MARICOPA COUNTY
CITIZENS FINANCIAL CONDITION REPORT
FISCAL YEAR ENDED JUNE 30, 2015
Maricopa County Shows Consistent
Strength in Fiscal Year 2015
Highlights
Our Fiscal Year 2015 Citizens Financial Condition
Report highlights the financial strength of the
County, and provides information on key financial
indicators.
Maricopa County . . .
 Has a fiscally conservative management
philosophy.
 Has low long-term liabilities.

Introduction

2

Profile

3

Economics

4

General Fund & Liquidity

5

Liabilities

6

Revenues

7

Property Taxes

8

Expenditures

9

County Services

10

Retirement Plans

12

Recognition

13

Maricopa County Internal Audit
301 W. Jefferson St., Suite 660
Phoenix, AZ 85003
(602) 506-1585
www.maricopa.gov/internalaudit
Ross L. Tate
County Auditor

 Has received strong credit ratings from Standard

& Poor’s and Fitch.
 Has had a slight increase in property values and

tax revenues.
 Spends significantly less on delivering services

than benchmark counties.
 Contributes to four employee retirement plans

with funding levels ranging from 78% to 39% for
the ASRS and EORP plans, respectively.

INTRODUCTION
About this Report
For FY 2015, we highlight the financial strength of Maricopa County’s General Fund and other
Governmental Funds through graphic displays of key financial ratios, trends, and comparisons. In spite of
national and local economic challenges in recent years, the County has been able to pay for significant
capital projects without incurring liabilities. Prior year General Fund balances were budgeted to be built
up and then spent down as capital projects were completed. This is reflected in the five-year chart on
page five.
In addition, we provide updated information on the state pension plans covering County employees.
Public pension funds are experiencing fiscal challenges due to: investment losses in previous years,
planned benefit payments, actuarial methods and assumptions used in projections, and insufficient
employee and employer contribution rates.

Methodology
Our primary information sources were the audited Comprehensive Annual Financial
Reports (CAFR) issued by Maricopa County and 10 national benchmark counties.
Other sources include: Arizona State Retirement System, Public Safety Personnel
Retirement System, Corrections Officer Retirement Plan, and Elected Officials
Retirement Plan CAFRs and actuarial reports; U.S. Census Bureau; Governmental
Accounting Standards Board; International City/County Managers Association;
Government Finance Officers Association; Maricopa County’s Strategic Plans
(budget documents); and correspondence with internal and external staff.
Benchmarks were chosen from western U.S. counties that share Maricopa’s
attributes of large geographic size and the existence of at least one major urban
center. Below are the benchmark counties used in this report.
Benchmarks

· King
· Multnomah

· Santa Clara

· Salt Lake

· Clark

Orange · · Riverside
San Diego ·
· Maricopa
· Clark
· Pima
Harris

Maricopa County Internal Audit

·

2

County

Population

Metro Area

Clark

2,102,238

Las Vegas, NV

Harris

4,441,370

Houston, TX

King

2,079,967

Seattle, WA

Multnomah

765,775

Orange

3,147,655

Santa Ana/Anaheim, CA

Pima

1,022,079

Tucson, AZ

Riverside

2,308,441

Riverside, CA

Salt Lake

1,091,742

Salt Lake City, UT

San Diego

3,227,496

San Diego, CA

Santa Clara

1,889,638

San Jose, CA

Portland, OR

FY 2015 Citizens Financial Condition Report

PROFILE
Maricopa County

District 2

Established in 1871, Maricopa was the fifth
county to be formed in what was then the
Arizona Territory.

District 4
District 3

The County is governed by an elected Board of
Supervisors representing five districts.

District 1
District 5

Size
Maricopa County is located in the south-central
area of the State of Arizona. At 9,225 square
miles, Maricopa County is larger than many
states, including Connecticut, Delaware,
Hawaii, Massachusetts, New Hampshire, New
Jersey, and Rhode Island.

Population

Largest U.S. Counties
(population in millions)

Maricopa County is the 4th largest county in the
nation.
10.1

Approximately 60% of the state’s total
population resides within the County, which
includes the cities of Phoenix, Mesa, Chandler,
Gilbert, Glendale, Scottsdale, Tempe, and
others. During the recent recession, Maricopa’s
population declined from a high of 4.1 million
in 2009 to 3.8 million in 2011. Current
estimates report a population of 4.1 million.

5.2

4.4

Los
Cook,
Angeles, Illinois
California

4.1

3.2

Harris, Maricopa, San
Texas
Arizona Diego,
California

Board of Supervisors
District 1

District 2

District 3

District 4

District 5

Denny Barney

Steve Chucri

Andrew Kunasek

Clint L. Hickman

Steve Gallardo

Maricopa County Internal Audit

3

FY 2015 Citizens Financial Condition Report

ECONOMICS
ECONOMICS
Unemployment

Maricopa's Unemployment Rate

Maricopa County’s unemployment rate has
generally remained below national and Arizona
rates. Starting in 2009, unemployment increased
significantly. By 2015, Maricopa’s unemployment
rate was 5.3%, continuing a gradual reversal from
its high of 9.6% in 2010. The current data shows
Maricopa unemployment equals the national rate,
and is slightly lower than the Arizona rate.

10.0%
5.3%
5.0%

0.0%
2007

2009

2011

Arizona (FY15 - 5.9%)

2013

2015

U.S. (FY15 - 5.3%)

Maricopa (FY15 - 5.3%)

Economic Activity
Maricopa County has a variety of employers within
its boundaries, with the majority being
government, retail, technology, financial, and
service industries.

Principal Employers
State of Arizona

50,816

Banner Health

35,406

Wal-Mart Stores

32,373

Fry’s Food Stores

17,286

City of Phoenix

14,585

Wells Fargo

14,480

Maricopa County

13,567

Arizona State University

12,676

Dignity Health

12,100

University of Arizona

11,442

Total for Principal Employers
Total Employment

Nine of the top ten principal property taxpayers
are public utilities.
Tourism has long been an important part of the
regional economy. The “Valley of the Sun” is a
popular winter retreat because of its climate and
cultural activities. Maricopa County is the home
of the Cactus League (which hosts spring training
for 15 of the 30 major league baseball teams),
and 5 major league sports teams (MLB
Diamondbacks, NBA Suns, WNBA Mercury, NFL
Cardinals, and NHL Coyotes).

214,731
1,900,314

Principal Property Taxpayers
Percent of Total County Assessed Property Tax Value
Arizona Public Service Company

3.08%

Southwest Gas Corporation

0.43%

Qwest Corporation

0.40%

Southern California Edison Co

0.38%

El Paso Electric Company

0.34%

Wal-Mart Stores Inc.

0.27%

Arizona Solar One LLC

0.22%

AT&T

0.22%

Public Service Company of New Mexico

0.20%

Sundevil Power Holdings, LLC

0.19%

Maricopa County Internal Audit

Tourism is important to the regional economy

4

FY 2015 Citizens Financial Condition Report

GENERAL FUND & LIQUIDITY
GENERAL FUND & LIQUIDITY
General Fund Spendable Fund Balance Decreased
General Fund
The General Fund accounts for all financial
transactions not required to be accounted for in
special purpose funds.

General Fund Spendable Balance
(millions)

Non-Spendable and Spendable Amounts
The General Fund balance is classified as spendable
or non-spendable. The non-spendable fund balance
comprises non-cash assets, such as inventories and
other amounts that must remain legally intact.
The spendable fund balance is generally available
for use in the following year. However, certain laws
and contracts may impose restrictions on how the
funds are used. In addition, the Board of
Supervisors may commit portions of the fund for
specific purposes. County management reports that
$83 million of the FY 2015 spendable balance was
assigned and budgeted to be spent in FY 2016. Over
the years, Maricopa County has used the spendable
balance for the financing of capital projects.

$409
$283

$121
FY11

FY12

FY13

FY14

$99
FY15

General Fund Spendable Balance
as a Percent of Revenues

37.3%
25.7%

General Fund Spendable Fund Balance as a
Percent of Revenues
Maricopa County’s spendable fund balance as a
percent of revenues has declined since FY 2011.
The decline in the fund balance reflects amounts
Maricopa used to fund new infrastructure and
improvements to existing infrastructure.

$259

FY11

19.0%

24.2%

FY12

FY13

Maricopa County

11.3%

8.6%

FY14

FY15

Benchmark Average

General Fund Liquidity Ratio

Liquidity Decreased in Accordance with
Planned Expenditures

14.8

General Fund Liquidity Ratio

6.7

The liquidity ratio compares current assets and
liabilities. It is a measure of the County’s ability
to pay for current obligations. Maricopa County
continues to maintain a sufficient liquidity ratio
of 1.2 to 1. This means that $1.20 is available in
cash for every $1 in current liabilities.

Maricopa County Internal Audit

3.6

FY11

FY12

Maricopa County

5

1.9
FY13

FY14

2.7
1.2
FY15

Benchmark Average

FY 2015 Citizens Financial Condition Report

LIABILITIES
LIABILITIES
Long-Term Liabilities Per Person is Low
Maricopa County has low long-term liabilities when compared with benchmark counties. The low
liability level is the result of a conservative financing policy. The FY 2015 County long-term liabilities,
excluding pension liabilities, were $102 per person. Bond rating firms Standard & Poor’s and Fitch have
rated general obligation bonds as “AAA” (implied) and revenue bonds as “AA+”. The general obligation
“AAA” rating is the highest possible and is “implied” since no general obligation bonds are outstanding.
Counties with higher liabilities may provide services such as airports and utilities that Maricopa County
does not provide. Some of these counties may provide municipal services that are offered by
incorporated cities in Maricopa County. These differences may impact comparative liability levels.

Long-Term Liabilities

Long Term Liabilities Per Person Excluding
Pension Liability

$450 $451

$563 $602

$759 $786

$1,058
$877 $942

$289
$102

Long-term liabilities and
obligations include financial
commitments expected to be paid
in future years. These include
certificates of participation,
revenue bonds, housing authority
loans, special assessment liabilities
with government commitment,
claims and judgments, liabilities
incurred but not reported, and
landfill closure and post-closure
liabilities.

Pension Liabilities
For FY 2015, Maricopa County implemented changes required by the Governmental Accounting
Standards Board regarding pension reporting. These changes included standards for measuring and
recognizing net pension (assets and) liabilities, and expenditures related to pension benefits provided
through retirement plans. Pension liability represents the difference between the payments due to
retirees, less the actual amount of funds on hand to make those payments. Therefore, an unfunded
pension liability indicates that future benefit
obligations to retirees are greater than the
Pension Liability (Asset)
assets on hand to make those payments.
Per Person
$1,212

Maricopa County’s FY 2015 pension liabilities
are low when compared to benchmark
counties at $359 per person. Only seven of
the ten benchmark counties reported their
pension liabilities (assets). Some of these
counties may have differences in pension
plans that may impact comparative pension
liability levels.

Maricopa County Internal Audit

$639
$549 $604

$784

$921

$359

$(100)

6

FY 2015 Citizens Financial Condition Report

REVENUES
REVENUES
Sources of County Funds

Governmental Funds Revenues
(millions)
Other

Most of Maricopa County’s revenues
come from County and State shared
taxes (75%).

State Shared
Taxes
$659
(36%)

State shared taxes (36%) include Sales
Tax, Vehicle License Tax, and Highway
Users Tax. County taxes (39%) include
General Property Tax, Jail Tax, and
Rental Car Tax. Other Governmental
revenues (11%) include federal and state
grants.

Governments
$199
(11%)

Charges for
Services
Other $159
$28
(9%)
(2%)
Fines &
Forfeits
$25
(1%)

County Taxes
$719
(39%)

Expenditures Exceed
Revenues

Licenses &
Permits
$46
(2%)

Governmental Revenues & Expenditures
(billions)

The excess of expenditures over
revenues from FY 2011 through
FY 2015 reflect building
construction, technology
improvements, and other capital
costs that were paid from prior
years’ savings. FY 2015
expenditures also increased due
to salary and benefit costs.

$1.81 $1.84 $1.82

FY11

$ 1.88

FY1 2
Revenues

Non-Property Tax
Revenues are Improving

$1.80

$1.83

FY13

$1.87 $ 1.84

$1.91

$1.75

FY14
Expenditures

FY15

In FY 2015, non-property revenues increased over those of the prior four years. Revenues have
increased $142 million since FY 2011 as a result of an improving economy.

Sales, Vehicle Lic ense, and Jail Taxes
(millions)
$671

$112

$640
$118

$125

$122

$122

$127

$400

$419

$619

$385

FY11

FY12

Maricopa County Internal Audit

FY13

$718

FY 11 to FY 15 Increase

$761
$140

Jail Excise

$ 28 million (25%)

$136

$145

Vehicle License

$ 23 million (19%)

$448

$476

State-Shared Sales
Tax

$ 91 million (24%)

Total Increase

$ 142 million

$134

FY14

FY15

7

FY 2015 Citizens Financial Condition Report

PROPERTY TAXES
PROPERTY TAXES
Most Property Tax Dollars Go to Schools
Property taxes are a major source of revenue for Maricopa County local governments. Property taxes
from many jurisdictions are combined into an annual bill that is payable in two installments. The
Maricopa County Assessor determines the assessed value of property. Each unit of local government
then applies a tax rate to the assessed value to calculate taxes due. Property tax bills are then
prepared and collected by the County Treasurer.
FY 2015 property taxes totaling $4.1 billion were distributed to Maricopa County, schools, cities,
towns, and special districts. The following chart shows that Maricopa County received 12% of each
property tax dollar. Schools and education received 71%, and cities, towns and special districts
received 17%.

All Property Taxes
(millions)

Distribution of the County’s
Property Tax for FY 2015
(millions)
County Operating

$ 443

Flood Control District

$ 44

Library District

$ 19

County Total

$ 506

Maricopa
County
$506
(12%)

Schools &
Education
$2,921
(71%)

Cities,
Towns,
Special
Districts
$721
(17%)

Assessed Property Values and Taxes Have Increased Slightly Since FY 2014
Maricopa County controls tax rates for its general operating, flood control, and library funds. Total direct
property tax rates ranged from 1.24% in FY 2011 to 1.52% in FY 2015.
The following chart (left) shows that assessed values declined $15 billion from FY 2011 to FY 2015.
Although several factors determine property tax collections, declining market values were a major factor
in reducing tax bills in recent years. Property values have increased slightly since FY 2014; however,
values are still below FY 2011 figures. The following chart (right) shows that general operating property
taxes were $49 million less in FY 2015 than in FY 2011.

Maricopa County General
Operating Property Taxes Billed
(millions)

Maricopa County Total Assessed
Property Valuations
(billions)
$50

$492
$39

FY11

FY12

$34

$32

$35

FY13

FY14

FY15

Maricopa County Internal Audit

FY11

8

$478

FY12

$425

$410

$443

FY13

FY14

FY15

FY 2015 Citizens Financial Condition Report

EXPENDITURES
EXPENDITURES
$471 Spent Per Person
Maricopa County has practiced conservative
fiscal policies. Total FY 2015 expenditures
for all governmental funds was $471 per
person. The per person average for 10
benchmark counties was $1,093.
Differences between the benchmark
averages and Maricopa County may occur
because of the following reasons:


Expenditures Per Person

$482

Proportion of residents living in
incorporated cities
Significantly higher cost of living along
the west coast



Population density and size



Political influences

Maricopa County provides a wide
variety of direct services to its
residents and visitors. Services
include public safety, health and
welfare, transportation, culture
and recreation, and education.
As shown on the following pages,
Maricopa County delivers services
at significantly lower costs in
comparison to benchmark
averages.
$1,005
$900

$483

FY11



County Services

$1,032

$1,026

$1,031

$465

FY12

FY13

Maricopa County

General
Government
$37
(8%)
Debt Service
$6
(1%)

$473

FY14

$1,093

$471

FY15

Benchmark Average

Expenditures Per Person by
Spending Category $471
Public Safety
$247
(52%)

Capital
Outlay
$52
(11%)
Education
$7
(2%)

$1,068

Highways &
Streets
$13
Health,
(3%)
Welfare &
Sanitation
$100
(21%)

Culture &
Recreation
$9
(2%)

Changes in Expenditures by Category
(millions)

$600
$405
$300
$0

$213

Public Safety Health, Welfare, Capital Outlay
and Sanitation
FY13

Maricopa County Internal Audit

FY14

9

$149

General
Government

$54
Highway and
Streets

$89
Other

FY15

FY 2015 Citizens Financial Condition Report

County Services
County Services
Public Safety

Sheriff Helicopter

Total Expenditures

$ 1,005,051,315

Expenditures per Person

$

247

Benchmark Average Expenditures per Person

$

359






County Jail




Flood Control



Adult and Juvenile Probation Services
Adult and Juvenile Public Defense Services
County Attorney (prosecutes criminals)
Flood Control (operates and maintains flood control structures
and implements other flood hazard controls)
Medical Examiner (conducts public inquiries into sudden or
unnatural deaths)
Public Fiduciary (provides personal, legal, and financial
management for vulnerable adults)
Planning and Development (regulates development and land use
activity for unincorporated areas within the County)
Sheriff (runs County jail system, investigates crimes, conducts
patrols, and provides victim and community outreach)
Superior and Justice Courts

Health, Welfare, and Sanitation

Public Health Clinic

Total Expenditures

$ 404,729,045

Expenditures per Person

$

100

Benchmark Average Expenditures per Person

$

385




Animal Care & Control






Human Services
Maricopa County Internal Audit

Air Quality (analyzes and monitors air quality, enforces
compliance with air quality standards, and manages carpool
programs)
Animal Care and Control (captures and shelters stray animals and
conducts adoptions)
Environmental Services (issues food permits, inspects restaurants,
and provides vector control)
Human Services (provides emergency food and housing, job
training, and Head Start education programs)
Public Health (provides health clinics, immunizations, and
nutrition services)
Waste Resources and Recycling (manages tire recycling and
oversees landfill operations)

10

FY 2015 Citizens Financial Condition Report

County Services
County Services
General Government
Total Expenditures

$ 149,081,146

Expenditures per Person

$

37

Benchmark Average Expenditures per Person

$

105








Assessor (determines property valuations for taxes)
Board of Supervisors (authorizes County budgets, policies, and
procedures)
County Administration
Internal Audit (conducts performance and compliance reviews of
County operations)
Recorder and Elections (stores public records, registers voters,
and conducts elections)
Treasurer (provides banking services to the County, school
districts, and special districts; collects property taxes)

Highways and Streets

Elections

Property Appraisals

Total Expenditures

$ 54,006,764

Expenditures per Person

$

13

Benchmark Average Expenditures per Person

$

73



Board of Supervisors

Transportation (plans, builds, and maintains roads and monitors
regional traffic flows)

Transportation

Culture, Recreation, and Education
Total Expenditures

$ 64,625,661

Expenditures per Person

$

16

Benchmark Average Expenditures per Person

$

50





Parks & Recreation Usery Park

Library District (runs 18 library branches)
Parks and Recreation (maintains 10 regional parks)
Education Service (provides financial and support services to
school districts)
White Tank Library

Maricopa County Internal Audit

11

FY 2015 Citizens Financial Condition Report

RETIREMENT PLANS
RETIREMENT PLANS
Retirement Plans Remain Underfunded
The County contributes to four retirement plans: (1) the Arizona State Retirement System, (2) the
Public Safety Personnel Retirement System, (3) the Corrections Officer Retirement Plan, and (4) the
Elected Officials Retirement Plan. The plans provide retirement, long-term disability, and health
insurance premium benefits as established by state statute. Each is a multi-employer plan administered
independently of Maricopa County. Maricopa County and its employees contribute to the plans in
accordance with plan requirements. In FY 2015, Maricopa County contributed $95 million to the four
retirement plans. County contributions and the number of employee members are summarized below.

A key measure of a retirement plan’s health is its funding ratio, derived by comparing assets to
liabilities. A pension plan whose assets equal its liabilities is 100% funded, or fully funded. A plan with
assets that are less than its liabilities is considered to be underfunded, or in a deficit position.
However, the financial health of a pension plan depends on many factors in addition to funded status.
Although Maricopa County is not directly liable for funding deficits, the County and its employees are
affected by contribution rates that may adjust periodically to compensate for investment returns and
operating cash flows. The following graph summarizes funding level trends over ten years.

Retirement Plans Funded Status
FY 2006 - FY 2015
100%

100%
78%

75%
57%
49%

50%

39%

25%
0%

Arizona State

Maricopa County Internal Audit

Public Safety

Corrections Officer

12

Elected Officials

FY 2015 Citizens Financial Condition Report

RECOGNITION
RECOGNITION
Recognition for Popular Annual Financial Reporting
The Government Finance Officers Association of the
United States and Canada has given the Award for
Outstanding Achievement in Popular Annual Financial
Reporting to Maricopa County for its Popular Annual
Financial Report for the fiscal year ended June 30,
2014.
A Popular Annual Financial Report takes information
from the CAFR and presents it in a way that is creative
and easy to understand for the general public.
The Award for Outstanding Achievement in Popular
Annual Financial Reporting is a prestigious national
award recognizing conformance with the highest
standards for preparation of state and local
government popular reports.

Project Team Members
Stella Fusaro, CIA, CGAP, CFE, CRMA, Audit Manager
Christina Black, CIA, CGAP, CRMA, Audit Supervisor
Kenton Schaben, Internal Auditor

Maricopa County Internal Audit Department
The County Auditor reports directly to the Maricopa County Board of Supervisors, with an advisory
reporting relationship to the Maricopa County Citizens Audit Advisory Committee.
The Mission of the Internal Audit Department is to provide objective information on the County’s
system of internal controls to the Board of Supervisors so they can make informed decisions and
protect the interests of County citizens.

Maricopa County CAFR
Maricopa County’s FY 2015 CAFR and prior year CAFRs are available by visiting the Maricopa County
Department of Finance website at: http://www.maricopa.gov/finance/cafr.aspx. These CAFRs will
provide additional detail on the content presented in this report.

Maricopa County Internal Audit

13

FY 2015
2014 Citizens Financial Condition Report