value $ 9,954 243,401 7,197 5,011 15,019 5,006 5,010 5,012 217,359 20,180 62 $ 533,211 A condensed statement of the investment pool’s net position and changes in net position follows: Statement of Net Position Assets held in trust for: Internal participants External participants Total assets Total liabilities Total net position held in trust Statement of Changes in Net Position Total additions Total deductions Net increase Net position held in trust: July 1, 2015 June 30, 2016 $ 449,143 84,068 533,211 $ 533,211 $ 5,301,467 (5,286,280) 15,187 $ 59 518,024 533,211 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 3: Cash and Investments (continued) Fair Value Measurement—The County’s investments at June 30, 2016, categorized within the fair value hierarchy established by generally accepted accounting principles, were as follows: Fair value measurement using Investment by fair value level Commercial paper Corporate bonds Municipal bonds Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Corporation Federal National Mortgage Association U.S. Treasury Notes Money market mutual fund Total investments by fair value level $ External investment pools measured at fair value State Treasurer’s investment pools Total investments measured at fair value Amount 9,954 243,401 7,197 5,011 15,019 5,006 5,010 5,012 29,111 324,721 Quoted prices in active markets for identical assets (Level 1) $ $ 5,012 29,111 34,123 Quoted prices in active markets for similar assets (Level 2) $ 9,954 243,401 7,197 5,011 15,019 5,006 5,010 $ 290,598 475,943 $ 800,664 The investments categorized as Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those investments. The investments categorized as Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Investments in the State Treasurer's investment pool are valued at the pool's share price multiplied by the number of shares the County held. The fair value of a participant's position in the pools approximates the value of that participant's pool shares. The State Board of Investment provides oversight for the State Treasurer's investment pools. 60 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 4: Fund Balance Classifications of the Governmental Funds The table below details the fund balance categories and classifications: General Fund Capital Projects Fund Debt Service Fund Other Governmental Funds CAFR Total Fund Balance: Nonspendable: Inventory Prepaid expenditures Loan receivable Permanent fund principal Total nonspendable $ $ 2,880 51 1,369 909 $ 45 2,323 2,931 1,369 3,789 51 45 5,254 Restricted for: Community and economic development Flood Control District Health Judicial activities Law enforcement Library District Municipal facilities Pima animal care Sanitation School reserve Streets and highways Waste tire Other purposes Total restricted $ 11,542 17,707 37 9,448 2,420 10,983 496 6,838 1,627 943 57,141 1,118 104,274 135 3,627 252 822 1,847 6,962 1,508 $ 6,656 195 195 $ 77,550 80,682 $ 105,977 61 $ 6,656 1,351 1,683 30 426 195 10,341 1,351 1,486 26 426 197 4 201 135 414 194 1,179 3,627 252 822 1,847 8,470 414 194 1,179 Assigned to: Debt service reserve Health Law enforcement Parks and recreation School reserve Other purposes Total assigned 11,983 24,593 6,982 18,374 2,366 10,652 9,448 3,993 10,983 496 57,857 1,627 2,061 161,415 1,573 51,019 Committed to: Community and economic development Judicial activities Library District Municipal facilities Parks and recreation School reserve Sports promotion (Stadium) Other purposes Total committed Unassigned: Total Fund Balance 441 6,886 6,982 18,374 2,329 10,652 6,656 3,289 6,656 (9,097) 60,618 $ $ 68,453 253,933 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 5: Capital Assets Capital asset activity for the year ended June 30, 2016, was as follows: Balance July 1, 2015 Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated $ Capital assets being depreciated: Buildings and improvements Infrastructure Equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Infrastructure Equipment Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net $ 521,049 104,275 625,324 Increases $ Less accumulated depreciation for: Buildings and improvements Sewage conveyance systems Equipment Total accumulated depreciation Total capital assets being depreciated, net Business-type activities capital assets, net $ (97,900) (97,900) $ 526,319 33,327 559,646 31,590 59,887 15,822 107,299 (480) (3,494) (6,415) (10,389) 860,346 1,433,719 220,965 2,515,030 (235,522) (702,291) (94,395) (1,032,208) (26,358) (38,794) (16,339) (81,491) 284 1,885 5,946 8,115 (261,596) (739,200) (104,788) (1,105,584) 1,385,912 2,011,236 $ Capital assets being depreciated: Buildings and improvements Sewage conveyance systems Equipment Total capital assets being depreciated $ 829,236 1,377,326 211,558 2,418,120 $ Balance July 1, 2015 Business-type activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated 5,270 26,952 32,222 Balance June 30, 2016 Decreases 13,994 50,204 64,198 25,808 58,030 $ Increases $ 5 46,480 46,485 (2,274) (100,174) $ Balance June 30, 2016 Decreases $ (57,549) (57,549) 1,409,446 1,969,092 $ 13,999 39,135 53,134 767,458 751,093 141,522 1,660,073 5,925 43,058 12,192 61,175 (188) (3,093) (2,995) (6,276) 773,195 791,058 150,719 1,714,972 (143,390) (293,569) (45,692) (482,651) (27,249) (14,957) (9,867) (52,073) 125 2,511 2,094 4,730 (170,514) (306,015) (53,465) (529,994) 1,177,422 1,241,620 62 $ 9,102 55,587 $ (1,546) (59,095) $ 1,184,978 1,238,112 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 5: Capital Assets (continued) Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Internal service funds Total governmental activities depreciation expense Business-type activities: Parking Garages Regional Wastewater Reclamation Department Total business-type activities depreciation expense $ $ $ $ 17,607 13,039 35,357 2,536 594 93 6,666 843 4,756 81,491 17,606,533 13,039,003 35,213,003 2,536,301 594,104 92,893 6,665,835 794,627 4,756,255 81,298,555 697 51,376 52,073 696,403.88 51,376,516.56 52,072,920 Balance July 1, 2015 Increases Balance June 30, 2016 Decreases Discretely presented component units: Southwestern Fair Commission (SFC): Capital assets being depreciated: Buildings and improvements Equipment Total capital assets being depreciated $ 7,130 2,737 9,867 Less accumulated depreciation for: Buildings and improvements Equipment Total accumulated depreciation Total capital assets being depreciated, net SFC capital assets, net $ 486 150 636 (3,958) (2,340) (6,298) (337) (135) (472) 3,569 164 3,569 63 $ $ 164 $ (139) (253) (392) $ 139 253 392 7,477 2,634 10,111 (4,156) (2,222) (6,378) 3,733 $ 3,733 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 6: Claims, Judgments and Risk Management Self-Insurance Trust Fund (SIT Fund) The SIT Fund, an internal service fund, accounts for the financing of the insured risk of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; medical malpractice; environmental claims; and natural disasters. The SIT Fund is liable for any single general or automobile liability claim up to $2,500 per occurrence, any workers’ compensation claim up to $1,000 per occurrence, and any single medical malpractice claim up to $1,000 per occurrence or any medical malpractice claims in aggregate up to $5,000 in any policy year. The County purchases commercial insurance for claims in excess of coverage provided by the SIT Fund. Settled claims have not exceeded insurance coverage in any of the last three fiscal years. Payment of unemployment claims is fully self-funded. Payment of environmental claims is generally self-funded, although some claims filed could result in past insurers being liable for such losses. All of the County’s departments participate in the SIT Fund. With the exception of environmental and unemployment losses, charges are based on actuarial estimates of the amounts needed to pay prior- and current-year claims. Charges for environmental losses are based on historical experience. Charges for unemployment losses are based on actual claims paid. Claims liabilities at June 30, 2016, for each insurable area are as follows: Auto liability General liability Workers' compensation Medical malpractice Environmental liability $ $ 135 18,842 20,527 120 1,500 41,124 The above amounts, excluding the environmental liability, are reported at their present value using an expected future investment yield assumption of 2 percent. Changes in the unpaid claims liability reported in the SIT Fund are as follows: Year 2014-15 2015-16 Balance July 1 $ 34,161 27,177 Current-Year Claims and Changes in Estimates $ (470) * 18,553 Claims Payments $ (6,514) (4,606) Balance June 30 $ 27,177 41,124 *This reduction was due to a decrease in the actuarial estimate for unpaid claims, which was greater than actual claims during the fiscal year ended June 30, 2015. 64 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 6: Claims, Judgments and Risk Management (continued) Health Benefits Trust Fund (HBT Fund) The County created the HBT Fund, an internal service fund, to account for the financing of the County’s selfinsured medical/pharmacy plan for employees and their dependents. The HBT Fund is responsible for collecting employer and employee premiums through payroll deductions and reimbursing Aetna, acting as a third-party administrator, for the payment of claims. The plan consists of two plan options, a High Deductible Health Plan and a Preferred Provider Organization Plan. The County purchases commercial stop-loss insurance coverage for claims in excess of coverage provided by the HBT Fund. Settled claims have not exceeded insurance coverage during the past three fiscal years. Claim liabilities are computed using a combination of two actuarial methods: the completion factor approach and the exposure approach. Accrued actuarial liabilities for the HBT Fund at June 30, 2016 for each plan option are as follows: High-Deductible Health Plan: Medical Pharmacy $ Preferred Provider Organization Plan: Medical Pharmacy $ 2,106 884 1,033 577 4,600 Changes in the unpaid claims liabilities reported in the HBT Fund are as follows: Year 2014-15 2015-16 Balance July 1 $ 6,700 4,200 Current-Year Claims and Changes in Estimates $ 46,123 49,285 Claims Payments $ (48,623) (48,885) Balance June 30 $ 4,200 4,600 Litigation Pima County is a defendant in a number of court actions. In the opinion of County management, the final disposition of these actions, if unfavorable, will not have a material effect upon the County's financial statements. Pollution Remediation The County has estimated and reported an environmental liability of $71 in the government-wide financial statements for governmental activities (in noncurrent liabilities). Remediation efforts are currently underway at one County site: El Camino del Cerro. Remediation efforts continue at the El Camino del Cerro site which is approximately bordered by the Santa Cruz River on the west, Interstate 10 on the east and El Camino del Cerro Road on the south. The groundwater 65 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 6: Claims, Judgments and Risk Management (continued) contamination is suggested to resonate from the municipal and solid waste landfill operated on the site from 1973 to 1977. The estimated liability was calculated based upon the expected future outlays associated with the estimate of one pump-and-treat system for one year. There is potential for changes due to increased costs associated with sewage disposal costs, construction costs for extraction and injection wells, and/or changes in the estimated extent of contamination. Note 7: Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2016. Balance July 1, 2015 Additions Balance Due within Reductions June 30, 2016 1 year Governmental activities: General obligation bonds Unamortized premium/discount Total general obligation bonds $ 383,935 7,363 391,298 Transportation revenue bonds Unamortized premium/discount Total transportation revenue bonds 113,870 4,900 118,770 Certificates of participation Unamortized premium/discount Total certificates of participation 166,245 11,526 177,771 $ $ Capital lease payable Installment note payable 41,560 3,644 45,204 168,620 10,434 179,054 34,415 3,445 37,860 149 13 136 48 3,179 8,733 2,394 16,236 15,141 16,547 3,027 Landfill closure and post-closure care costs (Note 9) Total governmental activities long-term liabilities $ 682,735 4,660 567 28,123 17,601 15,075 4,491 10,584 294 223 71 1,429,188 66 503 $ 41,445 1,504 42,949 43,935 2,552 46,487 Reported but unpaid losses (Note 6) Incurred but not reported losses (Note 6) 29,494 $ 14,585 1,269 15,854 29,538 Compensated absences payable 344,620 5,515 350,135 100,660 3,301 103,961 653,197 Pollution remediation (Note 6) $ 13,210 1,599 14,809 11,912 Net pension liabilities (Note 11) 39,315 1,848 41,163 96,251 5,465 6,284 29,997 $ 114,309 $ 1,411,130 $ 110,854 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) Balance July 1, 2015 Additions Balance Due within Reductions June 30, 2016 1 year Business-type activities: Sewer revenue bonds Unamortized premium/discount Total revenue bonds payable $ 120,095 266 120,361 $ 15,950 258 16,208 $ 104,145 8 104,153 $ 11,250 94 11,344 Sewer revenue obligations Unamortized premium/discount Total revenue obligations payable 472,240 38,523 510,763 22,740 6,996 29,736 449,500 31,527 481,027 36,170 6,365 42,535 Regional Wastewater Reclamation Loans payable Total loans payable 18,145 18,145 1,582 1,582 16,563 16,563 1,629 1,629 Net pension liabilities (Note 11) 44,154 Contracts and notes 1,098 Compensated absences payable 3,092 Total business-type activities long-term liabilities $ 697,613 $ 1,448 45,602 1,479 $ 2,927 $ 1,000 1,577 406 2,686 48,932 $ 651,608 $ 55,508 The County’s debt consists of various issues of general obligation bonds, HURF revenue bonds, certificates of participation, sewer revenue bonds, loans, and obligations that are generally callable with interest payable semiannually. Bond proceeds primarily pay for acquiring or constructing capital facilities. Bonds have also been issued to advance-refund previously issued bonds. The County repays general obligation bonds from voter-approved property taxes. HURF revenue bonds are repaid from net highway user revenues in the Transportation fund. Certificates of participation are repaid from General fund and other various funds’ revenues. Sewer revenue bonds, loans, and obligations are repaid from the charges for services in the Regional Wastewater Reclamation fund. GENERAL OBLIGATION BONDS OUTSTANDING Governmental Activities (Payments made from property tax revenues of the Debt Service Fund) General obligation bonds payable at June 30, 2016, consisted of the outstanding general obligation bonds presented below. Of the total amounts originally authorized, $1,289 from the May 20, 1997, $6,400 from the May 18, 2004, $37 from the May 16, 2006, and $17,955 from November 4, 2014 bond elections remain unissued. 67 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) The following table presents amounts outstanding by issue. Issue Issue Amount Series of 2007 $ 95,000 Series of 2008 100,000 Series of 2009 75,000 Series of 2009A 90,000 Series of 2011 75,000 Series of 2012A 60,000 Series of 2012B Refunding 16,225 Series of 2013A 50,000 Series of 2013B Refunding 38,575 Series of 2014 10,000 Series of 2015 15,000 G.O. bonds outstanding Plus unamortized premium/discount: Interest Rates 3.00 - 4.25% 4.00% 3.50 - 4.13% 3.50 - 4.00% 3.00 - 5.00% 3.00 - 4.00% 3.00% 1.75 - 4.00% 3.00 - 4.00% 1.50 - 5.00% 2.25 - 4.00% Outstanding Call Date June 30, 2016 July 1, 2017 $ 34,715 July 1, 2018 53,750 July 1, 2019 32,185 July 1, 2019 52,395 July 1, 2021 38,145 July 1, 2022 38,960 4,035 July 1, 2023 41,185 29,435 July 1, 2023 8,000 July 1, 2025 11,815 344,620 5,515 Total G.O. bonds outstanding $ 350,135 Maturities 2017-21 2017-22 2017-23 2017-24 2017-26 2017-27 2017 2017-28 2017-20 2018-28 2018-29 The following schedule details general obligation bond debt service requirements to maturity at June 30, 2016. Year Ending June 30, 2017 2018 2019 2020 2021 2022 - 2026 2027 - 2029 Total Principal 41,445 43,005 40,475 43,450 39,935 119,510 16,800 $ 344,620 $ Interest 12,802 11,445 9,873 8,461 6,932 14,827 895 $ 65,235 $ REFUNDED GENERAL OBLIGATION BONDS In prior years, the County defeased $1,200 of General Obligation Bonds, Series 2007 with County funds. County funds were placed in an irrevocable trust to provide for future debt service payments of the defeased debt. Accordingly, the trust account assets and liability for the defeased bonds are not included in the County’s financial statements. At June 30, 2016, $1,200 of outstanding bonds are considered defeased. 68 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) TRANSPORTATION BONDS PAYABLE Governmental Activities (Payments made from street and highway revenues) Pima County transportation revenue bonds were issued to provide monies to construct improvements to the County’s streets and highways. Of the total amount originally authorized, $73,375 from the November 4, 1997 bond election remains unissued. The following table presents amounts outstanding by issue. Issue Interest Issue Maturities Rates Amount Series of 2007 $ 21,000 3.25 - 4.75% 2017-22 25,000 4.00 - 4.50% 2017-22 Series of 2008 Series of 2009 15,000 3.00 - 4.00% 2017-24 Series of 2009 Refunding 8,420 3.00 - 4.00% 2017-24 Series of 2012 18,425 3.00 - 4.00% 2017-27 Series of 2012 Refunding 14,520 4.00% 2017-18 Series of 2014 16,000 3.00 - 5.00% 2017-28 Series of 2014 Refunding 8,805 5.00% 2017-18 Series of 2015 Refunding 13,685 5.00% 2019-20 Transportation bonds outstanding Plus unamortized premium/discount: Total transportation bonds outstanding Outstanding Call Date June 30, 2016 July 1, 2017 $ 11,680 July 1, 2018 16,040 July 1, 2019 12,400 July 1, 2019 6,330 July 1, 2022 14,520 6,230 July 1, 2023 14,405 8,805 10,250 100,660 3,301 $ 103,961 The following schedule details transportation bond debt service requirements to maturity at June 30, 2016. Year Ending June 30, 2017 2018 2019 2020 2021 2022 - 2026 2027 - 2028 Total Principal $ 14,585 15,245 14,160 14,875 10,020 27,350 4,425 $ 100,660 69 Interest $ 4,146 3,497 2,824 2,204 1,555 3,030 191 $ 17,447 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) Pima County has pledged future street and highway revenues, to repay $100,660 in transportation revenue bonds issued between 2007 and 2015. Proceeds from the bonds provide financing for construction of various highways and streets within Pima County. The bonds are payable from transportation revenues and are payable through 2028. Total principal and interest remaining to be paid on the bonds is $118,107. It is expected that approximately 33 percent of revenues will be used to pay annual principal and interest on the bonds. Prior year street and highway revenues are required to be greater than two times the maximum annual debt service payment. Principal and interest paid for bonds in the current year, the maximum principal and interest to be paid in any one future year, and total street and highway revenues for the prior fiscal year were $17,921, $18,742 and $53,212, respectively. CERTIFICATES OF PARTICIPATION Governmental Activities (Payments made from General Fund revenues) Certificates of Participation represent proportionate interests in semiannual lease payments. The County’s obligation to make lease payments is subject to annual appropriations being made by the County for that purpose. On May 1, 2007, the County issued Certificates of Participation Series 2007A for $28,765 to finance the acquisition of and improvements to a 22-story office tower located in downtown Tucson and to acquire and construct replacement facilities for the Pima County Community Services Department. On February 4, 2010, the County issued Certificates of Participation Series 2010 for $20,000 to finance the replacement computer enterprise system composed of servers and other hardware, computer terminals, software and system training. The enterprise system serves the County with finance, budget, procurement, human resources, and material management systems. On May 22, 2013, the County issued Certificates of Participation Series 2013A for $80,175. The County intends to use $60,000 of the proceeds from that issue for projects related to its sewer system. Although no sewer revenues are pledged for the repayment of the Certificates, the County intends to transfer available cash from the Regional Wastewater Reclamation Fund to repay that portion of the proceeds actually used for sewer projects. The County also issued $12,705 of Refunding Certificates of Participation, Series 2013B. The Certificates were issued with a premium of $1,260 and the proceeds were used to refund and redeem $1,220 of Certificates of Participation, Series 1999, and $12,335 of Certificates of Participation, Series 2003, previously reported by the County as a jail capital lease. On February 12, 2014, the County issued Certificates of Participation Series 2014 for $52,160 to finance the costs of completing the Public Service Center and Office Tower. The County may also use a portion of the funds for other capital projects. On April 15, 2015, the County issued Certificates of Participation Series 2015 for $57,025 to expand and improve the County’s existing sewer system facilities. The County may also use a portion of the funds for other capital projects. 70 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) On April 14, 2016, the County issued Certificates of Participation Series 2016A for $28,750, $9,640 to refund a portion of Certificates of Participation Series 2007A, and $19,110 of the proceeds to expand and improve the County’s existing sewer system facilities. Although no specific sewer revenues are pledged for the repayment of the Certificates, the County anticipates using available cash from the Regional Wastewater Reclamation Fund to repay that portion of the proceeds actually used for sewer projects. The $9,640 refunding portion of Certificates were issued with a premium of $1,469 and the proceeds were used to refund and redeem $10,320 of Certificates of Participation Series 2007A. The 2016A Certificates refunding portion have an average life of 4.41 years and an average interest rate of 4.99%. This refunding transaction resulted in an economic gain of $1,061 and a reduction in debt service between the refunding debt and the refunded debt of $1,169. The proceeds of the new Certificates were placed in an irrevocable trust to provide for future debt service payments of the refunded Certificates. Accordingly, the trust account assets and liability for the defeased Certificates are not included in the County’s financial statements. On April 14, 2016, the County also issued Certificates of Participation Series 2016B for $15,185 to develop, design, and construct a manufacturing and administrative headquarters to be used by World View Enterprises, Inc., which will lease the facility from the County over a 20-year period. The County, in January 2016, entered into a lease-sale agreement with World View Enterprises, Inc., a private for-profit entity, as the tenant/purchaser of a to-be-built County facility. The County intends to use the proceeds of the Taxable 2016B Certificates to pay for the construction of the facility, which will be owned by the County during the term of the lease-sale agreement. The following schedule details outstanding Certificates of Participation payable at June 30, 2016. Issue Interest Outstanding Issue Call Date June 30, 2016 Amount Rates Maturities Series of 2007A $ 28,765 5.00% 2017-18 July 1, 2017 $ 4,450 Series of 2010 20,000 4.00 - 5.25% 2017-19 7,550 Series of 2013A 80,175 5.00% 2017-23 17,405 Series of 2013B Refunding 12,705 5.00% 2017-18 5,435 Series of 2014 52,160 4.00 - 5.00% 2017-29 December 1, 2023 47,820 Series of 2015 57,025 2.00 - 5.00% 2017-19 42,025 Series of 2016A 19,110 2.00 - 5.00% 2017-19 19,110 Series of 2016A Refunding 9,640 2.00 - 5.00% 2017-22 9,640 Series of 2016B 15,185 1.12 - 4.04% 2017-31 June 1, 2026 15,185 Certificates of participation outstanding 168,620 Plus unamortized premium/discount: 10,434 Total certificates of participation outstanding $ 179,054 71 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details debt service requirements to maturity for the County’s Certificates of Participation payable at June 30, 2016. Year Ending June 30, 2017 2018 2019 2020 2021 2022 - 2026 2027 - 2031 Total Principal 34,415 35,605 27,180 9,685 9,390 32,470 19,875 $ 168,620 $ Interest 7,218 5,617 4,049 3,114 2,664 7,828 1,660 $ 32,150 $ INSTALLMENT NOTE PAYABLE Governmental Activities In prior years, the County acquired tasers and computer equipment under contract agreements at a total purchase price of $764 and $239, respectively. The County also acquired Stardust and Painted Hills properties under contract agreements at a total purchase price of $8,750 and $7,500, respectively. The following schedule details debt service requirements to maturity for the County’s installment note payable at June 30, 2016. Year Ending June 30, 2017 2018 2019 2020 Total Equipment Principal Interest $ 178 $ 4 $ 178 $ 4 Land Principal $ 2,216 2,348 2,423 1,568 $ 8,555 Interest 506 375 236 94 $ 1,211 $ CAPITAL LEASE Governmental Activities During fiscal year 2015-16, the County acquired computer network storage arrays under a long-term capital lease agreement. The carrying value of assets acquired through capital lease consists of $142 of equipment. The following schedule details debt service requirements to maturity for the County’s capital lease payable at June 30, 2016. Equipment Year Ending June 30, Principal Interest 2017 $ 48 $ 3 2018 50 2 2019 38 Total $ 136 $ 5 72 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) SEWER REVENUE BONDS AND LOANS Business-type Activities (Payments made from user charges received in the RWR) Pima County sewer revenue bonds, as presented below, were issued to provide monies to construct improvements to the County’s Regional Wastewater Reclamation system and for the defeasance of prior sewer revenue bonds. As of June 30, 2016, the County has issued the total amounts originally authorized from the May 20, 1997 and May 18, 2004 bond elections. Issue Interest Outstanding Issue Amount Rates Maturities Call Date June 30, 2016 30,245 Series of 2007 $ 50,000 4.00 - 5.00% 2017-26 July 1, 2017 $ Series of 2008 75,000 4.00 - 5.00% 2017-23 July 1, 2018 61,725 Series of 2009 18,940 3.50 - 4.25% 2017-24 July 1, 2019 12,175 Sewer revenue bonds outstanding 104,145 Plus unamortized premium/discount: 8 Total sewer revenue bonds outstanding $ 104,153 The following schedule details sewer revenue bond debt service requirements to maturity at June 30, 2016. Principal $ 11,250 11,810 12,405 13,025 13,685 41,970 $ 104,145 Year Ending June 30, 2017 2018 2019 2020 2021 2022 - 2026 Total Interest $ 4,354 3,886 3,414 2,914 2,302 3,830 $ 20,700 On June 17, 2010, Pima County entered into an agreement, whereby future revenues were pledged, that provided monies to be used primarily to pay a portion of the capital project costs associated with the construction, expansion and improvement of sewer treatment facilities and conveyance systems for the countywide sewer system, including the Agua Nueva (previously known as Roger Road) and Tres Rios (previously known as Ina Road) Wastewater Reclamation Facilities. In December 2011, the County issued Sewer Revenue Obligations Series 2011B for $189,160 to provide additional funding for the construction and improvements of the County’s wastewater conveyance systems and treatment facilities. In December 2012, the County issued Sewer Revenue Obligations Series 2012A for $128,795. The net proceeds of the issuance were used primarily to pay a portion of the costs of the construction, expansion and improvement of sewer treatment facilities and conveyance systems for the System, including the Agua Nueva and Tres Rios Wastewater Reclamation Facilities. 73 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) In February 2014, the County issued Sewer Revenue Obligations Series 2014 for $48,500. The net proceeds of the issuance were used primarily to pay a portion of the costs of the construction, expansion and improvement of sewer treatment facilities and conveyance systems for the System. Issue Interest Issue Amount Rates Maturities Series of 2010 $165,000 3.25 - 5.00% 2017-25 Series of 2011B 189,160 5.00% 2017-26 Series of 2012A 128,795 1.75 - 5.00% 2017-27 Series of 2014 48,500 5.00% 2017-28 Sewer revenue obligations outstanding Plus unamortized premium/discount: Total sewer revenue obligations outstanding Outstanding Call Date June 30, 2016 July 1, 2020 $ 159,000 July 1, 2021 143,270 July 1, 2022 103,910 July 1, 2023 43,320 449,500 31,527 $ 481,027 The following schedule details sewer revenue obligation debt service requirements to maturity at June 30, 2016. Year Ending June 30, 2017 2018 2019 2020 2021 2022 - 2026 2027 - 2028 Total Principal 36,170 37,795 39,615 41,585 43,605 229,855 20,875 $ 449,500 $ Interest 21,989 20,366 18,548 16,571 14,557 38,604 1,276 $ 131,911 $ In prior years, the Regional Wastewater Reclamation Enterprise Fund entered into various loan agreements (used for construction and improvement of wastewater treatment facilities). In October 2009 the County entered into an additional loan agreement for the funding of construction of wastewater treatment facilities. Interest is payable semiannually and is calculated based on the principal amount of the loan outstanding during such period. Issue 2004 Loans payable 2009 Loans payable Issue Amount $ 19,967 8,002 74 Interest Rate Maturities 1.81% 2017-24 0.96% 2017-24 Total loans payable Outstanding June 30, 2016 $ 11,416 5,147 $ 16,563 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details loans payable debt service requirements to maturity at June 30, 2016. Year Ending June 30, 2017 2018 2019 2020 2021 2022 - 2024 Total Principal 1,629 1,679 1,730 1,782 1,837 7,906 $ 16,563 $ Interest 480 430 378 324 269 490 $ 2,371 $ Pima County has pledged future user charges, net of specified operating expenses, to repay $104,145 in sewer revenue bonds issued between 2007 and 2009, $16,563 in sewer revenue loans issued between 2004 and 2009, and $449,500 in sewer revenue obligations issued between 2010 and 2014. Proceeds from the bonds, loans and obligations provided financing for construction of various treatment facilities and sewer infrastructure within Pima County. The bonds, loans and obligations are payable from net sewer revenues and are payable through fiscal year 2028. It is expected that approximately 73 percent of net revenues will be used to pay annual principal and interest payments on the bonds and obligations and approximately 2 percent of net revenues will be used to pay annual principal and interest on the loans. Total principal and interest remaining to be paid on the bonds, loans and obligations are $124,845, $18,934, and $581,411, respectively. Principal and interest paid for loans, bonds and obligations in the current year, and total customer net revenues were $2,134, $66,715 and $90,800, respectively. All sewer revenue bonds were issued and the loan agreements were executed with a first lien on the pledge of the RWR net revenues and have restrictive covenants, primarily related to minimum utility rates and limitations on future bond issues. The bond covenants also require the RWR to either maintain a surety bond guaranteeing the payment of annual debt service or to maintain in the Bond Reserve Account monies in amounts set by each debt issue. At June 30, 2016, the RWR met the requirements of the debt covenants. The County is also authorized to issue for the RWR additional parity bonds or revenue obligations if certain conditions are met, primarily that net revenues for parity bonds and pledged revenues for revenue obligations for the fiscal year immediately preceding issuance of the new debt exceed 120 percent of the maximum annual debt service requirements immediately after such issuance. CONTRACTS AND NOTES Business-type Activities (Payments made from restricted assets in the RWR) Contracts and notes consist of contract retentions for several construction projects. Generally, interest is not accrued and the timing of payments is based on completion of the related construction projects. 75 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 7: Long-Term Liabilities (continued) LEGAL DEBT MARGIN County General Obligation Bonds General obligation debt may not exceed 6 percent of the value of the County’s taxable property as of the latest assessment. However, with voter approval, debt may be incurred up to 15 percent of the value of taxable property. Pima County has received voter approval for all general obligation debt. The legal debt margin at June 30, 2016, is as follows: Net assessed valuation $ 7,906,190 Debt limit (15% of net assessed valuation): $ 1,185,929 Less amount of debt applicable to debt limit: General obligation bonds outstanding $ 344,620 Less fund balance in debt service fund available for payment of general obligation bond principal (5,606) Legal debt margin available 339,014 $ 846,915 Note 8: Short-Term Liabilities LINE OF CREDIT The County maintains a revolving line of credit with Bank of America National Trust and Savings Association to meet its short-term cash needs. At June 30, 2016, the County had an outstanding balance of $0. Advances on the line of credit are payable on demand. The credit line is secured by the County’s general taxing authority. Line of credit July 1, 2015 Balance $0 Draws $20,000 76 Repayments $20,000 June 30, 2016 Balance $0 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 9: Landfill Liabilities Solid Waste Landfill Closure and Post-Closure Care Costs: State and Federal laws and regulations require the County to place a final cover on its solid waste landfill sites when these sites stop accepting waste and to perform certain maintenance and monitoring functions at the sites for thirty years after their closure. Although closure and post-closure care costs will not be paid until near or after the date the landfills stop accepting waste, the County records a portion of these closure and post-closure care costs as a longterm liability in each period, based on landfill capacity used as of each balance sheet date. The $10,584 reported as landfill closure and post-closure care long-term liability within the governmental activities represents the cumulative amount reported to date, based on the percentage used of each landfill's total estimated capacity. The County will recognize the remaining estimated cost of closure and post-closure care of $4,111 as the remaining estimated capacities are used. These amounts are based on what it would cost to perform all closure and post-closure care in the fiscal year ended June 30, 2016; actual costs may change due to inflation, changes in technology, or changes in regulations. Landfill Site Ajo Sahuarita* Tangerine** Capacity Used June 30, 2016 74% 59% 100% Estimated Remaining Service Life 35 Years 26 Years Closed *The Sahuarita Landfill stopped accepting waste from the public in February 2016 but remains open for internal County waste disposal needs. **The Tangerine Landfill has stopped accepting waste and has reached its capacity. The construction to close this facility is currently in progress, and is expected to be completed by December 2016. The County plans to fund the estimated closure and post-closure care costs with proceeds of general obligation bonds. According to State and Federal laws and regulations, the County must comply with the local government financial test requirements that ensure the County can meet the costs of landfill closure, post-closure, and corrective action when needed. The County is in compliance with these requirements. The Ina Road Landfill facility is closed to municipal solid waste and only receives green waste and construction debris. It is not subject to the closure and postclosure cost requirements referred to above. Pima County estimates that it will cost approximately $11,232 when closure occurs and plans to fund the costs with proceeds of general obligation bonds. At this time, there is no closure date available. On June 1, 2013 Tucson Recycling and Waste Services was contracted to operate the remaining open landfills and transfer stations on behalf of Pima County in an agency capacity. The closure and post closure costs remain the liability of Pima County. 77 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 10: Operating Leases The County leases land, buildings, parking spaces, machineries, and office equipment under the provisions of various long-term lease agreements classified as operating leases for accounting purposes. Rental expenditures under the terms of the operating leases were $5,767 for the year ended June 30, 2016. These operating leases have remaining lease terms from one to thirty nine years. Also, they provide renewal options and are contingent on budgetary appropriations each fiscal year. The future estimated minimum rental payments under these operating leases as of June 30, 2016, are as follows: Year ending June 30 2017 2018 2019 2020 2021 2022-26 2027-31 2032-36 2037-41 2042-46 2047-51 2052-55 Total minimum lease payments Governmental Activities Business-type Activities $ 16,358 14,782 14,300 3,740 360 584 $ $ 50,124 $ 78 200 200 200 200 200 1,000 1,000 1,000 1,000 1,000 1,000 750 7,750 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits The County contributes to the Arizona State Retirement System (ASRS), the Corrections Officer Retirement Plan (CORP), the Corrections Officer Retirement Plan – Administrative Office of the Courts (CORP AOC), the Public Safety Personnel Retirement System (PSPRS), consisting of Pima County Sheriffs and Pima County - County Attorney Investigators, and the Elected Officials Retirement Plan (EORP), all component units of the State of Arizona. At June 30, 2016, the County reported the following aggregate amounts related to pensions for all plans to which it contributes: Statement of Net Position and Statement of Activities Net pension liabilities Deferred outflows of resources Deferred inflows of resources Pension expense Governmental Activities $ 682,735 102,101 42,084 68,482 $ Business-Type Activities 45,602 4,378 4,501 2,356 $ Total 728,337 106,479 46,585 70,838 The County’s accrued payroll and employee benefits includes $2,750 of outstanding pension contribution amounts payable to all pension plans for the year ended June 30, 2016. Also, the County reported $45,366 of pension contributions as expenditures in the governmental funds related to all pension plans to which it contributes. The ASRS, CORP, CORP AOC, PSPRS - Pima County Sheriffs, and EORP plans are described below. The PSPRS, Pima County - County Attorney Investigators are not described due to their relative insignificance to the County's financial statements. A. Arizona State Retirement System Plan description—County employees not covered by the other pension plans described below participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on its website at www.azasrs.gov. 79 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Benefits provided—The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: ASRS Years of service and age required to receive benefit Retirement Initial membership date: Before July 1, 2011 On or after July 1, 2011 Sum of years and age equals 80 30 years, age 55 10 years, age 62 25 years, age 60 5 years, age 50* 10 years, age 62 any years, age 65 5 years, age 50* any years, age 65 Final average salary is based on Highest 36 consecutive months of last 120 months Highest 60 consecutive months of last 120 months 2.1% to 2.3% 2.1% to 2.3% Benefit percent per year of service *With actuarially reduced benefits. Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earning. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a member’s death. For retired members, the retirement benefit option chosen determines the survivor benefit. For all other members, the beneficiary is entitled to the member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. Contributions—In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the year ended June 30, 2016, statute required active ASRS members to contribute at the actuarially determined rate of 11.47 percent (11.35 percent for retirement and 0.12 percent for long-term disability) of the members’ annual covered payroll, and statute required the County to contribute at the actuarially determined rate of 11.47 percent (10.85 percent for retirement, 0.50 percent for health insurance premium benefit, and 0.12 percent for long-term disability) of the active members’ annual covered payroll. In addition, the County was required by statute to contribute at the actuarially determined rate of 9.36 percent (9.17 percent for retirement, 0.13 percent for health insurance premium benefit, and 0.06 percent for long-term disability) of annual covered payroll of retired members who worked for the County in positions that an employee who contributes to the ASRS would typically fill. The County’s contributions to the pension plan for the year ended June 30, 2016, were $24,752. The County’s OPEB contributions for the current and 2 preceding years for OPEB, all of which were equal to the required contributions, were as follows: ASRS Year ended June 30 2016 2015 2014 Health Benefit Supplement Fund $ 1,129 1,363 1,387 80 Long-Term Disability Fund $ 272 277 555 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) During fiscal year 2016, the County paid for ASRS pension and OPEB contributions as follows: 60 percent from the General Fund, 10 percent from major funds, and 30 percent from other funds. Pension liability—At June 30, 2016, the County reported a liability of $391,629 for its proportionate share of the ASRS’ net pension liability. The net pension liability was measured as of June 30, 2015. The total pension liability used to calculate the net pension liability was determined using update procedures to roll forward the total pension liability from an actuarial valuation as of June 30, 2014, to the measurement date of June 30, 2015. The County’s proportion of the net pension liability was based on the County’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2015. The County’s proportion measured as of June 30, 2015, was 2.51 percent, which was a decrease of 0.05 percent from its proportion measured as of June 30, 2014. Pension expense and deferred outflows/inflows of resources—For the year ended June 30, 2016, the County recognized pension expense for ASRS of $20,082. At June 30, 2016, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: ASRS Deferred Outflows of Resources $ 10,686 Differences between expected and actual experience Deferred Inflows of Resources $ 20,522 Net difference between projected and actual earnings on pension plan investments 12,551 Changes in proportion and differences between county contributions and proportionate share of contributions 2,245 County contributions subsequent to the measurement date 24,752 Total $ 37,683 5,838 $ 38,911 The $24,752 reported as deferred outflows of resources related to ASRS pensions resulting from County contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions will be recognized in pension expense as follows: Year ending June 30 2017 2018 2019 2020 $ 81 (9,335) (16,133) (9,572) 9,060 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Actuarial Assumptions—The significant actuarial assumptions used to measure the total pension liability are as follows: ASRS Actuarial valuation date Actuarial roll forward date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2014 June 30, 2015 Entry age normal 8% 3–6.75% 3% Included 1994 GAM Scale BB Actuarial assumptions used in the June 30, 2014, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2012. The long-term expected rate of return on ASRS pension plan investments was determined to be 8.79 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: ASRS Asset Class Equity Fixed income Real estate Multi-asset Commodities Total Target Allocation 58% 25% 10% 5% 2% 100% Long-Term Expected Arithmetic Real Rate of Return 6.79% 3.70% 4.25% 3.41% 3.93% Discount Rate—The discount rate used to measure the ASRS total pension liability was 8 percent, which is less than the long-term expected rate of return of 8.79 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 82 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Sensitivity of the County’s proportionate share of the ASRS net pension liability to changes in the discount rate—The following table presents the County’s proportionate share of the net pension liability calculated using the discount rate of 8 percent, as well as what the County’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (7 percent) or 1 percentage point higher (9 percent) than the current rate: ASRS County’s proportionate share of the net pension liability 1% Decrease (7%) $ 513,167 Current Discount Rate (8%) $ 391,629 1% Increase (9%) $ 308,335 Pension plan fiduciary net position—Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. B. Public Safety Personnel Retirement System and Corrections Officer Retirement Plan Plan descriptions—County sheriff employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan (agent plans). A seven-member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. County detention officers and Administrative Office of the Courts (AOC) probation, surveillance, and juvenile detention officers participate in the Corrections Officer Retirement Plan (CORP). The CORP administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan for county detention officers (agent plans), and a cost-sharing multiple-employer defined benefit pension plan and a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan for AOC officers (cost-sharing plans). The PSPRS Board of Trustees and the participating local boards govern CORP according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. The PSPRS and CORP issues a publicly available financial report that includes financial statements and required supplementary information for PSPRS and CORP plans. The report is available on the PSPRS website at www.psprs.com. Benefits provided—The PSPRS and CORP provide retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefit terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: PSPRS Initial membership date: Before January 1, 2012 On or after January 1, 2012 Retirement and Disability Years of service and age required to receive benefit 20 years, any age 15 years, age 62 25 years, age 52.5 Final average salary is based on Highest 36 consecutive months of last 20 years Highest 60 consecutive months of last 20 years 83 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) PSPRS Initial membership date: Before January 1, 2012 On or after January 1, 2012 Benefit percent Normal Retirement Accidental Disability Retirement Catastrophic Disability Retirement Ordinary Disability Retirement 50% less 2.0% for each year of credited service less than 20 years OR plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 2.5% per year of credited service, not to exceed 80% 50% or normal retirement, whichever is greater 90% for the first 60 months then reduced to either 62.5% or normal retirement, whichever is greater Normal retirement calculated with actual years of credited service or 20 years of credited service, whichever is greater, multiplied by years of credited service (not to exceed 20 years) divided by 20 Survivor Benefit Retired Members 80% to 100% of retired member’s pension benefit Active Members 80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job CORP Initial membership date: Before January 1, 2012 On or after January 1, 2012 Retirement and Disability Years of service and age required to receive benefit Sum of years and age equals 80 20 years, any age 10 years, age 62 25 years, age 52.5 10 years, age 62 Final average salary is based on Highest 36 consecutive months of last 10 years Highest 60 consecutive months of last 10 years Benefit percent Normal Retirement Accidental Disability Retirement Total and Permanent Disability Retirement 2.0% to 2.5% per year of credited service, not to exceed 80% 50% or normal retirement if more than 20 years of credited service 50% or normal retirement if more than 25 years of credited service 50% or normal retirement if more than 25 years of credited service 84 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) CORP Initial membership date: Before January 1, 2012 On or after January 1, 2012 Ordinary Disability Retirement 2.5% per year of credited service Survivor Benefit Retired Members 80% of retired member’s pension benefit Active Members 40% of average monthly compensation or 100% of average monthly compensation if death was the result of injuries received on the job. If there is no surviving spouse or eligible children, the beneficiary is entitled to 2 times the member’s contributions. Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. In addition, from and after December 31, 2015, the Legislature may enact permanent one-time benefit increases after a Joint Legislative Budget Committee analysis of the increase's effects on the plan. PSPRS also provides temporary disability benefits of 50 percent of the member's compensation for up to 12 months. Employees covered by benefit terms—At June 30, 2016, the following employees were covered by the agent pension plans’ benefit terms: Inactive employees or beneficiaries currently receiving benefits Inactive employees entitled to but not yet receiving benefits Active employees Total PSPRS Sheriff 373 118 478 CORP Detention 182 102 465 969 749 Contributions and annual OPEB cost—State statutes establish the pension contribution requirements for active PSPRS and CORP employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS and CORP pension and health insurance premium benefits. As allowed by statute, the County contributed 3.65 percent of the PSPRS members’ required contribution. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2016, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active members—Pension Pension PSPRS Sheriff CORP Detention CORP AOC 11.65% 8.41% 8.41% County Pension Health insurance premium benefit 49.76% 0.28% 22.79% 0.18% 19.10% 0.85% 85 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) In addition, statute required the County to contribute at the actuarially determined rate of 28.62 percent for the PSPRS and 11.33 percent for the CORP of annual covered payroll of retired members who worked for the County in positions that an employee who contributes to the PSPRS or CORP would typically fill. For the agent plans, the County’s contributions to the pension plan and annual OPEB cost and contributions for the health insurance premium benefit for the year ended June 30, 2016, were: PSPRS Sheriff Pension Contributions made $ CORP Detention 15,119 $ 4,618 Health Insurance Premium Benefit Annual OPEB cost 85 36 Contributions made 85 36 Contributions to the CORP AOC pension plan for the year ended June 30, 2016, were $2,613. The County’s contributions for the current and 2 preceding years for the CORP AOC OPEB, all of which were equal to the required contributions, were as follows: CORP AOC Health Insurance Fund $ 116 172 151 Year ended June 30 2016 2015 2014 During fiscal year 2016, the County paid for PSPRS and CORP pension and OPEB contributions as follows: 93 percent from the General Fund and 7 percent from other non-major funds. Pension liability —At June 30, 2016, the County reported the following net pension liabilities: PSPRS Sheriff CORP Detention CORP AOC (County’s proportionate share) Net Pension Liability $ 192,042 53,135 30,274 The net pension liabilities were measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. In May 2016 voters approved Proposition 124 that authorized certain statutory adjustments to PSPRS’ automatic cost-of-living adjustments. The statutory adjustments change the basis for future cost-of-living adjustments from excess investment earnings to the change in the consumer price index, limited to a maximum annual increase of 2 percent. The change in the County’s net pension liability as a result of the statutory adjustments is not known. 86 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Pension actuarial assumptions—The significant actuarial assumptions used to measure the total pension liability are as follows: PSPRS and CORP—Pension Actuarial valuation date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2015 Entry age normal 7.85% 4.0%–8.0% for PSPRS and 4.0%–7.25% for CORP 4.0% Included RP-2000 mortality table (adjusted by 105% for both males and females) Actuarial assumptions used in the June 30, 2015, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2011. The long-term expected rate of return on PSPRS and CORP pension plan investments was determined to be 7.85 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: PSPRS and CORP Target Allocation 2% 5% 4% 7% 8% 10% 11% 10% 13% 14% 16% 100% Asset Class Short term investments Absolute return Risk parity Fixed income Real assets GTAA Private equity Real estate Credit opportunities Non-U.S. equity U.S. equity Total Long-Term Expected Geometric Real Rate of Return 0.75% 4.11% 5.13% 2.92% 4.77% 4.38% 9.50% 4.48% 7.08% 8.25% 6.23% Pension discount rates—The discount rate used to measure the PSPRS and CORP total pension liabilities was 7.85 percent.The projection of cash flows used to determine the discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the pension plans' fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 87 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Changes in the Net Pension Liability PSPRS – Sheriff Balances at June 30, 2015 Changes for the year: Service cost Interest on the total pension liability Differences between expected and actual experience in the measurement of the pension liability Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2016 Total Pension Liability (a) $ 324,825 Increase (Decrease) Plan Fiduciary Net Net Pension Position Liability / (Asset) (b) (a) – (b) $ 139,846 $ 184,979 6,421 24,997 (4,579) 6,421 24,997 (4,579) (19,209) $ 88 7,630 332,455 $ 11,490 3,505 5,053 (19,209) (11,490) (3,505) (5,053) (124) (148) 124 148 567 140,413 $ 7,063 192,042 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) CORP – Detention Balances at June 30, 2015 Changes for the year: Service cost Interest on the total pension liability Differences between expected and actual experience in the measurement of the pension liability Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2016 Total Pension Liability (a) $ 100,333 Increase (Decrease) Plan Fiduciary Net Net Pension Position Liability / (Asset) (b) (a) – (b) $ 48,360 $ 51,973 2,798 7,751 (2,557) 2,798 7,751 (2,557) (5,988) $ 2,004 102,337 $ 3,441 1,737 1,765 (5,988) (3,441) (1,737) (1,765) (44) (69) 44 69 842 49,202 1,162 53,135 $ The County's proportion of the CORP AOC net pension liability was based on the County’s actual contributions to the plan relative to the total of all participating counties' actual contributions for the year ended June 30, 2015. The County's proportion measured as of June 30, 2015, was 12.45 percent, which was an increase of 0.02 percent from its proportion measured as of June 30, 2014. Sensitivity of the County’s net pension liability to changes in the discount rate—The following table presents the County's net pension liabilities calculated using the discount rate of 7.85 percent, as well as what the County's net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.85 percent) or 1 percentage point higher (8.85 percent) than the current rate: 1% Decrease (6.85%) Current Discount Rate (7.85%) 1% Increase (8.85%) PSPRS Sheriff Net pension liability $ 229,713 $ 192,042 $ 160,408 CORP Detention Net pension liability $ 66,061 $ 53,135 $ 42,408 $ 39,584 $ 30,274 CORP AOC County’s proportionate share of the net pension liability 89 $ 22,526 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Pension plan fiduciary net position—Detailed information about the pension plans’ fiduciary net position is available in the separately issued PSPRS and CORP financial reports. Pension expense—For the year ended June 30, 2016, the County recognized the following pension expense: PSPRS Sheriff CORP Detention CORP AOC (County’s proportionate share) $ Pension Expense 22,080 6,401 4,046 Pension deferred outflows/inflows of resources—At June 30, 2016, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS – Sheriff Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments County contributions subsequent to the measurement date Total $ 38,024 Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments County contributions subsequent to the measurement date $ Total $ CORP – AOC Deferred Outflows of Resources $ 1,037 3,209 4,082 Deferred Inflows of Resources $ 2,479 6,727 94 4,618 11,439 $ 2,479 Deferred Inflows of Resources $ 171 166 39 2,613 $ 90 $ 15,119 Differences between expected and actual experience Total 4,082 22,613 Deferred Outflows of Resources Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between county contributions and proportionate share of contributions County contributions subsequent to the measurement date $ 292 $ CORP – Detention Deferred Inflows of Resources 7,064 $ 171 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) The amounts reported as deferred outflows of resources related to pensions resulting from county contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ending June 30 2017 2018 2019 2020 2021 PSPRS Sheriff $ $ CORP Detention 4,696 4,696 4,696 5,307 (572) 18,823 $ $ 1,236 1,236 1,236 861 (227) 4,342 CORP AOC $ $ 1,101 1,101 1,101 989 (12) 4,280 Agent plan OPEB actuarial assumptions—The health insurance premium benefit contribution requirements for the year ended June 30, 2016, were established by the June 30, 2014, actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the reported amounts' value and assumptions about the probability of events in the future. Amounts determined regarding the plans' funded status and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress for the health insurance premium benefit presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of the plans' assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on (1) the plans as the County and plans' members understand them and include the types of benefits in force at the valuation date, and (2) the pattern of sharing benefit costs between the County and plans' members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The significant actuarial methods and assumptions used are the same for all PSPRS and CORP plans and related benefits (unless noted), and the following actuarial methods and assumptions were used to establish the fiscal year 2016 contribution requirements: PSPRS and CORP—OPEB Contribution Requirements Actuarial valuation date June 30, 2014 Actuarial cost method Entry age normal Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period 22 years for unfunded actuarial accrued liability, 20 years for excess Asset valuation method 7-year smoothed market value; 20% corridor Actuarial assumptions: Investment rate of return 7.85% Projected salary increases 4%–8% for PSPRS and 4%–7.25% for CORP Wage growth 4% for PSPRS and CORP 91 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Agent plan OPEB trend information—Annual OPEB cost information for the health insurance premium benefit for the current and 2 preceding years follows for each of the agent plans: Year Ended June 30 PSPRS Sheriff 2016 2015 2014 CORP Detention 2016 2015 2014 Percentage of Annual Cost Contributed Annual OPEB Cost $ 85 608 563 100% 100% 100% $ 36 264 252 100% 100% 100% Net OPEB Obligation Agent plan OPEB funded status—The health insurance premium benefit plans’ funded status as of the most recent valuation date, June 30, 2015, along with the actuarial assumptions and methods used in those valuations follow. Actuarial value of assets: (a) Actuarial accrued liability: (b) Unfunded actuarial accrued liability (funding excess): (b) – (a) Funded ratio: (a)/(b) Annual covered payroll: (c) Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll: (b) – (a) / (c) 8,092 7,593 $ CORP Detention 3,532 3,092 $ (499) $ (440) $ 106.6% 31,515 $ 114.2% 20,816 $ PSPRS Sheriff (1.6)% (2.1)% The actuarial methods and assumptions used are the same for all the PSPRS and CORP health insurance premium benefit plans (unless noted), and for the most recent valuation date are as follows: PSPRS and CORP—OPEB Funded Status Actuarial valuation date June 30, 2015 Actuarial cost method Entry age normal Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period 21 years for unfunded actuarial accrued liability, 20 years for excess Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases Wage growth 7-year smoothed market value; 80%/120% market corridor 7.85% 4%–8% for PSPRS and 4%–7.25% for CORP 4% for PSPRS and CORP 92 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) C. Elected Officials Retirement Plan Plan description—Elected officials and judges participate in the Elected Officials Retirement Plan (EORP) or ASRS. EORP administers a cost-sharing multiple-employer defined benefit pension plan and a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan for elected officials and judges who were members of the plan on December 31, 2013. This plan was closed to new members as of January 1, 2014. The PSPRS Board of Trustees governs the EORP according to the provisions of A.R.S. Title 38, Chapter 5, Article 3. The PSPRS issues a publicly available financial report that includes its financial statements and required supplementary information for the EORP plans. The report is available on PSPRS’s website at www.psprs.com. Benefits provided—The EORP provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefit terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average yearly compensation, and service credit as follows: EORP Retirement and Disability Years of service and age required to receive benefit Initial membership date: Before January 1, 2012 On or after January 1, 2012 20 years, any age 10 years, age 62 5 years, age 65 5 years, any age* any years and age if disabled 10 years, age 62 5 years, age 65 any years and age if disabled Highest 36 consecutive months of last 10 years Highest 60 consecutive months of last 10 years Normal Retirement 4% per year of service, not to exceed 80% 3% per year of service, not to exceed 75% Disability Retirement 80% with 10 or more years of service 40% with 5 to 10 years of service 20% with less than 5 years of service 75% with 10 or more years of service 37.5% with 5 to 10 years of service 18.75% with less than 5 years of service Retired Members 75% of retired member’s benefit 50% of retired member’s benefit Active Members and Other Inactive Members 75% of disability retirement benefit 50% of disability retirement benefit Final average salary is based on Benefit percent Survivor Benefit * With reduced benefits of 0.25% for each month early retirement precedes the member’s normal retirement age, with a maximum reduction of 30%. Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. In addition, from and after December 31, 2015, the Legislature may enact permanent one-time benefit increases after a Joint Legislative Budget Committee analysis of the increase's effects on the plan. 93 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Contributions—State statutes establish active member and employer contribution requirements. Statute also appropriates $5 million annually through fiscal year 2043 for the EORP from the State of Arizona to supplement the normal cost plus an amount to amortize the unfunded accrued liability and designates a portion of certain court fees for the EORP. For the year ended June 30, 2016, active EORP members were required by statute to contribute 13 percent of the members' annual covered payroll, and the County was required to contribute 23.5 percent of active EORP members' annual covered payroll. Also, the County was required by statute to contribute 12.15 percent to EORP of the annual covered payroll of elected officials and judges who were ASRS members, in addition to the County's required contributions to ASRS for these elected officials and judges. In addition, the County was required by statute to contribute 23.5 percent of annual covered payroll of retired members who worked for the County in positions that would typically be filled by an employee who contributes to the EORP. The County’s contributions to the pension plan for the year ended June 30, 2016, were $1,555. No OPEB contributions were required or made for the years ended June 30, 2015 and 2016. The County's OPEB contributions for the current and 2 preceding years, all of which were equal to the required contributions, were as follows: EORP Year ended June 30 2016 2015 2014 Health Insurance Fund $ 54 During fiscal year 2016, the County paid for EORP pension contributions entirely from the General Fund. Pension liability—At June 30, 2016, the County reported a liability for its proportionate share of the EORP's net pension liability that reflected a reduction for the County's proportionate share of the State's appropriation for EORP. The amount the County recognized as its proportionate share of the net pension liability, the related state support, and the total portion of the net pension liability that was associated with the County were as follows: County’s proportionate share of the EORP net pension liability State’s proportionate share of the EORP net pension liability associated with the County Total $ $ 59,037 18,405 77,442 The net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The County's proportion of the net pension liability was based on the County's actual contributions to the plan relative to the total of all participating employers' actual contributions for the year ended June 30, 2015. The County’s proportion measured as of June 30, 2015 was 7.55 percent, which was a decrease of 0.09 percent from its proportion measured as of June 30, 2014. 94 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) Pension expense and deferred outflows/inflows of resources—For the year ended June 30, 2016, the County recognized pension expense for EORP of $17,941 and revenue of $4,952 for the County's proportionate share of the State's appropriation to EORP and the designated court fees. At June 30, 2016, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: EORP Deferred Outflows of Resources $ 94 9,892 Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between county contributions and proportionate share of contributions County contributions subsequent to the measurement date Total Deferred Inflows of Resources $ 657 358 271 $ 1,555 11,899 $ 928 The $1,555 reported as deferred outflows of resources related to EORP pensions resulting from County contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to EORP pensions will be recognized in pension expense as follows: Year ending June 30 2017 2018 2019 2020 $ 7,967 1,151 29 269 Actuarial assumptions—The significant actuarial assumptions used to measure the total pension liability are as follows: EORP Actuarial valuation date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2015 Entry age normal 7.85% 4.25% 4.00% Included RP-2000 mortality table projected to 2025 with projection scale AA Actuarial assumptions used in the June 30, 2015, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2011. 95 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 11 - Pensions and Other Postemployment Benefits (continued) The long-term expected rate of return on EORP pension plan investments was determined to be 7.85 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: EORP Asset Class Short term investments Absolute return Risk parity Fixed income Real assets GTAA Private equity Real estate Credit opportunities Non-U.S. equity U.S. equity Total Target Allocation 2% 5% 4% 7% 8% 10% 11% 10% 13% 14% 16% 100% Long-Term Expected Geometric Real Rate of Return 0.75% 4.11% 5.13% 2.92% 4.77% 4.38% 9.50% 4.48% 7.08% 8.25% 6.23% Discount rate—At June 30, 2015, the discount rate used to measure the EORP total pension liability was 4.86 percent, which was a decrease of 0.81 from the discount rate used as of June 30, 2014. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate, employer contributions will be made at the statutorily set rates, and state contributions will be made as currently required by statute. Based on those assumptions, the pension plan's fiduciary net position was projected to be insufficient to make all projected future benefit payments of current plan members. Therefore, to determine the total pension liability for the plan, the long-term expected rate of return on pension plan investments of 7.85 percent was applied to periods of projected benefit payments through the year ended June 30, 2028. A municipal bond rate of 3.80 percent obtained from the 20-year Bond Buyer Index, as published by the Federal Reserve as of June 25, 2015, was applied to periods of projected benefit payments after June 30, 2028. Sensitivity of the County's proportionate share of the EORP net pension liability to changes in the discount rate—The following table presents the County's proportionate share of the net pension liability calculated using the discount rate of 4.86 percent, as well as what the County's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (3.86 percent) or 1 percentage point higher (5.86 percent) than the current rate: EORP County’s proportionate share of the net pension liability 1% Decrease (3.86%) $ 68,727 Current Discount Rate (4.86%) $ 59,037 1% Increase (5.86%) $ 50,889 Pension Plan Fiduciary Net Position—Detailed information about the pension plan’s fiduciary net position is available in the separately issued EORP financial report. 96 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 12: Due from Other Governments Governmental activities: Capital Projects Fund General Fund Federal government: Grants and contributions State of Arizona: Taxes and shared revenues Grants and contributions Cities: Reimbursement for services Other governments: Reimbursement for services Total due from other governments fund based statements $ 184 20,915 $ $ $ 1,000 100 2,203 $ Other Governmental Funds 5 $ 787 1,849 23,048 Debt Service Fund 3,990 97 6,460 5,500 6,469 9 Total Governmental Activities Internal Service Funds $ $ 1,518 2 27,202 6,471 1 4,377 50 $ 14 $ 19,997 6,649 2,353 $ 3 $ 47,052 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 13: Interfund Transactions A. Interfund Assets/Liabilities Due from / Due to Other Funds are used to record loans or unpaid operating transfers between funds. Capital Projects $ Other Governmental 10 s vi ce e Se r al To ta l ter n In O 6 415 414 $ pr is W as 6,204 $ 17 Regional Wastewater Reclamation $ 45 $ 6,210 165 642 31 455 3,393 3,393 Other Enterprise Internal Services Total Re gi on al ov er n th er G O $ th er En te r en ta l m ts ro je c Ca pi ta lP al en er G Amounts recorded as due fro om: General te wa te r Re cl am at io n Amounts recorded as due to: 21 $ 452 $ 3,403 $ 7 11 6 2 6,663 $ 18 $ 64 $ 14 165 $ 43 14 $ 10,761 B. Transfers Transfers are used to record transactions between individual funds to subsidize their operations and fund debt service payments and capital construction projects. $ 5,892 $ s vi ce e To ta l In ter n al Se r pr is 155 25,807 289 2,479 56,299 18,391 22,692 Other Governmental 20,209 514 1,170 188 6 44,289 713 142 33,596 $ 47,317 $ $ 10,171 304 193 Total 7 $ 52 12,255 Internal Service 250 $ 24,883 Debt Service Regional Wastewater Reclamation th er En te r W as Re gi on al 243 $ O en ta l 413 th er G 1,600 $ O 2,179 $ eb tS er D vi ce ov er n m ts ro je c Capital Projects $ Ca pi ta lP al en er G Amounts recorded as transfe fers in: General te wa te r Re cl am at io n Amounts recorded as transfers out: 22,081 44,295 1,600 $ 16 87 50,352 $ 23,262 $ 958 843 $ 2,641 $ 159,611 The table above does not include transfers of capital assets from the proprietary funds to the governmental activities because these are not reported in the governmental funds. 98 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 14: Construction and Other Significant Commitments At June 30, 2016, Pima County had the following major contractual commitments related to Facilities Management, General Government, Natural Resources, Parks and Recreations, Stadium District, Transportation, and Regional Wastewater Reclamation. Facilities Management At June 30, 2016, the Pima County Facilities Management Department had construction contractual commitments of $13,937 and other contractual commitments related to service contracts of $2,246. Funding for these expenditures will be provided from general fund revenues and general obligation bonds. General Government At June 30, 2016, Pima County had contractual commitments related to service contracts for the Department of Information Technology of $5,246. The Office of Medical Services had commitments related to service contracts of $34,179. Procurement had construction contractual commitments of $6,263. Funding for these expenditures will be provided from general fund revenues, the OEM Radio System special revenue fund, and general obligation bonds. Natural Resources, Parks and Recreation At June 30, 2016, the Pima County Natural Resources, Parks and Recreation Department had construction contractual commitments of $82 and other contractual commitments related to service contracts of $11,294. Funding for these expenditures will be provided from general fund revenues. Stadium District At June 30, 2016, the Pima County Stadium District had contractual commitments related to service contracts of $8,379. Funding for these expenditures will be provided from general fund revenues and various taxes, such as Hotel/Motel tax revenue. Transportation At June 30, 2016, the Pima County Transportation Department had construction commitments of $29,557 and other contractual commitments related to services of $28,446. Funding for these expenditures will be primarily provided from Transportation Revenue bonds, federal grants funding and state Highway User Tax Revenue, which is the primary source of revenue for the Transportation Department. Regional Wastewater Reclamation At June 30, 2016, the Regional Wastewater Reclamation enterprise fund had construction contractual commitments of $37,308 and other contractual commitments related to services of $11,351. Funding for these expenses will be primarily from the Sewer Revenue Bonds and sewer user fees. Note 15: Deficit Fund Balances/Net Position The Stadium District and Other Grants – Special Revenue Fund had deficit fund balances at June 30, 2016, of $1,592 and $6,559 respectively. In addition, the Development Services Enterprise Fund had a deficit net position at June 30, 2016, of $4,366. 99 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 16: Subsequent Events General Obligation Refunding Bonds – On July 6, 2016, the County issued General Obligation Refunding Bonds, Series 2016 in the amount of $122,070. The net proceeds of the refunding bonds issuance were placed in an irrevocable trust account with U.S. Bank to advance refund various General Obligation bonds as follows: Series 2007 Series 2008 Series 2009 Series 2009A Series 2011 $ 28,475 35,750 22,185 21,600 17,380 $ 125,390 The interest rate on the bonds range from 2.00% to 4.00%, and the maturity dates range from July 1, 2018 to 2026. Interest is payable semiannually beginning January 1, 2017. Street and Highway Revenue Refunding Bonds – On July 6, 2016, the County issued Street and Highway Revenue Refunding Bonds, Series 2016 in the amount of $28,315. The net proceeds of the refunding bonds issuance were placed in an irrevocable trust account with U.S. Bank to advance refund various Transportation bonds as follows: Series 2007 Series 2008 Series 2009 $ $ 9,965 8,605 11,385 29,955 The interest rate on the bonds range from 1.75% to 5.00%, and the maturity dates range from July 1, 2018 to 2024. Interest is payable semiannually beginning January 1, 2017. Payments will be made from the revenues received by the County from highway user taxes. Sewer System Revenue Refunding Obligations – On July 7, 2016 the Regional Wastewater Reclamation Enterprise Fund issued Series 2016 Obligations in the amount of $211,595. The net proceeds of the refunding obligations issuance were placed in an irrevocable trust account with The Bank of New York Mellon to advance refund various Sewer Revenue Bonds and Obligations as follows: Sewer Revenue Bonds, Series 2007 Sewer Revenue Bonds, Series 2008 Sewer Revenue Bonds, Series 2009 Sewer Revenue Obligations, Series 2010 Sewer Revenue Obligations, Series 2011B 100 $ 27,840 37,825 6,725 85,495 71,000 $ 228,885 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2016 (in thousands) Note 16: Subsequent Events (Continued) The interest rate on the obligations is 5.00%, and the maturity dates range from July 1, 2018 to 2026. Interest is payable semiannually beginning January 1, 2017 and is calculated based on the principal amount of the obligations outstanding during such period. Payments will be made from the user charges received in the Regional Wastewater Reclamation Enterprise Fund. 101 (This page is intentionally blank) 102 Required Supplementary Information Other Than Management’s Discussion & Analysis PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund For the Year Ended June 30, 2016 Exhibit B - 1 (in thousands) Budgeted Amounts Original Final Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Expenditures: General government Assessor Board of Supervisors Clerk of Superior Court Constables County Administration County Attorney Justice Courts Juvenile Courts Justice & Law Enforcement Public Works (Facilities Management) Recorder Superior Court Superior Court Mandated Services Treasurer Public safety Sheriff Office of Emergency Management & Homeland Security Sanitation Environmental Quality Health Forensic Science Center Welfare County Admin - Welfare Office of Medical Services Culture and recreation Public Works (Parks and Recreation) Education and economic opportunity Community & Economic Development School Superintendent Debt Service - principal Debt Service - interest Total expenditures Excess (deficiency) of revenues over (under) expenditures 337,310 3,075 144,574 45,192 4,262 196 6,144 540,753 $ 337,310 3,075 144,574 45,192 4,262 196 6,144 540,753 Actual Amounts $ 336,904 3,135 145,907 44,465 3,401 389 6,510 540,711 Variance with Final Budget $ (406) 60 1,333 (727) (861) 193 366 (42) 8,493 2,020 10,211 1,199 106,255 22,453 8,129 22,605 32,063 22,829 3,913 29,277 1,757 2,543 8,493 2,020 10,211 1,199 106,255 22,453 8,129 22,605 32,063 22,829 3,913 29,277 1,757 2,543 7,678 1,846 10,198 1,245 56,223 21,565 7,945 22,307 32,032 20,717 4,097 29,292 1,610 2,367 815 174 13 (46) 50,032 888 184 298 31 2,112 (184) (15) 147 176 142,955 414 142,955 414 143,014 345 (59) 69 1,431 1,431 1,205 226 3,718 3,718 3,557 161 57,782 38,251 57,782 38,251 56,840 31,277 942 6,974 17,903 17,903 17,418 485 11,873 1,655 160 11,873 1,655 160 549,889 549,889 10,676 1,416 3,098 762 488,730 1,197 239 (2,938) (762) 61,159 61,117 (9,136) (9,136) 51,981 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing uses 10,165 (32,877) (22,712) 10,165 (32,877) (22,712) 1 10,171 (33,596) (23,424) Net change in fund balances (31,848) (31,848) 28,557 60,405 31,848 31,848 52,125 20,277 Fund balances at beginning of year Fund balances at end of year $ 103 $ $ 80,682 1 6 (719) (712) $ 80,682 PIMA COUNTY, ARIZONA Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund June 30, 2016 Exhibit B - 1 (in thousands) Note 1- Budgeting and Budgetary Control Arizona Revised Statutes (A.R.S.) requires the County to prepare and adopt a balanced budget annually for each governmental fund. The Board of Supervisors must approve such operating budgets on or before the third Monday in July to allow sufficient time for the legal announcements and hearings required for the adoption of the property tax levy on the third Monday in August. A.R.S. prohibits expenditures or liabilities in excess of the amounts budgeted. Expenditures may not legally exceed appropriations at the department level. In certain instances, transfers of appropriations between departments or from the contingency account to a department may be made upon the Board of Supervisors’ approval. With the exception of the General Fund, Other Special Revenue, and Other Special Revenue – Grants, each fund includes only one department. Note 2 – Expenditures in Excess of Appropriations For the year ended June 30, 2016, expenditures for the following departments in the General Fund exceeded final budget amounts at the department level (the legal level of budgetary control) as follows: Function/Department General government: Constables Recorder Superior Court Total general government: Excess $ Public safety: Sheriff Total public safety 46 184 15 245 59 59 Debt Service - principal - inteest Total debt service $ 2,938 762 3,700 These expenditures were funded by greater than anticipated revenues and unspent appropriations. 104 PIMA COUNTY, ARIZONA Schedule of the County's Proportionate Share of the Net Pension Liability Cost-Sharing Pension Plans June 30, 2016 Exhibit B - 2 (in thousands) Arizona State Retirement System County’s proportion of the net pension liability County’s proportionate share of the net pension liability County’s covered payroll County’s proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability Corrections Officer Retirement Plan—Administrative Office of the Courts County’s proportion of the net pension liability County’s proportionate share of the net pension liability County’s covered payroll County’s proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability Elected Officials Retirement Plan County’s proportion of the net pension liability County’s proportionate share of the net pension liability State's proportionate share of the net pension liability associated with the County Total County’s covered payroll County’s proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability Reporting Fiscal Year (Measurement Date) 2014 2016 2015 through 2007 (2015) (2014) 2.51% 2.56% Information $ 391,629 $ 379,139 not available $ 231,570 $ 229,907 169.12% 68.35% Reporting Fiscal Year (Measurement Date) 2014 2016 2015 through 2007 (2015) (2014) 12.45% 12.43% Information $ 30,274 $ 27,888 not available $ 13,857 $ 13,114 218.47% 57.89% 212.66% 58.59% Reporting Fiscal Year (Measurement Date) 2014 2016 2015 through 2007 (2015) (2014) 7.55% 7.64% Information $ 59,037 $ 51,259 not available $ 18,405 $ 15,717 $ 77,442 $ 66,976 $ 6,391 923.75% 28.32% See accompanying notes to pension schedules. 105 164.91% 69.49% $ 6,932 739.45% 31.91% PIMA COUNTY, ARIZONA Schedule of Changes in the County's Net Pension Liability and Related Ratios Agent Pension Plans June 30, 2016 Exhibit B - 2 (in thousands) Public Safety Personnel Retirement System - Sheriff 2016 (2015) $ 6,421 24,997 (4,579) Total pension liability Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan fiduciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) County's net pension liability - ending (a) - (b) (19,209) 7,630 324,825 $ 332,455 $ $ 11,490 3,505 5,053 (19,209) (124) (148) 567 139,846 $ 140,413 $ $ 10,627 3,415 17,221 (17,811) (139) (92) 13,221 126,625 139,846 $ 192,042 $ 184,979 42.24% Plan fiduciary net position as a percentage of the total pension liablity $ Covered payroll County's net pension liability as a percentage of covered payroll 31,515 609.37% See accompanying notes to pension schedules. 106 Reporting Fiscal Year (Measurement Date) 2014 through 2015 2007 (2014) $ 6,346 Information not 21,060 available 7,336 (462) 34,338 (17,811) 50,807 274,018 324,825 43.05% $ 31,543 586.43% PIMA COUNTY, ARIZONA Schedule of Changes in the County's Net Pension Liability and Related Ratios Agent Pension Plans June 30, 2016 Exhibit B - 2 (in thousands) Corrections Officer Retirement Plan - Detention Total pension liability Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net change in plan ficuciary net position Plan fiduciary net position - beginning Plan fiduciary net position - ending (b) County's net pension liability - ending (a) - (b) $ (5,988) 2,004 100,333 $ 102,337 $ $ $ County's net pension liability as a percentage of covered payroll $ $ 2,970 1,686 6,030 (6,975) (48) 11 3,674 44,686 48,360 $ 53,135 $ 51,973 $ 20,816 $ 20,051 48.08% 255.26% See accompanying notes to pension schedules. 107 10,555 (6,975) 13,905 86,428 100,333 3,441 1,737 1,765 (5,988) (44) (69) 842 48,360 49,202 Plan fiduciary net position as a percentage of the total pension liability Covered payroll 2016 (2015) 2,798 7,751 (2,557) Reporting Fiscal Year (Measurement Date) 2014 through 2015 (2014) 2007 $ 2,852 Information not 6,623 available 1,459 (609) 48.20% 259.20% PIMA COUNTY, ARIZONA Schedule of County Pension Contributions June 30, 2016 Exhibit B - 2 (in thousands) Arizona State Retirement System Reporting Fiscal Year Statutorily required contribution County’s contributions in relation to the statutorily required contribution County’s contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll 2016 $ 24,752 24,752 $ 228,129 10.85% 2015 $ 25,218 25,218 $ 231,570 10.89% Corrections Officer Retirement Plan - Administrative Office of the Courts Statutorily required contribution County’s contributions in relation to the statutorily required contribution County's contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll 2014 $ 24,600 24,600 $ 229,907 10.70% Reporting Fiscal Year 2016 $ 2,613 2,613 $ 13,681 19.10% 2015 $ 2,062 2,062 $ 13,857 14.88% Elected Officials Retirement Plan 2014 $ 1,933 1,933 $ 13,114 14.74% Reporting Fiscal Year Statutorily required contribution County’s contributions in relation to the statutorily required contribution County's contribution deficiency (excess) County’s covered payroll County’s contributions as a percentage of covered payroll 2016 $ 1,555 1,555 $ 6,617 23.50% 2015 $ 1,502 1,502 $ 6,391 23.50% Public Safety Personnel Retirement System - Sheriff 2014 $ 1,629 1,629 $ 6,932 23.50% Reporting Fiscal Year 2016 Actuarially determined contribution $ 15,119 County’s contributions in relation to the actuarially determined contribution 15,119 County’s contribution deficiency (excess) County’s covered payroll $ 30,384 County’s contributions as a percentage of covered payroll 49.76% 2015 $ 11,490 11,490 $ 31,515 36.46% Corrections Officer Retirement Plan - Detention 2014 $ 10,627 10,627 $ 31,543 33.69% Reporting Fiscal Year 2016 Actuarially determined contribution $ 4,618 County’s contributions in relation to the actuarially determined contribution 4,618 County’s contribution deficiency (excess) County’s covered payroll $ 20,263 County’s contributions as a percentage of covered payroll 22.79% 2015 $ 3,441 3,441 $ 20,816 16.53% See accompanying notes to pension schedules. 108 2014 $ 2,970 2,970 $ 20,051 14.81% 2013 through 2007 Information not available 2013 through 2007 Information not available 2013 through 2007 Information not available 2013 through 2007 Information not available 2013 through 2007 Information not available PIMA COUNTY, ARIZONA Notes to Pension Plan Schedules June 30, 2016 (in thousands) Note 1 – Change in Accounting Principle For the year ended June 30, 2016, the County implemented the provisions of GASB Statement No. 82, Pension Issues. The statement changed the classification of employer-paid member contributions from employer contributions to employee contributions. In addition, the statement changed the measure of payroll that is required to be presented in required supplementary information from covered-employee payroll to covered payroll. Accordingly, contribution and payroll amounts presented in the pension plan schedules and related ratios for prior periods have been restated. Note 2 – Actuarially Determined Contribution Rates Actuarial determined contribution rates for PSPRS and CORP are calculated as of June 30 two years prior to the end of the fiscal year in which contributions are made. The actuarial methods and assumptions used to establish the contribution requirements are as follows: Actuarial cost method Entry age normal Amortization method Level percent closed for unfunded actuarial accrued liability, open for excess Remaining amortization period as of the 2014 actuarial valuation 22 years for unfunded actuarial accrued liability, 20 years for excess Asset valuation method 7-year smoothed market value; 80% / 120% market corridor Actuarial assumptions: Investment rate of return In the 2013 actuarial valuation, the investment rate of return was decreased from 8.0% to 7.85% Projected salary increases In the 2014 actuarial valuation, projected salary increases were decreased from 4.5%–8.5% to 4.0%–8.0% for PSPRS and from 4.5%–7.75% to 4.0%–7.25% for CORP. In the 2013 actuarial valuation, projected salary increases were decreased from 5.0%–9.0% to 4.5%–8.5% for PSPRS and from 5.0%–8.25% to 4.5%–7.75% for CORP. Wage growth In the 2014 actuarial valuation, wage growth was decreased from 4.5% to 4.0% for PSPRS and CORP. In the 2013 actuarial valuation, wage growth was decreased from 5.0% to 4.5% for PSPRS and CORP. Retirement age Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 June 30, 2011. Mortality RP-2000 mortality table (adjusted by 105% for both males and females) 109 Exhibit B - 2 PIMA COUNTY, ARIZONA Schedule of Agent OPEB Plans' Funding Progress June 30, 2016 Exhibit B - 2 (in thousands) Health Insurance Premium Benefit Actuarial value of assets (a) Actuarial Valuation Date PSPRS Sheriff 6/30/15 6/30/14 6/30/13 CORP Detention 6/30/15 6/30/14 6/30/13 $ $ 8,092 7,549 3,532 3,248 Actuarial accrued liability (b) Unfunded actuarial accrued liability (UAAL) (funding excess) (b) – (a) Annual covered payroll (c) Funded ratio (a)/(b) UAAL (funding excess) as a percentage of covered payroll (b) – (a)/c) $ 7,593 7,337 7,460 $ (499) (212) 7,460 106.6% 102.9% 0.0% $ 31,515 31,543 30,768 -1.6% -0.7% 24.3% $ 3,092 3,122 3,195 $ (440) (126) 3,195 114.2% 104.0% 0.0% $ 20,816 20,051 19,665 -2.1% -0.6% 16.3% Note 1 – Factors That Affect the Identification of Trends Beginning in fiscal year 2014, PSPRS and CORP established separate funds for pension benefits and health insurance premium benefits. Previously, the plans recorded both pension and health insurance premium contributions in the same Pension Fund. During fiscal year 2014, the plans transferred prior-year health insurance premium benefit contributions that exceeded benefit payments from each plan’s Pension Fund to the new Health Insurance Fund. 110 Combining Statements and Other Schedules Other (Nonmajor) Governmental Funds OTHER GOVERNMENTAL FUNDS (Nonmajor) Transportation Fund - to account for administrative and operating costs, as well as resources transferred to the Capital Projects Fund for construction of highways and streets. Financing is provided primarily from the County share of gasoline and vehicle license taxes collected by the State. Health Fund - to account for resources used to finance activities involved in the conservation and improvement of public health and animal care. Major sources of funding include Federal and State grants, charges for services provided, and operating transfers from the General Fund. Regional Flood Control District Fund - to account for amounts expended to protect persons and property from floodwaters. Revenues are provided by secondary taxes on real property and government grants. The Regional Flood Control District is a blended component unit of Pima County. Other Special Revenue Fund - to account for resources specifically identified to be expended for the various other programs of the County. These include various probation programs, consumer protection programs, family support, antiracketeering programs, law library, etc. Revenues are provided by fines, intergovernmental revenues, fees and forfeitures, and charges for services. Other Special Revenue Grants Fund - to account for Federal and State grants received by the County not required to be accounted for in a separate fund. Each grant has a specific project objective and the grant funds must be used for a stated purpose. Office of Emergency Management’s Radio System Special Revenue Fund – to account for the design, procurement and deployment of a regional public safety voice communications network to serve public and non-profit entities responsible for providing public safety and emergency management services to the Pima County populace. School Reserve Fund - to account for Federal and State grants received by the Superintendent of Schools. Each grant has a specific project objective and the grant funds must be used for a stated purpose. Environmental Quality Fund - to account for resources specifically identified to be expended for protection of water, air, and land from pollutants. Revenues are provided by fines, fees and forfeitures, licenses, permits, and Federal and State grants. Waste Tire Fund – to account for the state shared revenue tax for the tire recycling program. Library District Fund – to account for the resources used for management and operation of the Library District. Revenues are provided primarily by secondary taxes on real property. The Library District is a blended component unit of Pima County. Stadium District Fund - to account for resources specifically identified to be expended for the Stadium District. Revenues are provided by the car rental, hotel/motel bed and recreation vehicle park taxes, and charges for services provided. The Stadium District is a blended component unit of Pima County. Street Lighting District (SLDs) Fund – to account for financial activity related to street lighting in unincorporated Pima County. The SLDs are a blended component unit of Pima County. (This page is intentionally blank) 111 PIMA COUNTY, ARIZONA Combining Balance Sheet - Nonmajor Governmental Funds June 30, 2016 (in thousands) Transportation Assets Cash and cash equivalents Property taxes receivable (net) Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expenditures Loan receivable Restricted cash equivalents Total assets $ 6,592 Special Revenue Funds Regional Flood Control District Other Health $ 4 10 4,698 216 1,189 42 1,481 6,827 $ 4 7 1,326 160 7,307 667 4 $ 58 30,760 16 265 315 686 27 25 20 OEM Radio System Other Grants $ - $ 45 12,786 1,949 $ 1,813 1 165 40 180 9 50 $ 14,232 $ 8,382 $ 8,050 $ 32,247 $ 14,830 $ 2,003 $ 4,060 $ 531 $ 515 $ 2,304 $ 7,804 2 290 4,640 1 $ 183 Liabilities, deferred inflows of resources and fund balances Liabilities: Accounts payable Interest payable Employee compensation Due to other funds Due to other governments Deposits and rebates Unearned revenue Total liabilities 402 14 1 2 1,482 333 6 11 139 2 461 181 26 3 2 7 1 1,199 865 119 5,961 884 665 4,146 13,602 328 22 64 Deferred inflows of resources: Unavailable revenue - intergovernmental Unavailable revenue - property taxes Unavailable revenue - other 73 564 129 52 19 448 12 Total deferred inflows of resources 202 616 479 22 7,787 6,163 1,500 1,144 4,168 21,389 328 1,231 6,838 58 6,824 20 6,886 165 21,895 5,888 131 50 70 189 Total liabilities and deferred inflows of resources Fund balances Nonspendable Restricted Committed Assigned Unassigned 1,486 (6,679) Total fund balances Total liabilities, deferred inflows of resources and fund balances 7,723 8,069 $ 14,232 6,882 $ 6,906 8,382 $ 112 8,050 28,079 $ 32,247 (6,559) $ 14,830 1,675 $ 2,003 Exhibit C - 1 Special Revenue Funds School Reserve $ Environmental Quality 1,159 $ 3,064 Waste Tire $ 2 12 124 18 Library District 1,595 $ 1 287 85 4 Stadium District 11,395 1,217 6 Street Lighting Districts $ - $ 10 377 116 424 64 557 4 Total Other Governmental Funds $ 143 1 $ 70,655 1,885 38 455 19,997 3,580 1,369 909 1,521 45 45 $ 1,305 $ 3,163 $ 1,883 $ 13,607 $ 608 $ 144 $ 100,454 $ 64 $ 50 $ 254 $ 1,037 $ 240 1 41 1,790 $ 8 $ 17,050 3 2,169 6,663 13 5 3,707 60 55 28 3 5 127 138 362 2 256 18 6 1,417 2,078 8 29,610 121 127 4 496 252 426 62 846 90 1 8,500 1,294 432 62 936 122 10,226 200 256 2,353 2,200 1,627 602 10,652 4 1,717 8 39,836 2,323 57,141 6,962 3,289 (9,097) 136 822 1,246 (2,418) 1,178 $ 1,305 2,963 $ 3,163 1,627 $ 1,883 11,254 $ 13,607 113 (1,592) $ 608 136 $ 144 60,618 $ 100,454 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended June 30 , 2016 (in thousands) Transportation Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Special Revenue Funds Regional Flood Control District Other Health $ $ Total revenues Expenditures: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Debt service - principal - interest 1,178 56,344 97 $ 38 319 2,294 5,071 2,173 105 29 2,324 57,976 11,996 21,463 1 316 57 $ 47 73 22,104 7,357 4,354 174 5,177 21,957 14,598 $ 53,122 $ 2,883 8 1,125 11 66 39,166 54,255 2,960 31,154 2,258 5,205 6,388 5,827 2,689 30 10,413 319 53 18,159 39,798 21,444 OEM Radio System Other Grants 503 2,959 94 2 Total expenditures 39,798 21,444 14,598 37,000 46,364 2,689 Excess (deficiency) of revenues over (under) expenditures 18,178 (9,448) 7,359 2,166 7,891 271 Other financing sources (uses): Proceeds from capital lease agreements Proceeds from sale of capital assets Transfers in Transfers (out) 88 154 (18,362) 12,962 (833) 150 (8,727) 1,561 (5,149) 1,578 (13,508) Total other financing sources (uses) (18,120) 12,129 (8,577) (3,439) (11,930) 58 2,681 (1,218) (1,273) (4,039) 271 8,011 4,311 8,124 29,352 (2,520) 1,404 149 Net change in fund balances Fund balances at beginning of year Changes in nonspendable resources: Change in inventory Change in prepaids Fund balances at end of year (110) $ 8,069 $ 6,882 $ 114 6,906 $ 28,079 $ (6,559) $ 1,675 Exhibit C - 2 Special Revenue Funds School Reserve Environmental Quality Waste Tire Library District $ $ $ Street Lighting Districts 38,821 $ 140 $ 2,216 1,748 $ 1,748 Stadium District Total Other Governmental Funds 1,215 19 22 9 2,257 1,224 215 249 560 45 278 $ 1,612 989 5 8 40,168 2,614 140 236,461 158 36,517 25,933 45,625 1,032 34,833 319 41,292 23,029 94 2 1,032 2,946 35,883 4,853 1,032 35,883 4,853 158 208,676 192 4,285 (2,239) (18) 27,785 1,911 1,911 2,946 (163) (689) (163) 655 (53) 164 (462) 4,857 (3,258) 149 88 22,081 (50,352) 602 (298) 1,599 (28,034) (87) 1,353 3,050 192 3,987 (640) (18) 1,435 7,267 (952) 154 (249) 60,989 (110) (12) (12) $ 1,178 60,424 5,689 141,747 13,805 5,019 385 9,392 $ 2,963 $ 1,627 $ 11,254 115 $ (1,592) $ 136 $ 60,618 (This page is intentionally blank) 116 Combining Statements and Other Schedules Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual – Other Governmental Funds PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Capital Projects Fund For the Year Ended June 30, 2016 Exhibit C - 3 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: Capital outlay Total expenditures 17,962 3,941 281 200 22,384 Actual $ 27,250 3,988 812 890 32,940 Variance $ 9,288 47 531 690 10,556 83,325 83,325 70,473 70,473 12,852 12,852 (60,941) (37,533) 23,408 Other financing sources (uses): Premium on bonds Face amount of long-term debt issued Transfers in Transfers (out) Total other financing sources (uses) 25,681 22,838 (61,947) (13,428) 890 34,295 25,807 (47,317) 13,675 890 8,614 2,969 14,630 27,103 Net change in fund balance (74,369) (23,858) 50,511 Deficiency of revenues under expenditures Fund balance at beginning of year Fund balance at end of year $ 91,256 16,887 117 $ 129,835 105,977 $ 38,579 89,090 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund For the Year Ended June 30, 2016 Exhibit C - 4 (in thousands) Budget Revenues: Property taxes Intergovernmental Investment earnings Miscellaneous Total revenues $ Actual 52,856 52,726 14 226 43 53,009 Expenditures: Debt service - principal - interest - miscellaneous Total expenditures 84,415 26,390 16 110,821 83,765 25,515 488 109,768 650 875 (472) 1,053 Deficiency of revenues under expenditures (57,965) (56,759) 1,206 Other financing sources (uses): Premium on bonds Issuance of refunding debt Payments to escrow agent Transfers in Transfers (out) Total other financing sources 57,106 (1,600) 55,506 1,662 9,640 (11,010) 56,299 (1,600) 54,991 1,662 9,640 (11,010) (807) Net change in fund balance (2,459) (1,768) Fund balance at beginning of year Fund balance at end of year 15,115 12,656 8,424 6,656 $ 52,856 118 $ Variance $ $ (130) 14 226 43 153 (515) 691 $ (6,691) (6,000) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation - Special Revenue Fund For the Year Ended June, 30 2016 Budget Revenues: Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual 1,121 53,180 243 80 258 54,882 $ Variance 1,178 56,344 97 38 319 57,976 Expenditures: Highways and streets Total expenditures 39,701 39,701 39,798 39,798 Excess of revenues over expenditures 15,181 18,178 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing uses 122 (19,025) (18,903) 88 154 (18,362) (18,120) Net change in fund balance Fund balance at beginning of year Fund balance at end of year (3,722) $ Exhibit C - 5 5,205 1,483 119 $ (97) (97) 2,997 88 32 663 783 58 $ 8,011 8,069 57 3,164 (146) (42) 61 3,094 3,780 $ 2,806 6,586 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Health - Special Revenue Fund For the Year Ended June 30, 2016 Exhibit C - 6 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Expenditures: Health Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in Transfers (out) Total other financing sources Actual 2,280 4,960 3,037 84 698 11,059 2,294 5,071 2,173 105 29 2,324 11,996 23,350 23,350 21,444 21,444 1,906 1,906 (12,291) (9,448) 2,843 12,960 (1,618) 11,342 12,962 (833) 12,129 2 785 787 Net change in fund balance (949) Fund balance at beginning of year Changes in nonspendable resources: Change in inventory Fund balance at end of year $ Variance 1,454 $ 505 120 $ $ 14 111 (864) 21 29 1,626 937 2,681 3,630 4,311 2,857 (110) 6,882 (110) 6,377 $ PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Regional Flood Control District - Special Revenue Fund For the Year Ended June 30, 2016 Exhibit C - 7 (in thousands) Budget Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: Flood control Total expenditures Actual 21,426 1 311 1,070 25 55 22,888 $ Variance 21,463 1 316 57 47 73 21,957 $ 37 5 (1,013) 22 18 (931) 17,121 17,121 14,598 14,598 2,523 2,523 5,767 7,359 1,592 Other financing sources (uses): Transfers in Transfers (out) Total other financing uses 2 (8,646) (8,644) 150 (8,727) (8,577) Net change in fund balance (2,877) (1,218) Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year $ 6,105 3,228 121 $ 8,124 6,906 148 (81) 67 1,659 $ 2,019 3,678 Exhibit C - 8 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Other - Special Revenue Fund For the Year Ended June 30, 2016 (in thousands) Budget Revenues: Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Expenditures: General government Public safety Health Culture and recreation Education and economic opportunity Debt service - principal - interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Proceeds from capital lease agreements Transfers in Transfers (out) Total other financing uses Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ Actual 25,660 8,125 3,366 160 6,272 43,583 $ Variance 22,104 7,357 4,354 174 5,177 39,166 $ (3,556) (768) 988 14 (1,095) (4,417) 46,105 5,277 30 1,021 3,177 81 2 55,693 31,154 2,258 30 503 2,959 94 2 37,000 18,693 (12,110) 2,166 14,276 1,051 (6,852) (5,801) 149 1,561 (5,149) (3,439) 149 510 1,703 2,362 (17,911) (1,273) 16,638 21,778 3,867 29,352 28,079 7,574 24,212 122 $ 14,951 3,019 518 218 (13) $ PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Other Grants - Special Revenue Fund For the Year Ended June 30, 2016 Exhibit C - 9 (in thousands) Budget Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Actual 73,795 6 1,757 75,558 $ Variance 53,122 8 1,125 54,255 $ (20,673) 2 (632) (21,303) Expenditures: County Administration Community Development Community Services County Attorney Elections Environmental Quality Finance Flood Control Health Juvenile Court Office of Emergency Management Office of Medical Services Office of Sustainability and Conservation Natural Resources, Parks and Recreation Recorder Sheriff Superior Court Transportation Total expenditures 6,038 16,672 3,996 36 863 5,985 368 11,441 785 2,740 907 5 382 38 8,638 1,221 5,003 65,118 136 4,265 13,894 3,340 33 788 28 232 9,625 660 1,485 319 1 53 23 4,671 984 5,827 46,364 (136) 1,773 2,778 656 3 75 5,957 136 1,816 125 1,255 588 4 329 15 3,967 237 (824) 18,754 Excess of revenues over expenditures 10,440 7,891 (2,549) 2,229 (12,044) (9,815) 1,578 (13,508) (11,930) (651) (1,464) (2,115) (4,039) (4,664) Other financing sources (uses): Transfers in Transfers (out) Total other financing uses Net change in fund balance Fund balance at beginning of year Fund balance at end of year 625 $ (2,579) (1,954) 123 $ (2,520) (6,559) $ 59 (4,605) Exhibit C - 10 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Office of Emeregency Management's Radio System - Special Revenue Fund For the Year Ended June 30, 2016 (in thousands) Budget Revenues: Charges for services Investment earnings Miscellaneous Total revenues $ Actual 2,781 2 64 2,847 Expenditures: Public safety Total expenditures $ 3,060 3,060 Variance 2,883 11 66 2,960 $ 102 9 2 113 2,689 2,689 371 371 Excess (deficiency) of revenues over (under) expenditures (213) 271 484 Net change in fund balance (213) 271 484 Fund balance at beginning of year Fund balance at end of year 1,767 1,554 $ 124 $ 1,404 1,675 $ (363) 121 Exhibit C - 11 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual School Reserve - Special Revenue Fund For the Year Ended June 30, 2016 (in thousands) Budget Revenues: Intergovernmental Total revenues $ Expenditures: School Reserve grants Total expenditures Actual 1,836 1,836 $ 1,836 1,836 Variance 1,748 1,748 $ 1,911 1,911 (88) (88) (75) (75) Deficiency of revenues under expenditures (163) (163) Net change in fund balance (163) (163) Fund balance at beginning of year Changes in nonspendable resources: Change in prepaid expenditures Fund balance at end of year $ 1,869 1,353 (516) 1,869 (12) 1,178 (12) (691) 125 $ $ Exhibit C - 12 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Environmental Quality - Special Revenue Fund For the Year Ended June 30, 2016 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Environmental Quality Total expenditures 2,366 16 15 8 2,405 $ 3,153 3,153 Deficiency of revenues under expenditures Other financing sources (uses): Transfers in Transfers (out) Total other financing sources Net change in fund balance Fund balance at beginning of year Fund balance at end of year Actual $ Variance 2,216 $ 19 22 2,257 (150) (16) 4 14 (148) 2,946 2,946 207 207 (748) (689) 59 655 (26) 629 655 (53) 602 (27) (27) (119) (87) 32 2,499 2,380 126 $ 3,050 2,963 $ 551 583 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Waste Tire - Special Revenue Fund For the Year Ended June 30, 2016 Exhibit C - 13 (in thousands) Budget Revenues: Intergovernmental Investment earnings Total revenues $ Actual 1,100 8 1,108 Expenditures: Sanitation Total expenditures $ 1,308 1,308 Variance 1,215 9 1,224 $ 115 1 116 1,032 1,032 276 276 Excess (deficiency) of revenues over (under) expenditures (200) 192 392 Net change in fund balance (200) 192 392 Fund balance at beginning of year Fund balance at end of year 1,292 1,092 $ 127 $ 1,435 1,627 $ 143 535 Exhibit C - 14 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library District - Special Revenue Fund For the Year Ending June 30, 2016 (in thousands) Budget Revenues: Property taxes Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Expenditures: Culture and recreation Total expenditures Actual 38,728 640 520 600 25 555 41,068 41,884 41,884 Excess (deficiency) of revenues over (under) expenditures (816) Other financing sources (uses): Transfers in Transfers (out) Total other financing uses (908) $ 3,205 2,297 128 38,821 215 249 560 45 278 40,168 $ $ 93 (425) (271) (40) 20 (277) (900) 35,883 35,883 6,001 6,001 4,285 5,101 164 (462) (298) (92) (92) Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ Variance 164 (370) (206) 3,987 4,895 7,267 11,254 4,062 8,957 $ PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Stadium District - Special Revenue Fund For the Year Ended June 30, 2016 Exhibit C - 15 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Actual 2,504 1,612 989 5 8 2,614 5,210 5,210 4,853 4,853 357 357 Deficiency of revenues under expenditures (2,706) (2,239) 467 Other financing sources (uses): Transfers in Transfers (out) Total other financing sources 4,731 (2,991) 1,740 4,857 (3,258) 1,599 126 (267) (141) (966) (640) Expenditures: Culture and recreation Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 1,563 931 10 (1,047) (2,013) 129 $ Variance $ (952) (1,592) $ 49 58 (5) 8 110 326 $ 95 421 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Street Lighting Districts For the Year Ended June 30, 2016 Exhibit C - 16 (in thousands) Budget Revenues: Property taxes Total revenues $ Actual 142 142 $ Variance 140 140 $ (2) (2) Expenditures: General government Total expenditures 178 178 158 158 20 20 Deficiency of revenues under expenditures (36) (18) 18 Net change in fund balance (36) (18) 18 Fund balance at beginning of year Fund balance at end of year $ (36) 130 $ 154 136 $ 154 172 Combining Statements and Other Schedules Other (Nonmajor) Enterprise Funds Other (Nonmajor) Enterprise Funds Development Services – to account for the operations of providing zoning permits, enforcing ordinances in compliance with state statutes, and administering uniform building codes. Parking Garages – to account for the management and operation of seven public parking garages located in downtown Tucson. Exhibit C - 17 PIMA COUNTY, ARIZONA Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2016 (in thousands) Development Services Assets Current assets: Cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable Prepaid expense Total current assets Noncurrent assets: Capital assets: Land Buildings and improvements Equipment Less accumulated depreciation Construction in progress Total capital assets (net) Total noncurrent assets Total assets $ 2,210 1 18 $ 95 (95) 2,325 Liabilities Current liabilities: Accounts payable Employee compensation Due to other funds Due to other governments Unearned revenue Total current liabilities Noncurrent liabilities: Compensated absences payable Net pension liability Total noncurrent liabilities Total liabilities Net position Net investment in capital assets Unrestricted $ 8 13 3 2,667 4,852 2 18 8 100 12 4,992 1,768 27,608 2,201 (10,499) 128 21,206 21,206 23,873 1,768 27,608 2,296 (10,594) 128 21,206 21,206 26,198 26 26 606 606 36 94 165 572 5 295 107 1 685 608 99 165 107 1 980 338 6,042 6,380 6,675 10 273 283 968 348 6,315 6,663 7,643 596 596 27 27 623 623 21,206 1,698 (4,366) $ 2,642 1 580 580 Deferred inflows of resources Pension Total deferred inflows of resources Total net position Parking Garages 87 9 2,325 Deferred outflows of resources Pension Total deferred outflows of resources Total Nonmajor Enterprise Funds (4,366) 131 $ 22,904 21,206 (2,668) $ 18,538 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Fund For the Year Ended June 30, 2016 Exhibit C - 18 (in thousands) Operating revenues: Charges for services Other Total net operating revenues Development Services $ Operating expenses: Employee compensation Operating supplies and services Repair and maintenance General and administrative Consultants and professional services Depreciation Total operating expenses 6,212 48 6,260 Parking Garages $ 4,688 17 7 1,843 136 2,209 15 2,224 $ 342 60 72 1,166 13 697 2,350 6,691 Operating loss Total Nonmajor Enterprise Funds 8,421 63 8,484 5,030 77 79 3,009 149 697 9,041 (431) (126) (557) 15 15 17 17 32 32 Loss before transfers (416) (109) (525) Transfers (out) (571) (272) (843) Change in net position (987) (381) (1,368) Nonoperating revenues: Investment earnings Total nonoperating revenues Net position at beginning of year Net position at end of year (3,379) $ (4,366) 132 23,285 $ 22,904 19,906 $ 18,538 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2016 Exhibit C - 19 (in thousands) Development Services Cash flows from operating activities: Cash received from customers for goods and services provided Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments to employees for services $ 6,411 (154) (1,877) (5,025) Total Nonmajor Enterprise Funds Parking Garages $ 2,276 (884) (65) (355) $ 8,687 (1,038) (1,942) (5,380) Net cash provided by (used for) operating activities (645) 972 327 Cash flows from noncapital financing activities: Cash transfers out to other funds Loans with other funds (571) 146 (272) (843) 146 Net cash used for noncapital financing activities (425) (272) (697) Cash flows from capital and related financing activities: Purchase of capital assets (1,055) (1,055) Net cash used for capital and related financing activities (1,055) (1,055) Cash flows from investing activities: Interest received on cash and investments 16 18 34 Net cash provided by investing activities 16 18 34 Net decrease in cash and cash equivalents (1,054) Cash and cash equivalents at beginning of year (337) 3,264 Cash and cash equivalents at end of year $ (continued) 133 2,210 (1,391) 2,979 $ 2,642 6,243 $ 4,852 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2016 Exhibit C - 19.1 (in thousands) (continued) Reconciliation of operating loss to net cash provided by (used for) operating activities Operating loss Development Services $ (431) Parking Garages $ (126) Total Nonmajor Enterprise Funds $ (557) Adjustments to reconcile operating loss to net cash provided by (used for) operating activities: Depreciation and amortization 697 Changes in assets and deferred outflows of resources: Decrease (increase) in assets: Accounts receivable Due from other governments Inventory and other assets Prepaid expense Increase in deferred outflows of resources: Pension plans 151 53 (2) 204 (2) 14 14 165 Changes in liabilities and deferred inflows of resources: Increase (decrease) in liabilities: Accounts payable Due to other governments Net pension liability Other liabilities Decrease in deferred inflows of resources: Pension plans Net cash provided by (used for) operating activities 697 8 (42) $ 173 193 (268) 255 107 9 (10) 213 107 202 (278) (427) (19) (446) (645) $ 972 $ 327 Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2016: Development Services Fund retired fully depreciated capital assets with an original cost of $195 and transferred out assets with an original cost of $19 to General Government. 134 Combining Statements and Other Schedules Internal Service Funds Internal Service Funds Self Insurance Trust Fund – to account for the risk management function of the County. The Fund provides self insurance coverage to the County for medical malpractice, workers’ compensation, unemployment, general liability, environmental liability, and property damage as well as acquiring coverage for other risks. Fleet Services – to account for the acquisition, operation, and maintenance of fleet services equipment provided to County departments. Health Benefit Trust Fund – to account for health care and health-related benefits. The Fund is responsible for collecting employer and employee premiums through payroll deductions, and for the payment of claims. The premiums collected include amounts paid for medical, dental, vision, shortterm disability and life insurance coverages. Other Internal Service – to account for the provision of printing, technology infrastructure, telecommunication services, and procurement of software and hardware resources utilized by County departments. PIMA COUNTY, ARIZONA Combining Statements of Net Position Internal Service Funds June 30, 2016 Exhibit C - 20 (in thousands) SelfInsurance Trust Assets Current assets: Cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expense Total current assets Noncurrent assets: Loan receivable Capital assets: Land Buildings and improvements Equipment Less accumulated depreciation Construction in progress Total capital assets (net) Total noncurrent assets $ $ 26,094 7 9 $ 20 422 8 26,560 Total Internal Service Funds Other Internal Service 32,539 12 $ 50 10 32,611 6,474 3 26 3 31 248 6,897 13,682 $ 6,700 449 18,969 53,378 (26,795) 550 46,551 53,251 452 7,152 77,339 67,286 32,611 19,055 196,291 176 176 348 348 93 93 236 236 853 853 606 33 6 1,186 64 132 21 8 2,896 119 4,820 237 14 5,007 $ 224 11,562 (6,551) 138 5,373 5,373 18,745 41,648 (20,079) 412 40,726 40,726 168 (165) Net position Net investment in capital assets Restricted for: Healthcare Unrestricted 134,524 31 43 3 102 670 7,667 143,040 6,700 449 Deferred inflows of resources Pension Total deferred inflows of resources Total net position 69,417 9 8 752 70,187 Deferred outflows of resources Pension Total deferred outflows of resources Total liabilities Fleet Services 1 Total assets Liabilities Current liabilities: Accounts payable Employee compensation Due to other funds Current portion reported but unpaid losses Current portion incurred but not reported losses Total current liabilities Noncurrent liabilities: Compensated absences payable Loan payable Reported but unpaid losses Incurred but not reported losses Net pension liability Total noncurrent liabilities Health Benefit Trust 458 2,165 7,817 1,250 52 197 22,656 11,296 1,832 35,836 5,465 4,119 4,738 6,284 16,820 3,015 3,625 3,822 36 6,700 2 21 974 7,733 2,455 2,763 593 6,700 22,658 11,317 8,886 50,154 43,653 5,072 12,471 5,778 66,974 181 181 358 358 96 96 242 242 877 877 452 40,726 5,373 46,551 33,229 21,478 7,898 20,137 62,605 33,681 $ 62,204 135 308 20,137 $ 20,137 $ 13,271 $ 129,293 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Year Ended June 30, 2016 Exhibit C - 21 (in thousands) Operating revenues: Charges for services Other Total net operating revenues SelfInsurance Trust $ 17,421 25 17,446 Fleet Services $ 18,902 92 18,994 Operating expenses: Employee compensation Operating supplies and services Incurred losses Insurance premiums General and administrative Repair and maintenance Consultants and professional services Depreciation Total operating expenses 2,109 231 18,553 3,826 1,040 407 610 2 26,778 1,140 2,002 1,067 59 4,415 15,969 Operating income (loss) (9,332) Nonoperating revenues (expenses): Investment earnings Gain/(loss) on disposal of capital assets Total nonoperating revenues Income (loss) before contributions and transfers Transfers in Transfers (out) Health Benefit Trust $ 2,917 4,369 Total Internal Service Funds Other Internal Service 62,743 2,183 64,926 $ $ 6,021 2,538 121,687 2,385 124,072 59,063 25 6,809 317 2,841 339 18,890 11,829 7,145 67,838 10,024 10,859 1,791 6,458 4,756 120,700 3,025 5,863 3,816 3,372 972 (13) 959 270 77 347 186 28 186 28 1,456 64 1,520 (8,373) 3,372 6,049 3,844 4,892 9 (190) 782 7 49,285 5,033 1,008 22,621 85 22,706 2,948 305 (2,436) 644 (15) 958 (2,641) Change in net position (8,554) 1,241 6,049 4,473 3,209 Net position at beginning of year 42,235 60,963 14,088 8,798 126,084 Net position at end of year $ 33,681 $ 136 62,204 $ 20,137 $ 13,271 $ 129,293 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2016 (in thousands) Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments for incurred losses Cash payments to employees for services SelfInsurance Trust $ Health Benefit Trust Fleet Services 17,656 25 (4,912) (1,156) (4,606) (2,187) $ 18,902 176 (6,331) (2,747) Exhibit C - 22 $ Total Internal Service Funds Other Internal Service (3,114) 65,022 2,183 (8,530) (473) (48,885) (831) $ 22,621 71 (14,226) (1,124) $ (5,876) 124,201 2,455 (33,999) (5,500) (53,491) (12,008) 1,466 21,658 Net cash provided by operating activities 4,820 6,886 8,486 Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds 9 (190) 3,300 305 (2,436) 9 47 (32) (3,300) 644 (15) (1) 1,005 (2,673) 8 Net cash provided by (used for) noncapital financing activities 3,119 (2,122) (3,285) 628 (1,660) Cash flows from capital and related financing activities: Proceeds from sale of capital assets Purchase of capital assets (13) 291 (3,148) (313) 291 (3,474) Net cash used for capital and related financing activities (13) (2,857) (313) (3,183) Cash flows from investing activities: Interest received on cash and investments 960 269 183 28 1,440 Net cash provided by investing activities 960 269 183 28 1,440 Net increase in cash and cash equivalents 8,886 2,176 5,384 1,809 18,255 60,531 23,918 27,155 4,665 116,269 Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ 69,417 (continued) 137 $ 26,094 $ 32,539 $ 6,474 $ 134,524 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2016 Exhibit C - 22.1 (in thousands) (continued) Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) SelfInsurance Trust $ (9,332) Fleet Services $ 3,025 Health Benefit Trust $ 5,863 Other Internal Service $ 3,816 Total Internal Service Funds $ 3,372 339 4,756 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization Changes in assets and deferred outflows of resources: Decrease (increase) in assets: Accounts receivable Due from other governments Inventory and other assets Prepaid expense Increase in deferred outflows of resources: Pension plans Changes in liabilities and deferred inflows of resources: Increase (decrease) in liabilities: Accounts payable Due to other governments Reported but unpaid losses Incurred but not reported losses Net pension liability Other liabilities Decrease in deferred inflows of resources: Pension plans Net cash provided by operating activities $ 2 4,415 235 2,279 (33) 8 76 18 13 50 99 27 67 79 (468) (4) 3 1,178 11,805 2,142 58 (57) (129) 4,820 (10) (13) (1) 17 (4,015) 115 (155) 82 318 31 (38) 77 175 (256) (69) (174) $ 6,886 $ 8,486 $ 1,466 Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2016: Self-Insurance Trust Fund transferred out an asset with a net book value of $13 to General Government. Fleet Services sold capital assets with a net book value of $203 and retired capital assets with a net book value of $11. 138 2,509 75 35 (4,045) 243 792 (4) 11,887 2,460 281 (75) (628) $ 21,658 Combining Statements and Other Schedules Fiduciary Funds PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Position Investment Trust Funds June 30, 2016 Exhibit C - 23 (in thousands) Treasurer's Investment Pool Assets Cash and cash equivalents Interest receivable Total assets Total Investment Trust Funds Individual Investment Accounts $ 84,006 62 $ 113,446 $ 197,452 62 $ 84,068 $ 113,446 $ 197,514 $ 84,068 $ 113,446 $ 197,514 Liabilities Total liabilities Net position Held in trust for pool participants 139 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Position Investment Trust Funds For the Year Ended June 30, 2016 Exhibit C - 24 (in thousands) Treasurer's Investment Pool Total Investment Trust Funds Individual Investment Accounts Additions Contributions from participants Total contributions $ Investment earnings Total investment earnings 2,054,519 2,054,519 $ 115,895 115,895 $ 2,170,414 2,170,414 838 838 88 88 926 926 Total additions 2,055,357 115,983 2,171,340 Deductions Distributions to participants Total deductions 2,071,832 2,071,832 131,325 131,325 2,203,157 2,203,157 Change in net position (16,475) (15,342) (31,817) Net position held in trust July 1, 2015 100,543 128,788 229,331 Net position held in trust June 30, 2016 $ 140 84,068 $ 113,446 $ 197,514 PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Position Agency Funds June 30, 2016 Exhibit C - 25 (in thousands) Payroll Clearing Assets Cash and cash equivalents Due from other governments $ 1,463 $ 1,463 Total assets Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities Treasurer's Clearing 4,091 1,508 Other $ 1,463 141 $ $ 81,890 1,508 5,599 76,336 83,398 5,599 52,289 24,047 1,463 52,289 29,646 1,463 $ 76,336 Total 5,599 $ 76,336 $ 83,398 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Position Agency Funds For the Year Ended June 30, 2016 Exhibit C - 26 (in thousands) Payroll Clearing Assets Cash and cash equivalents Balance 6/30/2015 $ 104 Additions $ 266,256 Balance 6/30/2016 Deductions $ 264,897 $ 1,463 Total assets 104 266,256 264,897 1,463 Liabilities Employee compensation 104 266,256 264,897 1,463 Total liabilities 104 266,256 264,897 1,463 3,977 163 1,677,036 1,345 1,676,922 4,091 1,508 Total assets 4,140 1,678,381 1,676,922 5,599 Liabilities Due to other governments Deposits and rebates 4,140 1,647,464 30,917 1,647,464 29,458 5,599 Total liabilities 4,140 1,678,381 1,676,922 5,599 Treasurer's Clearing Assets Cash and cash equivalents Due from other governments Other Assets Cash and cash equivalents 64,568 238,802 227,034 76,336 Total assets 64,568 238,802 227,034 76,336 Liabilities Due to other governments Deposits and rebates 40,181 24,387 193,734 45,068 181,626 45,408 52,289 24,047 Total liabilities 64,568 238,802 227,034 76,336 68,649 163 2,182,094 1,345 2,168,853 81,890 1,508 Total assets 68,812 2,183,439 2,168,853 83,398 Liabilities Employee compensation Due to other governments Deposits and rebates 104 40,181 28,527 266,256 1,841,198 75,985 264,897 1,829,090 74,866 1,463 52,289 29,646 Totals - All Agency Funds Assets Cash and cash equivalents Due from other governments Total liabilities $ 68,812 142 $ 2,183,439 $ 2,168,853 $ 83,398 PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2016 INTRODUCTORY SECTION FINANCIAL SECTION STATISTICAL SECTION Financial Trends Information Revenue Capacity Information Debt Capacity Information Demographic and Economic Information Operating Information STATISTICAL SECTION FINANCIAL TRENDS: The financial trends schedules are intended to provide users with information to assist them in understanding and assessing how a government’s financial position has changed over time. Financial trends information is considered to be a primary source of the historical perspective that helps users comprehend the direction in which a government’s economic condition is heading. It also serves the purpose of giving users a form of information that is among their most highly valued, comparative information over time. Exhibit D-1 PIMA COUNTY, ARIZONA Net Position by Component Last Ten Fiscal Years (in thousands) (accrual basis of accounting) 2007 Governmental activities Net investment in capital assets Restricted for: Special revenue Highways and streets Debt service Capital projects Healthcare Unrestricted (deficit) Total governmental activities net position 143 Business-type activities Net investment in capital assets Restricted for: Debt service Capital projects Regional Wastewater Healthcare Unrestricted Total business-type activities net position $ $ $ Primary government Net investment in capital assets Restricted for: Facilities, justice, library, tax stabilization and community development Special Revenue Highways and streets Debt service Capital projects Regional Wastewater Healthcare Unrestricted (deficit) Total primary government net position $ Fiscal Year 2011 2008 2009 2010 774,000 $ 882,424 $ 972,346 $ 1,048,821 $ 1,136,033 $ 1,245,227 63,014 16,734 8,980 90,467 71,618 17,390 13,612 80,922 78,080 21,349 44,566 59,945 64,991 25,749 64,446 32,906 103,592 32,322 100,423 27,033 61,936 10,988 46,256 999,451 53,778 $ 1,119,744 34,850 $ 1,211,136 57,939 3,405 149,966 $ 1,350,871 60,381 4,074 164,606 $ 1,462,446 30,224 1,360 157,315 $ 1,570,040 9,853 1,163 145,618 1,592,147 66,885 3,591 84,514 1,582,370 476,950 482,822 539,718 550,540 575,525 564,561 531,945 586,868 592,351 636,369 574 35,480 38,628 9,985 10,845 572,462 791 37,925 5,956 13,732 56,397 $ 597,623 819 14,479 5,883 9,017 34,477 $ 604,393 13,454 11,623 16,110 15,943 29,914 637,584 12,567 24,236 17,161 23,562 33,448 686,499 22,538 31,680 18,449 29,100 42,841 17,785 31,615 22,720 18,820 36,683 7,980 19,419 36,666 3,440 19,223 1,250,950 1,365,246 1,512,064 1,599,361 1,711,558 1,809,788 1,840,002 1,941,324 1,978,347 2,013,130 71,618 78,080 64,991 64,446 103,592 100,423 61,936 60,285 58,269 17,390 14,403 118,847 5,956 13,732 110,175 $ 1,717,367 21,349 45,385 74,424 5,883 9,017 69,327 $ 1,815,529 25,749 13,454 69,562 16,110 19,348 179,880 $ 1,988,455 32,906 12,567 84,617 17,161 27,636 198,054 $ 2,148,945 32,322 22,538 61,904 18,449 1,360 223,785 $ 2,273,738 27,033 29,100 52,694 17,785 1,163 247,377 2,315,577 10,988 31,615 89,605 18,820 3,591 201,939 2,359,818 63,014 16,734 9,554 125,947 38,628 9,985 57,101 1,571,913 $ $ 2012 $ 66,470 703,698 2013 $ $ $ $ 1,308,057 101,759 723,430 2014 $ $ $ $ 1,354,456 117,425 777,448 2015 $ 1,385,996 2016 $ 60,285 8,039 $ $ $ 64,612 28,610 (507,127) 1,040,415 87,010 743,443 8,039 36,683 72,592 19,419 28,610 (420,117) 1,783,858 Note: Due to the implementation of GASB Statement No. 82, Pension Issues, in fiscal year 2016, net position for the year ended June 30, 2015 was restated, however this change was not reflected in this schedule. Due to the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in fiscal year 2015, net position for the year ended June 30, 2014 was restated, however this change was not reflected in this schedule. Source: Pima County Finance & Risk Management 1,376,761 58,269 8,269 $ $ $ 62,386 34,342 (494,395) 1,045,632 88,906 784,604 8,269 36,666 65,826 19,223 34,342 (405,489) 1,830,236 PIMA COUNTY, ARIZONA Changes in Net Position Last Ten Fiscal Years Exhibit D-2 (in thousands) (accrual basis of accounting) 2007 Expenses Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization-unallocated Interest on long-term debt Total governmental activities expenses 144 Business-type activities: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Total business-type activities expenses Total primary government expenses Program revenues Governmental activities: Charges for services General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Operating grants and contributions Capital grants and contributions Subtotal governmental activities program revenues Source: Pima County Finance & Risk Management $ $ $ 2008 2009 $ 98,222 261,859 15,400 1,579 377,060 1,099,776 106,803 295,494 14,750 1,877 418,924 $ 1,196,617 26,663 9,797 11,732 4,747 10,270 25,502 9,550 9,316 5,930 9,965 26,283 10,386 4,616 4,668 10,488 31,050 10,218 5,317 3,378 11,003 27,802 9,034 4,891 3,699 11,436 30,444 12,047 5,059 3,487 12,605 2,991 698 139,324 15,085 221,307 3,031 716 144,479 48,672 $ 257,161 2,754 691 131,361 68,535 259,782 2,532 749 142,840 65,820 272,907 2,191 1,024 136,472 65,030 261,579 2,254 1,008 143,388 47,528 257,820 $ $ $ 218,504 145,697 68,691 6,669 33,086 87,107 61,642 52,023 428 26,403 700,250 110,618 204,619 7,924 1,906 325,067 1,025,317 $ $ $ 218,843 146,395 73,348 6,208 36,475 90,521 67,063 56,626 (2,625) 26,078 718,932 Fiscal Year 2012 $ 239,399 165,715 88,488 9,658 36,977 106,546 60,616 47,296 138 22,860 777,693 105,139 224,959 9,992 1,696 341,786 1,070,809 $ 2011 223,266 148,831 92,985 9,623 33,800 97,154 55,482 42,483 168 18,924 722,716 $ 212,196 149,253 79,251 7,434 31,541 115,513 60,520 46,770 (235) 26,780 729,023 2010 113,495 200,305 6,982 1,538 322,320 1,041,252 $ $ $ 223,005 150,349 69,183 7,224 47,248 94,409 61,900 55,126 805 24,776 734,025 117,774 58,773 6,912 1,988 185,447 919,472 2013 $ 233,984 166,476 80,087 6,409 36,540 95,428 65,341 49,924 (286) 23,915 757,818 2014 $ 230,742 188,782 93,675 4,252 36,085 93,224 63,961 35,756 (5,758) 27,994 768,713 2015 $ 259,734 188,189 85,618 (4,882) 38,219 93,524 62,981 35,051 (6,237) 27,696 779,893 2016 $ 267,658 201,759 102,461 3,089 38,386 88,515 65,770 35,833 (6,862) 27,464 824,073 144,085 145,117 184,884 155,566 $ 7,231 1,825 153,141 910,959 $ 6,796 1,877 153,790 922,503 6,888 1,814 193,586 973,479 6,691 2,350 164,607 988,680 $ 28,910 10,238 6,511 3,577 12,495 320 2,865 1,544 116,121 59,298 241,879 $ 27,355 14,846 6,307 31 13,259 80 2,548 430 113,129 54,583 232,568 $ $ $ 27,974 12,883 6,136 27,149 12,733 5,263 12,894 200 3,144 577 126,862 42,570 233,240 13,437 50 2,855 545 127,536 45,579 235,147 $ (continued) PIMA COUNTY, ARIZONA Changes in Net Position Last Ten Fiscal Years Exhibit D-2 (in thousands) (accrual basis of accounting) (continued) 2007 Program revenues Business-type activities: Charges for services Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues $ Net (expense) revenue Governmental activities Business-type activities Total governmental activities net expense 145 General revenues and other changes in net position Governmental activities: Taxes Property taxes Hotel/motel taxes Other taxes levied for stadium district Shared sales tax Shared vehicle licenses Unrestricted grants and contributions Interest and penalties on delinquent taxes Investment earnings Miscellaneous Capital contributions Gain on sale of capital assets Transfers Total governmental activities Business-type activities: Investment earnings Miscellaneous Capital contributions Transfers Total business-type activities 106,266 257,142 11,239 1,548 5,174 803 382,172 603,479 2008 $ 106,448 291,980 8,992 1,720 4,806 22,952 436,898 694,059 2009 $ 105,162 216,108 5,654 1,676 4,626 14,916 348,142 607,924 Fiscal Year 2011 2010 $ 127,889 205,176 5,886 1,985 4,421 9,319 354,676 627,583 $ 148,010 207,652 5,688 2,071 4,691 4,192 372,304 633,883 2012 $ 2013 154,601 58,722 6,073 2,083 1,275 2,676 225,430 483,250 $ 2014 156,573 7,553 2,362 3,914 169,079 410,958 $ 2016 172,597 $ 167,856 6,807 188,372 420,940 6,324 2,271 35 5,854 187,081 420,321 6,212 2,209 35 7,297 183,609 418,756 (501,409) 5,112 (496,297) (520,532) 17,974 (502,558) (469,241) 6,356 (462,885) (427,343) 29,609 (397,734) (457,353) 49,984 (407,369) (476,205) 39,983 (436,222) (515,939) 15,938 (500,001) (536,145) 34,582 (501,563) (546,653) (6,505) (553,158) (588,926) 19,002 (569,924) 343,525 8,715 1,884 106,985 26,967 9,468 5,149 16,439 16,309 5,051 377,810 8,176 1,952 103,171 27,166 7,748 6,365 16,326 15,416 393,255 6,591 1,534 89,177 25,869 5,741 6,123 5,875 21,323 416,500 5,688 1,515 84,767 24,203 4,081 7,940 5,266 16,579 416,985 5,591 1,538 88,631 23,173 4,527 8,125 2,153 13,555 394,963 6,285 1,608 93,123 23,537 4,268 8,235 3,416 22,676 383,508 6,076 1,524 97,685 22,043 3,207 7,439 2,627 21,267 378,032 6,262 1,509 101,605 23,899 5,035 6,976 2,955 16,810 423,538 6,155 1,536 105,522 24,976 4,562 6,164 1,931 16,889 444,194 6,620 1,614 107,966 26,302 4,199 5,590 3,268 15,712 721 541,213 113 564,243 1,140 4,005 560,633 538 567,077 4,650 568,928 25,688 583,799 (7,330) 538,046 (16,715) 526,368 (17,133) 574,140 (20,190) 595,275 5,510 1,522 6,721 1,286 2,025 2,394 1,236 2,884 900 2,681 1,001 1,903 1,017 580 1,237 1,484 903 549 1,291 678 (721) 6,311 (113) 7,894 (4,005) 414 (538) 3,582 (4,650) (1,069) (25,688) (22,784) 7,330 8,927 16,715 19,436 17,133 18,585 20,190 22,159 545,804 592,725 617,434 27,487 12,080 39,567 6,349 41,161 47,510 547,524 572,137 561,047 570,659 567,859 561,015 546,973 Change in net position: Governmental activities Business-type activities Total primary government 39,804 11,423 51,227 43,711 25,868 69,579 91,392 6,770 98,162 139,734 33,191 172,925 111,575 48,915 160,490 107,594 17,199 124,793 22,107 24,865 46,972 Source: Pima County Finance & Risk Management 171,650 6,519 2,073 Total primary government $ $ 2015 $ $ $ $ $ $ $ (9,777) 54,018 44,241 $ $ Exhibit D-3 PIMA COUNTY, ARIZONA Fund Balance - Governmental Funds Last Ten Fiscal Years (in thousands) (modified accrual basis of accounting) 2007 General Fund Reserved Unreserved $ Nonspendable 1 Restricted Committed Assigned Unassigned Total General Fund $ 5,415 64,974 2009 $ 2010 146 Nonspendable 1 Restricted Committed Assigned Unassigned Capital projects funds 57,560 70,389 40,166 13,999 17,094 39,139 69,773 77,451 86,121 89,328 $ 173,100 152,643 $ 247,188 126,821 $ 2011 Fiscal Year 2012 2013 2014 252,081 $ 4,089 522 $ 3,315 336 $ 2,720 333 $ 3,848 $ 5,278 $ 4,053 $ 2,931 357 73,547 77,555 118 77,596 80,767 158 56,526 60,532 181 42,731 48,190 194 47,878 52,125 201 77,550 80,682 2,011 82,957 15,305 3,221 (5,793) 2,011 94,567 37,978 4,368 (9,180) 1,550 105,468 10,264 16,682 (9,013) 1,939 76,570 7,746 23,784 (8,385) 1,894 60,984 6,308 4,204 (6,536) 2,515 53,155 6,320 3,769 (4,770) 2,323 57,141 6,962 3,289 (9,097) 18 124,830 1,487 52 (227) 40,868 264,729 $ 12 112,668 6,639 157,688 7,234 187,855 6,958 145,256 3,836 126,827 3,065 (791) 35,903 284,175 (3,553) 28,298 314,618 (83) 25,640 322,024 (80) 7,848 223,714 (57) 8,424 199,248 $ $ $ Due to implementation of GASB 54 in FY 2009-10 categories regarding fund balances have been redefined. See Note 1, page 53 for details. See Note 4, page 61 for purpose details. Source: Pima County Finance & Risk Management 2016 3,093 73,837 81,541 Note: 1 2015 4,363 35,803 $ All other governmental funds Reserved Unreserved, reported in: Special revenue funds Nonspendable 1 Restricted Committed Assigned Unassigned Debt service: Assigned Total other governmental funds 8,889 48,671 2008 $ 104,274 1,508 195 $ 6,656 173,251 PIMA COUNTY, ARIZONA Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years Exhibit D-4 (in thousands) (modified accrual basis of accounting) 2007 2008 2009 Fiscal Year 2011 2010 2012 2013 2014 2015 2016 Revenues Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous $ Total revenues 348,700 521 7,132 303,392 63,508 6,550 13,988 17,544 $ 381,862 556 7,710 312,634 58,890 6,480 14,218 21,752 $ 396,241 441 6,989 292,236 55,346 6,283 5,335 22,414 $ 423,443 536 7,791 296,004 60,376 8,443 4,612 17,442 $ 421,623 330 8,494 308,219 54,491 6,786 1,723 14,162 $ 407,711 245 8,155 327,939 56,881 10,249 2,286 24,796 $ 391,630 $ 385,829 $ 431,371 $ 450,054 8,371 301,223 53,521 9,904 2,282 22,182 8,275 292,082 57,826 8,652 1,737 17,464 8,456 296,628 60,222 9,509 1,155 15,680 8,824 314,918 62,258 8,420 1,812 16,835 761,335 804,102 785,285 818,647 815,828 838,262 789,113 771,865 823,021 863,121 General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service - principal - interest - miscellaneous 222,434 132,930 42,683 6,766 32,311 97,168 45,197 38,474 202,659 53,733 18,965 12 237,640 149,475 43,741 8,310 34,352 106,607 50,509 42,286 139,539 59,719 22,639 330 222,309 144,617 38,132 6,666 31,626 115,481 51,657 42,299 146,334 100,384 26,849 24 221,144 136,744 34,274 5,637 32,737 87,089 50,198 48,402 162,306 87,307 26,414 433 223,611 136,709 34,614 5,375 36,511 90,572 49,986 50,432 153,203 76,361 26,086 21 236,020 145,711 33,651 6,317 46,672 94,360 52,103 47,798 149,612 78,688 24,762 1,179 238,582 152,373 35,866 5,328 35,581 95,339 55,691 44,299 174,976 68,342 23,904 1,654 247,507 157,572 37,772 2,521 35,357 93,193 56,745 34,196 135,746 113,337 26,777 1,030 256,331 161,484 39,664 2,403 37,787 93,418 68,987 34,280 100,788 81,933 26,439 863 255,639 169,292 45,625 2,237 38,390 88,436 58,710 35,121 70,473 86,957 26,279 488 Total expenditures 893,332 895,147 926,378 892,685 883,481 916,873 931,935 941,753 904,377 877,647 (131,997) (91,045) (141,093) (74,038) (67,653) (78,611) (142,822) (169,888) (81,356) (14,526) 31,955 1,909 (32,361) 3,276 51,280 11,959 (55,423) 764 31 130,175 113,227 (122,244) 8,805 9,488 (10,131) 239 360 78,160 162,683 (190,140) 13,685 5,949 (15,250) 11,500 119 72,025 121,497 (148,744) 9,640 2,552 (11,010) 149 89 34,295 114,358 (132,865) 129,769 59,464 60,781 17,208 Expenditures 147 Deficiency of revenues under expenditures Other financing sources (uses): Issuance of refunding debts Premium on bonds Payments to escrow agents Capital leases/Installment notes Proceeds from sale of capital assets Face amount of long-term debt Transfers in Transfers (out) Total other financing sources (uses) Change in reserves - net Net change in fund balances Debt service as a percentage of noncapital expenditures Source: Pima County Finance & Risk Management 1,426 146,320 86,089 (86,688) 312 27 175,000 128,406 (127,692) 876 109,400 171,186 (166,319) 1,118 125,000 98,800 (98,355) 59 75,000 109,715 (105,007) 30,745 7,349 (33,013) 894 1,938 78,425 141,924 (115,914) 148,576 178,017 115,818 128,066 83,043 112,348 1,429 1,964 (211) $ 16,368 9.88% 675 (55) $ 86,917 10.43% (55) $ (25,330) 15.88% 70 $ 54,028 15.24% $ 15,460 13.54% (27) $ 33,710 13.35% $ (13,053) 11.67% $ (110,424) 16.44% $ (20,575) 13.51% $ 2,682 13.41% (This page is intentionally blank) 148 STATISTICAL SECTION REVENUE CAPACITY: The revenue capacity information is intended to assist users to understand and assess the factors affecting a government’s ability to generate its own-source revenues. The presentation here is not limited to property tax revenues, but certain other revenues are presented to comply with debt disclosure requirements, e.g., hotel taxes, car rental and RV taxes, and street and highway revenues. Exhibit D-5 PIMA COUNTY, ARIZONA Taxable Assessed Value and Estimated Actual Value of Property Last Ten Tax Years (in thousands) Tax Year 149 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Commercial Property $2,204,072 2,358,259 2,568,203 2,473,320 2,436,692 2,514,310 2,375,969 2,308,924 2,230,175 2,246,501 Residential Property $4,689,972 5,352,916 5,853,947 5,889,572 5,332,608 5,036,810 4,701,881 4,752,612 4,952,757 5,172,564 Vacant Land $428,486 493,055 525,779 536,958 500,836 472,558 429,967 407,857 385,043 345,099 Other $30,802 35,442 37,783 39,797 39,984 50,260 51,312 49,090 52,386 52,536 Taxable Assessed Value $7,353,332 8,239,672 8,985,712 8,939,647 8,310,120 8,073,938 7,559,129 7,518,482 7,620,361 7,816,700 Total Direct Tax Rate 5.0674 4.6702 4.5917 4.6798 4.8491 4.8520 5.1309 5.7639 5.9632 5.8852 Estimated Limited Value $64,347,659 73,122,499 80,593,121 82,348,215 78,036,208 76,085,641 73,262,703 74,402,882 76,489,654 78,911,345 Assessed Value as a Percentage of Limited Value 11.43% 11.27% 11.15% 10.86% 10.65% 10.61% 10.32% 10.11% 9.96% 9.91% Notes: Property in Pima County is assessed annually with values being set by either the County Assessor or the Arizona Department of Revenue. The values are the basis for Primary Taxes and annual changes therein are restricted by the State Constitution. Assessment ratios are set by the legislature for individual property types. The taxable assessed value is arrived at by multiplying an assessment ratio that has varied from ten percent for residential property to twenty-five percent for commercial property. Tax rates are per $100 of assessed value. Source: Pima County Finance & Risk Management PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates Exhibit D-6 (per $100 of assessed value) County Direct Rates Tax County County Flood Control County Library Fire District Year Primary Secondary District 1 District Assistance 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 150 Tax State of Education Year Arizona Assistance 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 0.4717 0.5123 0.5089 0.5054 0.5010 3.6020 3.3913 3.3133 3.3133 3.4178 3.4178 3.6665 4.2779 4.3877 4.2896 0.6850 0.6050 0.7100 0.7500 0.7800 0.7800 0.7800 0.7000 0.7000 0.7000 Flowing Wells Irrigation District Community College City of City of South Street Lighting Central AZ Water Conservation District Tucson Tucson District District 1.1845 1.1355 1.0770 1.0848 1.1094 1.1741 1.2933 1.3344 1.3689 1.3733 1.1321 0.9601 0.9344 0.9550 1.1621 1.2639 1.4304 1.4606 1.5960 1.5982 0.2258 0.2143 0.2035 0.1999 2.6603 2.7640 2.9776 0.2528 0.2528 0.2528 9.6038 10.1900 12.0787 12.3345 12.4384 0.1000 0.1000 0.1000 0.1000 0.1000 0.1000 0.1400 0.1400 0.1400 0.1400 2 12.9000 19.3500 19.3500 19.3500 19.3500 19.3500 19.3500 19.3500 19.3500 19.3500 0.3446 0.2935 0.2635 0.2635 0.2635 0.2635 0.2635 0.3035 0.3135 0.3335 0.3975 0.3393 0.2643 0.3100 0.3460 0.3460 0.3753 0.4353 0.5153 0.5153 Overlapping Rates 0.0383 0.0411 0.0406 0.0430 0.0418 0.0447 0.0456 0.0472 0.0467 0.0468 Silverbell Irrigation CortaroMarana Irrigation Mobile Home Relocation District2 District2 District3 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 65.0000 66.0000 66.0000 66.0000 66.0000 66.0000 69.0000 69.0000 72.0000 75.0000 0.5000 0.5000 0.5000 0.5000 0.5000 0.0000 Total 5.0674 4.6702 4.5917 4.6798 4.8491 4.8520 5.1309 5.7639 5.9632 5.8852 Gladden Farms Vanderbilt Farms Community Community Facilities Facilities District 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 District 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 Quail Creek Community Facilities Gladden Farms Phase II Community Saguaro Springs Community Facilities District Facilities District District 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 3.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 Notes: Primary and secondary tax rates (per $100 of net assessed value) are set by the County Board of Supervisors or the governing boards of other taxing jurisdictions. The Towns of Marana, Oro Valley and Sahuarita do not currently levy a property tax. The Tucson Business Improvement District levy (on a per-business basis) is not shown. 1 The Pima County Flood Control District tax levy applies only to real property. 2 Irrigation Districts' tax rates shown are levied on a per acre basis. 3 Mobile Home Relocation levy applies only to unsecured mobile homes. Source: Pima County Finance & Risk Management PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates - School Districts Last Ten Tax Years Exhibit D-6a (per $100 of assessed value) School District 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 151 Tucson Unified (#1) 7.0500 6.5659 6.0701 6.2976 6.9480 7.3187 7.4319 7.5094 7.3425 7.1258 Marana Unified (#6) 5.7887 5.4815 4.9286 4.6995 5.2047 5.5863 6.0085 6.2288 6.3370 6.3871 Flowing Wells Unified (#8) 6.5674 6.2665 6.1239 6.0407 5.9689 5.9778 6.7146 6.6135 6.6292 6.8971 Amphitheater Unified (#10) 5.4964 4.8589 4.6112 5.0511 5.4033 5.5539 5.9226 5.8044 5.6725 5.4917 Sunnyside Unified (#12) 8.1490 7.8009 7.0899 6.9680 6.9415 6.3154 5.0003 6.0364 3.9987 5.5498 Tanque Verde Unified (#13) 5.1033 4.3682 3.1837 3.3545 3.8042 4.1538 5.0012 5.0329 5.3069 5.2329 Ajo Unified (#15) 4.8627 4.5964 4.3158 4.9069 5.6740 3.5338 3.8882 4.8452 4.5540 4.7673 Catalina Foothills Unified (#16) 6.3942 6.1053 4.9970 4.2154 4.2095 4.7472 4.8264 4.7066 4.9985 5.9893 Vail Elementary (#20) 6.0327 5.5360 5.2016 4.8839 4.6550 5.9120 7.1703 7.3000 7.0189 7.0523 Sahuarita Unified (#30) 6.1807 5.9176 5.4230 6.5753 5.4067 5.5183 6.6341 7.2885 7.2847 7.3670 San Fernando Elementary (#35) 3.7900 3.7920 4.5954 3.6883 4.8541 4.0331 5.7831 5.8244 5.9538 4.4826 Empire Elementary (#37) 7.5703 4.9021 2.9383 2.9195 2.7531 1.2484 1.1287 2.1687 1.7677 2.4363 Continental Elementary (#39) 1.8970 1.7343 1.6122 1.6945 2.0258 1.5729 1.7027 2.6146 2.6512 2.4626 Redington Elementary (#44) 4.8952 7.4720 7.6340 7.0689 6.7630 5.9198 4.8200 4.7711 4.5901 8.9614 Altar Valley Elementary (#51) 5.8086 5.7451 6.0506 6.2500 6.5675 6.4355 6.2676 6.7381 7.6184 5.9857 Unorganized1 1.6020 1.4622 1.3726 1.4797 1.7682 1.9585 2.1265 2.1123 2.0977 2.0793 Notes: 1 County Education District; Only applies to those geographical areas within Pima County not part of formal school districting Source: Pima County Finance & Risk Management Exhibit D-7 PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Fiscal Years (in thousands) 2007 Estimated Assessed Taxpayer Unisource/Tucson Electric Power Co. Rank 1 Value 2008 Percent of Total Assessed Estimated Assessed Value Value1 Rank 2009 Percent of Total Assessed Estimated Assessed Value Value1 Rank 2010 Percent of Total Assessed Estimated Assessed Value Value1 Rank 2011 Percent of Total Assessed Estimated Assessed Value Value1 Rank Percent of Total Assessed Value $ 150,771 1 1.8% $ 153,431 2 1.6% $ 158,764 2 1.6% $ 164,363 1 1.8% $ 168,510 1 2.0% Phelps Dodge Corporation - Sierrita Mine 93,656 3 1.1% 156,780 1 1.6% 198,694 1 2.0% 89,289 2 1.0% 99,048 2 1.2% Southwest Gas Corporation 62,919 4 0.8% 63,698 4 0.7% 64,775 4 0.7% 65,879 3 0.7% 64,533 3 0.8% 0.0% - 0.0% 20,042 8 0.2% 28,878 5 0.3% 58,585 4 0.7% 5 0.6% ASARCO LLC - Mission Mine - QWEST Corporation 94,300 2 1.1% 87,000 3 0.9% 74,646 3 0.8% 55,076 4 0.6% 51,942 Trico Electric Co-Op Inc. 18,044 8 0.2% 18,816 9 0.2% 21,029 7 0.2% 21,208 6 0.2% - Northwest Hospital LLC - 0.0% - 0.0% - 0.0% 17,097 8 0.2% 17,390 9 0.2% 7 0.2% 0.0% 152 DND Neffson Co. (Tucson Mall) 19,897 7 0.2% 21,013 8 0.2% 18,888 10 0.2% 17,715 7 0.2% 17,931 Starr Pass Resort Developments LLC 15,280 10 0.2% 15,889 10 0.2% 19,384 9 0.2% 16,582 10 0.2% - Arizona Portland Cement 23,468 6 0.3% 23,593 7 0.2% 27,561 6 0.3% 16,635 9 0.2% 21,217 6 0.3% 0.0% 44,047 5 0.5% 63,572 5 0.6% - 0.0% 16,153 10 0.2% 6 0.4% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% 17,519 5.3% $ 532,828 ASARCO Mining - Raytheon 58,987 5 0.7% 33,833 Westin La Paloma 15,959 9 0.2% - Total Top Ten Notes: $ 553,281 6.7% $8,220,396 $ 618,100 6.4% $9,594,862 $ 667,355 6.8% $9,860,981 $ 492,722 $9,342,561 0.0% 0.0% 8 0.2% 6.3% $8,448,282 1 Secondary Assessed Valuation for Tax Year Source: Pima County Assessor's Office Arizona Department of Revenue (continued) PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Fiscal Years Exhibit D-7 (in thousands) (continued) 2012 Estimated Assessed Taxpayer Unisource/Tucson Electric Power Co. Rank Value1 2013 Percent of Total Assessed Estimated Assessed Value Value1 Rank 2014 Percent of Total Assessed Estimated Assessed Value Value1 Rank 2015 Percent of Total Assessed Estimated Assessed Value Value1 Rank 2016 Percent of Total Assessed Estimated Assessed Value Value1 Rank Percent of Total Assessed Value $ 179,262 1 2.2% $ 200,706 1 2.6% $ 201,401 1 2.7% $ 200,344 1 2.5% $ 188,366 1 2.3% 142,419 2 1.7% 136,947 2 1.8% 95,186 2 1.3% 93,847 2 1.2% 81,988 2 1.0% ASARCO, LLC 83,778 3 1.0% 74,101 3 1.0% 55,322 4 0.7% 48,496 4 0.6% 42,290 3 0.5% Southwest Gas Corporation 61,718 4 0.8% 61,669 4 0.8% 66,789 3 0.9% 70,297 3 0.9% 36,696 4 0.4% Qwest Corporation 53,225 5 0.7% 40,386 5 0.5% 38,035 5 0.5% 37,877 5 0.5% 33,114 5 0.4% Wal-Mart Stores, Inc. 15,581 9 0.2% 16,923 8 0.2% 19,366 7 0.3% 18,494 6 0.2% 18,211 6 0.2% 0.0% 17,471 7 0.2% Phelps Dodge Corporation SMSJ Tucson Holdings, LLC 0.0% 0.0% 0.0% 153 Northwest Hospital, LLC 17,723 8 0.2% 16,980 7 0.2% 16,982 8 0.2% 17,058 7 0.2% 16,858 8 0.2% DND Neffson Co. (Tucson Mall) 17,998 7 0.2% 16,030 9 0.2% 16,037 9 0.2% 15,695 8 0.2% 15,668 9 0.2% 0.0% 12,499 10 0.2% DDR Tucson Spectrum II, LLC Raytheon Company Trico Electric Co-Op, Inc. JW Marriott Starr Pass Resort Verizon Wireless Target Corporation Total Top Ten 0.0% 22,133 6 14,291 $ 608,128 10 0.0% 0.0% - 0.3% 21,713 0.0% - 0.2% 12,884 0.0% - 7.4% $ 598,339 6 10 0.0% 0.0% - 0.3% 21,845 0.0% 12,298 0.2% 0.0% 7.8% 0.0% 14,703 9 0.2% 0.0% 6 0.3% 14,131 10 0.2% 0.0% 10 0.2% - 0.0% 0.0% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% $ 543,261 7.2% $ 530,942 6.7% $ 463,161 5.6% Notes: 1 Secondary Assessed Valuation for Tax Year Source: Pima County Assessor's Office Arizona Department of Revenue $8,171,212 $7,623,691 $ 7,579,899 $ 7,906,190 $ 8,262,665 PIMA COUNTY, ARIZONA Real Property Tax Levies and Collections Last Ten Fiscal Years (in thousands) Fiscal Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Primary Property Tax Levy and Secondary Property Tax Levy for $ Debt Service 283,253 305,699 322,902 353,594 352,276 335,467 324,786 323,026 359,298 374,101 Original Real Property Secondary Property Tax Levy for Flood Control $ and Library District 46,987 56,836 56,772 48,468 50,256 48,242 46,136 45,287 52,186 59,448 $ Tax Levy 330,240 362,535 379,674 402,062 402,532 383,709 370,922 368,313 411,484 433,549 Tax Roll Corrections $ (322) (622) (360) (106) (384) Real Property Tax Levy (Adjusted) $ 329,918 361,913 379,314 401,956 402,148 383,709 370,922 368,313 411,484 433,549 154 Note: 1 Amounts collected are on a cash basis rather than the modified accrual basis used in the financial statements. 2 Represents the difference between the adjusted levy and collected to June 30, 2016. Source: Pima County Finance & Risk Management Pima County Treasurer's Office Collected to June 30, Collected to End of Tax Fiscal Year1 June 30, 20161 Percent of Original $ Exhibit D-8 Amount 318,520 348,741 363,624 384,983 383,978 369,100 357,556 355,338 397,670 418,716 Levy 96.45% 96.20% 95.77% 95.75% 95.39% 96.19% 96.40% 96.48% 96.64% 96.58% Collections in Subsequent $ Years 11,298 12,946 15,416 16,679 16,295 13,041 11,845 11,597 12,795 Percent of Adjusted $ Amount 329,818 361,687 379,040 401,662 400,273 382,141 369,401 366,935 410,465 418,716 Levy 99.97% 99.94% 99.93% 99.93% 99.53% 99.59% 99.59% 99.63% 99.75% 96.58% Delinquent Taxes $ Receivable2 100 226 274 294 1,875 1,568 1,521 1,378 1,019 14,833 PIMA COUNTY, ARIZONA Assessed, Limited and Full Cash (Secondary) Value of Taxable Property Last Ten Fiscal Years Exhibit D-9 (in thousands) Fiscal Year 2006-07 Primary 2006-07 Secondary $ Net Assessed Limited and Full Cash Value Value 6,467,202 6,869,955 $ 1 Ratio of Net Assessed to Full Cash Value 56,437,790 59,890,229 11.46% 11.47% 2007-08 Primary 2007-08 Secondary 7,353,331 8,220,396 64,347,659 72,101,321 11.43% 11.40% 2008-09 Primary 2008-09 Secondary 8,230,967 9,594,862 73,122,499 85,993,246 11.26% 11.16% 2009-10 Primary 2009-10 Secondary 8,985,712 9,860,981 80,593,121 88,095,754 11.15% 11.19% 2010-11 Primary 2010-11 Secondary 8,939,647 9,342,561 82,348,221 86,228,902 10.86% 10.83% 2011-12 Primary 2011-12 Secondary 8,310,120 8,448,282 78,036,208 80,152,473 10.65% 10.54% 2012-13 Primary 2012-13 Secondary 8,073,938 8,171,212 76,085,641 77,731,086 10.61% 10.51% 2013-14 Primary 2013-14 Secondary 7,559,129 7,623,691 73,262,703 74,590,067 10.32% 10.22% 2014-15 Primary 2014-15 Secondary 7,518,482 7,579,899 74,402,882 75,389,155 10.11% 10.05% 2015-16 Primary 2015-16 Secondary 7,620,361 7,906,190 76,489,654 79,550,159 9.96% 9.94% Notes: 1 Limited value is the basis for primary taxes and annual changes therein are restricted by statute; Full Cash Value or Secondary Value approximates market value. Source: Pima County Finance & Risk Management 155 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D-10 (per $100 assessed value) (in thousands) Jurisdiction State of Arizona FY 2015-16 (Tax Year 2015) Valuation Rate $ 7,620,361 0 Pima County General Fund - Primary Debt Service - Secondary Free Library - Secondary FY 2016-17 (Tax Year 2016) Valuation Rate $ 7,816,700 0 7,620,361 7,620,361 7,620,361 4.3877 0.7000 0.5153 7,816,700 7,816,700 7,816,700 4.2896 0.7000 0.5153 7,620,361 4.3877 1.2153 5.6030 7,816,700 4.2896 1.2153 5.5049 Education Assistance 7,620,361 0.5054 7,816,700 0.5010 Flood Control District - Secondary 6,917,201 0.3135 7,089,460 0.3335 Fire District Assistance - Secondary 7,620,361 0.0467 7,816,700 0.0468 Pima Community College District Primary Secondary Total 7,620,361 0 1.3689 0 1.3689 7,816,700 0 1.3733 0 1.3733 7,620,361 0.1400 7,816,700 0.1400 3,123,670 3,123,670 0.5326 1.0634 1.5960 3,185,432 3,185,432 0.5348 1.0634 1.5982 Total County - Primary Total County - Secondary Grand Total Central Arizona Water Conservation District Secondary Cities & Towns City of Tucson Primary Secondary Total City of South Tucson Primary Secondary Total School Districts Unorganized - Primary Tucson Unified (District #1) Primary Secondary Total 20,334 0 0.2528 0 0.2528 20,403 0 0.2528 0 0.2528 18,270 2.0977 17,382 2.0793 3,026,615 3,026,615 6.5217 0.8208 7.3425 3,081,170 3,081,170 6.3831 0.7427 7.1258 Source: Pima County Finance & Risk Management (continued) 156 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D-10 (per $100 assessed value) (in thousands) (continued) Jurisdiction Marana Unified (District #6) Primary Secondary Total FY 2015-16 (Tax Year 2015) Valuation Rate $ 736,011 736,011 4.4563 1.8807 6.3370 Flowing Wells Unified (District #8) Primary Secondary Total 183,908 183,908 Amphitheater Unified (District #10) Primary Secondary Total FY 2016-17 (Tax Year 2016) Valuation Rate 766,203 766,203 4.5020 1.8851 6.3871 4.3164 2.3128 6.6292 187,116 187,116 4.3124 2.5847 6.8971 1,403,631 1,403,631 4.2501 1.4224 5.6725 1,438,176 1,438,176 4.1145 1.3772 5.4917 Sunnyside Unified (District #12) Primary Secondary Total 405,451 405,451 2.7746 1.2241 3.9987 412,271 418,271 4.3228 1.2270 5.5498 Tanque Verde Unified (District #13) Primary Secondary Total 173,314 173,314 3.7233 1.5836 5.3069 180,680 180,680 4.2195 1.0134 5.2329 18,506 18,506 4.5540 0 4.5540 17,773 17,773 4.7673 0 4.7673 Catalina Foothills Unified (District #16) Primary Secondary Total 572,819 572,819 3.4551 1.5434 4.9985 589,872 589,872 4.4418 1.5475 5.9893 Vail Elementary (District #20) Primary Secondary Total 429,134 429,134 4.5425 2.4764 7.0189 440,846 440,846 4.5047 2.5476 7.0523 Ajo Unified (District #15) Primary Secondary Total Source: Pima County Finance & Risk Management $ (continued) 157 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates Exhibit D-10 (per $100 assessed value) (in thousands) (continued) Jurisdiction Sahuarita Unified (District #30) Primary Secondary Total FY 2015-16 (Tax Year 2015) Valuation Rate $ 299,027 299,027 FY 2016-17 (Tax Year 2016) Valuation Rate 4.6088 2.6759 7.2847 $ 295,126 295,126 4.4380 2.9290 7.3670 San Fernando Elementary (District #35) Primary Secondary Total 1,260 1,260 5.9538 0 5.9538 11,403 11,403 4.4826 0 4.4826 Empire Elementary (District #37) Primary Secondary Total 7,673 7,673 1.7677 0 1.7677 7,180 7,180 2.4363 0 2.4363 312,442 312,442 2.1799 0.4713 2.6512 320,271 320,271 2.0077 0.4549 2.4626 2,108 2,108 0 0 0 1,804 1,804 0 0 0 1,327 1,327 4.5901 0 4.5901 1,312 1,312 8.9614 0 8.9614 28,867 28,867 6.1119 1.5065 7.6184 48,244 48,244 5.0522 0.9335 5.9857 Continental Elementary (District #39) Primary Secondary Total Baboquivari Unified School (District #40) Primary Secondary Total Redington Elementary (District #44) Primary Secondary Total Altar Valley Elementary (District #51) Primary Secondary Total Source: Pima County Finance & Risk Management 158 PIMA COUNTY, ARIZONA Historical Collections - Hotel Excise Tax Car Rental Surcharge and Recreational Vehicle Tax Last Ten Fiscal Years Exhibit D-11 (in thousands) Fiscal Hotel Excise Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Tax1 $ 7,796 6,901 5,628 5,637 5,887 6,626 6,286 6,276 6,105 6,534 Car Rental Recreational Vehicle Surcharges2 $ 1,357 1,732 1,389 1,521 1,538 1,464 1,399 1,390 1,384 1,468 Tax3 $ Notes: 1 Tax increased from 1% to 2% January 1, 1997; the additional 1% can only be used for County sports facilities. In January of 2006, the tax increased from 2% to 6%, of which only 34% can be used for sports facilities. 2 Car rental surcharges increased from $2.50 to $3.50 per rental contract July 1, 1996. Usage is restricted to County sports facilities. 3 Recreational vehicle taxes apply at the rate of $0.50 per vehicle per night and became effective July 1, 1997. Usage of this tax is limited to athletic activities. Source: Pima County Finance and Risk Management Department 159 210 222 159 181 165 146 136 122 137 146 Exhibit D-12 PIMA COUNTY, ARIZONA Streets and Highways Revenues Last Ten Fiscal Years (in thousands) Fiscal Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Highway User Revenue Amount $ 58,638 57,847 53,907 50,535 50,460 44,890 47,449 49,212 53,212 56,006 $ Source: Pima County Finance and Risk Management Department 160 44,607 44,060 41,210 38,739 38,974 33,665 36,860 37,500 40,762 42,543 Vehicle License Tax $ 14,031 13,787 12,697 11,796 11,486 11,225 10,589 11,712 12,450 13,463 STATISTICAL SECTION DEBT CAPACITY: The debt capacity information is intended to assist users to understand and assess a government’s debt burden and ability to issue debt. Debt capacity information is cited as being very useful for assessing economic condition as frequently as revenue or tax capacity. Five of the schedules presented provide ten-year comparisons. Certain schedules, for example, leases, lease-purchase installment notes payable, and purchase agreements, are provided to comply with debt disclosure requirements. PIMA COUNTY, ARIZONA Ratios of Outstanding Debt by Type to Personal Income and Per Capita Last Ten Fiscal Years Exhibit D-13 (in thousands) Governmental Activities General Obligation Bonds Fiscal Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 $ 290,150 349,542 388,032 420,261 455,856 461,557 467,368 416,006 391,298 350,135 Flood Control Bonds $ 1,470 725 725 Transportation Revenue Bonds $ Special Assessment Bonds 136,541 149,801 139,683 142,226 131,375 141,536 128,604 133,081 118,770 103,961 Business-Type Activities Certificates of Transportation Participation Loans $ 31,731 81,612 74,554 72,638 48,235 39,772 134,494 149,703 177,771 179,054 $ 3,714 1,000 Capital Leases $ 24,736 23,223 21,327 19,387 17,775 16,431 298 136 161 Fiscal Total Primary Personal Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Government $ 664,089 845,872 878,680 1,058,962 1,046,919 1,248,820 1,431,672 1,405,771 1,350,118 1,245,339 Income $ 33,641,312 35,320,737 33,713,976 33,883,172 35,132,468 36,412,855 36,935,363 38,025,100 39,106,000 40,359,300 1 Percentage of Personal Income 1.97% 2.39% 2.61% 3.13% 2.98% 3.43% 3.88% 3.70% 3.45% 3.09% Notes: Details regarding outstanding debt can be found in Note 7 to the Financial Statements, pages 66-76. 1 Personal income and population statistics are based on calendar year. Prior years' statistics updated based on current data. Source: Pima County Finance & Risk Management UA Economic and Business Research Center, Eller College of Management Sewer Revenue Bonds Installment Note Payable $ $ 605 640 11,912 8,733 Population at July 11 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,007,162 1,022,079 1,016,743 Debt per Capita $ 681 860 893 1,079 1,062 1,261 1,437 1,396 1,321 1,225 94,356 163,701 183,389 166,935 184,782 171,022 155,514 138,431 120,361 104,153 Sewer Revenue Obligations Regional Wastewater Loans Payable $ $ 165,000 176,849 379,418 510,975 540,288 510,763 481,027 76,111 70,426 64,489 66,210 27,390 23,719 21,169 19,680 18,145 16,563 Contracts and Notes $ 5,280 5,842 6,481 6,305 4,657 15,365 12,645 7,942 1,098 1,577 Total Primary Government $ 664,089 845,872 878,680 1,058,962 1,046,919 1,248,820 1,431,672 1,405,771 1,350,118 1,245,339 PIMA COUNTY, ARIZONA Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years Exhibit D-14 (in thousands) 162 Fiscal General Obligation Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Bond Debt $ 290,150 349,542 388,032 420,261 455,856 461,557 467,368 416,006 391,298 350,135 Flood Control General Obligation Debt Service Funds Available for Net General Bond Debt $ 1,470 725 725 Principal $ 7,431 10,241 10,523 11,396 27,904 22,602 22,900 5,326 6,037 5,606 Bond Debt $ 284,189 340,026 378,234 408,865 427,952 438,955 444,468 410,680 385,261 344,529 Secondary Net Assessed $ Notes: Details regarding outstanding debt can be found in Note 7 to the Financial Statements, pages 66-76. 1 Population statistics are based on calendar year. Prior years' statistics updated to reflect current data. 2 Debt per Capita is shown in actual dollars and not in thousands. Source: Pima County Finance & Risk Management UA Economic and Business Research Center, Eller College of Management Value 6,869,955 8,220,396 9,594,862 9,860,981 9,342,561 8,448,282 8,171,212 7,623,691 7,579,899 7,906,190 Percent Net General Bond Debt to Assessed Value 4.14% 4.14% 3.94% 4.15% 4.58% 5.20% 5.44% 5.39% 5.08% 4.36% Population 1 at July 1 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,007,162 1,022,079 1,016,743 Net General Bond Debt per Capita2 $ 291 346 384 417 434 443 447 408 377 339 PIMA COUNTY, ARIZONA Ratio of Direct and Overlapping Debt to Property Values and Per Capita Last Ten Fiscal Years Exhibit D-14a (dollar amounts in thousands) Total Overlapping Fiscal Year 163 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Secondary Net Assessed Debt $ 1,107,662 1,137,114 1,213,050 1,302,802 1,335,431 1,284,219 1,311,417 1,153,220 1,501,691 1,445,104 Value $ 6,869,955 8,220,396 9,594,862 9,860,981 9,342,561 8,448,282 8,171,212 7,623,691 7,579,899 7,906,190 Percentage of Assessed Value 16.12% 13.83% 12.64% 13.21% 14.29% 15.20% 16.05% 15.13% 19.81% 18.28% Population at July 1 Debt 1 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,007,162 1,022,079 1,016,743 per Capita2 $ 1,133 1,156 1,232 1,328 1,353 1,297 1,317 1,145 1,469 1,421 Notes: Overlapping governments are those that coincide (at least in part), with the geographic boundaries of the County. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Pima County. When considering the County's ability to issue and repay long-term debt, the process should recognize the entire debt burden borne by the residents and businesses therein. However, this does not imply that every taxpayer is a resident and is responsible for the repayment of debt of each overlapping government. 1 Population statistics are based on calendar year. 2 Debt per Capita is shown in actual dollars and not in thousands. Source: Pima County Finance & Risk Management UA Economic and Business Research Center, Eller College of Management PIMA COUNTY, ARIZONA Computation of Direct and Overlapping Governmental Activities Debt Outstanding At June 30, 2016 Exhibit D-15 (in thousands) Debt Outstanding Governmental Unit Amount Overlapping Debt repaid with property tax: School Districts $ 594,225 City of Tucson 208,860 Total overlapping Debt repaid with property tax Direct: Pima County* $ $ 350,135 Total direct 594,225 208,860 $ 803,085 $ 350,135 $ 350,135 $ 179,054 Other Debt: Certificates of participation $ 179,054 Installment note payable Capital Lease Payable Transportation bonds 8,733 8,733 136 136 103,961 103,961 Total other debt $ 291,884 Total direct and overlapping debt $ 1,445,104 Notes: Overlapping governments are those that coincide with the geographic boundaries of the County. All overlapping governments are 100% within the County's boundaries. This schedule estimates the portion of the outstanding debt borne by the residents and businesses of Pima County. When considering the county's ability to issue and repay long-term debt, the process should recognize the entire debt burden borne by the residents and businesses therein. However, this does not imply that every taxpayer is a resident of each government and is responsible for the repayment of debt of each overlapping government. *Excludes improvement districts. Source: Pima County Finance & Risk Management City of Tucson Finance Department Pima Community College District Finance Office 164 PIMA COUNTY, ARIZONA Legal Debt Margin Last Ten Fiscal Years Exhibit D-16 (dollar amounts in thousands) Full Cash Net Assessed Value $ 2007 6,869,955 $ 2008 8,220,396 $ 2009 9,594,862 $ 2010 9,860,981 $ 2011 9,342,561 2012 $ 8,448,282 2013 $ 8,171,212 2014 $ 7,623,691 $ 2015 7,579,899 $ 2016 7,906,190 Legal Debt Margin Debt limit (15% of assessed value) 1,030,493 1,233,059 1,439,229 1,479,147 1,401,384 1,267,242 1,225,682 1,143,554 1,136,985 1,185,929 289,590 348,335 386,845 417,995 452,750 456,145 456,690 407,275 383,935 344,620 (10,241) (10,523) (11,396) (27,904) (22,602) (22,900) 338,094 376,322 406,599 424,846 433,543 433,790 Debt applicable to limit: General obligation bonds Less: Net assets reserved for repayment of general obligation debt (7,431) Total net debt applicable to the limit Legal debt margin 282,159 $ 165 Total net debt applicable to the limit as a percentage of debt limit. 748,334 27.38% $ 894,965 27.42% $ 1,062,907 26.15% $ 1,072,548 $ 976,538 27.49% Please see Note 7 to the Financial Statements, pages 76 for additional details on calculation of the legal debt margin for the current year. Source: Pima County Finance & Risk Management 30.32% $ 833,699 34.21% $ 791,892 35.39% (5,326) (6,037) 401,949 $ 741,605 35.15% (5,606) 377,898 $ 759,087 33.24% 339,014 $ 846,915 28.59% PIMA COUNTY, ARIZONA Regional Wastewater Reclamation Pledged Sewer Revenue Debt Coverage Last Ten Fiscal Years Exhibit D-17a (dollar amounts in thousands) Plus: Ending cash 166 Fiscal Sewer User Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Revenues $ 103,959 109,264 105,987 128,067 151,212 158,397 163,512 181,553 182,118 176,974 1 Less: Operating Available Expense2 $ 69,597 78,521 73,186 69,904 74,638 73,241 73,577 77,893 84,492 83,423 Net Revenue $ 34,362 30,743 32,801 58,163 76,574 85,156 89,935 103,660 97,626 93,551 Debt Service6 Balances of Prior Fiscal Year Pledged (unrestricted) Revenues $ 20,163 11,260 32,806 99,491 128,735 121,426 110,741 3 $ 78,326 87,834 117,962 189,426 232,395 219,052 204,292 Principal $ 13,957 13,325 14,187 16,952 17,110 20,895 29,759 37,025 41,026 40,320 Interest $ 6,340 7,221 9,469 9,838 17,047 21,658 28,243 30,386 30,306 28,529 Coverage Total $ 20,297 20,546 23,656 26,790 34,157 42,553 58,002 67,411 71,332 68,849 4,5 Ratio 1.69 1.50 1.39 2.92 2.57 2.77 3.27 3.45 3.07 2.97 Notes: 1 Includes sewer connection fees. 2 Excludes grants, depreciation, interest expense and amortization. 3 Pledged revenues defined by BOS Resolution 2010-50. 4 Sewer revenue debt rate covenants require minimum coverage of 120%. 5 For fiscal year 2009-2010, a new Debt Coverage calculation was implemented. 6 Debt service requirements include principal and interest payable during the Bond Fiscal Year. Per the bond resolution, Bond Fiscal Year is defined as 7/2/20XX to 7/1/20XX. Source: Pima County Finance & Risk Management Exhibit D-17b PIMA COUNTY, ARIZONA Transportation Revenue Bonds - Pledged Revenue Bond Coverage Last Ten Fiscal Years (dollar amounts in thousands) Less: Fiscal Year 167 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Transportation Revenue $ 64,781 65,009 58,891 54,897 52,711 46,834 49,874 50,997 55,466 57,976 Operating Expense $ 42,639 43,490 38,082 34,214 34,552 33,335 35,041 37,295 39,022 39,798 Debt Service1 Principal Interest Available Net Revenue $ 22,142 21,519 20,809 20,683 18,159 13,499 14,833 13,702 16,444 18,178 $ 11,745 12,365 15,145 10,530 11,015 12,055 12,425 13,685 13,210 14,585 $ 5,659 6,147 6,203 5,709 5,244 5,537 4,969 5,197 4,711 4,146 Notes: Details regarding outstanding debt can be found in Note 7 to the Financial Statements, pages 69-70. Operating expenditures do not include interest, depreciation or amortization. 1 Debt Service requirements include principal and interest payable in the 12 months following each fiscal year. Source: Pima County Finance & Risk Management Coverage Ratio 1.27 1.16 0.97 1.27 1.12 0.77 0.85 0.73 0.92 0.97 PIMA COUNTY, ARIZONA Lease, Lease-Purchase, Installment Note Payable and Purchase Agreements Scheduled Payments Exhibit D-18 (dollar amounts in thousands) Function/Department Clerk of Superior Court - Equipment FY 07-08 $ 1 Jail Sheriff - Equipment Solid Waste - Equipment County Administration - Culture & Recreation 82 FY 08-09 $ 5,920 131 FY 09-10 $ 3,027 111 FY 10-11 $ 3,007 FY 11-12 FY 12-13 37 3,004 $ $ 3,004 $ 3,427 160 298 $ 3,885 298 $ 6,002 $ 3,158 $ 3,118 $ 3,041 FY 13-14 $ 3,302 63 FY 14-15 $ 160 298 $ 521 $ Funds derived from a sale/leaseback of the County's Adult Corrections Facility provided funding for construction of Kino Veteran's Memorial Sportspark & Tucson Electric Park Stadium. Source: Pima County Finance & Risk Management $ 160 Notes: 1 84 FY 15-16 244 96 FY 16-17 $ 160 $ 3,625 3,881 73 160 $ 2,722 2,955 168 PIMA COUNTY, ARIZONA Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures Last Ten Fiscal Years Exhibit D-19 (dollar amounts in thousands) Fiscal Year 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Principal 50,940 56,459 96,751 83,565 72,525 78,390 67,885 112,835 81,705 83,765 Interest 17,672 19,757 24,322 24,097 23,945 24,762 23,903 26,758 26,424 25,515 Total Debt Service 68,612 76,216 121,073 107,662 96,470 103,152 91,788 139,593 108,129 109,280 Total General Expenditures* 689,968 755,413 780,044 730,379 730,278 767,261 756,959 806,007 803,590 807,174 Ratio of Debt Service To General Expenditures 9.9% 10.1% 15.5% 14.7% 13.2% 13.4% 12.1% 17.3% 13.5% 13.5% *Includes General, Special Revenue and Debt Service Funds, while excluding Capital Projects Fund. Source: Pima County Finance & Risk Management 169 (This page is intentionally blank) 170 STATISTICAL SECTION DEMOGRAPHIC AND ECONOMIC INFORMATION: The dual objectives of the demographic and economic information are to assist users in understanding certain aspects of the environment in which a government operates and to provide information that facilitates the comparisons of financial statement data over time and across governments. Information of this type can help readers assess a government’s condition by providing information about community expansion, average age increases or decreases and changes in personal income and unemployment. This type of data is important to readers in assessing economic condition. PIMA COUNTY, ARIZONA Demographic and Economic Statistics Last Ten Years Calendar Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Population 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,007,162 1,022,079 1,016,743 Per Capita Personal Income Personal Income $ 33,641,312 35,320,737 33,713,976 33,883,172 35,132,468 36,412,855 36,935,363 38,025,100 39,106,000 40,359,300 $ Exhibit D-20 Unemployment Rate 34,424 35,894 34,253 34,534 35,628 36,767 37,082 37,755 38,261 39,695 Sources: Arizona Department of Administration, Office of Employment & Population Statistics UA Economic and Business Research Center, Eller College of Management 171 3.6% 5.7% 9.0% 9.4% 8.5% 7.4% 7.0% 6.4% 5.6% 5.0% Exhibit D-21 PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 2007 Employer Employees Rank Percent of Total County Employment 2008 Employees Rank Percent of Total County Employment 2009 Employees Rank Percent of Total County Employment 2010 Employees Rank Percent of Total County Employment 2011 Employees Rank Percent of Total County Employment University of Arizona 10,354 2 2.3% 10,535 3 2.3% 10,575 2 2.2% 10,363 2 2.1% 10,481 2 2.2% Raytheon 11,184 1 2.5% 12,515 1 2.7% 11,539 1 2.4% 12,140 1 2.5% 10,500 1 2.2% State of Arizona 9,927 3 2.2% 10,754 2 2.3% 9,329 3 1.9% 8,708 3 1.8% 8,866 3 1.8% Davis-Monthan AFB 8,233 5 1.8% 7,701 5 1.7% 7,509 4 1.5% 7,755 4 1.6% 8,462 4 1.7% Tucson Unified School District 7,419 6 1.6% 8,018 4 1.7% 7,227 5 1.5% 7,012 6 1.4% 6,709 6 1.4% Pima County Government 7,290 7 1.6% 6,954 6 1.5% 6,235 8 1.3% 6,511 7 1.3% 6,403 7 1.3% 5,982 9 1.2% 7,308 5 1.5% 6,225 8 4,930 10 UA Healthcare Network 172 Freeport-McMoran Copper Wal-Mart Stores, Inc. 5,625 9 Fort Huachuca1 9,119 4 City of Tucson 5,848 8 1.2% 1.3% 5,840 9 1.3% 5,987 9 1.2% 5,805 10 1.3% 6,715 6 1.4% 6,701 7 6,463 7 5,848 8 5,635 10 1.3% 1.2% Carondelet Health Network Phelps Dodge Total Total Work Force 4,900 79,899 10 7,192 5 1.5% 6,236 8 5,399 9 1.1% 4,566 10 0.9% 1.0% 1.1% 17.6% 80,671 453,500 17.6% 459,200 77,214 15.9% 486,400 75,882 15.6% 488,500 75,866 14.3% 485,800 Notes: 1 Fort Huachuca is located in Cochise County but is listed here due to its role as a large regional employer. Sources: UA Economic and Business Research Center, Eller College of Management Data is obtained from www.tucson.com/star200, a website of the Arizona Daily Star. (continued) Exhibit D-21 PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago (continued) 2012 Employer Employees Rank Percent of Total County Employment 2013 Employees Rank Percent of Total County Employment 2014 Employees Rank Percent of Total County Employment 2015 Employees Rank Percent of Total County Employment 2016 Employees Rank Percent of Total County Employment 173 University of Arizona 10,681 1 2.3% 10,846 1 2.4% 11,047 1 2.4% 11,235 1 2.4% 11,251 1 2.4% Raytheon 10,500 2 2.3% 10,300 2 2.3% 9,933 2 2.2% 9,600 2 2.1% 9,600 2 2.1% State of Arizona 9,061 3 2.0% 8,807 4 1.9% 9,439 3 2.1% 8,524 3 1.8% 8,580 3 1.8% Davis-Monthan AFB 8,566 4 1.9% 9,100 3 2.0% 8,933 4 2.0% 8,335 4 1.8% 8,406 4 1.8% Pima County Government 6,170 8 1.4% 6,076 9 1.3% 7,328 5 1.6% 7,023 6 1.5% 7,023 5 1.5% Tucson Unified School District 6,674 6 1.5% 6,790 6 1.5% 6,525 6 1.4% 7,134 5 1.5% 6,770 6 1.4% Banner Healthcare - UMC 5,594 10 1.2% 6,099 8 1.3% 6,329 7 1.4% 6,542 7 1.4% 6,272 7 1.3% U.S. Cuistoms & Border Protection 6,000 9 1.3% 6,500 7 1.4% 4,135 0.9% 6,470 8 1.4% 5,739 8 1.2% 5,463 10 1.2% 5,600 9 1.2% 5,800 9 1.2% 5,530 9 1.2% 7,450 5 1.6% 5,200 10 1.1% 5,400 10 1.2% 5,500 10 1.2% 5,717 8 Freeport-McMoran Inc. Wal-Mart Stores, Inc. 7,300 5 Fort Huachuca1 6,198 7 1.6% 6,198 City of Tucson Total 70,546 15.5% 4,585 1.0% 4,845 77,431 17.1% 74,469 5,314 5,477 1.1% 4,882 4,595 16.5% 76,063 16.3% 74,671 16.0% ` Total County Work Force 455,900 Notes: 1 Fort Huachuca is located in Cochise County but is listed here due to its role as a large regional employer. Sources: UA Economic and Business Research Center, Eller College of Management Data is obtained from www.tucson.com/star200, a website of the Arizona Daily Star. 453,200 452,429 467,438 467,438 PIMA COUNTY, ARIZONA Population and Employment Last Ten Calendar Years Year 174 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Population 977,258 984,032 984,274 981,168 986,081 990,380 996,046 1,007,162 1,022,079 1,016,743 Civilian Labor Force 454,854 473,344 486,040 479,879 465,640 459,349 449,958 452,429 467,438 476,578 Total Unemployment Rate 3.6% 5.7% 9.0% 9.4% 8.5% 7.4% 7.0% 6.4% 5.6% 5.0% Exhibit D-22 EMPLOYMENT Mining 1,800 1,900 1,700 1,800 1,900 2,100 2,300 2,300 2,300 2,200 Construction 26,600 22,900 16,700 15,100 14,500 14,400 15,400 14,800 14,600 14,300 Manufacturing 27,400 27,100 24,900 23,800 23,300 23,200 23,000 22,500 22,600 23,500 Transportation & Utilities 64,800 63,100 58,600 57,200 58,000 58,000 59,200 60,600 60,600 60,700 Financial Activities 18,000 16,900 17,100 17,200 16,900 16,900 17,300 17,500 17,600 19,600 Notes: All Employment data presented is not seasonally adjusted. Labor Force, Unemployment and Sector Employment for 2016 represent the average through July 2016. Prior year's employment statistics are revised with updated data. Sources: UA Economic and Business Research Center, Eller College of Management Bureau of Labor Statistics PIMA COUNTY, ARIZONA Transportation and Real Estate Last Ten Fiscal Years Fiscal Year 175 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Aircraft Movements 263,910 240,329 190,445 169,780 164,152 145,967 138,263 139,420 141,422 139,555 Transportation No. of Air Bus Passengers Ridership 4,374,371 4,395,205 3,669,924 3,709,178 3,676,894 3,649,783 3,308,620 3,239,849 3,181,901 3,228,389 17,857,865 19,491,376 21,648,350 20,483,709 19,746,774 19,971,230 20,352,101 19,713,449 19,657,931 15,743,501 Note: Tucson International Airport follows the Federal fiscal calendar. Sources: UA Economic and Business Research Center, Eller College of Management Tucson Airport Authority Pima Association of Governments Tucson Association of Realtors, Multiple Listing Service, Inc. Riders Per Mile 2.21 2.27 2.46 2.22 2.18 2.15 2.16 2.06 2.06 1.84 Exhibit D-23 Residential Bldg. Permits 6,265 4,171 2,364 2,340 2,400 2,062 3,713 2,040 3,250 2,428 Real Estate Multiple Listings 13,821 10,718 10,472 12,471 11,545 13,436 13,587 13,379 13,692 13,795 Sales Volume (In thousands) $ 3,757,536 2,810,383 2,245,644 2,457,147 2,033,702 2,211,369 2,528,609 2,648,443 2,856,957 3,313,078 PIMA COUNTY, ARIZONA Economic Indicators by Calendar Year Last Ten Years Exhibit D-24 (dollar amounts in thousands) Fiscal Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Retail 1 Sales 11,530,620 11,865,697 11,583,359 10,439,448 10,640,207 11,440,377 12,010,672 12,317,085 12,555,553 8,443,626 No. of Dwelling Units 2 Awarded 8,522 5,237 3,221 2,129 1,938 2,242 2,841 3,491 3,250 2,428 Change in Real Estate Sales Volume -19% -34% -25% 9% -21% 8% 13% 5% 7% 14% Commercial Bank Deposits $ 10,497,000 10,765,000 10,855,000 11,134,000 11,265,000 11,501,822 12,173,345 12,980,645 13,760,260 14,654,142 Notes: 1 Prior to FY 2016, Retail Sales statistics were calculated in the aggregate, which included total taxable sales from the following categories: Retail, Restaurant & Bar, Food and Gasoline. As of FY 2016, only retail sales (not including food and fuel) are shown. 2 Beginning with calendar year 2011, the number of dwelling units awarded includes both single family and multiple family unit structures combined. Sources: UA Economic and Business Research Center, Eller College of Management Tucson Association of Realtors, Multiple Listing Service, Inc. Federal Deposit Insurance Corporation 176 PIMA COUNTY, ARIZONA Population Statistics June 30, 2016 ESTIMATED POPULATION BY AGE Age Group Population 0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+ 60,408 61,972 62,058 72,505 79,285 68,736 62,533 59,645 57,613 57,279 62,013 67,070 64,129 60,156 44,411 76,930 Total 1,016,743 POPULATION PROJECTIONS Year Projected Population 2017 2020 2025 2035 2045 1,025,044 1,051,451 1,093,043 1,160,603 1,209,547 Source: Arizona Department of Administration, Office of Employment & Population Statistics 177 Exhibit D-25 PIMA COUNTY, ARIZONA Average Annual Jail Population Last Ten Fiscal Years Fiscal Year Average Jail Population 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2,008 1,913 1,888 1,724 1,640 1,802 2,000 2,061 1,863 1,862 Source: Pima County Sheriff's Department, Corrections Bureau 178 Exhibit D-26 STATISTICAL SECTION OPERATING INFORMATION: The objective of the operating information is to provide contextual information about a government’s operations and resources to assist users in using financial information to understand and assess a government’s economic condition. Two types of information are considered important: 1. Basic information about infrastructure assets, utilities, and public works; in essence, the capital resources at the government’s disposal. Examples include miles of streets and sewers and wastewater treatment volume. 2. Descriptive service information, which would help to evaluate the size of the government. This would include types of services, the related demand and volume, and the non-financial resources employed to provide the services. PIMA COUNTY, ARIZONA Employees by Function Last Ten Fiscal Years Function/Program 2007 2008 2009 2010 2011 Exhibit D-27 2012 2013 2014 2015 2016 Governmental activities General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity 2,776 1,442 334 41 408 22 466 179 2,860 1,560 330 40 404 26 485 186 2,684 1,491 311 34 397 29 480 184 2,870 1,488 264 33 422 32 467 174 2,850 1,529 262 23 412 27 461 170 2,473 1,540 274 24 404 377 652 133 2,321 1,468 265 3 174 397 331 144 2,805 1,525 258 31 319 8 442 112 2,832 1,387 248 33 282 7 434 111 2,753 1,418 253 32 322 9 453 116 Total governmental activities 5,668 5,891 5,610 5,750 5,734 5,877 5,103 5,500 5,334 5,356 Business-type activities Regional Wastewater Reclamation 179 472 508 507 488 481 531 413 438 387 406 559 153 3 563 128 3 451 73 3 422 66 2 421 66 2 0 59 3 0 52 3 0 60 3 0 56 5 0 52 4 Total business-type activities 1,187 1,202 1,034 978 970 593 468 501 448 462 Total 6,855 7,093 6,644 6,728 6,704 6,470 5,571 6,001 5,782 5,818 Pima Health System & Services Development Services Parking Garages 1 Notes: 1 Variances can be noted in the Business Activities categories due to the closure of Kino Hospital which resulted in the absorption of some Kino employees into Pima Health System & Services. PIMA COUNTY, ARIZONA Operating Indicators by Program Last Ten Fiscal Years 2007 2008 2009 2010 2011 Exhibit D-28 2012 2013 2014 2015 2016 Program: Sheriff Physical arrests Traffic violations/citations Criminal Civil Total violations/citations 33,929 32,796 33,571 27,946 24,108 24,841 25,451 24,394 21,233 21,627 3,927 30,204 34,131 5,967 41,542 47,509 6,422 49,817 56,239 6,417 41,800 48,217 4,304 32,270 36,574 4,205 32,445 36,650 4,291 33,837 38,128 5,691 34,466 40,157 8,743 30,656 39,399 9,026 24,855 33,881 68.5 8,734 67.3 4,452 67.8 1,477 65.4 1,950 62.7 1,412 62.3 1,355 60.9 1,856 60.2 1,804 60.3 1,427 59.5 1,986 20,850 N/A 36,001 21,944 N/A 21,942 N/A N/A 36,723 N/A N/A 41,259 N/A N/A 40,804 Wastewater Avg. daily sewage treated (MGD) New connections 1 180 Cultural and Recreational2,3 Spring training attendance Sidewinders attendance Soccer attendance 142,773 153,595 N/A 160,626 143,611 N/A 103,407 58,879 N/A Parks & Recreation Athletic field permits issued Community center admissions Volunteer hours 141 438,051 25,700 147 445,137 19,622 149 403,887 25,756 168 351,692 14,321 161 339,550 12,168 228 347,379 10,787 263 306,841 8,213 326 327,257 11,366 280 318,524 12,108 267 303,293 10,512 1,395,849 6,371,480 492,973 1,429,365 6,874,888 554,339 1,425,235 7,409,820 516,780 1,427,089 7,517,692 526,170 1,414,928 7,199,809 452,400 1,326,375 7,557,865 434,841 1,257,821 6,098,216 405,419 1,193,357 4,521,039 405,507 1,139,730 5,484,961 379,631 1,237,281 6,131,049 385,945 $ 37,402,683 66,095,100 21,944,399 29,146,482 $ 18,619,333 17,591,833 4,673,301 72,925,857 $ 59,922,798 14,336,536 9,028,251 22,733,535 $ 36,953,802 11,994,142 1,921,052 14,160,620 $ 5,655,264 57,876,009 6,366,258 24,259,854 $ 13,075,719 5,008,707 4,287,186 46,463,053 $ 4,335,540 8,595,432 20,436,143 108,053,960 $ 10,746,469 107,899,620 3,763,811 41,041,250 $ $ 154,588,664 $ 113,810,324 $ 106,021,120 $ 65,029,616 $ 94,157,385 $ 68,834,665 $ 59,450,396 $ 141,421,075 $ 163,451,150 $ 94,037,869 Library Volumes in collection Total volumes borrowed Number of cardholders Capital Projects Land Buildings Improvements Infrastructure Total Completed 84,520 N/A N/A Notes: 1 MGD: Millions of Gallons per Day 2 Sidewinders attendance 7/08 through 9/08; beginning in fiscal year 2008-09, the team is no longer in Tucson 3 For fiscal year 2010-11 there were no Spring Training games in Tucson N/A N/A N/A 6,947 33,313,996 12,837,873 13,291,580 $ 4,230,852 6,367,369 25,101,285 58,338,363 PIMA COUNTY, ARIZONA Capital Assets & Infrastructure by Program Last Ten Fiscal Years Exhibit D-29 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 7 4 302 7 4 324 7 4 323 7 4 361 7 4 355 7 4 358 7 2 305 7 2 354 7 2 371 7 2 362 1,893 1,893 Program: Sheriff Stations Zone offices Patrol units Transportation (streets and highways) Streets (miles)1 Pothole repair2 $ 1,801 1,893 1,150,950 $ 1,321,034 $ 1,257,087 1,892 $ 2,822,770 $ 1,897 1,905 1,854 1,493,531 $ 1,462,810 $ 1,767,246 1,854 $ 2,715,481 1,870 $ 2,340,060 Flood Control Bank protection (miles)3 Flood plain / drainage way (acres)4 181 139 140 140 140 141 175 195 200 10,840 10,999 11,053 11,966 12,027 13,210 13,645 16,538 16,806 26,000 2,932 41 84 16 9 9 2,991 41 90 17 11 9 2,881 38 85 17 8 9 2,881 38 85 17 8 9 2,898 39 86 18 11 10 3,012 40 86 18 11 10 3,143 40 87 18 11 10 3,147 41 89 20 11 10 3,489 38 91 21 11 10 3,736 37 94 24 11 10 Parks & Recreation Urban parks (acres) Playgrounds Baseball/softball diamonds Soccer/football fields Community centers Swimming pools / Splashpads Wastewater Sanitary sewers (miles) Treatment capacity (MGD)5 3,464 3,492 3,462 3,472 3,476 3,440 3,448 3,462 3,466 3,470 92.45 90.00 91.50 94.26 97.76 97.06 97.04 95.04 95.03 95.04 Libraries6 County City Open Space Acquisitions Properties added Acres Cumulative acreage Total properties 25 N/A 18 3,668 36,616 67 26 N/A 9 757 37,373 76 26 N/A 5 14,753 52,126 81 26 N/A 9 5,390 57,516 90 26 N/A 4 275 57,791 94 Notes: 1 Annexation by other jurisdictions resulted in a decrease of Transportation (Streets and Highways). 2 Pothole repair figures were unavailable in FY 2009-10. 3 No soil cement bank protection projects in 2012 and 2013. 4 Regional Flood Control District maintained acreage only. 5 On Jan. 3, 2012 capacity was reduced when the Town of Marana obtained ownership of the Marana Wastewater Treatment Facility. 6 On July 1, 2006, the Pima County Library District assumed control of the operations of all County libraries. 26 N/A 6 595 58,386 100 26 N/A 1 1,416 59,802 101 27 N/A 3 823 60,625 104 27 N/A 2 389 61,014 106 27 N/A 3 676 61,690 109 (This page is intentionally blank) 182