MOHAVE COUNTY Annual Financial Report Year Ended June 30, 2010 TABLE OF CONTENTS Independent Auditors’ Report..............................................................................................................1 - 2 Required Supplementary Information - Management’s Discussion and Analysis .............................3 - 14 Government-wide Statements Statement of Net Assets .................................................................................................................. 16 Statement of Activities .................................................................................................................. 17 Fund Statements Governmental Funds Balance Sheet ...................................................................................................................... 18 Reconciliation of the Balance Sheet to the Statement of Net Assets ................................... 19 Statement of Revenues, Expenditures, and Changes in Fund Balances ............................... 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities ............................................................................. 21 Proprietary Funds Statement of Net Assets ...................................................................................................... 22 Statement of Revenues, Expenses, and Changes in Fund Net Assets ................................. 23 Statement of Cash Flows ..................................................................................................... 24 Fiduciary Funds Statement of Fiduciary Net Assets ....................................................................................... 25 Statement of Changes in Fiduciary Net Assets ................................................................... 26 Notes to Financial Statements..........................................................................................................27 - 52 Other Required Supplementary Information Budgetary Comparison Schedule – General Fund ...................................................................54 - 55 Budgetary Comparison Schedule – Road Fund............................................................................... 56 Budgetary Comparison Schedule – Flood Control Fund................................................................. 57 Notes to Budgetary Comparison Schedules .................................................................................... 58 Schedule of Agent Retirement Plans’ Funding Progress................................................................. 59 Notes to Schedule of Agent Retirement Plans’ Funding Progress .................................................. 60 JOHN TIMKO Financial Services Director 700 West Beale Street P.O. Box 7000 Kingman, AZ 86402-7000 Phone: (928) 753-0735 Fax: (928) 753-0704 Management’s Discussion and Analysis 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, 2010. Please read it in conjunction with the County’s basic financial statements, which begin on page 16. Financial Highlights • • • • Total assets of the County exceeded its liabilities at the close of the fiscal year by $305.1 million, an increase of 7.7% from the prior year. Of this amount, $71.3 million is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors. The County’s total net assets as reported in the Statement of Activities increased by $21.8 million. Of this amount, $21.3 million (97.6%) is attributable to governmental activities and $.5 million (2.4%) is attributable to business-type activities. As reported in the Statement of Revenues, Expenditures, and Changes in Fund Balances, the County’s governmental funds reported combined fund balances of $104.3 million, a decrease of $36 million. This decrease resulted from payments made for debt service and capital projects from funds collected in previous years. The unreserved fund balance for the General Fund increased by $4.5 million (39%), General Fund revenues were below budgeted revenues by $2.9 million, and expenditures were only 77.6% and 77.5% respectively of both the original adopted and final General Fund budgets. Overview of the Financial Statements The intent of this discussion and analysis is to serve as an introduction to Mohave County’s basic financial statements. Mohave County’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements themselves. Government-wide financial statements are designed to provide readers with a broad overview of Mohave County’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of Mohave County’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of Mohave County is improving or deteriorating. The statement of activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused accrued leave). Both of these government-wide financial statements distinguish functions of Mohave County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of Mohave County include general government, public safety, highways and streets, health, welfare, education, and culture and recreation. The business-type activities of Mohave County include water companies, recreation, and landfill operations. The government-wide financial statements include not only Mohave County itself (known as the primary government), but blended component units. The blended component units are legally separate entities for which Mohave County is financially accountable. 3 Blended component units include the following: a television district, two tax-levying districts, special assessment districts, and two finance corporations. The County’s Board of Supervisors serves as the board of directors for all of the component units except for the finance corporations, which have a separate board of directors made up of County management. The list of blended component units follows: • • • • • • Mohave County Television District provides and maintains communication equipment for TV signals. Mohave County Library District provides and maintains library services for County residents. Mohave County Flood Control District provides flood control systems for the County. Mohave County Special Assessment Districts provide funds to construct or improve roads, bridges, and water distribution systems. Mohave Administration Building Finance Corporation provides financing and oversight of the operation of the Mohave County administration building. Mohave Jail Finance Corporation provides financing and oversight of the construction and equipping of a jail facility for use of and ultimate ownership by Mohave County. Financial information for the blended component units is combined with the financial information presented for the primary government itself. The government-wide financial statements are on pages 16-17 of this report. 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. Mohave County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of Mohave County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. 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 funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The governmental funds financial statements can be found on pages 18-21 of this report. Mohave County maintains 180 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Road Fund, Flood Control Fund, and the County Capital Improvement Fund, all of which are major funds. Data from the other 176 governmental funds are combined into a single, aggregated presentation, under the heading Other Governmental Funds. Mohave County adopts an annual appropriated budget for all its funds. A budgetary comparison schedule has been provided for the General Fund and the major special revenue funds to demonstrate compliance with their budgets. These schedules are presented on pages 54 to 58. Proprietary funds - Mohave County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Mohave County uses enterprise funds to account for its water companies, park services, and landfill operations. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among Mohave County’s various functions. Mohave County uses internal service funds to account for its fleet of vehicles, employee benefit health insurance trust, self-insurance trust, janitorial services, communication services, and for its management information systems. Because all of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. 4 Proprietary funds financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary funds financial statements provide separate information for the water companies and the landfill operations, which are major funds of Mohave County. Conversely, all of the internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. The proprietary funds financial statements are located on pages 22-24 of this report. Fiduciary funds - Fiduciary funds 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 Mohave County’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary funds financial statements can be found on pages 25-26 of this report. Notes to the financial statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements are located on pages 27-52 of this report. Other information - In addition to the basic financial statements and accompanying notes, pages 54-60 present required supplementary information including budgetary comparison schedules and Mohave County’s progress in funding its obligation to provide pension benefits to some of its employees. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of Mohave County, assets exceeded liabilities by $305 million at the close of the most recent fiscal year. By far the largest portion of Mohave County’s net assets (60%) reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery, and equipment) less accumulated depreciation and any related debt used to acquire those assets that is still outstanding. Mohave County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Mohave County’s investment in its 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. 17% of Mohave County’s net assets represent resources subject to external restrictions on how they may be used. The remaining $71.3 million (23%) of unrestricted net assets may be used to meet the government’s ongoing obligations to citizens and creditors. The largest changes in the net assets occurred in the governmental funds. The changes are discussed separately under the following sections; Governmental activities – net assets highlights, Business-type activities – net assets highlights, and Capital Asset and Debt Administration. Government-wide Net Assets As of June 30, 2009 Current assets and other assets $ Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt 183,807,661 Increase (Decrease) 2010 $ 151,989,408 $ % Change (31,818,253) -17.31% 179,461,188 228,654,869 49,193,681 27.41% 363,268,849 380,644,277 17,375,428 4.78% 73,166,384 68,502,725 (4,663,659) -6.37% 6,769,895 7,019,743 79,936,279 75,522,468 (4,413,811) 249,848 -5.52% 3.69% 163,310,188 181,951,869 18,641,681 11.41% Restricted 42,253,846 51,859,759 9,605,913 22.73% Unrestricted 77,768,536 71,310,181 (6,458,355) -8.30% 21,789,239 7.69% Total net assets $ 283,332,570 5 $ 305,121,809 $ Governmental activities - net assets highlights: The net assets invested in capital assets, net of related debt had a net increase of $19.2 million. The capitalization of new buildings resulted in the increase to Capital Assets, a decrease in Construction in Progress and a decrease in current assets for the net effect seen in invested in capital assets, net of related debts. The details of the increase in capital assets are discussed later in this report under the Capital Asset and Debt Administration heading. Total liabilities decreased $5 million from last year. The decrease was due to principal payments made on the County’s Beneficial Interest Certificates (BIC’s) and special assessment bonds payable, without incurring any new long-term debt. The restricted net assets reflected a net increase of $8.9 million from the prior year, approximately $5.1 million from capital projects, $1.8 million from debt service, $1.3 million from highways and streets and .$7 million from other sources. Unrestricted net assets decreased by $6.9 million from the prior year, from assets being used for capital projects. Governmental Activities Net Assets As of June 30, 2009 Current assets and other assets $ Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Increase (Decrease) 2010 166,419,607 $ 132,994,258 $ % Change (33,425,349) -20.08% 163,554,563 213,296,302 49,741,739 30.41% 329,974,170 346,290,560 16,316,390 4.94% 68,581,024 63,567,275 (5,013,749) -7.31% 6,511,158 6,570,947 75,092,182 70,138,222 (4,953,960) -6.60% 59,789 0.92% 147,403,563 166,593,302 19,189,739 13.02% Restricted 33,014,116 41,960,509 8,946,393 27.10% Unrestricted 74,464,309 67,598,527 (6,865,782) -9.22% 21,270,350 8.35% Total net assets $ 254,881,988 6 $ 276,152,338 $ Governmental activities – comparative statement of activities highlights: The current year governmental activities financial statements reflect a decrease of $3.1 million in total revenues due to several factors. The declining economy contributed to a downturn in retail sales resulting in a decrease in other taxes which includes sales tax, auto-lieu tax, and capital projects sales tax. The declining economy has also affected the Federal and state governments, who in turn have reduced the grant awards given out to local governments, including Mohave County. Investment earnings increased $.6 million from the prior year due to a slight increase in the return on investments and a decrease in the amount of unrealized loss recorded in the current year. Increased assessed valuations of property resulted an increase in property tax revenue. Charges for services saw a slight net increase over the previous year. This was spread throughout the County funds. In some cases it was from increased services provided (mostly in the Court system) and there were some increases in fees and additional fees added. Expenses decreased $8.5 million (6.3%) from the prior year. The County managed to maintain moderate growth in controllable expenses, through increased efficiency, and by offsetting increased costs with vacancy savings and suspending cost of living and step increases for employees. Non-controllable expenses, such as court costs from increased caseloads and indigent support, continue to rise, somewhat offsetting the decreases reflected. Interest on longterm debt decreased due to payments made on the BICs issued in prior years. Education increased due to spending of ARRA grant funds. Highways and streets increased due to two new flood control projects: updating the Aerial mapping and a new Mohave wash project. Governmental Activities Comparative Statement of Activities Year Ended June 30, 2009 Revenues: Program revenues Charges for services Operating grants & contributions Capital grants & contributions Total program revenues General revenues Property taxes Other taxes Other revenues Total general revenues Total revenues Expenses: General government Public safety Highways and streets Health Welfare Culture and recreation Education Interest on long-term debt Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets beginning of year Net assets end of year $ $ Increase (decrease) 2010 18,139,455 29,968,968 92,004 48,200,427 $ 19,233,326 28,590,598 50,410 47,874,334 $ % Change 1,093,871 (1,378,370) (41,594) (326,093) 6.03% -4.60% -45.21% -0.68% 59,585,358 39,416,103 2,865,225 101,866,686 150,067,113 61,059,523 34,768,476 3,249,820 99,077,819 146,952,153 1,474,165 (4,647,627) 384,595 (2,788,867) (3,114,960) 2.47% -11.79% 13.42% -2.74% -2.08% 58,616,197 25,318,232 20,449,462 15,176,533 5,129,308 5,391,550 1,714,370 2,541,037 134,336,689 15,730,424 (56,671) 15,673,753 239,208,235 254,881,988 55,530,077 23,052,108 22,351,824 10,392,273 4,746,626 4,665,183 2,686,669 2,395,750 125,820,510 21,131,643 138,707 21,270,350 254,881,988 276,152,338 (3,086,120) (2,266,124) 1,902,362 (4,784,260) (382,682) (726,367) 972,299 (145,287) (8,516,179) 5,401,219 195,378 5,596,597 15,673,753 21,270,350 -5.26% -8.95% 9.30% -31.52% -7.46% -13.47% 56.71% -5.72% -6.34% 34.34% -140.86% 35.71% 6.55% 8.35% 7 $ $ The chart below represents all revenues collected from governmental activities, including general revenues, as reported in the Statement of Activities. Revenues by source - Governmental Activities Charges for services 13% $19,233,326 Other 10% $15,199,743 Sales taxes 16% $22,818,553 Operating grants and contributions 19% $28,590,598 Capital grants and contributions 0% $50,410 Property taxes 42% $61,059,523 The following graph represents the expenses and program revenues for governmental activities as reported in the Statement of Activities. Program revenue does not include the general revenues listed on the bottom portion of the Statement of Activities. Total revenues generated by governmental activities (program revenues and general revenues) were $147.1 million. General revenues of $99.2 million are not included in this graph, though they represent 67.5% of total revenues reported for governmental activities. While this graph indicates expenses exceeded program revenues, the addition of general revenues produced an increase to net assets of $21.3 million for the fiscal year as indicated on the Statement of Activities. Expenses and program revenues - Governmental activities Expense Revenue $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- General government Public safety Highways and streets Health Expense $55,530,077 Revenue $15,997,041 Welfare Culture and recreation $23,052,108 $22,351,824 $7,672,966 $12,063,141 $10,392,273 $4,746,626 $4,856,527 $4,653,848 8 Education Interest on longterm debt $4,665,183 $2,686,669 $2,395,750 $231,443 $2,399,368 $- Business-type activities - net assets highlights: Net assets increased by $.52 million. The 12.3% increase to unrestricted net assets was due to net income realized in the I-40 Water Corridor fund and Landfill fund from a concerted effort to reduce costs and from a decrease in waste tire expense (a bi-annual expense of the Landfill fund). The 11% increase to total liabilities was due to an increase in the closure and postclosure, estimated future costs for the Landfill fund (as provided by engineering consultants), a large accrued expense and July deferred revenues in the I-40 Water Corridor fund. The $1.6 million, 9% increase in current assets and other assets is a reflection of the positive cash flow of all the funds, but mostly the Landfill fund and I-40 Water Corridor fund. The increases reflect reductions in controllable expenses – payments to supplier, and increases in investment earnings. Business-type Activities Net Assets As of June 30, 2009 Current assets and other assets $ Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt 17,388,054 Increase (Decrease) 2010 $ 18,995,150 $ 1,607,096 (548,058) % Change 9.24% 15,906,625 15,358,567 -3.45% 33,294,679 34,353,717 1,059,038 4,585,360 4,935,450 350,090 7.63% 258,737 448,796 190,059 73.46% 4,844,097 5,384,246 540,149 11.15% -3.45% 3.18% 15,906,625 15,358,567 (548,058) Restricted 9,239,730 9,899,250 659,520 7.14% Unrestricted 3,304,227 3,711,654 407,427 12.33% 518,889 1.82% Total net assets $ 28,450,582 $ 28,969,471 $ The chart below represents all revenues collected from business-type activities, including general revenues, as reported in the Statement of Activities. Revenues by source - Business-type Activities Charges for services 84%, $4,386,785 Capital grants and contributions 0%, $7,875 Operating grants and contributions 7%, $357,515 Other 2%, $108,710 Unrestricted investment earnings 7%, $378,083 Analysis of revenue changes - The Business-type Activities Comparative Statement of Activities schedule on the following page shows the increases and decreases in revenue with an overall 12% decrease to total revenues. This decrease was due to a one time capital contribution to the G.V.I.D. fund in 2009 to install an arsenic removal system. Investment income was the only category that increased significantly over the prior year due to recoupment of previous investment losses. 9 Business-type activities - comparative statement of activities highlights: The increase in net assets for the enterprise funds decreased by $279,553 (35%) from the prior year. This decrease was due primarily to a one time contribution in the G.V.I.D. fund in 2009 of $1 million, replaced by decreased expenditures in all funds in 2010. In addition, the Landfill fund transferred $150,000 to the General Fund and Other governmental funds to cover the costs of a nuisance abatement program. Business-type Activities Comparative Statement of Activities Year Ended June 30, 2009 Revenues: Program revenues Charges for services Operating grants & contributions Capital grants & contributions Total program revenues General revenues Other taxes Other revenues Total general revenues Total revenues Expenses: Landfill Recreation Water companies Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets beginning of year Net assets end of year $ $ Increase (decrease) 2010 4,373,982 366,003 1,004,449 5,744,434 $ 4,386,785 357,515 7,875 4,752,175 $ % Change 12,803 (8,488) (996,574) (992,259) 0.29% -2.32% -99.22% -17.27% 100,000 115,649 215,649 5,960,083 100,000 386,793 486,793 5,238,968 271,144 271,144 (721,115) 0.00% 234.45% 125.73% -12.10% 1,599,618 1,470,652 2,148,042 5,218,312 741,771 56,671 798,442 27,652,140 28,450,582 1,202,541 1,344,607 2,034,224 4,581,372 657,596 (138,707) 518,889 28,450,582 28,969,471 (397,077) (126,045) (113,818) (636,940) (84,175) (195,378) (279,553) 798,442 518,889 -24.82% -8.57% -5.30% -12.21% -11.35% 140.86% -35.01% 2.89% 1.82% $ $ The graph below represents the expenses and program revenues for business-type activities as reported in the Statement of Activities. Please note that program revenue does not include the general revenues on the bottom portion of the statement. Expenses and program revenues - Business-type activities Expense Revenue $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $Landfill Recreation Water companies Expense $1,202,541 $1,344,607 $2,034,224 Revenue $1,725,657 $1,174,646 $1,851,872 10 Financial Analysis of the Government’s Funds As noted earlier, Mohave County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds - The focus of Mohave County’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable sources. Such information is useful in assessing Mohave County’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, Mohave County’s governmental funds reported combined ending fund balances of $104.3 million, a decrease of $36 million in comparison with the prior year. The reserved fund balances consist of $10.8 million reserved for debt service and $287,143 invested in inventory. The decrease reflects the spending down of the BIC’s proceeds for the building of the new jail facility, offset by increases in other funds. The General Fund is the chief operating fund of Mohave County. At the end of the current fiscal year, the unreserved fund balance of the General Fund was $16.1 million. As a measure of the General Fund’s liquidity, it may be useful to compare unreserved fund balance to total fund expenditures. The General Fund unreserved fund balance equals 25% of total General Fund expenditures, an increase from the prior year. During the current fiscal year, the fund balance of Mohave County’s General Fund increased by $4.5 million. This represents a 39% increase from the fiscal year 2009 ending balance. Revenues decreased by $1.4 million (2%), mostly from taxes and intergovernmental revenues. Expenditures decreased by $6 million and total expenditures as a percentage of the total original budget were only 77.6% in fiscal year 2010. The County did not provide employees with any cost of living or step increases during the year. The Road Fund had a total fund balance of $11.7 million, of which $287,143 is reserved for inventories and $11.4 million is unreserved and will be used for road maintenance. The net increase in unrestricted fund balance during the current year in the Road Fund was $1.5 million. The increase results from fewer road projects completed in this fiscal year than the amount of funds collected. The balance reflects funds available for ongoing road projects of the County. The Flood Control Fund - fund balance increased by $4 million. Expenses increased $2.4 million over the prior year, with $1.6 million spent on Geographic Information System (GIS) mapping services and flood plain studies for updating FEMA maps, $.4 million for capital improvement projects of flood control systems, $.3 million in personnel services and $.1 million in other operating expenditures. While revenues decreased slightly from the prior year, there was still excess revenue collected over expenditures. This balance reflects funds available for ongoing flood control projects of the County. The Scenic Debt Service Fund, which had an ending fund balance of $1.1 million the previous year, no longer qualifies to be a major fund. The fund is now reflected as part of the Other Governmental funds information. The County Capital Improvement Fund had an ending fund balance of $11.9 million. This was a decrease of $54.6 million from the prior year. The decrease results from construction costs related to various projects including the County Jail, the Development Services building, and various other building projects, totaling $54.4 million, along with transfers out for debt service payments of $6.7 million. These were offset by tax revenue of $5.7 million, investment earnings of $.7 million and miscellaneous income of $.1 million. The Other Governmental Funds had a combined fund balance of $42.2 million at year-end. This was a net increase of $8.2 million from the prior year. The increase is from transfers in exceeding transfers out by $10.6 million, net of excess expenditures over revenue of $2.4 million. Comparing the prior year to the current year, there was a decrease in revenues of $.5 million. $1.4 million was a result of a decrease in grant revenues, net of the increase from adding the Scenic Debt Service fund of $.4 million, an increase in investment earnings of $.6 million and miscellaneous other increases and decreases. Although the expenditures exceeded revenues, by $2.4 million, the total expenditures actually decreased in total by $2 million. 11 Proprietary funds Reports for Mohave County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. In response to the economic downturn, County departments cut expenses wherever possible. Even with these measures, some funds reflected in the statements show decreases to net assets. Statement of Net Assets-Business-type Activities - Net assets for all enterprise funds increased $.5 million. At the end of the year, the unrestricted net assets of the water companies and other enterprise funds, which includes park services, was $3.7 million. The G.V.I.D. and other enterprise funds both reflected a net loss before contributions and transfers, after recording depreciation expense. Excluding non-cash expenditures, both funds showed an increase in cash position. The Landfill and I-40 Water Corridor fund net assets increased by nearly $1 million. The majority of the increase was in the Landfill and was due to decreased expenses for waste tire disposal and closure/postclosure costs. The accumulated net assets are restricted and will be used for future expansion, as well as closure and postclosure costs. Governmental Activities-Internal Service Funds - Net assets for the internal service funds increased by $1.9 million. The majority of the increase was from the Employee Benefit Trust Fund (EBT), which experienced a favorable health insurance claims year resulting in $1 million excess revenue over expenses. The investment in capital assets, net of related debt decreased due to depreciation expense exceeding purchases in the current year. Statement of Revenues, Expenses, and Changes in Fund Net Assets-Business-type Activities - The only difference between this statement and the Statement of Activities-Business type, discussed previously on page 10, is the presentation. The expenses are broken out in more detail on this report and the revenues are shown as either operating or non-operating. Statement of Revenues, Expenses, and Changes in Fund Net Assets-Governmental Activities Internal Service Funds - Total Internal Service Funds operating expenses decreased $1.8 million or 9.3% from last year, while revenues increased by only $.2 million or .09%. Investment income increased by approximately $1.9 million. This increase was due to recoupment of unrealized investment losses from prior years. General Fund Budgetary Highlights Revenues: The General Fund revenue was below the total amount budgeted by $ 2.9 million (4%). Although the 2010 budget reflected a 3% decrease in budgeted revenues from 2009, it was still overly optimistic due to the economic downturn. Actual revenues were less than the previous year’s total by $1.5 million, and they were also below budgeted expectations. Expenditures: Differences between the original budget and the final amended budget line items resulted from moving expenditures between departments and categories of budget. There was net increase of $152,170 in total expenditures, which resulted from an increase in the Public Defender’s budget to cover court-mandated expenditures. Total actual expenditures were below budgeted expenditures by $18.5 million, which was comprised mostly of unspent contingency funds. Actual expenditures decreased $6 million from 2009. Variances between actual revenues, expenditures, and final budgeted amounts will be discussed below for all significant differences, as related to the schedule in required supplementary information on pages 54-55. Revenues: Overall, revenues fell short of the budgeted amounts for all categories except fines and forfeits. Court fines increased by $222 thousand due to an increase in court cases and new fees charged. Intergovernmental revenue, a major revenue source, was below budget by $2.7 million. The primary cause was major declines in sales tax, auto lieu, and state lottery revenues, which were below budget by $2.5 million. Expenditures: Expenditures were less than budgetary estimates by $18.5 million. Of the County contingency budget of $11.6 million, $.8 million was transferred to other departments and $10.8 million remained unused. The County’s contribution to the Arizona Health Care Cost Containment System (AHCCCS) was reduced by $4 million due to American Recovery and Reinvestment Act (ARRA) funding. In October 2007 as a hedge against the declining economy, the Board of Supervisors enacted a hiring freeze on most vacant positions which continued into fiscal year 2010. Personnel vacancies resulted in $2 million excess budget. In addition to vacant positions, the Development Services and Building Inspection departments had excess budget from not outsourcing the plans review function. They had savings of $.6 million and $.4 million, respectively. The remaining balance of available budget is scattered throughout the other departments in supplies and other services. Actual expenditures decreased over the prior year by $6 million (8.5%). Most departments were able to maintain expenses at the prior year level. No merit raises or cost of 12 living increases were given to employees for the second consecutive year. Capital Asset and Debt Administration Capital assets – Mohave County’s investment in capital assets for its governmental and business-type activities as of June 30, 2010 amounts to $228.6 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, water systems, improvements other than buildings, machinery and equipment, park facilities, roads, highways, bridges, and an internally generated software program. The increase in capital assets of $49.2 million (net of depreciation) resulted from the following major projects and purchases: Mohave County Jail, Development Services building, Negus building remodel, road additions, and the purchase of additional fleet vehicles. Capital Assets, net of accumulated depreciation As of June 30, 2009 2010 Increase % Decrease Change Governmental activities Capital assets, not being depreciated $ Capital assets, being depreciated Total governmental assets 53,101,816 $ 110,452,747 $ 107,626,255 $ 105,670,047 163,554,563 $ 1,630,859 $ 213,296,302 $ 1,714,287 $ 54,524,439 102.68% (4,782,700) -4.33% 49,741,739 30.41% Business-type activities Capital assets, not being depreciated $ Capital assets, being depreciated Total business-type assets 14,275,766 $ 13,644,280 15,906,625 $ 15,358,567 $ 54,732,675 $ 109,340,542 $ 83,428 5.12% (631,486) -4.42% (548,058) -3.45% Total governmental and business-type activities Capital assets, not being depreciated $ Capital assets, being depreciated Total capital assets 124,728,513 $ 179,461,188 119,314,327 $ 228,654,869 $ 54,607,867 99.77% (5,414,186) -4.34% 49,193,681 27.41% Major capital asset events during the current fiscal year include the following: • • • • • The Beaver Dam Bridge project is still in process with $2 million spent to date and an estimated $5.9 million additional cost to complete. FaulknerUSA continued work on the County Correctional Facility with expenditures of $48.1 million for the year. The project was completed in the fall of 2010 with total estimated expenditures of $72 million. The Negus building was remodeled at a total cost of $1.77 million and now houses the Probation department. In April, the Development Services building on Kino Avenue was substantially completed and the Public Works Director, Flood Control, Planning and Zoning, Emergency Services and Environmental Health departments moved into the new building. A total of $3.5 million has been spent and an additional $247,000 is estimated to complete the building by September 2010. The County replaced twenty-four aging vehicles from the fleet at a total cost of $606,400. Twenty-three vehicles were purchased using general government funding: seven from the General fund, two from Road funds, one from Flood Control, thirteen from Other Governmental funds and one from business-type funds. The 102.7% increase to governmental activities capital assets not being depreciated reflects $54.5 million in costs added to construction in process (as discussed above). Notes 5 and 6, on pages 38-39 of this report, contain additional information on Mohave County’s capital assets. Long-term liabilities - At the end of the current fiscal year, Mohave County had total long-term liabilities outstanding of $68.5 million. Of this amount, $55 million is related to construction projects and special assessment debt, backed as follows: $7.4 million of unspent proceeds and reserves, $46.2 million backed by buildings of the government used as 13 collateral for Beneficial Interest Certificates issued, and $1.4 million is special assessment debt for which the government can sell the taxpayer’s property to cover the debt in the event of default by the property owners subject to the assessment. The remainder of Mohave County’s long-term liabilities are comprised of claims and judgments payable, landfill closure and postclosure care costs payable, and compensated absences payable incurred during normal operations. For details see note 8. State statutes limit the amount of general obligation debt a government entity may issue to 6% of its total secondary assessed valuation, without taxpayer approval, and up to 15% with the approval of a majority of taxpayers. The debt limitation for Mohave County for fiscal year 2009/2010 was $184 million (6% of $3.1 billion secondary assessed value). Mohave County does not have any outstanding general obligation debt and therefore has its full debt limit capacity available for future needs. Note 8, on pages 40-44 of this report, contains additional information on Mohave County’s long-term debt. Economic Factors and Next Year’s Budgets and Rates Population growth has leveled off, but there are still significant service demands for the existing population. A declining economy creates additional costs and additional demand for public services. The revenue trend for governments was declining for 2010 and is either still declining or flat for 2011. This trend is predicted to continue for the next year or two. All of these factors were considered in preparing Mohave County’s budget for the 2011 fiscal year. In an effort to keep expenses down and avoid layoffs, the County has not budgeted a step or cost of living increase for FY 2011 and will continue to reduce the labor force through attrition. The average unemployment rate for Mohave County was 10.6% for 2010, which is an increase from an average rate of 9.5% in 2009. The unemployment rate in Mohave County exceeded the state’s average unemployment rate of 9.4% and compares unfavorably to the national average rate of 9.8%. The rates within the state vary greatly and continue to climb. In November 2010, Mohave County’s rate was at 10.7% while the state’s was 9.4% and the Federal rate was 9.8%. Requests for Information This financial report is designed to provide a general overview of Mohave County’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Mohave County Finance P.O. Box 7000 Kingman, AZ 86402-7000 14 Basic Financial Statements 15 MOHAVE COUNTY Statement of Net Assets June 30, 2010 Primary Government Governmental Business-Type Activities Activities Total Assets Cash and investments $ 108,003,847 $ 16,158,945 $ 124,162,792 Receivables (net of allowances for uncollectibles): Property taxes 6,433,823 388 6,434,211 Accounts 1,070,164 312,398 1,382,562 448,886 68,913 517,799 1,221,252 - 1,221,252 Accrued interest Special assessments 5,673,449 89,143 5,762,592 Inventories Due from other governments 387,211 366,948 754,159 Prepaid items 891,340 61,166 952,506 9,764,360 1,037,175 10,801,535 900,074 - Restricted cash Internal balances (900,074) Capital assets, not being depreciated 107,626,255 1,714,287 109,340,542 Capital assets, being depreciated, net 105,670,047 13,644,280 119,314,327 346,290,560 34,353,717 380,644,277 Accounts payable and other current liabilities 2,744,695 175,250 2,919,945 Accrued payroll and employee benefits 2,156,819 45,803 2,202,622 Accrued interest 494,200 - 494,200 Due to other governments 180,647 7,164 187,811 Deposits held for others 481,333 130,305 611,638 Deferred revenue 513,253 90,274 603,527 Total assets Liabilities Noncurrent liabilities Current portion of long-term obligations 12,730,775 159,000 12,889,775 Noncurrent portion of long-term obligations 50,836,500 4,776,450 55,612,950 70,138,222 5,384,246 75,522,468 166,593,302 15,358,567 181,951,869 Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for: Public safety Highways and streets Health Welfare Education 2,794,432 - 2,794,432 11,425,398 - 11,425,398 573,051 - 573,051 1,042,078 - 1,042,078 224,467 - 224,467 Debt service 10,808,041 - 10,808,041 Capital projects 14,705,831 1,037,175 15,743,006 Other purposes 387,211 8,862,075 9,249,286 67,598,527 3,711,654 71,310,181 Unrestricted Total net assets $ 276,152,338 $ 28,969,471 The notes to the financial statements are an integral part of this statement 16 $ 305,121,809 MOHAVE COUNTY Statement of Activities Year Ended June 30, 2010 Program Revenues Net (Expense) Revenue and Changes in Net Assets Primary Government Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Health Welfare Culture and recreation Education Interest on long-term debt Total governmental activities Business-type activities: Landfill Recreation Water companies Total business-type activities Total primary government Expenses $ Charges for Services Operating Grants and Contributions Capital Grants and Contributions $ $ $ 13,585,962 2,544,406 927,676 1,582,854 522,882 69,546 - 125,820,510 19,233,326 28,590,598 50,410 (77,946,176) 1,202,541 1,344,607 2,034,224 1,368,142 1,174,646 1,843,997 357,515 - 7,875 - 4,581,372 4,386,785 $ 23,620,111 357,515 $ 28,948,113 General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for flood control Share of state sales taxes Special county sales tax for capital projects Auto-lieu tax Federal in-lieu tax Local in-lieu tax Utilities franchise tax County equalization revenue Investment earnings Miscellaneous Rent Transfers Total general revenues Change in net assets Net assets, July 1, 2009 Net assets, June 30, 2010 $ 50,410 - $ Business-Type Activities 55,530,077 23,052,108 22,351,824 10,392,273 4,746,626 4,665,183 2,686,669 2,395,750 $ 130,401,882 2,360,669 5,128,560 11,135,465 3,273,673 4,130,966 161,897 2,399,368 - Governmental Activities (39,533,036) (15,379,142) (10,288,683) (5,535,746) (92,778) (4,433,740) (287,301) (2,395,750) $ $ - (39,533,036) (15,379,142) (10,288,683) (5,535,746) (92,778) (4,433,740) (287,301) (2,395,750) (77,946,176) 523,116 (169,961) (182,352) 523,116 (169,961) (182,352) 7,875 - 170,803 170,803 58,285 (77,946,176) 170,803 (77,775,373) $ 47,535,980 13,523,543 17,163,770 5,654,783 8,357,218 3,219,658 15,805 357,242 88,856 2,922,790 131,459 106,715 138,707 99,216,526 21,270,350 254,881,988 276,152,338 $ The notes to the financial statements are an integral part of this statement 17 - Total 100,000 378,083 6,710 2,000 (138,707) 348,086 518,889 28,450,582 28,969,471 $ 47,535,980 13,523,543 17,163,770 5,654,783 8,357,218 3,319,658 15,805 357,242 88,856 3,300,873 138,169 108,715 99,564,612 21,789,239 283,332,570 305,121,809 MOHAVE COUNTY Balance Sheet Governmental Funds June 30, 2010 Assets Cash and investments $ 100 205 General Fund Road Fund 14,902,731 $ 10,410,666 $ 305 Flood Control Fund 410 County Capital Improvement Fund Other Governmental Funds Total Governmental Funds 22,599,731 $ $ $ 3,770,369 41,460,681 93,144,178 Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Special assessments 3,392,924 - 1,646,624 - 1,394,275 562,559 6,822 210 - 287,212 856,803 58,024 41,399 106,123 25,961 164,258 395,765 - - - 1,221,252 1,221,252 - 6,433,823 Due from: Other funds Other governments Inventories Prepaid items Restricted cash 637,207 39,283 - 1,608,103 1,213,634 273,314 - 287,143 - 17,459 1,627 6,924 - Total assets $ - 21,179,007 $ 617,113 $ 445,656 239,889 - 7,790,467 156,179 832,669 2,127,388 5,668,095 - 287,143 273,614 539,513 1,911,875 9,702,342 12,000,574 $ 24,632,926 $ 12,272,342 $ 48,996,734 $ 119,081,583 78,263 $ 883,386 $ 413,813 $ 626,025 Liabilities and Fund Balances Liabilities Accounts payable $ Accrued payroll and employee benefits 1,317,385 209,770 36,402 - 526,807 $ 2,618,600 2,090,364 Due to: Other funds 99,415 - 39,283 - 757,421 896,119 Other governments 856 - - - 179,791 180,647 Deposits held for others 387,736 - - - 93,597 481,333 - - - - 900,000 900,000 Advances payable - Landfill Beneficial interest certificates: Principal payable - - - - 580,000 580,000 Interest payable - - - - 494,200 494,200 Deferred revenue 2,657,789 - 1,244,585 - 2,642,019 6,544,393 5,080,294 288,033 2,203,656 413,813 6,799,860 14,785,656 Inventories - 287,143 - - - 287,143 Debt service - - - - 10,808,041 10,808,041 Total liabilities Fund balances Reserved for: Unreserved, reported in: General fund Special revenue funds Capital projects funds Total fund balances Total liabilities and fund balances $ 16,098,713 - - - - 16,098,713 - 11,425,398 22,429,270 - 28,541,531 62,396,199 - - - 11,858,529 2,847,302 14,705,831 16,098,713 11,712,541 22,429,270 11,858,529 42,196,874 104,295,927 48,996,734 $ 119,081,583 21,179,007 $ 12,000,574 $ 24,632,926 $ 12,272,342 The notes to the financial statements are an integral part of this statement 18 $ MOHAVE COUNTY Reconciliation of the Balance Sheet to the Statement of Net Assets Governmental Funds June 30, 2010 Fund balances - total governmental funds $ 104,295,927 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 210,225,860 Some receivables are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Property taxes receivable Special assessments receivable 4,965,174 1,065,966 Internal service funds are used by management to charge the costs of certain activities, such as insurance, automotive maintenance and operation, and telecommunications, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets. Some liabilities, including bonds and beneficial interest certificates payable, are not due and payable in the current period and, therefore, are not reported in the funds. Special assessment bonds (1,441,000) Beneficial interest certificates (52,640,000) Beneficial interest certificates premium-unamortized (357,979) Compensated absences (7,079,130) Net assets of governmental activities 6,031,140 17,117,520 (61,518,109) $ 276,152,338 The notes to the financial statements are an integral part of this statement 19 MOHAVE COUNTY Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended June 30, 2010 General Fund Flood Control Fund Road Fund County Capital Improvement Fund Other Governmental Funds $ Total Governmental Funds Revenues: Taxes - $ 13,523,543 5,654,784 $ 12,300,089 Special assessments $ 34,620,400 - - - - 737,034 737,034 Licenses and permits 610,403 16,500 6,400 - 732,634 1,365,937 Intergovernmental $ $ 66,098,816 27,004,279 13,153,999 273,553 - 16,575,150 57,006,981 Charges for services 6,229,579 495,076 409,700 - 4,987,253 12,121,608 Fines and forfeits 1,953,239 - - - 61,581 2,014,820 325,337 220,972 516,022 736,106 841,067 2,639,504 Investment earnings Rents - 121,358 - 101,276 2,260 224,894 Contributions 24,340 - - 42,500 318,300 385,140 Miscellaneous 78,492 25,717 - - 24,558 128,767 70,846,069 14,033,622 14,729,218 6,534,666 36,579,926 142,723,501 General government 36,547,080 - - - 5,895,227 42,442,307 Public safety 21,729,572 - - - 5,650,037 27,379,609 - 11,974,481 10,027,262 - 9,411 22,011,154 5,095,078 - - - 5,914,379 11,009,457 Total revenues Expenditures: Current: Highways and streets Health Welfare - - - - 5,012,400 5,012,400 Culture and recreation - - - - 6,189,902 6,189,902 406,987 - - - 2,618,897 3,025,884 - - - 54,395,016 444,248 54,839,264 Principal retirement - - - - 4,865,000 4,865,000 Interest and fiscal charges - - - - 2,395,750 2,395,750 63,778,717 11,974,481 10,027,262 54,395,016 38,995,251 179,170,727 7,067,352 2,059,141 4,701,956 (47,860,350) (2,415,325) (36,447,226) Education Capital outlay Debt service: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in 1,651,534 Transfers out Total other financing sources (uses) Net change in fund balances Fund balances, July 1, 2009 Decrease in reserve for inventory of supplies Fund balances, June 30, 2010 (4,182,237) (2,530,703) - - (524,222) - (686,085) (17,084,408) (6,710,978) 10,590,695 138,707 1,534,919 4,015,871 (54,571,328) 8,175,370 (36,308,519) 11,562,064 10,179,129 18,413,399 66,429,857 34,021,504 140,605,953 - - - (1,507) 11,858,529 $ 42,196,874 $ 16,098,713 (686,085) 17,223,115 (4,980,886) 4,536,649 - (524,222) 15,571,581 (6,710,978) (1,507) $ 11,712,541 $ 22,429,270 $ The notes to the financial statements are an integral part of this statement 20 $ 104,295,927 MOHAVE COUNTY Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Governmental Funds Year Ended June 30, 2010 Net change in fund balances - total governmental funds $ (36,308,519) 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 allocated over their estimated useful lives and reported as depreciation expense. Capital outlay Depreciation expense 58,442,909 (6,330,968) 52,111,941 In the Statement of Activities, only the gain/loss on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the book value of the capital assets sold. (1,451,461) Net effect of disposal of capital assets Debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Principal repaid on long-term debt: Special assessment bonds Beneficial interest certificates-payments Beneficial interest certificates premium-amortization 580,000 4,285,000 39,776 Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available resources. In the Statement of Activities, however, which is presented on the accrual basis of accounting, expenses are reported regardless of when the financial resources are available. Increase in compensated absences Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Some cash outlays, such as the purchase of supply inventories, are recorded as expenditures in the governmental funds when purchased. In the Statement of Activities, however, inventories are reported as expenses when consumed. Decrease in supply inventory Internal service funds are used by management to charge the costs of certain activities, such as insurance, automotive maintenance and operation, information technology and telecommunications, to individual funds. The net revenue of certain internal service funds is reported with governmental activities in the Statement of Activities. Change in net assets of governmental activities 4,904,776 (306,878) 374,963 (1,507) 1,947,035 $ 21,270,350 The notes to the financial statements are an integral part of this statement 21 MOHAVE COUNTY Statement of Net Assets Proprietary Funds June 30, 2010 fy09 Add 922 I-40 Water Corridor Fund Landfill Fund $ 1,558,328 $ 12,421,453 11,647 6,563 Governmental ActivitiesInternal Service Funds Other Enterprise Funds Total 952,481 $ 1,226,683 $ 16,158,945 245,057 51,622 388 48,058 6,291 7,636 4,437 388 312,398 68,913 213,361 53,121 183,623 58,357 1,818,518 89,043 166 12,807,341 93 100 183,325 1,190,736 2,643 1,241,399 93 89,143 366,948 61,166 17,057,994 133,069 5,354 100,068 351,827 15,716,469 500,785 - 900,000 536,390 - - 1,037,175 900,000 62,018 - 3,755,618 36,047 4,292,450 6,110,968 108,699 904,515 22,066 83,428 2,018,708 14,826,049 40,388 6,581,422 48,447 176,273 7,382,920 8,573,656 1,481,772 630,720 1,286,353 202,819 3,601,664 4,843,063 1,630,859 11,872,275 1,334,800 437,205 83,428 17,295,742 34,353,736 3,070,442 3,132,460 18,848,929 103,380 5,892 34,060 8,916 4,524 10,207 33,286 20,788 175,250 45,803 126,095 66,455 17 (370) 25,000 90,274 2 - 7,534 105,305 - - 19 7,164 130,305 90,274 69,693 - 21,000 245,193 32,000 74,978 30,000 157,570 76,000 130,074 159,000 607,815 161,500 1,219,017 1,642,760 708 708 245,901 4,767,669 2,619 4,770,288 4,845,266 2,511 2,511 160,081 2,943 2,943 133,017 4,767,669 8,781 4,776,450 5,384,265 88,649 88,649 1,731,409 3,791,665 1,118,708 6,846,530 3,601,664 15,358,567 3,070,442 500,785 1,572,617 $ 5,865,067 8,862,075 9,980,783 536,390 1,030,655 $ 8,413,575 1,108,382 $ 4,710,046 1,037,175 8,862,075 3,711,654 $ 28,969,471 14,047,078 17,117,520 G.V.I.D. Fund Assets Current assets: Cash and investments Receivables (net of allowances for uncollectibles): Property taxes Accounts Accrued interest Due from: Other funds Other governments Inventories Prepaid items Total current assets Noncurrent assets: Restricted cash Advance to other funds Capital assets, net of accumulated depreciation, where applicable Land Infrastructure, net Buildings, net Equipment, net Construction in progress Total noncurrent assets Total assets Liabilities Current liabilities: Accounts payable Accrued payroll and employee benefits Due to: Other funds Other governments Deposits held for others Deferred revenues Current portion of: Compensated absences payable Claims and judgments payable Total current liabilities Noncurrent liabilities: Landfill closure and postclosure care costs payable Compensated absences payable Total noncurrent liabilities Total liabilities Net Assets Invested in capital assets, net of related debt Restricted for: Capital projects Sanitation Unrestricted Total net assets $ $ The notes to the financial statements are an integral part of this statement 22 $ $ 14,859,669 MOHAVE COUNTY Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Year Ended June 30, 2010 Business-type Activities - Enterprise Funds 850 I-40 Water 505 Corridor Fund Landfill Fund 856 Fy09 Add 922 Other G.V.I.D. Fund Enterprise Funds Governmental ActivitiesInternal Service Funds Total Operating revenues: Charges for services $ 1,188,037 Miscellaneous Total operating revenues $ 1,368,142 $ 627,318 $ 1,203,288 $ 4,386,785 $ 19,385,517 769 - 2,649 3,292 6,710 2,692 1,188,806 1,368,142 629,967 1,206,580 4,393,495 19,388,209 Operating expenses: Personnel services 183,738 301,505 320,182 663,194 1,468,619 2,126,197 Supplies 16,598 20,853 49,401 122,452 209,304 293,514 Professional services 16,452 256,398 28,656 63,537 365,043 90,116 5,358 1,307 17,771 18,021 42,457 715,920 708,669 Communications Insurance 69,249 9,587 9,730 14,271 102,837 Landfill closure and postclosure care costs - 362,996 - - 362,996 Insurance claims - - - - Lawsuit judgments Repairs and maintenance Public utility service Rents and leases Depreciation Other Total operating expenses Operating income (loss) - - 10,322,486 - - - - - 77,206 2,417 3,203 32,281 6,566 44,467 91,949 465,615 115,187 99,728 281,685 962,215 2,000 5,000 2,500 6,679 16,179 1,247,771 265,223 52,785 353,244 115,978 787,230 1,024,489 14,110 73,720 29,381 17,346 134,557 970,190 1,040,760 1,202,541 942,874 1,309,729 4,495,904 17,668,507 148,046 165,601 (312,907) (103,149) (102,409) - 1,719,702 Nonoperating revenues (expenses): Investment earnings 42,087 295,269 16,858 23,869 378,083 Rent income - - 2,000 - 2,000 - Noncapital grants - 357,515 - 100,000 457,515 - Gain (loss) on disposal of capital assets Total nonoperating revenues Income (loss) before contributions and transfers 283,286 - - 1,601 (87,069) (85,468) (53,267) 42,087 652,784 20,459 36,800 752,130 230,019 190,133 818,385 (292,448) (66,349) 649,721 1,949,721 Capital contributions - - 7,875 - 7,875 Transfers in - - 14,333 1,960 16,293 - Transfers out - - - (155,000) - Increase (decrease) in net assets Total net assets, July 1, 2009 Total net assets, June 30, 2010 (155,000) 190,133 663,385 5,674,934 $ 5,865,067 (270,240) 8,683,815 9,317,398 $ 9,980,783 (64,389) $ 8,413,575 $ 518,889 4,774,435 28,450,582 4,710,046 $ 28,969,471 The notes to the financial statements are an integral part of this statement 23 (2,686) 1,947,035 15,170,485 $ 17,117,520 MOHAVE COUNTY Statement of Cash Flows Proprietary Funds Year Ended June 30, 2010 Business-type Activities- Enterprise Funds Other Landfill G.V.I.D. Enterprise Fund Fund Funds I-40 Water Corridor Fund Cash flows from operating activities: Receipts from customers and users Receipts from interfund services provided Payments to suppliers Payments to employees Payments for interfund services used $ 1,243,212 (563,118) (185,020) (29,297) 465,777 Net cash provided by operating activities Cash flows from noncapital financing activities: Transfers from (to) other funds Advanced to other funds Rent income Subsidy from non-capital grant Net cash provided by (used for) noncapital financing activities Cash flows from capital and related financing activities: Purchases of capital assets Proceeds from sales of capital assets Net cash used for capital and related financing activities Cash flows from investing activities: Interest and dividends received Net cash provided by investing activities Net increase in cash and cash equivalents Cash and cash equivalents, July 1, 2009 Cash and cash equivalents, June 30, 2010 Reconciliation of operating income (loss) to net cash provided by operating activities: Operating income (loss) 1,295,362 (421,126) (294,892) (57,372) $ 650,889 (180,377) (323,047) (76,825) $ 1,199,276 (454,240) (669,991) (70,187) $ 4,388,739 (1,618,861) (1,472,950) (233,681) $ 1,063,247 1,142,444 18,157,984 (14,815,416) (2,095,640) (228,189) 521,972 70,640 4,858 2,161,183 - (155,000) (900,000) 353,137 14,333 2,000 - 1,960 100,000 (138,707) (900,000) 2,000 453,137 - - (701,863) 16,333 101,960 (583,570) - (48,728) 3,114 (81,695) (28,917) 4,109 (63,175) - (222,515) 7,223 (231,039) 69,763 (45,614) (81,695) (24,808) (63,175) (215,292) (161,276) 40,808 279,831 14,917 22,541 358,097 289,002 40,808 279,831 14,917 22,541 358,097 289,002 622,482 2,288,909 1,598,142 $ 2,059,113 0.00 460,971 12,403,208 $ 12,421,453 0.00 1,411,789 $ 1,488,871 0.00 1,160,499 $ 1,226,683 0.00 16,573,638 $ 17,196,120 12,632,778 $ 14,921,687 $ $ $ $ $ $ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation expense Landfill closure and postclosure care costs Expenses incurred but not reported Change in assets and liabilities: Receivables, (increase) Due from other funds, (increase) decrease Due from other governments, (increase) decrease Inventories, decrease Prepaid items, (increase) decrease 148,046 18,245 Accrued payroll and employee benefits, increase Compensated absences payable, increase (decrease) Deferred revenues, increase Deposits held for others, increase Total adjustments (312,907) 52,785 362,996 - (11,150) 939 (72,780) - (3,417) 15,950 (166) 66,184 353,244 - (103,149) 115,978 (7,553) 740 (94,900) 17,629 (105,820) (102,885) (100) 22,304 4,306 3,332 815 3,232 25,296 6,759 (648) 13,090 131,275 (10,457) (939) 8,073 (4,415) 6,367 (21,378) (115,114) 28,300 (20,442) - 305 - 970 391 2,457 465,777 - $ 1,558,328 500,785 $ 2,059,113 0.00 4,749 356,371 $ (3,834) 5,794 383,547 521,972 - $ $ 12,421,453 $ 12,421,453 0.00 $ 70,640 - 952,481 536,390 $ 1,488,871 0.00 (20,137) $ 4,858 - $ 1,226,683 $ 1,226,683 0.00 - 4,400 (11,420) 108,007 The notes to the financial statements are an integral part of this statement 24 1,719,702 1,024,489 (460,800) 7,815 2 (2,401) 90,274 5,000 317,731 (102,409) 787,230 362,996 - 936 (16,026) 582 $ 165,601 77,082 265,223 - 2,992 1,804 Accounts payable, increase (decrease) Due to other funds, increase (decrease) Due to other governments, increase (decrease) Net cash provided by operating activities Turn this row font white to print Cash at June 30, 2010 is comprised of the following: Cash and investments Restricted cash Total $ Total Governmental ActivitiesInternal Service Funds 12,636 (12,906) 90,274 10,794 1,165,656 $ 1,063,247 - $ 16,158,945 1,037,175 $ 17,196,120 0.00 16,958 441,481 $ 2,161,183 - $ 14,859,669 62,018 $ 14,921,687 0 MOHAVE COUNTY Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2010 Investment Trust Agency Funds Funds Assets Cash and investments Total assets $ 72,285,425 $ 373,408 $ 72,285,425 $ 373,408 $ - $ 373,408 - $ 373,408 Liabilities Deposits held for others Total liabilities Net Assets Held in trust for investment trust participants $ 72,285,425 The notes to the financial statements are an integral part of this statement 25 MOHAVE COUNTY Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended June 30, 2010 Investment Trust Funds Additions: Contributions from participants $ 414,705,652 Investment earnings: Interest and dividend income 2,209,402 Net decrease in fair value of investments (1,808,257) Net investment earnings 401,145 Total additions 415,106,797 Deductions: Distributions to participants (436,076,737) Total deductions (436,076,737) Change in net assets (20,969,940) Net assets, July 1, 2009 93,255,365 Net assets, June 30, 2010 $ 72,285,425 The notes to the financial statements are an integral part of this statement 26 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Table of Contents Note 1 - Summary of Significant Accounting Policies ..................................................................................... 28 A B. C. D. E. F. G. H. I. Reporting Entity .......................................................................................................................................................28 Basis of Presentation................................................................................................................................................29 Basis of Accounting .................................................................................................................................................30 Cash and Investments...............................................................................................................................................31 Inventories and Prepaid Items..................................................................................................................................31 Property Tax Calendar .............................................................................................................................................32 Capital Assets...........................................................................................................................................................32 Investment Earnings.................................................................................................................................................32 Compensated Absences............................................................................................................................................33 Note 2 – Stewardship, Compliance, and Accountability................................................................................... 33 Note 3 – Deposits and Investments ................................................................................................................... 34 Note 4 – Property Taxes Receivable ................................................................................................................. 37 Note 5 – Capital Assets ..................................................................................................................................... 38 Note 6 – Construction and Other Significant Commitments............................................................................. 39 Note 7 – Restricted Assets................................................................................................................................. 40 Note 8 – Long-Term Liabilities......................................................................................................................... 40 Note 9 – Risk Management ............................................................................................................................... 44 Note 10 – Operating Leases .............................................................................................................................. 45 Note 11 – Pensions and Other Postemployment Benefits ................................................................................. 45 Note 12 – Interfund Balances and Activity ....................................................................................................... 50 Note 13 – County Treasurer’s Investment Pool ................................................................................................ 51 27 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 1 - Summary of Significant Accounting Policies The accounting policies of Mohave County conform to generally accepted accounting principles applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). For the year ended June 30, 2010, the County implemented the provisions of GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets. GASB Statement No. 51 establishes accounting and financial reporting requirements for intangible assets. A. Reporting Entity Mohave County is a general purpose local government that is governed by a separately elected board of three county 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 in substance part of the County's operations. Therefore, data from these units is combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize that they are legally separate from the County. The County has no discretely presented component units. Each blended component unit discussed below has a June 30 year end. The following table describes the County’s component units: Component Unit Mohave County Flood Control District Mohave County Library District Mohave County Television District Mohave County Special Assessment Districts Mohave Administration Building - Finance Corporation Mohave Jail - Finance Corporation Description; Criteria for Inclusion A tax-levying district that provides flood control systems; County board of supervisors serves as board of directors A tax-levying district that provides and maintains library services for County residents; County board of supervisors serves as board of directors Provides and maintains communication equipment resources to provide television signals to residents; County board of supervisors serves as board of directors Constructs or improves roads, bridges, and water distribution systems; County board of supervisors serves as board of directors A corporation set up to provide financing and oversight of the construction and operation of the Mohave County administration building; management of Mohave County serves as the board of directors of the corporation A corporation set up to provide financing and oversight of the construction and equipping of the Mohave County jail facility; management of Mohave County serves as the board of directors of the corporation 28 Reporting Method Blended For Separate Financial Statements Not available Blended Not available Blended Not available Blended Not available Blended Not available Blended Not available MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 1 - Summary of Significant Accounting Policies (cont’d) 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 usefulness of the information. Government-wide statements—provide information about the primary government (the County) and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business-type activities of the County. 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 only allocates indirect expenses to special taxing districts and proprietary funds. 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, 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 and insurance premiums, in which each party receives and gives up essentially equal values, are operating revenues. Other revenues, such as noncapital grants, result from transactions in which the parties do not exchange equal values and are considered nonoperating revenues along with investment earnings and revenue generated by ancillary activities. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. Other expenses, such as interest expense, are considered to be nonoperating expenses. 29 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 1 - Summary of Significant Accounting Policies (cont’d) The County reports the following major governmental funds: • 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. • Road Fund accounts for all taxes on gas and auto license fees collected for building and maintaining County roads. • Flood Control Fund accounts for all monies collected from local taxpayers in the form of a levy on real property. These funds are used in planning, engineering, constructing, repairing, and maintaining flood control channels in Mohave County. • County Capital Improvement Fund accounts for a ¼ cent sales tax collected to provide for major capital improvements of the County. The County reports the following major enterprise funds: • I-40 Water Corridor Fund accounts for the operations of a water company located in the County’s industrial park, off U.S. I-40. • Landfill Fund accounts for the operations of two landfills located in Mohave County. • G.V.I.D. Fund accounts for the operations of a water company located in Golden Valley. The County reports the following fund types: The internal service funds account for automotive maintenance and operation, insurance, computer services, janitorial services, and telecommunications services provided to the County’s departments or to other governments on a cost-reimbursement basis. The investment trust funds account for pooled and non-pooled assets held and invested by the County Treasurer on behalf of other governmental entities; as well as individual investments, including money market investments held by outside trustees. The agency funds account for assets held by the County as an agent for Public Fiduciary clients. C. Basis of Accounting The government-wide, proprietary fund, and fiduciary fund financial statements are presented using the economic resources measurement focus, with the exception of agency funds, and the accrual basis of accounting. The agency funds are custodial in nature and do not have a measurement focus. 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. 30 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 1 - Summary of Significant Accounting Policies (cont’d) 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 became both measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 60 days after year-end. The County’s major revenue sources that are susceptible to accrual are property taxes, special assessments, intergovernmental, charges for services, and investment earnings. 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, and landfill closure and postclosure care costs, 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. 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 net assets available to finance the program. The County applies grant resources to such programs before using general revenues except where matching requirements exist. The County’s business-type activities and enterprise funds follow FASB Statements and Interpretations issued on or before November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has chosen the option not to follow FASB Statements and Interpretations issued after November 30, 1989. D. Cash and Investments For purposes of its statement of cash flows, the County considers all cash on hand, demand deposits, cash on deposit with the County Treasurer, and only those highly liquid investments with a maturity of 3 months or less when purchased to be cash equivalents. Nonparticipating interest-earning investment contracts are stated at cost. All other investments are stated at fair value. E. Inventories and Prepaid Items The County accounts for its inventories in the governmental funds using the purchase method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to indicate that they do not constitute "available spendable resources." These inventories are stated at cost using the first-in, first-out method. Inventories in the government-wide and the proprietary funds’ financial statements are recorded as assets when purchased and expensed when consumed. These inventories are stated at cost using the first-in, first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. 31 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 1 - Summary of Significant Accounting Policies (cont’d) 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. Certain infrastructure costs were estimated by calculating the current replacement cost of a similar asset and deflating this cost through the use of price-level indexes. Donated assets are reported at estimated fair value at the time received. Certain types of road improvements are expensed rather than capitalized. The improvement types that are expensed are millings and soil stabilization. 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 reported in the government-wide statements and proprietary funds are as follows: Capitalization Threshold Land Construction in progress Buildings Equipment Infrastructure and improvements other than buildings Utility systems Intangibles H. All $5,000 $5,000 $5,000 Depreciation Method Straight Line Straight Line Estimated Useful Life 20-50 years 3-20 years $5,000 $5,000 $5,000 Straight Line Straight Line Straight Line 10-50 years 10-50 years 7-15 years Investment Earnings Investment earnings are composed of interest, dividends, and net changes in the fair value of applicable investments. 32 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 1 - Summary of Significant Accounting Policies (concl’d) I. Compensated Absences Compensated absences consist of vacation leave and a calculated amount of sick leave earned by employees based on services already rendered. The County uses PTO (personal time off), which is a combination of vacation and sick leave, for compensating employees. PTO benefits do not vest with employees until they have satisfactorily completed their probationary period. Public Safety employees and those employees covered under the Judicial Merit System have a one year probationary period. All other employees have a six month probationary period. Employees may accumulate up to 900 hours of PTO annually. Upon termination of employment, most employees will be paid up to 400 hours of PTO. However, at-will employees are paid up to 600 hours of PTO. Any remaining PTO balance, in excess of the maximum, will be forfeited. Accordingly, 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. Note 2 – Stewardship, Compliance, and Accountability Deficit fund balances or net assets-At June 30, 2010, the following funds reported deficits in net assets or fund balances: Fund Capital projects G.V.I.D. construction Special revenue Juvenile Intensive Probation Supervision Probation grants Victims of Crime Assistance Fund Deficit $ 840,590 8,479 13,491 13,990 $ 876,550 The G.V.I.D. construction fund borrowed funds from the Landfill fund to cover expenses of an improvement district instead of issuing bonds. These funds are reflected as a liability, rather than revenue, resulting in a negative fund balance. The liability is to be paid back to the Landfill fund through collections from the property owners. The other funds reflect programs for which additional funding is expected to become available in the next program year. The deficit will be made up by the General fund for any funding that does not become available. 33 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 3 – Deposits and Investments 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; interest earning investments such as saving accounts, certificates of deposit, and repurchase agreements in eligible depositories; and specified commercial paper, bonds, debentures, and notes issued by corporations organized and doing business in the United States. In addition, the County Treasurer may invest trust funds in fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk Statutes have the following requirements for credit risk: 1. Commercial paper must be rated P1 by Moody’s investors service or A1 or better by Standard and Poor’s rating service. 2. Corporate bonds, debentures, and notes must be rated A or better by Moody’s investors service or Standard and Poor’s rating service. 3. Fixed income securities must carry one of the two highest ratings by Moody’s investors service and Standard and Poor’s rating services. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk Statutes require collateral for demand deposits, certificates of deposit, and repurchase agreements at 101 percent of all deposits not covered by federal depository insurance. Concentration of credit risk Statutes do not include any requirements regarding concentration of credit risk. Interest rate risk Statutes require that public monies invested in securities and deposits have a maximum maturity of 5 years and that public operating fund monies invested in securities and deposits have a maximum maturity of 3 years. Investments in repurchase agreements must have a maximum maturity of 180 days. Foreign currency risk Statutes do not allow foreign investments. Deposits - At June 30, 2010, the carrying amount of the County’s deposits was $8,215,071 and the bank balance was $22,286,276. There was cash on hand of $21,244. It is the County’s policy to collateralize all deposits by at least 101 percent of the deposits not covered by depository insurance. 34 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 3 – Deposits and Investments (cont’d) Investments – The County’s investments at June 30, 2010, were as follows: Investment Type Amount Guaranteed investment contract $ U.S. agency securities Corporate bonds 7 ,378,573 174,294,858 8,634,549 Corporate stock 997,613 Repurchase agreement 634,337 State Treasurer’s Local Government Investment Pool Total investments 7,446,915 $ 199,386,845 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. Credit Risk – It is the County’s investment policy to invest to preserve the principal value of the portfolio. This is to be accomplished through limiting the types of securities purchased, the percent of the portfolio of each type of security and the length of time they can be held. Investments allowed are obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities. The County can also invest in certificates of deposits, commercial paper, obligations of Arizona state and local governments, repurchase agreements, money market mutual funds, and corporate bonds, debentures or notes issued by United States companies with AA or greater ratings by Standard and Poor’s rating service. All purchases must have prior approval of the investment oversight committee. At June 30, 2010, credit risk for the County’s investments was as follows: Investment Type U.S. agency securities Repurchase agreement Corporate bonds Corporate bonds Corporate bonds State Treasurer’s Local Government Investment Pool 7 Rating AAA AAA BB+ B+ Unrated Rating Agency S&P S&P S&P S&P S&P Amount $ 174,294,858 634,337 4,596,740 3,050,309 987,500 Unrated Not applicable 7,446,915 $ 191,010,659 At the time of purchase, all investments carried ratings at or above AA. 35 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 3 – Deposits and Investments (cont’d) Custodial Credit Risk – For an investment, custodial credit 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’s formal policy for custodial credit risk states that an independent third-party custodian, selected by the Mohave County Treasurer, will hold the securities in the County’s name. Concentration of Credit Risk - The County’s formal investment policy requires at least 10 percent of the overall portfolio to be invested in highly liquid accounts such as local government pools, money market funds or overnight repurchase agreements to ensure the ability to meet ongoing obligations. It also limits the total amount of corporate securities to 20 percent of the total portfolio, with not more than 5% invested in any single corporation. Corporate bonds and stocks represented 4.8 percent of the total portfolio at June 30, 2010. All other securities will be structured with varying maturity dates, not to exceed 5 years, and in various types of investments described under credit risk. The County had investments at June 30, 2010, of 5 percent or more in Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. These investments were 26.44 percent, 26.71 percent, and 33.94 percent, respectively, of the County’s total investments. The County Capital Improvement fund had 100 percent of its beneficial interest certificates proceeds held in a guaranteed investment contract, which was 3.7 percent of the primary government’s total investments. Interest Rate Risk – The County’s formal policy with respect to interest rate risk minimizes the risk by structuring the portfolio into two accounts to meet cash needs. The return on investment is secondary to safety and liquidity. One account consists of highly liquid securities with maturities of 120 days or less. The second account has maturities of greater than 120 days. Both accounts will have active secondary markets. At June 30, 2010, the County had the following investments in debt securities: Investment Type State Treasurer's investment pools U.S. agency securities Corporate bonds Repurchase agreement Total Amount $ 7,446,915 174,294,858 8,634,549 634,337 $ 191,010,659 36 Investment Maturities Less than 1 to 5 1 year Years $ $ 7,446,915 86,749,737 634,337 94,830,989 $ 87,545,121 8,634,549 $ 96,179,670 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 3 – Deposits and Investments (concl’d) A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Assets follows: Cash, deposits, and investments: Amount 21,244 8,215,071 199,386,845 $ 207,623,160 Cash on hand Amount of deposits Amount of investments Total $ Statements of Net Assets: Governmental Activities Cash and investments Restricted cash Total $ 108,003,847 9,764,360 $ 117,768,207 Business-type Activities $ 16,158,945 1,037,175 $ 17,196,120 Investment Trust Funds $ 72,285,425 $ 72,285,425 Agency Funds Total $ 373,408 $ 373,408 $ 196,821,625 10,801,535 $ 207,623,160 Note 4 – Property Taxes Receivable Property taxes receivable consist of uncollected real and personal property taxes as determined from the records of the County Treasurer's Office, and at June 30, 2010 were as follows: Fiscal Year 2009 2008 Prior Total General Fund $ 2,299,634 0 329,219 0 764,071 0 $ 3,392,924 Flood Control Fund $ 1,271,436 0 226,340 0 148,848 0 $ 1,646,624 Other Governmental Funds $ 1,056,283 0 189,364 0 148,628 0 $ 1,394,275 Total Governmental Funds $ 4,627,353 744,923 1,061,547 $ 6,433,823 That portion of property taxes receivable, not collected within 60 days after June 30, 2010, has been deferred and, consequently, is not included in current-year revenues on the fund statements. For the government-wide statements, the entire receivable balance has been recognized as revenue. 37 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 5 – Capital Assets Capital asset activity for the year ended June 30, 2010, was as follows: Balance July 1, 2009 Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated $ Capital assets being depreciated: Buildings Infrastructure & improvements other than buildings Intangibles Equipment Total Less accumulated depreciation for: Buildings Infrastructure & improvements other than buildings Equipment Total Total capital assets being depreciated, net 26,177,607 26,924,209 53,101,816 $ 26,263,817 81,362,438 107,626,255 214,314,713 4,146,819 (3,793,257) 214,668,275 (14,109,458) (66,273,280) (23,479,228) (103,861,966) (1,286,998) (2,875,270) (3,193,189) (7,355,457) 2,219,195 2,219,195 (15,396,456) (69,148,550) (24,453,222) (108,998,228) 110,452,747 (3,208,638) (1,574,062) 105,670,047 $ 1,630,859 1,630,859 $ (487,569) (487,569) 64,026,521 108,916,666 54,578 41,670,510 Business-type activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Business-type activities capital assets, net $ (3,793,257) 163,554,563 Total capital assets being depreciated, net 86,210 54,925,798 55,012,008 990,091 54,578 3,102,150 $ Less accumulated depreciation for: Buildings Utility systems Equipment Total $ Balance June 30, 2010 Decreases 63,036,430 108,916,666 42,361,617 Governmental activities capital assets, net Capital assets being depreciated: Buildings Utility systems Equipment Total Increases $ 51,803,370 $ (2,061,631) $ 213,296,302 $ $ $ 1,630,859 83,428 1,714,287 83,428 83,428 - 2,275,149 20,817,314 1,219,778 24,312,241 193,635 51,687 245,322 (220,872) (25,073) (245,945) 2,054,277 21,010,949 1,246,392 24,311,618 (804,587) (8,503,429) (728,459) (10,036,475) (48,692) (635,245) (103,293) (787,230) 133,802 22,565 156,367 (719,477) (9,138,674) (809,187) (10,667,338) 14,275,766 (541,908) (89,578) 13,644,280 15,906,625 38 $ (458,480) $ (89,578) $ 15,358,567 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 5 – Capital Assets (concl’d) Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Health Welfare Culture and recreation Education Internal service funds Total governmental activities depreciation expense Business-type activities: Landfill Recreation Water companies Total business-type activities depreciation expense $ 1,372,051 790,296 3,854,275 10,579 81,243 208,197 14,327 1,024,489 $ 7,355,457 $ $ 52,785 101,172 633,273 787,230 Note 6 – Construction and Other Significant Commitments The County had 3 major contractual commitments at June 30, 2010, as follows: Contractual Commitments Expenditure to Date Funding Source Correctional facility ¼ cent sales tax Prison health care contract – 11/17/09 through 11/16/10 Tax revenues Bullhead City library addition – Architectural services Secondary tax revenues Total 39 Total Project Cost Remaining Commitments $ 67,881,149 $ 72,979,013 $ 5,097,864 1,023,281 1,754,195 730,914 372,291 757,269 384,978 $ 69,276,721 $ 75,490,477 $ 6,213,756 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 7 – Restricted Assets As of June 30, 2010, the County had restricted assets as follows: Governmental activities assets: Cash $ 9,764,360 Cash held by trustees restricted by agreements for construction, debt payments, insurance trusts, loans, or major maintenance. $ 500,785 I-40 collections restricted for future repairs of infrastructure by agreement with customers. 536,390 G.V.I.D. water corridor collections restricted for future infrastructure repairs by agreement with customers. Business-type activities assets: Cash Cash Total business-type activities assets $ 1,037,175 Note 8 – Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2010: Balance July 1, 2009 Governmental activities: Special assessment bonds payable Beneficial interest certificates payable Beneficial interest certificates premiumunamortized Compensated absences payable Claims and judgments payable Total governmental activities long-term liabilities $ 1,891,000 Additions $ Balance June 30, 2010 Reductions - $ (450,000) $ 1,441,000 Due Within 1 Year $ 541,000 57,610,000 - (4,390,000) 53,220,000 4,540,000 397,755 - (39,776) 357,979 39,775 7,005,443 6,780,556 (6,456,720) 7,329,279 6,460,000 1,676,826 9,926,496 (10,384,305) 1,219,017 1,150,000 $68,581,024 $16,707,052 ($21,270,801) $ 63,567,275 $12,730,775 $ Business-type activities: Landfill closure and postclosure care costs payable $ 4,404,673 Compensated absences payable 180,687 Total business-type activities long-term liabilities $ 4,585,360 $ $ 362,996 $ - $ 4,767,669 146,696 ( 159,602) 167,781 159,000 509,692 ($ 159,602) $ 4,935,450 $ 159,000 40 - MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 8 – Long-Term Liabilities (cont’d) Bonds - The County's bonded debt consists of special assessment bonds that are ten-year bonds, payable in installments and callable with interest payable semiannually. Bond proceeds primarily pay for constructing infrastructure assets. Special assessment bonds are secured by pledges of revenues from special assessments levied against the benefiting property owners. Annual principal and interest on the bonds are expected to use 100% of the net revenues. The County is not obligated in any manner for the special assessment debt. However, if the property owner defaults on their payment of the debt, the County places a lien on the property. In the event that the lien is not cleared, the property is sold and the proceeds are used to pay off the debt. The principal and interest paid in 2010 was $549,225 (56% of available net revenue collected in the current and prior years.) The original amount of special assessment bonds issued in prior years was $4,591,000. Bonds outstanding at June 30, 2010, were as follows: Maturities Interest Rates $ 4,500,000 1/10-1/13 6.30% $1,350,000 91,000 in arrears 5.50% 91,000 District Scenic road and bridge project improvement Mohave County improvement district Total Outstanding Principal June 30, 2010 Original Amount $ 1,441,000 $ 4,591,000 The following schedule details debt service requirements to maturity for the County’s bonds payable at June 30, 2010. Governmental activities Special Assessment Bonds Year Ending June 30, 2011 2012 2013 Total Principal Interest 541,000 450,000 450,000 $ 1,441,0000 $ 205,496 42,525 14,175 $ 262,196 $ 41 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 8 – Long-Term Liabilities (cont’d) Beneficial Interest Certificates (BIC) - The County has issued 15 and 12 year beneficial interest certificates to purchase or construct capital facilities that are generally noncallable, with principal payable in annual installments and interest payable semiannually. The BICs are secured by pledges of the ¼ percent sales tax revenue, up to the amount of the annual debt payments. The 2010 debt service requirement of $6,703,652 was 118% of the current year tax revenue. This amount exceeded revenue by approximately $1.5 million, which was paid from prior years reserves. The original amount of certificates issued in prior years was $65,320,000. Beneficial interest certificates outstanding at June 30, 2010, were as follows: Description Beneficial interest certificates Series 2004 Beneficial interest certificates Series 2008 Total Original Amount Maturity Ranges Interest Rates 7/2010-7/2019 2.0%-5.25% 46,000,000 10/2010-4/2020 3.0%-4.25% $ 19,320,000 $ 65,320,000 Outstanding Principal June 30, 2010 $ 13,695,000 39,525,000 $ 53,220,000 The following schedule details debt service requirements to maturity for the County’s beneficial interest certificates payable at June 30, 2010: Governmental activities Beneficial Interest Certificates Year Ending June 30, 2011 2012 2013 2014 2015 2016-20 Total Principal $ 4,540,000 4,700,000 4,875,000 6,693,000 5,255,000 27,157,000 $ 53,220,000 42 Interest $ 2,167,496 2,007,119 1,832,181 1,657,903 1,368,913 3,874,419 $ 12,908,031 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 8 - Long-Term Liabilities (cont’d) Landfill closure and postclosure care costs - The County owns two 160-acre landfill sites, Cerbat and Mohave Valley, which are operated by independent contractors under contract with the County. Both landfills began operations in January 1989. The County operates its landfills on a cell basis. The County owns additional unused parcels of land adjacent to the existing landfill sites that will (or may) be used, as needed, to open additional cells. State and federal laws and regulations require the County to place a final cover on its Cerbat and Mohave Valley landfill sites when they stop accepting waste and to perform certain maintenance and monitoring functions at the sites for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfills stop accepting waste, the County reports a portion of these closure and postclosure care costs in each period that the County operates the landfills. These costs will be paid from the enterprise fund. The amount of cost recognized each year is based on landfill capacity used at the end of each fiscal year. The $4,767,669 reported as landfill closure and postclosure care liability at June 30, 2010 represents the cumulative amount reported to date at the Cerbat and Mohave Valley landfills based on the use of 88% and 79%, respectively, of the estimated capacity of the open cells of the landfills. The County will recognize the remaining estimated costs of closure and postclosure care costs of $801,180 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in fiscal year 2010. The County expects to close the landfills in the years 2011 and 2028, respectively, and the actual cost may be higher due to inflation, changes in technology, or changes in regulations. 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, postclosure, and corrective action when needed. The County is in compliance with these requirements. Insurance Claims - The County established two internal service funds, Health Insurance and SelfInsurance. The Health Insurance Fund accounts for employee health benefits through a combination of self-insurance and commercial insurance. The Self-Insurance Fund provides property, casualty, and general liability coverage up to $50,000 per claim and also accounts for premium payments to the Arizona Counties Workers’ Compensation Pool for workers’ compensation coverage. The SelfInsurance Fund accounts for the risk financing of certain benefits and losses through combinations of cost-reimbursement, self-insurance for losses up to certain limits, participation in public entity risk pools, and the purchase of insurance for losses above the limits. Settled claims have not exceeded risk pool coverage or the purchased commercial insurance in any of the past four fiscal years. The Health Insurance Fund accounts for the financing of the uninsured risk of loss for certain health benefits (comprehensive major medical, prescriptions, dental, life/accidental death and dismemberment, and short-term disability) to eligible employees and their dependents, through a combination of commercial insurance and self-insurance. The County is self-insured up to certain limits, with commercial insurance to cover losses above the limits. The life insurance is 100% commercial insurance. Under the health insurance program, the employees have a preferred provider organization program. The County is fully self-insured for dental, which is administered by Delta Dental. A third party administers the short-term disability program. Settled claims have not exceeded available selfinsurance funds or the purchased commercial insurance in any of the past four fiscal years. 43 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 8 - Long-Term Liabilities (concl’d) The insurance claims payable liability of the Self-Insurance Fund and Health Insurance Fund totaling $1,219,017, included in the balance below at June 30, 2010, is the estimated ultimate cost of settling claims that have been reported but not settled, and claims that have been incurred but not reported. This estimate is based on actuarial estimates provided by the County’s healthcare administrator (based on claims received subsequent to June 30, 2010) and Arizona Counties Property and Casualty Pool (based on expected outcomes of outstanding lawsuits and incurred but not reported occurrences). Changes in the funds’ claims payable for the years ended June 30, 2009 and 2010, were as follows: 2009 Claims payable - beginning of year Add: Claims incurred and changes in estimates Deduct: Claims paid Claims payable - end of year $ 1,776,526 12,111,371 (12,211,071) $ 1,676,826 2010 $ 1,676,826 9,926,496 (10,384,305) $ 1,219,017 Compensated absences and claims and judgments – Compensated absences are paid from various funds in the same proportion that those funds pay payroll costs. Claims and judgments are generally paid from the fund that accounts for the activity that gave rise to the claim. During fiscal year 2010, the County paid for compensated absences as follows: 59 percent from the General Fund, 14 percent from other major funds, and 27 percent from Other Governmental Funds. The County paid for claims and judgments as follows: 94 percent from the Health Insurance Fund and 6 percent from the SelfInsurance Fund. The claims paid from the Health Insurance Fund were medical claims funded through payroll deductions and contributions from County funds. The Self-Insurance Fund was funded $469,416 (56%) by the General Fund and $369,240 (44%) by various Public Works Funds this past year to cover insurance expense and possible settlements. Occasionally it is also reimbursed by other funds. Note 9 – Risk Management The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters; but was unable to obtain insurance at a cost it considered to be economically justifiable for Workers’ Compensation or liability insurance. Therefore, the County joined and is covered by two public entity risk pools: the Arizona Counties Property and Casualty Pool and the Arizona Counties Workers’ Compensation Pool, which are described below. The Arizona Counties Property and Casualty Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties catastrophic loss coverage for risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters; and provides risk management services. Such coverage includes all defense costs as well as the amount of any judgment or settlement. The County is responsible for paying a premium, based on its exposure in relation to the exposure of the other participants, and a deductible of $10,000 per occurrence for property claims and $50,000 per occurrence for liability claims. The County is also responsible for any payments in excess of the maximum coverage of $300 million per occurrence for property claims and $15 million per occurrence for liability claims. However, lower limits apply to certain categories of losses. A county must participate in the pool at least three years after becoming a member; however, it may withdraw after the initial three-year period. If the pool were to become insolvent, the County would be assessed an additional contribution. 44 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 9 – Risk Management (concl’d) The Arizona Counties Workers’ Compensation Pool is a public entity risk pool currently composed of 11 member counties. The pool provides member counties with workers’ compensation coverage, as required by law, and risk management services. The County is responsible for paying a premium, based on an experience-rating formula that allocates pool expenditures and liabilities among the members. The Arizona Counties Property and Casualty Pool and the Arizona Counties Workers’ Compensation Pool receive independent audits annually and an audit by the Arizona Department of Insurance every 5 years. Both pools accrue liabilities for losses that have been incurred but not reported. These liabilities are determined annually based on an independent actuarial valuation. Note 10 – Operating Leases The County leases buildings, copiers, computers, and land 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 $998,534 for the year ended June 30, 2010. The operating leases have remaining noncancellable lease terms from one to eighty-six years and provide renewal options. The future minimum payments required under the operating leases at June 30, 2010, were as follows: Governmental Business-type Year ending June 30, Activities Activities 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2096 Total minimum lease payments $ 990,542 808,184 555,665 276,330 6,559 12,000 9,605 71 $ 2,658,961 $ $ 1,952 1,952 1,952 651 6,507 Note 11 – Pensions and Other Postemployment Benefits Plan Descriptions - The County contributes to four plans, three of which are described below. The Elected Officials Retirement Plan (EORP) is not described, due to its relative insignificance to the County’s financial statements. Benefits are established by state statute and the plans generally provide retirement, long-term disability and health insurance premium benefits, including death and survivor benefits. The retirement benefits are generally paid at a percentage, based on years of service, of the retirees’ average compensation. Long-term disability benefits vary by circumstance, but generally pay a percentage of the employee’s monthly compensation. Health insurance premium benefits are generally paid as a fixed dollar amount per month towards the retiree’s healthcare insurance premiums, in amounts based on whether the benefit is for the retiree or for the retiree and his or her dependents. The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefit pension plan; a cost-sharing, multiple-employer defined benefit health insurance premium plan 45 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 11- Pensions and Other Postemployment Benefits (cont’d) and a cost-sharing, multiple-employer defined benefit long-term disability plan that covers employees of the State of Arizona and employees of participating political subdivisions and school districts. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The Public Safety Personnel Retirement System (PSPRS) administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona and participating political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The Corrections Officer Retirement Plan (CORP) administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium plan that covers state, county, and local correction officers; dispatchers; and probation, surveillance, and juvenile detention officers. The CORP is governed by The Fund Manager of PSPRS and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ASRS 3300 North Central Avenue P. O. Box 33910 Phoenix, AZ 85067-3910 (602) 240-2000 or (800) 621-3778 PSPRS and CORP 3010 East Camelback Road, Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 Funding Policy - The Arizona State Legislature establishes and may amend active plan members’ and the County’s contribution rates for ASRS, PSPRS, and CORP. Cost-sharing plans - For the year ended June 30, 2010, active ASRS members were required by statute to contribute at the actuarially determined rate of 9.4 percent (9.0 percent for retirement and 0.4 percent for long-term disability) of the members’ annual covered payroll and the County was required by statute to contribute at the actuarially determined rate of 9.4 percent (8.34 percent for retirement, .66 percent for health insurance premium, and 0.4 percent for long-term disability) of the members’ annual covered payroll. The County’s contributions for the current and 2 preceding years, all of which were equal to the required contributions, were as follows: Retirement Health Benefit Long-Term Fund Disability Fund Supplement Fund Year ended June 30 2010 $3,205,300 $253,657 $153,731 2009 3,153,381 378,879 197,333 2008 3,276,129 427,321 203,487 46 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 11- Pensions and Other Postemployment Benefits (cont’d) Agent plans - For the year ended June 30, 2010, active PSPRS members were required by statute to contribute 7.65 percent of the members’ annual covered payroll and the County was required to contribute 17.86 percent, the aggregate of which is the actuarially required amount. The health insurance premium portion of the contribution was actuarially set at 1.25 percent of covered payroll. Active CORP members were required by statute to contribute 8.41 percent of the members’ annual covered payroll. In addition, the County was required to contribute 5.00 percent. The aggregate of the members’ and the County’s contributions is the actuarially required amount. The health insurance premium portion of the contribution rate was actuarially set at .78 percent of covered payroll. Probation officers participating in CORP-AOC contributed the statutorily determined amount of 8.41 percent and the County contributed 6.00 percent of their annual covered payroll, respectively. The health insurance premium portion of the contribution was actuarially set at .12 percent of covered payroll. Actuarial methods and assumptions - Except for the contribution requirements for probation officers participating in the CORP-AOC which were established by state statute, the contribution requirements for the year ended June 30, 2010, were established by the June 30, 2008 actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plans 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 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 understood by the County and the plans’ members 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 that are 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 plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2010 contribution requirements, are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation at June 30, 2008 Projected unit credit Level percent closed for unfunded actuarial accrued liability, open for excess 28 years for unfunded actuarial accrued liability, 20 years for excess Smoothed market value 8.50% 5.50%-8.50% for PSPRS and CORP 5.50% for PSPRS and CORP 47 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 11- Pensions and Other Postemployment Benefits (cont’d) Annual Pension/OPEB Costs - The County’s pension/OPEB cost for the three agent plans for the year ended June 30, 2010, and related information follows. PSPRS S Health Insurance Pension Annual pension/ OPEB cost Contributions made $824,041 824,041 CORP Pension $62,014 62,014 $123,404 123,404 P Health Insurance $22,809 22,809 CORP-AOC C Health Insurance Pension $159,518 159,518 $3,255 3,255 Trend Information – Annual pension cost and OPEB cost information for the current and 2 preceding years follows for each of the agent plans. Plan PSPRS Pension Health insurance Pension Health insurance Pension Health insurance CORP Pension Health insurance Pension Health insurance Pension Health insurance CORP-AOC Pension Health insurance Pension Health insurance Pension Health insurance Year Ended June 30 Annual Pension/OPEB Cost Percentage of Annual Cost Contributed Net Pension/OPEB Obligation 2010 2010 2009 2009 2008 2008 $824,041 62,014 909,388 66,193 644,564 49,548 100% 100% 100% 100% 100% 100% $ - 2010 2010 2009 2009 2008 2008 123,404 22,809 123,595 20,422 114,391 28,188 100% 100% 100% 100% 100% 100% - 2010 2010 2009 2009 2008 2008 159,518 3,255 212,804 60,606 249,682 10,403 100% 100% 100% 100% 100% 100% - 48 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 11- Pensions and Other Postemployment Benefits (concl’d) Funded Status – Except for the CORP-AOC, the funded status of the plans as of the most recent valuation date, June 30, 2010, along with the actuarial assumptions and methods used in those valuations follow. PSPRS Pension Actuarial accrued liability (a) $25,568,864 Actuarial value of assets (b) 18,729,245 Unfunded actuarial accrued liability (funding excess) (a) – (b) 6,839,619 Funded ratio (b) / (a) Covered payroll (c) Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll ([(a) – (b)]/(c)) CORP Health Insurance $ 760,418 - Pension $ 3,636,215 Health Insurance $ 171,518 5,200,975 - 760,418 (1,564,760) 171,518 73.3% 0.0% 143.0% 0.0% $ 4,782,717 $ 4,782,717 $ 2,947,082 $ 2,947,082 143.0% 15.9% (0.0%) 5.82% The actuarial methods and assumptions used are the same for all plans and related benefits, and for the most recent valuation date, are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation at June 30, 2010 Projected unit credit Level percent closed for unfunded actuarial accrued liability, open for excess 26 years for unfunded actuarial accrued liability, 20 years for excess 7-Year smoothed market value 8.50% 5.50%-8.50% for PSPRS and CORP 5.50% for PSPRS and CORP The CORP-AOC’s actuarial valuation is prepared on a statewide basis; accordingly, actuarial information for the County, as a participating government, is not available. 49 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 12 – Interfund Balances and Activity Interfund Receivables and Payables - Interfund balances at June 30, 2010, were as follows: Payable to General Fund Road Fund Nonmajor Governmental Funds G.V.I.D. Fund $ $ Internal Service Funds Landfill Fund Total Payable From General Fund Flood Control Fund $ - $ - 35,612 - $ 63,803 $ - $ 99,415 - 39,283 - - - - 39,283 636,780 - 120,567 74 - 900,000 1,657,421 I-40 Water Corridor Fund - - - 17 - - 17 Landfill Fund - - - 2 - - 2 427 - - - 69,266 - 69,693 93 $133,069 $900,000 $ 1,865,831 Nonmajor Governmental Funds Internal Service Funds Total $ 637,207 $ 39,283 $ 156,179 $ The majority of the interfund receivables and payables result from year-end accruals and adjustments. All cash is transferred within the first two months of the next fiscal year for these transactions. The balance of $900,000 due to the Landfill Fund from the nonmajor governmental funds is an advance from the landfill to cover special assessment engineering fees. This expense is to be reimbursed over the next 10 years, from property owners, through collections assessed on tax bills. 50 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 12 – Interfund Balances and Activity (concl’d) Interfund Transfers –Interfund transfers for the year ended June 30, 2010, were as follows: Transfers out to Other Funds General Fund Road Fund Flood Control Fund County Capital Improvement Fund $ $ Nonmajor Governmental Funds Landfill Fund Total 541 $ 1,058,521 $ 86,000 $ 1,651,534 Transfers in from Other Funds General Fund $ Nonmajor Governmental Funds - $ - 506,472 4,182,237 524,222 179,613 6,696,104 3,920,405 69,000 15,571,581 - - - 14,333 - - 14,333 - - - - 1,960 - 1,960 4,182,237 $ 524,222 686,085 $ 6,710,978 $ 4,980,886 $ 155,000 $ 17,239,408 G. V. I. D Fund Other Enterpirse Funds Total $ $ The General Fund transfers monies to other funds to provide support for such items as matching funds for grants or to make up the shortfall of grant-funded programs that the County feels are important. Other funds also transfer monies to reimburse for shared expenses of programs and to cover matching grants. Note 13 – 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 Treasurer has a fiduciary responsibility to administer those and the County’s monies under her stewardship. The Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the 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 company and there is no regulatory oversight of its operations. The pool’s structure 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 Treasurer allocates interest earnings to each of the pool’s participants. 51 MOHAVE COUNTY Notes to Financial Statements June 30, 2010 Note 13 – County Treasurer’s Investment Pool (concl’d) Substantially, all deposits and investments of the County’s primary government are included in the County Treasurer’s investment pool, except for $2,148,913 of deposits held by the Treasurer and $9,743,697 held by trustees in the County’s name. Therefore, the deposit and investment risks of the Treasurer’s investment pool are substantially the same as the County’s deposit and investment risks. See Note 3 for disclosure of the County’s deposit and investment risks. Details of each major investment classification follow: Investment Type p Principal s Repurchase agreement $ 634,337 U.S. agency securities 173,366,732 Corporate bonds 13,252,265 Corporate stock 997,613 State Treasurer’s Local Government Investment Pool 7,446,915 $ 195,697,862 Interest Rates s 15.00% .16-6.625% 4.85-7.00% N/A 1.00% Maturities s 9/28/10 07/10-04/15 2/12-5/15 N/A N/A Fair Value s $ 634,337 174,294,858 8,634,549 997,613 7,446,915 $ 192,008,272 A condensed statement of the investment pool’s net assets and changes in net assets follows. Statement of Net Assets Assets $ 196,248,349 Liabilities Net assets $ 196,248,349 Net assets held in trust for: Internal participants $ 125,106,510 External participants 71,141,839 Total net assets held in trust $ 196,248,349 Statement of Changes in Net Assets Total additions $ 741,461,011 Total deductions (747,303,540) Net decrease (5,842,529) 000000000000 Net assets held in trust: July 1, 2009 202,090,878 June 30, 2010 $ 196,248,349 52 Required Supplementary Information 53 MOHAVE COUNTY Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2010 Budgeted Amounts Original Final Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Contributions Miscellaneous $ Total revenues Expenditures: Current: General government Assessor County attorney Risk management Board of supervisors Clerk of board Housing community development General administration Clerk of superior court Constables Contingency Elections Finance Building & grounds maintenance Justice courts Juvenile detention Personnel Development services Public fiduciary Public defender Public legal defender Building inspector Public works Procurement Recorder Superior courts Treasurer Voter registration Supervisory districts Total general government $ 34,717,000 788,500 29,698,131 6,069,195 1,730,724 400,000 1,000 106,070 $ 34,717,000 788,500 29,698,131 6,239,645 1,730,724 400,000 25,320 106,070 Actual Amounts $ 34,620,400 610,403 27,004,279 6,229,579 1,953,239 325,337 24,340 78,492 Variance with Final Budget $ (96,600) (178,097) (2,693,852) (10,066) 222,515 (74,663) (980) (27,578) 73,510,620 73,705,390 70,846,069 (2,859,321) 3,719,612 4,010,388 290,295 988,005 222,622 361,133 1,975,631 1,906,761 369,114 11,636,971 405,229 1,054,822 2,118,641 3,116,506 1,405,856 577,389 2,273,586 523,763 4,341,974 901,961 1,179,407 274,428 400,687 686,771 3,075,588 1,671,261 316,546 368,493 3,719,612 4,010,388 290,295 988,005 222,622 361,133 2,015,631 1,906,761 369,200 10,828,565 491,579 1,054,822 2,118,641 3,116,506 1,405,856 577,389 2,273,586 523,763 5,081,238 901,961 1,179,407 274,428 400,687 686,771 3,104,644 1,671,261 340,646 368,493 3,652,577 3,780,620 274,505 926,727 200,944 344,317 1,870,548 1,826,099 359,933 67,035 229,768 15,790 61,278 21,678 16,816 145,083 80,662 9,267 10,828,565 54,276 24,850 233,367 184,916 163,457 24,327 580,034 34,202 47,602 47,905 396,761 5,602 18,771 38,588 55,079 228,256 59,306 63,569 50,173,440 $ 50,283,890 437,303 1,029,972 1,885,274 2,931,590 1,242,399 553,062 1,693,552 489,561 5,033,636 854,056 782,646 268,826 381,916 648,183 3,049,565 1,443,005 281,340 304,924 $ 36,547,080 $ 13,736,810 (Continued) See accompanying notes to budgetary comparison schedule 54 MOHAVE COUNTY Required Supplementary Information Budgetary Comparison Schedule General Fund Year Ended June 30, 2010 (Concluded) Budgeted Amounts Original Final Expenditures: Public safety: Animal control Jail Medical examiner Probation Sheriff Total public safety $ Health A.H.C.C.C.S. 693,897 9,349,910 437,000 1,806,922 10,201,662 22,489,391 $ Actual Amounts 693,897 9,349,910 437,000 1,812,922 10,177,382 22,471,111 $ 678,663 9,034,893 422,000 1,683,646 9,910,370 21,729,572 Variance with Final Budget $ 15,234 315,017 15,000 129,276 267,012 741,539 9,098,000 9,098,000 5,095,078 4,002,922 402,821 462,821 406,987 55,834 Total expenditures 82,163,652 82,315,822 63,778,717 18,537,105 Excess (deficiency) of revenues over expenditures (8,653,032) (8,610,432) 7,067,352 15,677,784 Other financing sources (uses): Transfers in Transfers out 1,605,416 (4,586,825) 1,605,866 (4,584,171) 1,651,534 (4,182,237) 45,668 401,934 (2,981,409) (2,978,305) (2,530,703) 447,602 Excess of revenues and other sources over (under) expenditures and other uses (11,634,441) (11,588,737) 4,536,649 Fund balances, July 1, 2009 11,634,441 11,588,737 11,562,064 Education School superintendent Total other financing sources (uses) Fund balances, June 30, 2010 $ - $ - $ 16,098,713 See accompanying notes to budgetary comparison schedule 55 16,125,386 (26,673) $ 16,098,713 MOHAVE COUNTY Required Supplem entary Inform ation Budgetary Com parison Schedule Road Fund Year Ended June 30, 2010 Budgeted Am ounts Original Final Actual Variance w ith Am ounts Final Budget Revenues: Licenses and permits $ Intergovernmental 25,000 $ 14,512,516 25,000 15,012,516 $ 16,500 $ (8,500) 13,153,999 (1,858,517) (199,987) Charges for services 695,063 695,063 495,076 Investment earnings 200,000 200,000 220,972 20,972 Rents 145,861 145,861 121,358 (24,503) Miscellaneous Total revenues 176,732 176,732 25,717 (151,015) 15,755,172 16,255,172 14,033,622 (2,221,550) Expenditures: Current: Highw ays and streets Total expenditures Excess (deficiency) of revenues over expenditures 17,710,922 18,093,394 11,974,481 6,118,913 17,710,922 18,093,394 11,974,481 6,118,913 (1,955,750) (1,838,222) 2,059,141 3,897,363 Other financing sources (uses): Transfers out Total other financing sources (uses) - (117,528) (524,222) (406,694) - (117,528) (524,222) (406,694) Excess of revenues and other sources over (under) expenditures and other uses Fund balances, July 1, 2009 Decrease in reserve for inventory Fund balances, June 30, 2010 $ (1,955,750) (1,955,750) 1,534,919 3,490,669 1,955,750 1,955,750 10,179,129 8,223,379 - - - $ - (1,507) $ 11,712,541 See accompanying notes to budgetary comparison schedule 56 (1,507) $ 11,712,541 MOHAVE COUNTY Required Supplementary Information Budgetary Comparison Schedule Flood Control Fund Year Ended June 30, 2010 Budgeted Amounts Actual Variance with Amounts Final Budget Original Final $ 13,926,747 $ 13,926,747 15,000 15,000 6,400 (8,600) 780 1,139,148 273,553 (865,595) Charges for services 347,656 347,656 409,700 62,044 Investment earnings 362,429 362,429 516,022 153,593 14,652,612 15,790,980 14,729,218 (1,061,762) 35,703,423 Revenues: Taxes Licenses and permits Intergovernmental Total revenues $ 13,523,543 $ (403,204) Expenditures: Current: Highways and streets 36,668,191 10,027,262 26,640,929 Total expenditures Excess (deficiency) of revenues over expenditures 35,703,423 36,668,191 10,027,262 26,640,929 (21,050,811) (20,877,211) 4,701,956 25,579,167 Other financing sources (uses): Transfers out (506,472) (680,072) (686,085) (6,013) (506,472) (680,072) (686,085) (6,013) (21,557,283) (21,557,283) 4,015,871 25,573,154 21,557,283 21,557,283 18,413,399 (3,143,884) Total other financing sources (uses) Excess of revenues and other sources over (under) expenditures and other uses Fund balances, July 1, 2009 Fund balances, June 30, 2010 $ - $ - $ 22,429,270 See accompanying notes to budgetary comparison schedule 57 $ 22,429,270 Mohave County Required Supplementary Information Notes to Budgetary Comparison Schedules June 30, 2010 Note 1 – Budgeting and Budgetary Control 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, each fund includes only one department. Note 2 – Budgetary Basis of Accounting The County’s budget is prepared on a basis consistent with generally accepted accounting principles. There are no differences between the budget and the annual financial report based on the basis of accounting used. Note 3 – Expenditures in Excess of Appropriations For the year ended June 30, 2010, there were no expenditures that exceeded final budget amounts at the department level (the legal level of budgetary control) in the General Fund or in any of the major special revenue funds presented. 58 Mohave County Required Supplementary Information Schedule of Agent Retirement Plans’ Funding Progress June 30, 2010 Public Safety Personnel Retirement System Actuarial Actuarial Value of Plan Accrued Assets Liability Actuarial Valuation Date (a) (b) Pension 06/30/2010 $ 18,729,245 $ 25,568,864 Health Insurance 06/30/2010 760,418 Pension 06/30/2009 17,760,643 23,967,200 Health Insurance 06/30/2009 725,142 Pension 06/30/2008 16,132,055 22,877,000 Health Insurance 06/30/2008 668,103 Funding (Liability) Excess (a-b) Funded Ratio (a/b) Annual Covered Payroll (c) Unfunded Liability as Percentage of Covered Payroll ([a-b]/c) $ (6,839,619) 73.3% $ 4,782,717 143.0% (760,418) 0.0% 4,782,717 15.9% (6,206,557) 74.1% 5,044,784 123.0% (725,142) 0.0% 5,044,784 14.4% (6,744,945) 70.5% 5,215,621 129.3% (668,103) 0.0% 5,215,621 12.8% Corrections Officer Retirement Plan Actuarial Actuarial Value of Plan Accrued Assets Liability Actuarial Valuation Date (a) (b) Pension 06/30/2010 $ 5,200,975 $ 3,636,215 Health Insurance 06/30/2010 171,518 Pension 06/30/2009 4,882,221 3,270,671 Health Insurance 06/30/2009 144,938 Pension 06/30/2008 4,581,742 3,110,055 Health Insurance 06/30/2008 168,504 Funding (Liability) Excess (a-b) $ 1,564,760 (171,518) 1,611,550 (144,938) 1,471,687 (168,504) Funded Ratio (a/b) Annual Covered Payroll (c) Unfunded Liability as Percentage of Covered Payroll ([a-b]/c) 143.0% $ 2,947,082 0.0% 0.0% 2,947,082 5.8% 149.3% 2,905,422 0.0% 0.0% 2,905,422 5.0% 147.3% 2,876,277 0.0% 0.0% 2,876,277 5.9% See accompanying Notes to Schedule of Agent Retirement Plans’ Funding Progress 59 Mohave County Required Supplementary Information Notes to Schedule of Agent Retirement Plans’ Funding Progress June 30, 2010 Note 1 – Actuarial Information Available The CORP-AOC’s actuarial valuation is prepared on a statewide basis; accordingly, actuarial information for the County, as a participating government, is not available. 60