Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2008 Regional Public Transportation Authority Phoenix, Arizona Valley Metro Regional Public Transportation Authority Phoenix, Arizona Board of Directors Chair, Mayor Elaine Scruggs, Glendale Vice Chair, Councilman Wayne Ecton, Scottsdale Secretary, Councilmember Shana Ellis, Tempe Treasurer, Councilmember Michael Johnson, City of Phoenix Mayor Marie Lopez-Rogers, Avondale Councilmember Trinity Donovan, Chandler Mayor Fred Waterman, El Mirage Councilmember Les Presmyk, Gilbert Councilmember Frank Cavalier, Goodyear Supervisor Mary Rose Wilcox, Maricopa County Councilman Scott Smith, Mesa Councilmember Ron Aames, Peoria Mayor Art Sanders, Queen Creek Councilmember Joe Johnson, Surprise Executive Director’s Office David A. Boggs, Executive Director Bryan Jungwirth, Deputy Executive Director, Communications & Government Relations Mike Taylor, Acting Deputy Executive Director, Finance Pat Dillon, Executive Assistant Carol Lightbourne, Executive Assistant Prepared By Finance Department Valley Metro Regional Public Transportation Authority Organization Chart Citizens of Maricopa County Board of Directors Executive Director’s Office Finance Operations Planning Management Services Marketing & Strategic Services Valley Metro Rail, Inc. Staff (Reports to VMR, Inc. Board of Directors) Regional Public Transportation Authority Table of Contents Comprehensive Annual Financial Report and Single Audit Reports Fiscal Year Ended June 30, 2008 Page Introductory Section Letter of Transmittal GFOA Certificate of Achievement iii-viii ix Financial Section Independent Auditors' Report 1-2 Management's Discussion and Analysis (required supplementary information) 3-11 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets Statement of Activities 12 13-14 Fund Financial Statements: Balance Sheet - Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual - General Fund Statement of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual - Public Transportation Fund Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Changes in Fiduciary Net Assets - Fiduciary Funds Index to the Notes to Financial Statements Notes to the Financial Statements 15 16 17 18 19 20 21 22 23 24 25-45 Other Supplementary Information - Combining and Individual Fund Financial Statements and Schedules: Nonmajor Governmental Funds - Special Revenue Funds Description Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual - Nonmajor Governmental Funds: Transit Planning Fund Transportation Demand Management Fund Regional Customer Services Fund Capital and Other Grants Fund Schedule of Revenues, Expenses and Changes in Net Assets Budget to Actual - Proprietary Funds: Enterprise Funds: Transit Service Operations Fund Valley Metro Rail Fund 46 47 48 49 50 51 52 53 54 (Continued) i Regional Public Transportation Authority Table of Contents (Continued) Comprehensive Annual Financial Report and Single Audit Reports Fiscal Year Ended June 30, 2008 Page Statistical Section Statistical Section Contents Financial Trends Net Assets by Component Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Revenue Capacity Sales Tax Revenues by Component Maricopa County Transportation Excise Tax Revenue Distributions Maricopa County Transportation Excise Tax Revenue Collections by Category Arizona Transaction Privilege Tax Excise Tax Rates by Category Demographic and Economic Information Regional Population Statistics Local Transportation Assistance Funds Demographic and Economic Statistics Operating Information Full-time Equivalent Employees by Function/Program Operating Indicators by Program: Fixed Route System Dial-a-Ride System Shuttle / Circulator System Capital Asset Statistics by Function/Program Revenue Vehicle for Transit Service Operations 55 56 57-58 59 60 61-62 63-64 65 66-67 68-69 70-71 72 73 74-75 76-79 80-81 82 Single Audit Section Supplementary Schedule of Expenditures of Federal Awards Notes to the Supplementary Schedule of Expenditures of Federal Awards Report on Internal Control Over Financial Reporting and on Compliance And Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133 Schedule of Findings and Questioned Costs ii 83 84 85-86 87-89 90-91 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis As management of Valley Metro Regional Public Transportation Authority (the Authority), we offer this narrative overview and analysis of the financial activities of the Authority for the fiscal year ended June 30, 2008. This discussion and analysis is designed to (1) assist the reader in focusing on significant financial issues, (2) provide an overview of the Authority’s financial activity, (3) identify changes in the Authority’s financial positions, (4) identify any material deviations from the financial plan (adopted annual budget), and (5) identify individual fund issues or concerns. Financial Highlights    The Authority’s total net assets increased $7,528,886 in FY 2008, a $14,466,044 decrease in governmental activities and a $21,994,930 increase in business-type activities. Total net assets of the Authority are $122.4 million, of which $46.1 million is unrestricted. The governmental activities revenues decreased by approximately $3.4 million (2.5%) over the previous year. The business-type activities revenues decreased by approximately $2.7 million (5.2%) from the previous year. OVERVIEW OF THE FINANCIAL STATEMENTS The financial statements are presented in accordance with Governmental Accounting Standards Board (GASB) Statement No. 34 – Basic Financial Statements - and Management’s Discussion and Analysis – for State and Local Governments (GASB No. 34). The statements are presented as follows:      Government-wide reporting – presents financial statements on a government-wide basis. Fund financial statements - presents governmental, proprietary and fiduciary fund financial statements, with the focus on major funds within each fund type. Measurement focus for governmental activities – in the government-wide financial statements all activities, including the governmental activities, are reported using the economic resources measurement focus and accrual basis of accounting. The current financial resources focus and modified accrual basis of accounting are followed for the governmental fund financial statements. Budgetary reporting – GASB No. 34 requires the display of both the original adopted budget and the revised budget in the budgetary comparison schedules. These schedules are only required for the general fund and major special revenue funds; however, the Authority has elected to present this information for the nonmajor special revenue funds and proprietary funds as additional information. Required narrative analysis – GASB No. 34 requires that the financial statements be accompanied by narrative introduction and analytical overview of the government’s financial activities in the form of “Management’s Discussion and Analysis” (MD&A). As presented on the following page, the financial section of the Comprehensive Annual Financial Report (CAFR) for the Authority consists of this discussion and analysis, the basic financial statements and required supplementary information (other than MD&A). There are also additional non-required supplementary schedules presented after the basic financial statements. The basic 3 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) financial statements include the government-wide financial statements, fund financial statements, including the budgetary statements for the general fund and major special revenue funds, and notes to the financial statements. Required Components of the Annual Financial Report Management's Discussion and Analysis Basic Financial Statements Required Supplementary Information Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary Detail Government-wide Financial Statements The government-wide financial statements (see pages 12 – 14) are designed to provide a broad overview of the Authority’s finances in a manner similar to those used by private businesses. All of the activities of the Authority, except those of a fiduciary nature, are included in these statements. The activities of the Authority are broken down into two columns on these statements – governmental activities and business-type activities. A total column for the Authority is also provided.   The governmental activities include the basic services of the Authority including general government (administration), regional planning, transportation demand management, and regional customer services. Grants and general revenues generally support these activities. The business-type activities include the private sector type activities which are transit service operations and light rail transit. These activities are partially supported by user charges and provide substantial benefits, both direct and indirect, to the public at large. The statement of net assets presents information on all of the Authority’s assets and liabilities, both current and long-term, with the difference between the two reported as net assets. The focus on net assets is designed to be similar to the emphasis for businesses. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating. To assess the overall health of the Authority, other indicators, including non-financial indicators like the Authority’s tax base and the condition of its capital assets, should also be considered. The statement of activities presents information showing how the Authority’s net assets changed over the most recent fiscal year. Since full accrual accounting is used for the government-wide 4 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) financial statements, all changes to net assets are reported at the time that the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also focuses on both the gross and net costs of the various functions of the Authority, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general taxes and revenues for support. Fund Financial Statements Also presented are more traditional fund financial statements for governmental funds, proprietary funds and fiduciary funds. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or conditions. Funds are used to ensure and demonstrate compliance with finance-related legal requirements as well as for managerial control to demonstrate fiduciary responsibility over the assets of the Authority. Governmental funds - Governmental funds are used to account for most of the Authority’s basic services. Unlike the governmental activities column on the government-wide financial statement, these fund financial statements (pages 15 - 19) 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. Such information is useful in looking at the Authority’s near-term financial requirements. Since the governmental activities on the statements focus on near-term spendable resources, while the governmental activities on the government-wide financial statements have a longer term focus, a reconciliation of the differences between the two statements is provided following the fund financial statements and is also provided in Note 2 (pages 34 - 36). Proprietary funds – Proprietary funds are used to account for business-type activities of the Authority. Enterprise funds are used for activities that primarily serve customers outside the governmental unit. The proprietary fund financial statements (pages 20 - 22) are prepared using the same long-term focus as the government-wide financial statements. The enterprise funds generally provide information similar to the business-type activities column of the governmentwide financial statements, but provide more detail and additional information (i.e., cash flows). Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of others. Fiduciary funds are not included in the government-wide financial statements because the resources of those funds are not available to support programs of the Authority. The fiduciary fund statement (page 23) is prepared on the same basis as the government-wide and proprietary fund statements. Notes to the Financial Statements – The notes to the financial statements (pages 25 – 45) provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements. Required supplementary information other than MD&A – Governments have an option of including the budgetary comparison statements of the general fund and major special revenue funds as either part of the fund financial statements within the basic financial statements, or as required supplementary information after the footnotes. The Authority has chosen to present these budgetary statements as part of the basic financial statements. Additionally, governments are required to disclose certain information about employee pension funds. The Authority has disclosed this information in Note 10 (pages 42-43). 5 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables and analysis discuss the financial position and changes to the financial position for the Authority as a whole as of and for the year ended June 30, 2008, with comparative information for the previous year. Net Assets Net assets may serve over time as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Assets as of June 30, 2008 compared to the prior year: Condensed Statement of Net Assets As of June 30 (in thousands of dollars) Governmental Activities 2008 Current and other assets Capital assets Business-type Activities 2007 2008 Total Primary Government 2007 2008 2007 Percent Change $ 30,279.5 $ 1,467.0 44,913.2 1,362.4 $ 45,374.2 $ 72,537.5 57,936.4 47,945.8 $ 75,653.7 $ 74,004.5 102,849.6 49,308.2 -26.4% 50.1% $ 31,746.5 $ 46,275.6 $ 117,911.7 $ 105,882.2 $ 149,658.2 $ 152,157.8 -1.6% $ 2,022.9 $ 149.8 2,126.7 109.1 $ 24,734.1 $ 316.0 34,779.2 236.3 $ 26,757.0 $ 465.8 36,905.9 345.4 -27.5% 34.9% $ 2,172.7 $ 2,235.8 $ 25,050.1 $ 35,015.5 $ 27,222.8 $ 37,251.3 -26.9% Net assets: Invested in capital assets, net of related debt $ Restricted Unrestricted 1,467.0 $ 28,106.8 1,362.4 42,677.4 $ 72,537.5 $ 2,332.5 17,991.6 47,945.8 1,778.9 21,142.0 $ 74,004.5 $ 2,332.5 46,098.4 49,308.2 1,778.9 63,819.4 50.1% 31.1% -27.8% 29,573.8 $ 44,039.8 $ 92,861.6 $ 70,866.7 $ 122,435.4 $ 114,906.5 6.6% Total assets Current liabilities Long-term liabilities Total liabilities Total net assets $ The Authority’s total net assets increased $7,528,886 in FY 2008, a $14,466,044 decrease in governmental activities and a $21,994,930 increase in business-type activities. Total net assets of the Authority are $122.4 million, of which $46.1 million is unrestricted. A large portion of net assets (60.4%) represents the Authority’s investment in capital assets net of accumulated depreciation and related outstanding debt used to acquire those assets. The Authority uses these capital assets to provide services to the region’s citizens; consequently, it is not the Authority’s intention to sell these assets and they are therefore not available for future spending. Although the capital assets are 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 are not intended to be used to liquidate these liabilities. An additional portion of the Authority’s net assets (1.9%) represents resources that are subject to external restrictions on how they may be used. Unrestricted net assets of $46.1 million may be used to meet the Authority’s ongoing obligations to citizens and creditors. 6 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) Changes in Net Assets Total revenues of governmental activities decreased approximately 2.5% over the previous year and governmental expenses increased approximately 4.1%. Revenues of business-type activities decreased approximately 5.2% and expenses of business-type activities increased 31.4% in fiscal year 2008. The following table compares the revenues and expenses of the Authority for the current and previous fiscal year: Changes in Net Assets Fiscal year ended June 30 (in thousands of dollars) Governmental Activities 2008 REVENUES Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes Interest earnings Other $ Total revenues EXPENSES Governmental activities: Regional planning Transportation demand management Regional customer services Administration Business-type activities: Transit service operations Light rail transit Total expenses Excess (deficit) before transfers Transfers in (out) Increase (decrease) in net assets $ 2007 - $ 2,062.6 - Total Primary Government Business-type Activities 2008 25.0 2,494.6 198.8 $ 2007 29,170.6 $ 1,421.9 16,237.0 2008 28,538.7 642.3 19,041.1 $ 29,170.6 3,484.5 16,237.0 2007 $ Percent Change 28,563.7 3,136.9 19,239.9 2.1% 11.1% -15.6% 130,490.8 2,503.9 142.8 134,235.3 1,664.4 - 536.1 1,688.2 945.2 2,564.3 130,490.8 3,040.0 1,831.0 134,235.3 2,609.6 2,564.3 -2.8% 16.5% -28.6% 135,200.1 138,618.1 49,053.8 51,731.6 184,253.9 190,349.7 -3.2% 2,390.3 1,785.8 8,567.3 1,941.4 2,425.3 1,699.7 7,289.8 2,688.4 - - 2,390.3 1,785.8 8,567.3 1,941.4 2,425.3 1,699.7 7,289.8 2,688.4 -1.4% 5.1% 17.5% -27.8% - - 96,796.9 65,243.4 60,090.2 63,225.7 96,796.9 65,243.4 60,090.2 63,225.7 61.1% 3.2% 176,725.1 137,419.1 28.6% 7,528.8 - 52,930.6 - -85.8% 0.0% 52,930.6 -85.8% 14,684.8 14,103.2 162,040.3 123,315.9 120,515.3 (134,981.4) 124,514.9 (92,948.4) (112,986.5) 134,981.4 (71,584.3) 92,948.4 (14,466.1) $ 31,566.5 $ 21,994.9 $ 21,364.1 $ 7,528.8 $ The largest financing source for the Authority as a whole is sales taxes (70.8%), and the major funding source for business-type activities is charges for services (59.5%). Business-type activities also receive substantial federal grants and contributions revenues (36.0%). The major funding sources of governmental activities are sales taxes (96.5%) and federal and state grants (1.5%). The Authority’s sales tax revenue over the prior year is limited to incorporating those elements necessary for implementing the third year of the Proposition 400 Transit Life Cycle Program (TLCP). The Public Transportation Fund (PTF) revenues are restricted to the implementation of the transit element of the Regional Transportation Plan (RTP). The laws pertaining to Regional Area Road Fund (RARF) revenues have changed beginning with FY 2006. Most notably, as a result of changes in the distribution of funds made by House Bill 2292, the amount of money that 7 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) the Authority received previously has been divided in two, with one half going to the Maricopa Association of Governments (MAG). Additionally, the allowable use of these funds has changed as well. Previously, RARF was unrestricted as to use. However, RARF revenue is now limited to fund administration in the General Fund and planning and is no longer available to fund transit services. The largest user of resources for the Authority as a whole is the business-type activities (91.69%). For the governmental activities, the largest users of resources are regional customer services (58.34%), regional planning (16.28%), administration (13.22%), and transportation demand management (12.16%). Total government-wide expenses of the Authority increased $39.3 million (28.6%) in fiscal year 2008. Expenses of the governmental activities increased $0.58 million (4.1%). This includes $1.3 million (17.5%) increase for regional services due to an increase in customer service personnel and increase in expenses for the development of the Valley Metro website, $0.35 million (1.5%) decrease for regional planning due to a decrease in consulting services and $0.75 million (27.8%) decrease for administration due to a decrease in salary expenses in the Executive Director’s Department. Expenses in business-type activities increased $38.7 million (31.4%), due to the expansion of transit service and implementation of the third year of the Proposition 400 TLCP. FINANCIAL ANALYSIS OF THE AUTHORITY’S FUNDS As previously mentioned, the Authority maintains fund accounting to demonstrate compliance with budgetary and legal requirements. The following is a brief discussion of financial highlights from the fund financial statements. Governmental funds The focus of the governmental funds financial statements (pages 15 - 19) is to provide information on near-term inflows, outflows and balances of spendable resources. All major governmental funds are presented in separate columns on these financial statements. All nonmajor governmental funds are aggregated into one column. The fund balance of the governmental funds is $28.8 million, a decrease of $14.4 million, or 33.3%, from the previous year. Of the $28.8 million total fund balance, the Authority has designated $0.645 million for certain uses and the remainder is in unreserved fund balance (see Note 5 (page 38). Unreserved fund balance may serve as a useful indicator of a government’s net resources available for spending at the end of the year. Of the $28.8 million fund balance, $3.1 million is reported in the General Fund, $25.2 million is reported in the Public Transportation Fund and $0.4 million is reported in the Nonmajor Governmental Fund. All other governmental funds are reimbursement-basis special revenue funds (i.e., revenues equal expenditures) that do not have fund balances. The General Fund accounts for activities that include the Executive Director’s office and finance and management services. General Fund revenues increased 3.5% over the previous year, primarily the result of an increase in Regional Area Road Funds (RARF) revenues allocated to the general fund of $4.2 million. As mentioned above, RARF revenue is now limited to administration in the General Fund and planning and is no longer available to fund transit services. The Public Transportation Fund was a fund developed in FY 2006 for activities relating to the first year of Proposition 400 Public Transportation Fund (PTF) sales tax revenues. The $126.3 million PTF sales tax revenue represents the second full year of earned revenue and decreased by $3.9 8 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) million from last year. The decrease was due to the weakened economy during FY 2008 creating a decline in sales tax revenue. The nonmajor governmental funds are aggregated in one column and include the Transit Planning Fund, the Transportation Demand Management Fund, Regional Customer Services, and the Capital and Other Grants Fund. The Transit Planning Fund accounts for activities related to the development of strategies to promote social and economic well being of the community through the provision of an efficient and effective regional transit system. Revenues decreased 61.3% and expenditures decreased 2.2% from the prior year due to a decrease of Federal grant funds available for planning studies. Prior to 2006, sales taxes allocated to the Transit Planning Fund were shown as revenues. These monies are now shown as transfers in. Total transfers in increased 29.1% over the prior year. The Transportation Demand Management Fund accounts for activities related to the countywide ridesharing program, trip reduction program and clean air campaign. Revenues increased 5.1% and expenditures increased 5.2% from the prior year due to an increase in grant funds available for trip reduction and ridesharing programs. The Regional Customer Services Fund accounts for activities related to marketing, customer services, Americans with Disabilities (ADA) compliance, contract maintenance and quality monitoring, and farebox data reporting for the region. Revenues decreased 48.1% from the prior year due to a decrease of Federal grant funds available and expenditures increased 9.3% from the prior year due to an increase in the customer service and marketing programs. Prior to 2006, sales taxes allocated to the Regional Customer Services Fund were shown as revenues. Total transfers in of sales taxes increased 12.0% over the prior year. The Capital and Other Grants Fund accounts for state and federal grant revenues and expenditures not related to planning, transportation demand management or Regional Customer Services. Revenues decreased 46.1% due to a decrease of Federal grant funds and expenditures increased 194.7% from the prior year due to the purchase of a new financial management system. Prior to 2006, sales taxes allocated to the Capital and Other Grants Fund were shown as revenues. These monies are shown as transfers in. Total transfers in increased 193.7% over the prior year. For the governmental funds only, the July 1, 2007 beginning fund balances totaling $468,980 have been restated upward as a result of reclassification of the unpaid compensated absences, $164,327 in the General Fund and $304,653 in the Nonmajor Governmental funds, which were accrued as current liabilities and expenditures prior to fiscal year 2008. See Note 1 (k) for current accounting policy. Proprietary funds The proprietary fund financial statements (pages 20 – 22) are prepared on the same accounting basis and measurement focus as the government-wide financial statements, but provide additional detail since each enterprise fund is a major fund and is shown discretely on the fund statements. Net assets of the enterprise funds increased $21,994,930 during fiscal year 2008, primarily due to the net change in capital assets. The Transit Service Operations Fund accounts for the activities related to the operations of local 9 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) and express bus, dial-a-ride and vanpool services for the region. Net assets increased 41.7%, ($25,158,327), primarily the result of the changes in capital assets related to vehicle purchases. The Valley Metro Rail Fund accounts for staffing and administrative services that are contractually provided by the Authority to Valley Metro Rail, Inc. (VMR) and the PTF sales tax revenues and expenses of such funds related to the Regional Transportation Plan approved light rail projects. Valley Metro Rail, Inc. is a nonprofit corporation organized for the purpose of planning, designing, constructing, and operating the light rail transit project in metropolitan Phoenix (see Note 1(a) on page 25). The Valley Metro Rail Fund has net assets of $7,364,557 as of June 30, 2008 as compared to net assets of $10,527,954 at the end of the previous year. In fiscal year 2008, the Valley Metro Rail Fund received 43.24% of the total PTF sales tax revenues distributed to the Authority, totaling $54,622,329 and receives 11.9% of the total RARF sales tax revenue, totaling $500,000. GENERAL FUND BUDGETARY HIGHLIGHTS During the year there was no change in appropriations between the original and final amended expenditure budget. However, there was a $348,168 net increase in revenues between the original and final amended budget primarily due to the revised interest earnings. For the year ended June 30, 2008, actual expenditures were under the final amended budget amounts by $578,168. The positive variance was attributable to the Executive Director’s Office and finance and management services activities of the General Fund being under budget. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital assets As of June 30, 2008, the Authority had $74.0 million invested in various capital assets, net of accumulated depreciation and related debt. There was a net increase in capital assets, net of accumulated depreciation and related debt, of $24.7 million from June 30, 2007, which consisted of a net increase of approximately $0.1 million resulting from governmental activities and a net increase of $24.6 million resulting from business-type activities. The following table provides a breakdown of capital assets of the Authority at June 30, 2008 with comparative information for the previous year. Additional information on the Authority’s capital assets may be found in Note 6 on pages 39 - 41. Capital Assets, Net of Depreciation As of June 30 (in thousands of dollars) Governmental Business-type Total Activities Activities Primary Government 2008 Transit fleet Computers & software E quipment V ehicles S ite Improvements Furniture & fixtures $ Work-in-progress Total assets 2007 918.9 366.4 55.6 126.1 $ $ 1,467.0 742.3 83.9 79.1 158.8 2008 $ 298.3 $ 1,362.4 47,892.2 48.5 5,234.0 662.3 40.3 2007 $ 18,660.2 $ 72,537.5 10 43,741.7 73.8 1,858.2 650.9 52.2 2008 $ 1,568.9 $ 47,945.7 47,892.2 967.4 5,600.4 55.6 662.3 166.4 2007 $ 18,660.2 $ 74,004.5 $ Percent Change 43,741.7 816.1 1,942.1 79.1 650.9 211.0 9.5% 18.5% 188.4% -29.7% 1.8% -21.2% 1,867.2 899.4% 49,308.1 50.1% Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued) Capital Lease Obligations and Short-term debt At fiscal year end, the Authority had no outstanding debt obligations. ECONOMIC FACTORS The Authority’s major initiative for fiscal year 2008 was to begin the phased implementation of the approved 20-year strategic plan. This included identification of an organizational structure that reflects the results of the strategic plan. Additionally, a number of agency focused studies were completed to prepare the agency for the next 20 years. The key initiatives for fiscal year 2008 included:      Development of specifications and implementation of a new Financial Management system, which will improve budgeting and financial reporting, as well as encumbrance accounting and will better link the procurement and human resources functions. The new system will benefit both RPTA and Valley Metro Rail. Go-live date was on July 1, 2008. Phased implementation of a 20-year strategic plan to coincide with the implementation of the Regional Transportation Plan as approved by the voters in November 2004 (Proposition 400). Establishing an organizational structure to carry out the strategic plan. Completion of a Regional Paratransit Study. Completion of a Service Effectiveness/Efficiency study to determine the overall performance of current bus service offerings through a detailed analysis of performance factors. Outcomes include strategies to improve, eliminate or modify the lowest performance-related services and development of recurring evaluation strategy and methodology that can be applied to a regular rating process. The adopted FY 2009 combined operating and capital budget is $319.0 million (up 33% from fiscal year 2008). The FY 2009 budget includes the third full year of projects funded with Proposition 400 PTF sales tax revenues ($133.5 million). Of the $133.5 million PTF revenue budgeted, $75.8 million is for bus operating and bus capital and $57.7 million is for light rail/high capacity capital. The total operating budget of $87.9 million represents a $10.9 million (14%) increase over the fiscal year 2008 operating budget of $77.0 million. The total capital budget of $231.1 million represents a $67.9 million (42%) increase over the fiscal year 2008 capital budget of $163.2 million. The major reason for the large increase in the capital budget is directly related to the projects programmed in the Transit Life Cycle Program (TLCP) for fiscal year 2009. The budget is balanced; decreases in net assets other than capital assets are not anticipated for fiscal year 2009. FINANCIAL CONTACT The financial report is designed to provide a general overview of the Authority’s finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to the Authority’s Deputy Executive Director of Finance, Valley Metro RPTA, 302 North First Avenue, Suite 700, Phoenix, Arizona 85003. 11 Basic Financial Statements  Government-wide Financial Statements  Fund Financial Statements  Notes to Financial Statements Valley Metro Regional Public Transportation Authority Statement of Net Assets June 30, 2008 Governmental Activities Business-type Activities Total Assets Current Assets Cash and investments Receivables Less allowance for doubtful account Due from other governments Internal balances Other assets Total current assets $ Noncurrent Assets Capital assets, not being depreciated Capital assets, net of accumulated depreciation Total noncurrent assets Total assets Liabilities Liabilities: Current Liabilities Accounts payable Due to other governments Compensated absences payable Other current liabilities Total current liabilities Noncurrent liabilities: Compensated absences payable Total liabilities 25,290,341 118,132 7,066,523 (2,199,023) 3,513 30,279,486 $ 17,837,874 347,765 (130,000) 24,883,311 2,199,023 236,250 45,374,223 $ 43,128,215 465,897 (130,000) 31,949,834 239,763 75,653,709 1,467,040 1,467,040 18,660,154 53,877,307 72,537,461 18,660,154 55,344,347 74,004,501 31,746,526 117,911,684 149,658,210 1,044,236 41,529 494,598 442,493 20,807,699 3,501,782 396,983 27,601 21,851,935 3,543,311 891,581 470,094 2,022,856 24,734,065 26,756,921 149,857 315,990 465,847 2,172,713 25,050,055 27,222,768 1,467,040 72,537,461 74,004,501 28,106,773 1,852,777 479,747 17,991,644 1,852,777 479,747 46,098,417 Net Assets Invested in capital assets Restricted for: Vanpool asset replacement Transit capital asset replacement Unrestricted Total net assets $ See accompanying notes to the financial statements. 12 29,573,813 $ 92,861,629 $ 122,435,442 Valley Metro Regional Public Transportation Authority Statement of Activities Fiscal Year Ended June 30, 2008 Program Revenues Operating Grants and Contributions Charges for Services Expenses Capital Grants and Contributions Programs Governmental activities: Regional planning: Long range planning Short range planning Capital planning Program support Transportation demand management: Trip reduction Ridesharing Other programs Regional customer services: Marketing Call center Other programs Administration: Executive director's office Finance & management services Total governmental activities $ Business-type activities: Transit service operations Light rail transit Total business-type activities Total primary government $ 316,147 735,888 224,767 1,113,474 $ - $ 93,836 73,739 45,446 55,640 $ - 819,553 592,460 373,833 - 812,869 582,491 355,381 - 3,110,366 3,599,018 1,857,934 - 43,200 - - 1,033,066 908,275 14,684,781 - 2,062,602 - 96,796,902 65,243,366 162,040,268 22,749,063 6,421,524 29,170,587 1,421,891 1,421,891 16,237,008 16,237,008 176,725,049 $ 29,170,587 $ 3,484,493 $ 16,237,008 General revenues: Sales taxes: Public transportation funds Regional area road funds Interest earnings Other income Transfers in (out) Total general revenues & transfers Change in net assets Net assets - beginning Net assets - ending (Continue) 13 Net (Expense) Revenues and Changes in Net Assets Governmental Business-Type Activities Activities $ (222,311) (662,149) (179,321) (1,057,834) $ (222,311) (662,149) (179,321) (1,057,834) (6,684) (9,969) (18,452) (6,684) (9,969) (18,452) (3,067,166) (3,599,018) (1,857,934) (3,067,166) (3,599,018) (1,857,934) (1,033,066) (908,275) (12,622,179) (1,033,066) (908,275) (12,622,179) $ $ Total (56,388,940) (58,821,842) (115,210,782) (56,388,940) (58,821,842) (115,210,782) (12,622,179) (115,210,782) (127,832,961) 126,323,611 4,167,168 2,503,935 142,810 (134,981,389) 536,116 1,688,207 134,981,389 126,323,611 4,167,168 3,040,051 1,831,017 - (1,843,865) 137,205,712 135,361,847 (14,466,044) 21,994,930 7,528,886 44,039,857 70,866,699 114,906,556 29,573,813 $ 92,861,629 $ 122,435,442 See accompanying notes to the financial statements. 14 Valley Metro Regional Public Transportation Authority Balance Sheet Governmental Funds June 30, 2008 Nonmajor Governmental Funds Public Transportation General Total Governmental Funds Assets Cash and investments Receivables Due from other governments Due from other funds Other assets $ 5,818,647 8,537 224,362 917 $ 19,471,694 88,130 5,801,744 - $ 21,465 1,040,417 784,245 2,596 $ 25,290,341 118,132 7,066,523 784,245 3,513 Total assets $ 6,052,463 $ 25,361,568 $ 1,848,723 $ 33,262,754 $ 186,587 2,281,556 41,529 421,206 $ 142,899 - $ 857,649 558,813 21,287 $ 1,044,236 2,983,268 41,529 442,493 Liabilities and Fund Balances Liabilities: Accounts payable Due to other funds Due to other governments Other liabilities Total liabilities 2,930,878 142,899 1,437,749 4,511,526 Fund balances: Unreserved, designated Unreserved, undesignated 233,480 2,888,105 25,218,669 410,974 - 644,454 28,106,774 Total fund balances 3,121,585 25,218,669 410,974 28,751,228 Total liabilities and fund balances $ 6,052,463 $ 25,361,568 $ 1,848,723 $ 33,262,754 $ 28,751,228 Reconciliation of the balance sheet to the statement of net assets Fund balances, total governmenta funds balance sheet Amounts reported for governmental activities in the statement of net assets are different because: Governmental capital assets Less accumulated depreciation 2,667,916 (1,200,876) Governmental compensated absences (long-term liabilities) (644,455) Net assets of governmental activities, statement of net assets See accompanying notes to the financial statements 15 $ 29,573,813 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Fiscal Year Ended June 30, 2008 General Revenues: Sales taxes: Public transportation funds Regional area road funds Intergovernmental: State & county grants Federal Transit Administration CMAQ Other federal grants Interest earnings Miscellaneous Total revenues $ Nonmajor Governmental Funds Public Transportation 4,167,168 $ 126,323,611 - $ - Total Governmental Funds $ 126,323,611 4,167,168 420,823 684 4,588,675 2,083,112 128,406,723 422,887 268,661 1,287,054 84,000 143,988 2,206,590 422,887 268,661 1,287,054 84,000 2,503,935 144,672 135,201,988 - - 311,129 733,017 222,439 1,104,198 311,129 733,017 222,439 1,104,198 - - 816,128 601,220 370,142 816,128 601,220 370,142 Expenditures: Current: Regional planning: Long range Short range Capital Program support Transportation demand management: Trip reduction Ridesharing Other programs Regional customer services: Marketing Call center Other programs Administration: Executive director Finance & management services Capital outlay Total expenditures - - 3,084,872 3,563,629 1,380,563 3,084,872 3,563,629 1,380,563 1,030,804 318,945 1,349,749 - 1,078,709 13,266,046 1,030,804 318,945 1,078,709 14,615,795 Excess (deficiency) of revenues over (under) expenditures 3,238,926 128,406,723 (11,059,456) 120,586,193 (2,717,685) (2,717,685) 521,241 (143,429,481) (143,429,481) (15,022,758) 11,165,777 11,165,777 106,321 11,165,777 (146,147,166) (134,981,389) (14,395,196) 2,436,017 164,327 2,600,344 40,241,427 40,241,427 Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balance, beginning Restatement Fund balance, beginning, as restated Fund balance, ending $ 3,121,585 $ See accompanying notes to the financial statements. 16 25,218,669 304,653 304,653 $ 410,974 42,677,444 468,980 43,146,424 $ 28,751,228 Valley Metro Regional Public Transportation Authority Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Fiscal Year Ended June 30, 2008 Net change in fund balances, total governmental funds $ (14,395,196) The change in net assets reported for governmental activities in the statement of activities is different because: 1. Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of capitalized assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays ($603,626) exceeded depreciation expense ($496,397) in the current period. 2. Proceeds from disposition of assets increase financial resources for budgetary basis, but is not a revenue for GAAP basis. 3. The loss on disposal of capital assets is not a budgeted expense, but is a revenue for GAAP purposes. 4. The governmental funds, under the modified accrual basis of accounting, do not report the unpaid compensated absences as expenditure or liability, as they are not paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are used. Change in net assets of governmental activities, statement of activities See accompanying notes to the financial statements. 17 107,229 (1,862) (740) (175,475) $ (14,466,044) Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual General Fund Fiscal Year Ended June 30, 2008 Budgeted Amounts Original Final Revenues: Sales taxes: Regional area road funds Interest Miscellaneous Total revenues $ 4,169,000 50,000 4,219,000 $ 4,167,168 400,000 4,567,168 Variance with Final Budget Over (Under) Actual Amounts $ 4,167,168 420,823 684 4,588,675 $ 20,823 684 21,507 Expenditures: Current: Executive director Finance and management services Total expenditures 1,217,840 710,077 1,927,917 1,217,840 710,077 1,927,917 1,030,804 318,945 1,349,749 (187,036) (391,132) (578,168) Excess of revenues over expenditures 2,291,083 2,639,251 3,238,926 599,675 Other financing uses: Transfers out: Transit planning Capital and other grants Valley Metro Rail Total other financing uses (1,761,439) (1,568,200) (500,000) (3,829,639) (1,731,251) (720,000) (500,000) (2,951,251) (1,539,723) (677,962) (500,000) (2,717,685) 191,528 42,038 233,566 Net change in fund balance (1,538,556) (312,000) Fund balance, beginning Restatement Fund balance, beginning, as restated Fund balance, ending 2,436,017 2,436,017 $ 897,461 See accompanying notes to the financial statements. 18 2,436,017 2,436,017 $ 2,124,017 $ 521,241 833,241 2,436,017 164,327 2,600,344 164,327 164,327 3,121,585 $ 997,568 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenditures and Changes in Fund Balances - Budget to Actua Public Transportation Fund Fiscal Year Ended June 30, 2008 Budgeted Amounts Original Final Revenues: Sales taxes: Public transportation funds Interest Total revenues $ Excess of revenues over expenditures Other financing uses: Transfers out: Transit planning Transit operations Regional customer services Valley Metro Rail Total other financing uses Net change in fund balance $ $ 129,300,000 1,249,772 130,549,772 Actual Amounts $ 126,323,611 2,083,112 128,406,723 $ (2,976,389) 833,340 (2,143,049) 140,247,774 130,549,772 128,406,723 (2,143,049) (1,784,662) (68,888,426) (8,450,350) (60,276,560) (139,399,998) (1,212,751) (78,141,141) (8,854,298) (55,909,320) (144,117,510) (533,031) (79,859,060) (8,415,061) (54,622,329) (143,429,481) 679,720 (1,717,919) 439,237 1,286,991 688,029 (13,567,738) (15,022,758) (1,455,020) 847,776 Fund balance, beginning Fund balance, ending 139,400,001 847,773 140,247,774 Variance with Final Budget Over (Under) 40,241,427 $ 40,241,427 $ 40,241,427 41,089,203 $ 26,673,689 $ 25,218,669 See accompanying notes to the financial statements. 19 $ (1,455,020) Valley Metro Regional Public Transportation Authority Statement of Net Assets Proprietary Funds June 30, 2008 Business-Type Activities - Enterprise Funds Transit Valley Service Metro Operations Rail Assets Current assets Cash and investments Receivables Less allowance for doubtful accounts Due from other governments Due from other funds Other assets Total current assets $ Noncurrent assets Capital assets, not being depreciated Capital assets, net of accumulated depreciation Total noncurrent assets Total assets 11,409,428 329,665 (130,000) 19,526,180 2,508,187 236,250 33,879,710 $ 6,428,446 18,100 5,357,131 11,803,677 Total Proprietary Funds $ 17,837,874 347,765 (130,000) 24,883,311 2,508,187 236,250 45,683,387 18,660,154 - 18,660,154 53,877,307 72,537,461 - 53,877,307 72,537,461 106,417,171 11,803,677 118,220,848 20,807,699 60,556 3,643 309,164 3,501,782 336,427 23,958 20,807,699 309,164 3,501,782 396,983 27,601 20,871,898 4,171,331 25,043,229 48,201 267,789 315,990 20,920,099 4,439,120 25,359,219 72,537,461 - 72,537,461 1,852,777 479,747 10,627,087 7,364,557 1,852,777 479,747 17,991,644 Liabilities Current liabilities Accounts payable Due to other funds Due to other governments Compensated absences payable Other current liabilities Total current liabilities Noncurrent liabilities Compensated absences payable Total liabilities Net Assets Invested in capital assets, net of related deb Restricted: Vanpool vehicle replacemen Transit vehicle replacemen Unrestricted Total net assets $ 85,497,072 See accompanying notes to the financial statements 20 $ 7,364,557 $ 92,861,629 Valley Metro Regional Public Transportation Authority Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds Fiscal Year Ended June 30, 2008 Business-Type Activities - Enterprise Funds Valley Transit Service Metro Operations Rail Operating Revenues: Charges for services Miscellaneous Total operating revenues $ Operating Expenses: Local & express bus service Light rail staff and administration Paratransit service Vanpool service Safety and security Administrative and general Depreciation Total operating expenses Operating loss Non-Operating Revenues (Expenses): Lead agency disbursements Federal Transit Administration grants IRS fuel tax credit Interest income Gain on disposal of capital assets Miscellaneous Total non-operating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Changes in net assets Net assets, beginning Net assets, ending $ 22,749,063 30,423 22,779,486 $ 6,421,524 6,421,524 Total Proprietary Funds $ $ 29,170,587 30,423 29,201,010 43,341,102 9,131,300 770,227 470,044 48,470 8,438,269 62,199,412 (39,419,926) 6,421,524 6,421,524 - 43,341,102 6,421,524 9,131,300 770,227 470,044 48,470 8,438,269 68,620,936 (39,419,926) (34,597,490) 16,501,060 1,147,487 346,999 163,298 (16,438,646) (58,821,842) 536,116 (58,285,726) (93,419,332) 16,501,060 1,147,487 536,116 346,999 163,298 (74,724,372) (55,858,572) (58,285,726) (114,144,298) 1,157,839 79,859,060 55,122,329 1,157,839 134,981,389 25,158,327 (3,163,397) 21,994,930 60,338,745 10,527,954 70,866,699 85,497,072 See accompanying notes to the financial statements. 21 $ 7,364,557 $ 92,861,629 Valley Metro Regional Public Transportation Authority Statement of Cash Flows Proprietary Funds Fiscal Year Ended June 30, 2008 Business-Type Activities - Enterprise Funds Transit Valley Metro Service Operations Rail Cash flows from operating activities Receipts from customers Payments to suppliers Payments to employees Net cash used in operating activities $ 29,522,282 (54,801,773) (877,222) (26,156,713) Cash flows from noncapital and related financing activities Transfers in - sales taxes Lead agency disbursements Due to/from other funds Federal alternative fuel tax cred Receipts from federal grants Net cash provided by noncapital financing activitie Cash flows from capital and related financing activities Purchases of capital assets Lead agency disbursements Receipts from federal capital grants Proceeds from sale of capital assets Transfers in - sales taxes Local member participation Miscellaneous Net cash (used in) provided by capital and related financing activities Cash flows from investing activities Interest received on investments Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of yea Cash and cash equivalents, end of yea Reconciliation of operating loss to ne cash (used in) provided by operating activities Operating loss Adjustments to reconcile operating loss to ne cash (used in) provided by operating activities Depreciation (Increase) decrease in assets Accounts receivable Due from other governments Other assets Decrease in liabilities Accounts payable Due to other governments Accrued liabilities Total adjustments Net cash used in operating activities $ 6,241,664 (253,807) (6,229,002) (241,145) Total Proprietary Funds $ 35,763,946 (55,055,580) (7,106,224) (26,397,858) 28,548,017 (1,053,712) (2,508,187) 3,453,852 309,665 28,749,635 500,000 (500,000) 241,145 241,145 29,048,017 (1,553,712) (2,267,042) 3,453,852 309,665 28,990,780 (26,256,977) (33,543,778) 13,307,292 496,852 51,311,043 (1,684,575) 146,151 (71,805,305) 54,893,299 - (26,256,977) (105,349,083) 13,307,292 496,852 106,204,342 (1,684,575) 146,151 3,776,008 (16,912,006) (13,135,998) - 598,348 598,348 $ 6,368,930 5,040,498 11,409,428 $ $ (39,419,926) $ 8,438,269 (16,313,658) 22,742,104 6,428,446 - 598,348 598,348 $ (9,944,728) 27,782,602 17,837,874 $ (39,419,926) - 8,438,269 60,335 6,682,461 - (179,860) - 60,335 6,502,601 - $ (1,821,149) (76,528) (20,175) 13,263,213 (26,156,713) $ (61,285) (241,145) (241,145) $ (1,821,149) (76,528) (81,460) 13,022,068 (26,397,858) $ 1,157,839 $ - $ 1,157,839 $ 5,747,813 $ - $ 5,747,813 Noncash capital and operating activities Capital assets contributed by a local member cit Purchase of capital assets with a corresponding increase in accounts payabl See accompanying notes to the financial statements 22 Valley Metro Regional Public Transportation Authority Statement of Changes in Fiduciary Net Assets Fiduciary Funds Fiscal Year Ended June 30, 2008 LTAF II Private Purpose Trust Fund Additions Contributions $ Total additions 6,074,872 6,074,872 Deductions Distributions 6,074,872 Total deductions 6,074,872 Changes in net assets - Net assets, beginning of year - Net assets, end of year $ See accompanying notes to the financial statements. 23 - Regional Public Transportation Authority Index to the Notes to Financial Statements Page 1. 2. 3. 4. 5. 6. 7. 8. 9. 10 . 11 . 12 . 13 . 14 . 15 . 16 . 17 . Summary of Significant Accounting Policies a. Financial Reporting Entity b. Basic Financial Statements c. Basis of Presentation d. Measurement Focus, Basis of Accounting, and Financial Statement Presentation e. Budgetary Basis of Accounting f. Deposits and Investments g. Prepaid Items h. Capital Assets i. Transactions between Funds j. Receivables k. Compensated Absences l. Cash Equivalents m. Use of Estimates n. Accounting Pronouncements Reconciliation of Governmental Fund Financial Statements to Government-Wide Statements Deposits and Investments a. Deposits b. Investments Accounts Receivable and Interfund transactions Fund Balance/Net Assets Reservations and Designations Capital Assets Operating Leases Compensated Absences Risk Management Retirement and Pension Plans a. Plan descriptions b. Financial report c. Funding policy Deferred Compensation Plan Contractual and Other Commitments a. Underground Storage Tank Revolving Fund Replenishment b. Commitments Contingencies Related Party Transactions Excess of Expenditures over Appropriations Restatement Subsequent Event 24 25 25 25-27 27-28 28-30 30 30-31 31 31-32 32 32-33 33 33 33 33-34 34-36 36 36-37 37-38 38-39 39-41 41 42 42 42 42 42-43 43 43 43-44 44 44 45 45 45 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 1. Summary of Significant Accounting Policies The accounting policies of the Regional Public Transportation Authority (the Authority) conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following summary of the more significant accounting policies of the Authority is presented to assist the reader in interpreting these financial statements, and should be viewed as an integral part of this financial report. a. Financial Reporting Entity The Authority was established under the laws of the State of Arizona in 1985 along with the passage of a one-half of one percent sales tax increase to fund regional highway and public transportation improvements. The Authority was charged with developing a regional transit plan and developing and operating a regional transit system for Maricopa County (the County). In 1993, the Authority’s Board of Directors adopted Valley Metro as the identity for the regional transit system. Valley Metro was chosen to give the region’s buses a more recognizable identity and to help unify public transit systems in the County. The Authority is governed by a Board of Directors consisting of a member of the County Board of Supervisors and the mayors (or their designees) of the cities of Avondale, Chandler, El Mirage, Glendale, Mesa, Peoria, Phoenix, Scottsdale, Surprise, Tempe and Goodyear, and the towns of Gilbert and Queen Creek. A municipality may have one elected official serve on the Authority’s Board of Directors by committing a portion of their local transportation assistance funds to local public transportation. In October 2002, the city councils of Glendale, Mesa, Phoenix and Tempe approved the formation of a public nonprofit corporation by the name of Valley Metro Rail, Inc. (VMR). The nonprofit corporation was organized for the purpose of planning, designing, constructing, and operating the Light Rail Transit Project. VMR contracts with the Authority for certain administrative functions, including personnel, administration and financial and accounting services. This activity is recorded in the Authority’s Valley Metro Rail Enterprise Fund. All VMR staff is hired and employed by the Authority but works solely under the direction of the legally separate entity of VMR and its Board of Directors through a contractual arrangement with the Authority. The Board of VMR is solely responsible for the governance of VMR and the Authority’s Board of Directors has no responsibility for VMR. VMR is not a component unit of the Authority because the economic resources received by VMR are entirely for the direct benefit of VMR and the Authority is not entitled to and has no ability to otherwise access any of the economic resources received or held by VMR. However, VMR is a related party of the Authority since the cities who are members of VMR’s Board of Directors are also members of the Authority’s Board of Directors. b. Basic Financial Statements These financial statements are presented in accordance with GASB Statement No. 34 – Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments (GASB No. 34). 25 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 The government-wide financial statements (statement of net assets and statement of activities) report on the Authority as a whole, excluding fiduciary activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The government-wide financial statements focus more on the sustainability of the Authority as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. Generally, the effect of interfund activity has been removed from the government-wide financial statements. Net interfund activity and balances between governmental activities and business-type activities are shown in the government-wide financial statements. The government-wide Statement of Net Assets reports all financial and capital resources of the government (excluding fiduciary funds). It is displayed in a format of assets less liabilities equal net assets, with the assets and liabilities shown in order of their relative liquidity. Net assets are required to be displayed in three components: 1) invested in capital assets, net of related debt, 2) restricted and 3) unrestricted. Invested in capital assets, net of related debt is capital assets net of accumulated depreciation and reduced by outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted net assets are those with constraints placed on their use by either: 1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, or 2) imposed by law through constitutional provisions or enabling legislation. All net assets not otherwise classified as restricted, are shown as unrestricted. Generally, the Authority would first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Reservations or designations of net assets imposed by the reporting government, whether by administrative policy or legislative action of the reporting government, are not shown on the government-wide financial statements. Note 5 discusses the internal reservations and designations of net assets in the various funds to demonstrate the government’s intended use of those net assets. The government-wide Statement of Activities demonstrates the degree to which the direct expenses of the various functions and segments of the Authority are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or users who purchase, use or directly benefit from goods, services or privileges provided by a particular function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, investment income and the other revenues not identifiable with particular functions or segments are included as general revenues. The general revenues support the net costs of the functions and segments not covered by program revenues. Also part of the basic financial statements are fund financial statements for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund 26 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 financial statements. c. Basis of Presentation The accounts of the Authority are organized and operated on the basis of funds. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts, which includes assets, liabilities, fund equity, revenues and expenditures/expenses. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The following fund categories (further divided by fund type) are used by the Authority: Governmental Funds Governmental funds are used to account for the Authority’s general government activities. The focus of Governmental Fund measurement, in the fund financial statements, is upon determination of financial position and changes in financial position rather than upon net income. The Authority reports the following major Governmental Funds: The General Fund is the Authority’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Public Transportation Fund accounts for activities related to the 20-year transportation tax. Proprietary Funds Proprietary funds account for activities of the Authority similar to those found in the private sector, where cost recovery and the determination of net income are useful or necessary for sound fiscal management. The focus of proprietary fund measurement is upon the determination of operating income, changes in net assets, financial position and cash flows. Currently, enterprise funds are the only type of proprietary funds that the Authority uses. Enterprise funds are used to account for those operations that provide services to the general public for a fee. Under GASB Statement No. 34, enterprise funds are also required for any activity whose principal revenue sources meet any of the following criteria: 1) any activity that has issued debt backed solely by the fees and charges of the activity, 2) if the cost of providing services for an activity, including capital costs such as depreciation or debt service, must legally be recovered through fees and charges, or 3) it is the policy of the Authority to establish activity fees or charges to recover the cost of providing services, including capital costs. 27 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 The Authority reports the following major enterprise funds: The Transit Service Operations Fund accounts for the activities related to the operations of local and express bus, dial-a-ride and vanpool services for the region. The Valley Metro Rail Fund accounts for the activities related to the staffing and administrative services that are contractually provided by the Authority to Valley Metro Rail, Inc. and transfers in of the Public Transportation Fund (PTF) and the Regional Area Road Funds (RARF) sales tax revenues and expenses of such funds related to the Regional Transportation Plan approved light rail projects. Fiduciary Funds Fiduciary funds account for assets held by the Authority in a trustee or agency capacity on behalf of others and therefore are not available to support Authority programs. The reporting focus is upon net assets and changes in net assets and employs accounting principles similar to proprietary funds. Fiduciary funds are not included in the government-wide financial statements since they are not assets of the Authority available to support Authority programs. Currently, private-purpose trust funds are the only type of fiduciary funds that the Authority uses: Private-purpose trust fund accounts for assets held by the Authority under the terms of a formal trust agreement where both the principal and income may be used to support individuals, private organizations or other governments as set forth in the trust agreement. The private-purpose trust fund of the Authority is as follows: The LTAF II Fund accounts for state general fund monies received from the Arizona Department of Transportation and distributed to the cities and county within the Authority’s region. d. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund types are presented, in the fund financial statements, using the flow of current financial resources measurement focus and modified accrual basis of accounting. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure of available spendable resources. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they are “measurable and available”). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon thereafter to pay liabilities of the current period. The Authority considers revenues available under modified accrual, if they are earned by June 30 (all eligibility requirements have been met) and the revenue is expected to be collected within six months after year-end. Expenditures are recorded 28 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 when the related fund liability is incurred. This is the traditional basis of accounting for governmental funds and also is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to 1) demonstrate legal and covenant compliance, 2) demonstrate the sources and uses of liquid resources, and 3) demonstrate how the Authority’s actual revenues and expenditures conform to the annual budget. Since the governmental fund financial statements are presented on a different basis than the governmental activities column of the government-wide financial statements, a reconciliation is provided immediately following each fund statement. These reconciliations briefly explain the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide financial statements. Additional reconciliations are also provided in Note 2. When applying the “susceptible to accrual” concept to intergovernmental revenues pursuant to GASB Statement No. 33 – Recipient Reporting for Certain Shared Nonexchange Transactions (Statement No. 33), receivables and revenues are recognized when the applicable eligibility requirements, including time requirements, are met. Resources transmitted before the eligibility requirements are met are reported as deferred revenue. Interest income is recognized on the modified accrual basis. Changes in fair value of investments are recognized in investment income at the end of the year. Sales taxes, entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. For the governmental fund statements, grant revenue earned but not expected to be received within six months of year end is deferred. The proprietary fund and private purpose trust funds financial statements are prepared on the same basis (economic resources measurement focus and accrual basis of accounting) as the government-wide financial statements. Therefore, the total enterprise funds on the proprietary fund financial statements will directly reconcile to the businesstype activities column on the government-wide financial statements. The flow of economic resources measurement focus emphasizes the determination of net income. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. On the proprietary fund financial statements, operating revenues are those that flow directly from the operations of that activity, i.e., charges to customers or users who purchase or use the goods or services of that activity. Operating expenses are those that are incurred to provide those goods or services. Non-operating revenues and expenses are items like investment income and interest expense that are not a result of the direct operations of the activity. 29 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 e. Budgetary Basis of Accounting An annual budget of revenues and expenditures is prepared and adopted by the Board of Directors each fiscal year for all funds. The legal level of budgetary control is the total annual appropriated budget. Costs in excess of the total annual appropriated budget require approval of the Board of Directors. Transfers of appropriations between departments require the approval of the Executive Director. The annual budget is adopted on the modified accrual basis. Encumbrance accounting is not used and all appropriations lapse at year end. Prior to final adoption, a proposed budget is presented to the Board of Directors for review and public comment is received. Final adoption of the budget must be on or before June 30 of each year. During the fiscal year, the Board of Directors approved the decrease of $16.4 million of revenues primarily due to the revised PTF revenue and FTA grant revenue collections and approved the decrease of expenditures of $35.6 million mainly due to some of the local governments’ construction project reimbursements and the capital projects deferred to Fiscal Year 2009. GASB Statement No. 34 requires that budgetary comparison statements for the general fund and major special revenue funds be presented as part of the basic financial statements or as required supplementary information. The Authority has chosen to present this information as part of the basic financial statements. These statements must display original budget, amended budget and actual results (on a budgetary basis). Budgetary comparisons for the nonmajor governmental funds and the major enterprise funds are presented in the combining statements following the notes to the financial statements. Where necessary, a reconciliation has been provided of the adjustments required to convert the budgetary revenues and expenditures or changes in net assets on a budgetary basis to revenues and expenditures/expenses or change in net assets on a GAAP basis. f. Deposits and Investments State statutes authorize the Authority to invest in obligations of the U.S. Treasury and any of its agencies, corporations or instrumentalities, collateralized repurchase agreements, certificates of deposit and the State of Arizona’s Local Government Investment Pool (LGIP). Currently the Authority invests only in the LGIP, which is operated by the Arizona State Treasurer’s Office, as authorized by Arizona Revised Statues, §35-326. Arizona Revised Statutes, §35-312 and §35-313 regulate authorized investments. Local Government Investment Pool investments are carried at fair value. The fair value of pooled investments is determined annually and is based on current market prices. The fair value of participants’ position in the pool approximates the value of the pool shares. The method used to determine the value of participants’ equity withdrawn is based on the book value of the participants’ percentage participation at the date of such withdrawal. The Authority maintains pooled cash and investments. Income from pooled cash and investments is allocated to the individual funds based on the fund’s month end cash balance in relation to the total pooled cash and investments. Authority management has determined that the investment income related to all funds except the Valley Metro Rail Enterprise Fund should be allocated to the General Fund. 30 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Each fund’s equity in the pooled cash and investments is tracked on an ongoing basis. In the event that a certain fund overdraws its share of pooled cash, the overdraft is reported as a due to the General Fund at year-end. g. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. h. Capital Assets GASB No. 34 requires that all capital assets, whether owned by governmental activities or business-type activities, be recorded and depreciated (unless the modified approach is used) in the government-wide financial statements. No long-term assets or depreciation are shown in the governmental fund financial statements. Capital assets are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life greater than one year. The Authority has no public domain infrastructure (e.g., roads, bridges, sidewalks, and other assets that are immovable and of value only to the Authority) or capital construction projects. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. (Remainder of this page intentionally left blank) 31 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives: Useful Life (Years) Assets Equipment Furniture and fixtures Vehicles Cars and vans Buses greater than 30 feet Buses greater than 40 feet Computers and software Site improvements 7-20 7-15 4 10 12 3 20 Capital assets transferred between funds are transferred at their net book value (cost less accumulated depreciation) or net realizable value, if lower, as of the date of the transfer. i. Transactions Between Funds Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported in the fund financial statements as “due to/from other funds”. See Note 4 for further discussion of the interfund receivables/payables at June 30. Certain transactions occurring between funds that are combined within the same fund type or displayed in the same financial statement column for presentation in these annual financial statements have been eliminated from the financial statements. In the government-wide financial statements, only the net interfund activity and balances between governmental activities and business-type activities are shown (reported as “internal balances”). j. Receivables Receivables primarily result from various grants awarded by the Federal Transit Administration and the Federal Highway Administration. These receivables are passed through to the Authority and are due from the City of Phoenix, Maricopa Association of Governments, Maricopa County, Pima County and the Arizona Department of Transportation as reimbursement for eligible grant expenditures associated with operating, capital projects and capital maintenance. During the fiscal year ended June 30, 2008, the Authority recorded $1,147,487 as nonoperating revenues and receivables of alternative fuel tax credit filed with the Internal Revenue Service (IRS) for fuel purchases during the fiscal year. The federal alternative fuel tax credit went into effect October 1, 2006, as part of the 2005 Transportation Act. 32 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Government and certain nonprofit organizations that qualify for the credit but do not have excise tax liability can receive cash payment from the federal government in the amount of $0.50 per gallon-equivalent. This credit applies to CNG, LNG, propane, and several other less frequently used fuels. RPTA registered with the IRS and was approved as a qualifying agency to receive the alternative fuel tax credit. k. Compensated Absences Employees of the Authority are entitled to 23.6 - 31.5 paid time off days (vacation and sick leave) per calendar year - based on an eight-hour workday, depending upon length of service. The valuation of accrued leave benefits is calculated in accordance with GASB Statement No. 16. Unpaid compensated absences are recorded as a liability when the benefits are earned in the proprietary fund financial statements. For governmental funds, there is no legal requirement to accumulate expendable available financial resources to liquidate the obligation; thus expenditures are recognized in the governmental funds when payments are made to employees (see Note 16 for restatement of governmental fund beginning fund balances). The liability is liquidated with resources of the same fund that has paid the applicable employee’s regular salaries and fringe benefits. The current portion of the accrued compensated absences liability is based on the average annual amount of leave charged over the preceding three years. l. Cash Equivalents The Authority considers short-term investments in the State of Arizona’s Local Government Investment Pool, mutual fund-money market, U.S. Treasury bills and notes with maturities of three months or less at acquisition date to be cash equivalents. m. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures during the reporting financial period. Actual results could differ from these estimates. n. Accounting Pronouncements GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, as amended, requires that governments’ enterprise activities apply all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins. Governments are given the option whether or not to apply all FASB Statements and Interpretations issued after November 30, 1989, except those that 33 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 conflict with or contradict GASB pronouncements. The Authority has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. 2. Reconciliation of Governmental Fund Financial Statements to GovernmentWide Statements The governmental fund financial statements are presented on a current financial resources measurement focus and modified accrual accounting basis while the government-wide financial statements are prepared on a long-term economic resources measurement focus and accrual accounting basis. Reconciliations briefly explaining the adjustments necessary to transform the fund financial statements into the governmental activities column of the government-wide financial statements immediately follow each fund financial statement. Additional reconciliations are provided below. Reconciliation of Governmental Funds Balance Sheet and the government-wide Statement of Net Assets: Total Governmental Funds Assets Cash and investments Receivables Due from other governments Due from other funds Other assets Capital assets (net) Total assets Liabilties Accounts payable Due to other funds Due to other governments Other liabilities Compensated absences Total liabilities $ $ $ Fund Balance/Net Assets Total fund balance/net assets $ 25,290,341 118,132 7,066,523 784,245 3,513 33,262,754 Long-term Assets/ Liabilities $ $ 1,044,236 2,983,268 41,529 442,493 4,511,526 $ 28,751,228 $ Reclassifications Statement of and Net Assets Eliminations Totals - 1,467,040 1,467,040 $ $ 644,455 644,455 $ 822,585 $ - $ (2,983,268) (2,983,268) $ - $ (2,983,268) (2,983,268) - $ 25,290,341 118,132 7,066,523 (2,199,023) 3,513 1,467,040 31,746,526 1,044,236 41,529 442,493 644,455 2,172,713 29,573,813 When capital assets that are to be used in governmental activities are purchased, the costs of those assets are reported as expenditures in governmental funds, and thus a reduction in fund balance. However, the statement of net assets includes those capital assets among the assets of the Authority as a whole: Cost of capital assets $ Accumulated depreciation Capital assets, net $ 34 2,667,916 (1,200,876) 1,467,040 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Interfund transactions between governmental activities of $2,983,268 are eliminated in the consolidation of these activities for the statement of net assets. Under the modified accrual basis of accounting, the governmental funds do not accrue for unpaid compensated absences in the amount of $644,455 as liability, as they are not paid with expendable available financial resources (see Note 16 for restatement of beginning fund balance). However, the statement of net assets includes the unpaid compensated absences as long-term liabilities regardless of when financial resources are used, and thus a reduction in net assets. Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance and the government-wide Statement of Activities: Total Governmental Funds Revenues Sales taxes Intergovernmental Interest earnings Miscellaneous Total revenues Expenditures/Expenses Current: Regional planning Transportation demand management Administration Regional customer services $ 130,490,779 2,062,602 2,503,935 144,672 135,201,988 Capital Purchases $ Depreciation Compensated Absences Disposals - - - 1,787,490 1,349,749 8,029,064 403,498 71,585 118,940 378,197 1,078,709 (1,078,709) 14,615,795 (603,626) Other financing uses/changes in net assets Transfers in 11,165,777 (146,147,166) (134,981,389) Net change for the year (1,862) (1,862) 2,370,783 Capital outlay Total expenditures/expenses and other uses Transfers out Total fund balance/net assets $ $ (14,395,196) $ $ Statement of Activities Totals - $ 130,490,779 2,062,602 2,503,935 142,810 135,200,126 19,493 2,390,276 (1,644) 69,154 88,472 1,785,846 1,941,341 8,567,318 - 497,137 175,475 14,684,781 - - - 11,165,777 - - - (146,147,166) (134,981,389) 603,626 $ (498,999) $ (175,475) $ (14,466,044) When capital assets that are to be used in governmental activities are purchased, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the cost of those assets is allocated over their useful lives and reported as depreciation expense. As a result, fund balance decreases by the amount of the financial resources expended for capital outlay ($603,627), whereas net assets decrease by the amounts of disposals and depreciation expense charged for the year ($498,999). 35 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 The governmental funds do not report unpaid compensated absences in the amount of $175,474 as expenditures, as they are not paid with expendable available financial resources. However, the statement of net assets includes the unpaid compensated absences as accrued expenses regardless of when financial resources are used, and thus a reduction in net assets. 3. Deposits and Investments The Authority maintains a cash and investment pool that is available for use by all funds. Each fund type’s portion of this pool is displayed on the government-wide Statement of Net Assets as “Cash and Investments”. a. Deposits The carrying amount of the Authority's deposits at June 30, 2008, was $2,320,985 and the bank ledger balance was $2,894,623. The difference of $573,638 represents deposits in transit and outstanding checks. Of the bank balance, $100,000 was covered by federal depository insurance and $2,794,623 was covered by collateral held by the pledging financial institution in the Authority’s name. b. Investments Interest Rate Risk. As a means of managing its exposure to fair value losses arising from increasing interest rates, the Authority’s investment policy provides for matching investment maturities with anticipated cash flow requirements while maintaining an emphasis on liquidity. Unless matched to a specific cash flow requirement, the Authority will not directly invest in securities maturing more than two years from the date of purchase. Historically, the Authority has limited its investments to participation in the State of Arizona's Local Government Investment Pool (LGIP). As of June 30, 2008, the Authority’s investments in the LGIP, investing in money market mutual funds, have the weighted average maturities less than 90 days. Credit Risk. State statutes authorize the Authority to invest in obligations of the U.S. Treasury and any of its agencies, corporations or instrumentalities, collateralized repurchase agreements, certificates of deposit and the LGIP. The Authority’s investment policy does not further limit its investment choices. The LGIP is operated by the Arizona State Treasurer’s Office, as authorized by Arizona Revised Statutes §35-326. Arizona Revised Statutes §35-312 and §35-313 regulate authorized investments. The LGIP is overseen according to Arizona State Statute by the State Board of Deposit. The Authority's investment in the LGIP is stated at fair value, which is the same as the value of the Authority’s pool shares. The LGIP does not receive a credit quality rating. Investments at June 30, 2008 consist of the following: State of Arizona Local Government Investment Pool $ 40,807,230 Governmental Accounting Standards Board Statement No. 40, Deposit and Investment Risk Disclosures, provides for disclosures of custodial credit risk associated with 36 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 investment securities. An exception is provided for investments in external investment pools and for investments in open-ended mutual funds. Cash and Investments at June 30, 2008 consist of the following: Carrying amount of the Authority's deposits $ Investments in the LGIP Total cash and investments $ 4. 2,320,985 40,807,230 43,128,215 Accounts Receivable and Interfund Transactions Accounts receivable are recorded in the various funds and displayed in the financial statements. All receivable balances at June 30, 2008 are expected to be collected in full, except for an allowance for uncollectible in the amount of $130,000 has been recorded. Net interfund receivables and payables between governmental activities and business-type activities of $2,199,023 are included in the government-wide financial statements at June 30, 2008. The following interfund receivables and payables are included in the fund financial statements at June 30, 2008: Due to / from other funds: Receivable Fund Governmental activities: Nonmajor governmental funds Nonmajor governmental funds Nonmajor governmental funds Total governmental activities Business-type activities: Enterprise funds: Transit service operations Transit service operations Total business-type activities Payable Fund Valley Metro Rail Public transportation fund Nonmajor governmental funds Amount $ General fund Nonmajor governmental funds Total 309,164 142,899 332,182 784,245 2,281,556 226,631 2,508,187 $ 3,292,432 The interfund balances at June 30, 2008 are short-term loans to cover temporary cash deficits in various funds. This occasionally occurs prior to grant and other reimbursements. All interfund balances outstanding at June 30, 2008 are expected to be repaid within one year. Interfund transfers are primarily used for transfers of sales tax revenues from the General fund and the Public Transportation fund to the various funds that receive earmarked sales tax revenues. The following interfund transfers are reflected in the fund financial statements for the year ended June 30, 2008. 37 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Transfers Out Public Transportation Fund General Fund Totals Transfers In Governmental funds: Nonmajor governmental funds Total governmental funds 2,217,685 2,217,685 8,948,092 8,948,092 11,165,777 11,165,777 Enterprise funds: Transit service operations Valley Metro Rail Total enterprise funds Grand totals 500,000 500,000 2,717,685 79,859,060 54,622,329 134,481,389 143,429,481 79,859,060 55,122,329 134,981,389 146,147,166 $ $ $ Net transfers from governmental activities to business-type activities on the governmentwide statement of activities to the Enterprise funds are in the amount $134,981,389. 5. Fund Balance/Net Assets Reservations and Designations General Fund: Unreserved/Designated - At June 30, 2008, $233,480 of fund balance was designated by management for the payment of accrued compensated absences. Unreserved/Undesignated - At June 30, 2008, $2,888,105 of fund balance was unreserved and undesignated. Public Transportation Fund: Unreserved/Undesignated - At June 30, 2008 $25,218,669 of fund balance was unreserved and undesignated. Nonmajor Governmental Funds Unreserved/Designated - At June 30, 2008, $410,974 of fund balance was designated by management for the payment of accrued compensated absences. Transit Service Operations Enterprise Fund: Restricted for Vanpool Vehicle Replacement - At June 30, 2008, $1,852,777 was restricted for replacement of vanpool vehicles. Restricted for Transit capital asset Replacement - At June 30, 2008, $479.747 was capital asset replacement. Unrestricted - At June 30, 2008, $10,627,087 of fund balance was unrestricted. 38 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Valley Metro Rail Fund: Unreserved/Undesignated - At June 30, 2008 $7,364,557 of fund balance was unreserved and undesignated. 6. Capital Assets A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2008: (Remainder of this page intentionally left blank) 39 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Balances, June 30, 2007 Governmental activities: Non-depreciable assets: Work in progress SANS processor and equipment Regional customer relation management system Total work in progress Depreciable assets: Computers & software Equipment Vehicles Furniture & fixtures Total depreciable assets at historical cost $ Business-type activities: Non-depreciable assets: Work in progress Bus spec development Fare collection system East valley equipment upgrades Transit fleet Mesa facility purchase Total work in progress $ 1,227,700 241,944 153,441 228,881 Decreases - $ 85,132 85,132 $ 1,851,966 (485,354) (158,033) (74,342) (70,088) (787,817) Balances, June 30, 2008 (102,629) $ - (280,767) (383,396) - 557,877 344,013 - (59,961) $ (25,979) - 1,725,616 559,978 153,441 228,881 901,890 (85,940) 2,667,916 (381,210) (59,012) (23,478) (32,697) (496,397) 59,831 23,507 83,338 (806,733) (193,538) (97,820) (102,785) (1,200,876) $ 1,362,413 $ 490,625 $ (385,998) $ 1,467,040 $ 49,750 1,496,416 22,753 1,568,919 $ 119,806 1,784,114 14,366,400 4,124,198 20,394,518 $ - $ (3,280,530) (22,753) (3,303,283) - 169,556 14,366,400 4,124,198 18,660,154 Depreciable assets: Transit fleet Site improvements Computers & software Equipment Furniture & fixtures Total depreciable assets at historical cost Less accumulated depreciation for: Transit fleet Site improvements Computers & software Equipment Furniture & fixtures Total accumulated depreciation Business-type activities capital assets, net $ 195,635 298,264 Less accumulated depreciation for: Computers & software Equipment Vehicles Furniture & fixtures Total accumulated depreciation Governmental activities capital assets, net 102,629 Increases $ 77,300,467 685,209 75,932 2,538,391 83,665 12,059,824 47,537 3,964,033 - (9,194,055) - 80,166,236 732,746 75,932 6,502,424 83,665 80,683,664 16,071,394 (9,194,055) 87,561,003 (33,558,773) (34,260) (2,109) (680,193) (31,441) (34,306,776) (7,776,569) (36,241) (25,311) (588,196) (11,952) (8,438,269) 9,061,349 9,061,349 (32,273,993) (70,501) (27,420) (1,268,389) (43,393) (33,683,696) 47,945,807 40 $ 28,027,643 $ (3,435,989) $ 72,537,461 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 Depreciation expense was charged to the following functions in the basic financial statements: Government- BusinessWide Type General government $ 118,200 $ Regional customer services 378,198 Transit service operations 8,438,269 Total depreciation expense $ 496,398 $ 8,438,269 The Authority’s enterprise funds have entered into contracts having remaining commitments at June 30, 2008 as follows: Expended To Date Contract Amount Outstanding Commitments Governmental activities: $ - Business-type activities: Costs for Bus Tag #s 6607- 6647 Tire costs for one hybrid bus Tire costs for Bus Tag #s 8511-8520 Bus spec develoment Mesa facility purchase Total $ 14,329,652 2,080 34,668 119,806 4,124,198 18,610,404 $ - 14,329,652 2,080 34,668 142,066 9,275,198 $ 23,783,664 $ - $ 22,260 5,151,000 5,173,260 These commitments have not been recorded in the accompanying financial statements. Only the currently payable portions of these contracts have been included in the accounts payable in the accompanying financial statements. 7. Operating Leases The Authority leases office space, fuel station and land under various operating lease agreements. Total rent expenditures for these leases were $1,274,263 for the fiscal year ended June 30, 2008. The future minimum lease payments under noncancelable operating leases at June 30, 2008 were as follows: Year Ending June 30 2009 2010 2011 Total 41 $ $ 732,276 544,776 272,388 1,549,440 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 8. Compensated Absences Compensated absences activity for the fiscal year ended June 30, 2008 is as follows: Balance, July 1, 2007 Compensated absences: Governmental activities Business-type activities 9. Increases Decreases Amount Due Within One Year Balance, June 30, 2008 $ 468,980 533,249 $ 675,578 553,220 $ (500,103) $ (373,496) 644,455 712,973 $ 494,598 396,983 $ 1,002,229 $ 1,228,798 $ (873,599) $ 1,357,428 $ 891,581 Risk Management The Authority 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. These risks are covered by commercial insurance purchased from independent third parties. The Authority purchases insurance coverage for property, general liability, automobile liability, umbrella liability, commercial crime, public entity employment practices liability, public entity management liability and excess liability. In addition, the Authority purchases workers’ compensation, employee life insurance and health and dental insurance coverage for all of its full-time employees. Settled claims for these risks have never exceeded commercial insurance limits and there were no significant changes in insurance coverage from the prior year. Insurance coverage for transit operations is carried by the contracted operators of service; the operators indemnify the Authority for all liability arising from transit operations. 10. Retirement and Pension Plans Arizona State Retirement System a. Plan descriptions All full-time Authority employees participate in the Arizona State Retirement System (ASRS), a multiple-employer cost sharing defined benefit pension plan. The ASRS is administered in accordance with Title 38, Chapter 5, of the Arizona Revised Statutes. b. Financial report The Arizona State Retirement System issues a publicly available financial report that includes financial statements and required supplementary information. A report may be obtained by writing to ASRS, P.O. Box 33910, Phoenix, Arizona 85067-3910, or by calling 1-800-621-3778. c. Funding policy The Arizona Revised Statutes provide statutory authority for determining the employees’ and employers’ contribution amounts as a percentage of covered payroll. Employers are 42 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 required to contribute at the same rate as employees. The Arizona State Legislature establishes and may amend a contribution rate other than the actuarially determined rate. For the year ended June 30, 2008, the Authority and active ASRS members were each required by statute to contribute at the actuarially determined rate of 9.1% (8.6% retirement and 0.5% long-term disability) of the annual covered payroll. The Authority’s contributions from employer to ASRS for the fiscal years ending June 30, 2008 and 2007 were $1,044,846 and $859,573, respectively, which were equal to the required contributions for each fiscal year by the employer. Fiscal year ended June 30, 2007 was the first year that the Authority participated in the Arizona State Retirement System. 11. Deferred Compensation Plan The Authority offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. As required by the Internal Revenue Code, the Authority established a trust for the assets and income of the Plan with an independent trustee for the exclusive benefit of participants and their beneficiaries. In accordance with Governmental Accounting Standards Board Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, the Authority does not account for or report the Deferred Compensation Plan in the financial records. The Plan is administered by ICMA Retirement Corporation, 777 North Capital Street, NE, Washington, D.C. 2002-4240. 12. Contractual and Other Commitments a. Underground Storage Tank Revolving Fund Replenishment In fiscal year 1994, the Arizona State Legislature allocated $6,000,000 to the Authority from the Arizona Area A portion of the underground storage tank revolving fund. Beginning with the first fiscal year and in each subsequent fiscal year that the Authority is allocated at least $2,000,000 from the Lottery, the amount allocated to the Authority will be reduced by a maximum of $2,000,000 each fiscal year until a total of $6,000,000 has been withheld to replenish the underground storage tank revolving fund. In the event the Authority does not receive at least $2,000,000 from the Lottery in a given year, no amounts will be withheld from the respective year's allocation. The Authority received a Lottery distribution of $1,760,759 in fiscal year 1998 which is the only year the Authority has received a Lottery distribution. b. Commitments The Authority has entered into various contracts for the administration and operation of transit services, travel demand management services, and regional transit planning. Commitments under these contracts exist only to the extent that services are requested or provided, and all contracts provide for cancellation without cause. In addition, the Authority has entered into various contractual agreements to reimburse member cities for construction of the East and West Valley operating/maintenance 43 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 facilities for bus services, bus stop improvements, Happy Valley Park and Ride, Scottsdale Loop 101 Park and Ride, Phoenix Camelback/19th Avenue Transit Center and ADA reimbursement contracts. At June 30, 2008, the Authority had outstanding contractual commitments for these services aggregating approximately $21.3 million. These commitments have not been recorded in the accompanying financial statements because the member cities either had not incurred the related expenses or had not requested reimbursement for the related expenses. Only the currently payable portions of these contracts have been included in accounts payable in the accompanying financial statements. 13. Contingencies As a subrecipient of federal and state grant monies, amounts passed through or receivable from other agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Authority expects such amounts, if any, to be immaterial. On November 22, 2002, the Arizona State Treasurer’s Office informed participants in the Local Government Investment Pool (LGIP) that it currently holds asset-backed securities administered by National Century Financial Enterprises (NCFE). These securities, which total $131 million of the total $4 billion in the LGIP, are backed by payments from Medicare/Medicaid and other creditworthy issuers. The Authority’s proportional share of the $131 million was $223,150. Of the $223,150, $88,792 was invested on behalf of Valley Metro Rail, Inc. NCFE has filed bankruptcy and come under investigation by the Federal Bureau of Investigation and the Securities and Exchange Commission. The Authority has joined in a lawsuit with 93 other Arizona governmental entities and 90 other plaintiffs against several parties in an effort to recover the Authority’s investment. During the fiscal year ended June 30, 2008, the Authority received one relatively small distribution of payouts of funds being held by the Indenture Trustee for NCFE securities totaling $2,267 plus interest on those amounts totaling $56. Of the total $2,323 received, $929 was allocated to Valley Metro Rail, Inc. As of June 30, 2008, the balance was reduced to $104,384. Of the $104,384, $41,529 was invested on behalf of Valley Metro Rail, Inc. At this point in time, it is impossible to determine the Authority’s financial exposure, if any, due to the aforementioned events. 14. Related Party Transactions As mentioned in Note 1 (a), the members of VMR’s Board of Directors are also members of the fourteen-member Authority’s Board of Directors. VMR contracts with the Authority for certain administrative functions, including personnel, administration, financial and accounting services, purchasing, and computer support services. All VMR staff is hired and employed by the Authority but work solely under the direction of the VMR and its Board of Directors, through a contractual agreement with the Authority. For the period ended June 30, 2008, VMR paid $6,421,524 for services provided by the Authority. 44 Valley Metro Regional Public Transportation Authority Notes to the Financial Statements (Continued) Fiscal Year Ended June 30, 2008 15. Excess of Expenditures over Appropriations For the fiscal year ended June 30, 2008, no excess of expenditures over appropriations at the department level of budgetary control occurred. 16. Restatement For the governmental funds only, the July 1, 2007 beginning fund balances totaling $468,980 have been restated upward as a result of reclassification of the unpaid compensated absences, $164,327 in the General Fund and $304,653 in the Nonmajor Governmental funds, which were reported as current liabilities and expenditures prior to fiscal year 2008. See Note 1 (k) for revised accounting policy. 17. Subsequent Event On September 15, 2008 the Arizona State Treasurer informed LGIP Pool 5 participants that it is splitting Pool 5 into two pools – Pool 5 and a temporary Pool 57. This is necessary because LGIP Pool 5 invested in three bonds issued by Lehman Brothers totaling $39.45 million in senior unsecured debt. Lehman Brothers Holding Inc’s filing for Chapter 11 bankruptcy reorganization caused the $39.45 million investment valued on September 12, 2008, to be inaccessible. The $39.45 million was transferred into Pool 57 until the court completes the reorganization or a reasonable price sale can be executed. The Authority’s proportional share of the $39.45 million is $386,923 of which, $58,567 was invested on behalf of Valley Metro Rail, Inc. 45 Other Supplementary Information Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Special Revenue Funds Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes.     The Transit Planning Fund is used to account for the receipt and expenditure of U. S. Department of Transportation, Federal Transit Administration, Federal Transit Technical Studies grant monies, regional area road fund sales tax revenues and member cities local match restricted for various planning studies. The Transportation Demand Management Fund is used to account for the receipt and expenditure of various grant monies restricted for activities related to the countywide ridesharing program, trip reduction program and clean air campaign. The Regional Customer Services Fund accounts for activities related to marketing, customer services, Americans with Disabilities (ADA) compliance, contract maintenance and quality monitoring, and farebox data reporting for the region. The Capital and Other Grants Fund is used to account for the receipt and expenditure of state and federal grant revenues and expenditures not included in other special revenue funds. 46 Valley Metro Regional Public Transportation Authority Combining Balance Sheet Nonmajor Governmental Funds June 30, 2008 Transit Planning Transportation Demand Management Regional Customer Services Capital and Other Grants Total Nonmajor Governmental Funds Assets Receivables Due from other governments Due from other funds Other assets Total assets $ 43,941 280,311 - $ 21,465 993,315 2,596 $ 3,161 493,659 - $ 10,275 - $ 21,465 1,040,417 784,245 2,596 $ 324,252 $ 1,017,376 $ 496,820 $ 10,275 $ 1,848,723 $ 220,316 3,730 $ 388,433 558,813 2,185 $ 238,625 15,372 $ 10,275 - $ 857,649 558,813 21,287 Liabilities and Fund Balances Liabilities: Accounts payable Due to other funds Due to other governments Other liabilities Total liabilities 224,046 949,431 253,997 10,275 1,437,749 Fund balances: Unreserved, designated Unreserved, undesignated 100,206 - 67,945 - 242,823 - - 410,974 - Total fund balances 100,206 67,945 242,823 - 410,974 Total liabilities and fund balances $ 324,252 $ 1,017,376 47 $ 496,820 $ 10,275 $ 1,848,723 Valley Metro Regional Public Transportation Authority Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Fiscal Year Ended June 30, 2008 Transit Planning Revenues: Intergovernmental State and county grants Federal Transit Administration CMAQ Other federal grants Miscellaneous $ Total revenues Expenditures: Current: Regional planning Long range Short range Capital Program support Transportation demand managemen Trip reduction Ridesharing Other programs Regional customer services Marketing Call center Other programs Capital outlay Total expenditures Deficiency of revenues under expenditures 268,661 48,861 379,687 1,287,054 84,000 35,105 $ 1,862 $ 422,887 268,661 1,287,054 84,000 143,988 101,360 1,862 2,206,590 311,129 733,017 222,439 1,104,198 - - - 311,129 733,017 222,439 1,104,198 - 816,128 601,220 370,142 - - 816,128 601,220 370,142 - - 3,084,872 3,563,629 1,380,563 398,885 679,824 3,084,872 3,563,629 1,380,563 1,078,709 2,370,783 1,787,490 8,427,949 679,824 13,266,046 (8,326,589) (677,962) (11,059,456) 8,415,061 677,962 - 2,217,685 8,948,092 8,415,061 88,472 677,962 - 11,165,777 106,321 154,351 - 304,653 Total other financing sources Net change in fund balances 2,072,754 19,493 (1,644) (1,644) 80,713 69,589 80,713 $ 43,200 58,160 Total Nonmajor Governmental Funds 1,785,846 1,539,723 533,031 Fund balance, beginning, as restated $ Capital and Other Grants 317,522 Other financing sources: Transfers in: General fund Public transportation fund Fund balance, ending $ (2,053,261) Fund balance, beginning Restatement Regional Customer Services Transportation Demand Management 100,206 69,589 $ 67,945 48 154,351 $ 242,823 $ - 304,653 $ 410,974 Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual Transit Planning Fund Fiscal Year Ended June 30, 2008 Budgeted Amounts Original Final Revenues: Intergovernmental: Federal Transit Administration Miscellaneous Total revenues $ Expenditures: Current: Long range Short range Capital Program support Total expenditures 1,352,274 310,898 1,663,172 $ Variance with Final Budget Over (Under) Actual Amounts 1,177,934 416,576 1,594,510 $ 268,661 48,861 317,522 $ (909,273) (367,715) (1,276,988) 618,850 1,962,335 391,335 2,236,753 5,209,273 618,850 1,178,155 391,335 2,350,172 4,538,512 311,129 733,017 222,439 1,104,198 2,370,783 (3,546,101) (2,944,002) (2,053,261) 890,741 1,761,439 1,784,662 3,546,101 1,731,251 1,212,751 2,944,002 1,539,723 533,031 2,072,754 (191,528) (679,720) (871,248) Net change in fund balance - - 19,493 19,493 Fund balance, beginning Restatement Fund balance, beginning, as restated - - 80,713 80,713 80,713 80,713 Excess (deficiency) of revenues over (under) expenditures Transfers in: General fund Public transportation fund Total transfers in Fund balance, ending $ - 49 $ - $ 100,206 (307,721) (445,138) (168,896) (1,245,974) (2,167,729) $ 100,206 Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual Transportation Demand Management Fund Fiscal Year Ended June 30, 2008 Budgeted Amounts Original Final Revenues: State sources: State grants Intergovernmental: CMAQ Other federal grants Miscellaneous Total revenues $ 435,000 $ Actual Amounts 557,760 $ 379,687 Variance with Final Budget Over (Under) $ (178,073) 1,503,000 42,000 1,980,000 1,468,000 42,000 2,067,760 1,287,054 84,000 35,105 1,785,846 (180,946) 42,000 35,105 (281,914) 912,000 594,000 474,000 1,980,000 842,000 594,000 631,760 2,067,760 816,128 601,220 370,142 1,787,490 (25,872) 7,220 (261,618) (280,270) Excess revenues over expenditures - - (1,644) (1,644) Fund balance, beginning Restatement Fund balance, beginning, as restated - - - - 69,589 69,589 69,589 69,589 Expenditures: Current: Trip reduction Ridesharing Other programs Total expenditures Fund balance, ending $ - 50 $ - $ 67,945 $ 67,945 Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual Regional Customer Services Fund Fiscal Year Ended June 30, 2008 Actual Amounts Budgeted Amounts Original Final Revenues: Intergovernmental: State and Local Grant Miscellaneous Total revenues $ $ Variance with Final Budget Over (Under) - 43,200 43,200 $ 43,200 58,160 101,360 $ 58,160 58,160 3,066,743 3,585,983 1,729,959 471,613 8,854,298 3,109,943 3,585,983 1,729,959 471,613 8,897,498 3,084,872 3,563,629 1,380,563 398,885 8,427,949 (25,071) (22,354) (349,396) (72,728) (469,549) (8,854,298) (8,854,298) (8,326,589) 527,709 8,450,350 8,450,350 8,854,298 8,854,298 8,415,061 8,415,061 (439,237) (439,237) - 88,472 88,472 - 154,351 154,351 154,351 154,351 Expenditures: Current: Regional marketing Regional call center Other programs Capital outlay Total expenditures Deficiency of revenues under expenditures Other financing sources: Transfers in Total other financing sources Net change in fund balance (403,948) Fund balance, beginning Restatement Fund balance, beginning, as restated Fund balance, ending $ (403,948) $ 51 - $ 242,823 $ 242,823 Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual Capital and Other Grants Fund Fiscal Year Ended June 30, 2008 Budgeted Amounts Original Final Variance with Final Budget Over (Under) Actual Amounts Revenues: Proceeds from sale of capital assets $ - Total revenues Expenditures: Capital outlay Total expenditures $ - $ 1,862 1,862 $ 1,862 1,862 1,568,200 1,568,200 720,000 720,000 679,824 679,824 (40,176) (40,176) (1,568,200) (720,000) (677,962) 42,038 1,568,200 720,000 677,962 (42,038) Net change in fund balance - - - - Budgetary fund balance, beginning - - - - Excess (deficiency) of revenues over (under) expenditures Transfers in: General fund Budgetary fund balance, ending $ - 52 $ - $ - $ - Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenses and Changes in Net Assets - Budget to Actual Transit Service Operations Fund Fiscal Year Ended June 30, 2008 Budgeted Amounts Original Final Operating Revenues: Charges for services Miscellaneous Total operating revenues $ 23,694,829 23,694,829 $ 24,063,007 24,063,007 Variance with Final Budget Over (Under) Actual Amounts (budgetary basis) $ 22,749,063 30,423 22,779,486 $ (1,313,944) 30,423 (1,283,521) Operating Expenses: Local & express bus service Paratransit service Vanpool service Safety and security Administrative and general Contingency Capital outlay Total operating expenses Operating income (loss) 40,679,276 8,507,814 777,314 1,357,501 47,851 7,889,948 44,525,374 103,785,078 (80,090,249) 40,984,148 8,282,951 1,247,314 788,247 47,851 1,000,000 35,866,457 88,216,968 (64,153,961) 43,341,102 9,131,300 770,227 470,044 48,470 32,004,792 85,765,935 (62,986,449) 2,356,954 848,349 (477,087) (318,203) 619 (1,000,000) (3,861,665) (2,451,033) 1,167,512 Non-Operating Revenues (Expenses): Lead agency disbursements State Grants Federal Transit Administration grants IRS fuel tax credit Proceeds from disposition of assets Miscellaneous Total nonoperating revenues (expenses) (44,980,237) 14,500 31,461,399 (13,504,338) (32,924,678) 14,500 23,992,322 (8,917,856) (34,597,490) 16,501,060 1,147,487 496,852 163,298 (16,288,793) (1,672,812) (14,500) (7,491,262) 1,147,487 496,852 163,298 (7,370,937) (93,594,587) (73,071,817) (79,275,242) (6,203,425) 68,888,426 78,141,141 79,859,060 1,717,919 Income (loss) before transfers Transfers in Excess revenues over expenses budgetary basis $ (24,706,161) $ 5,069,324 $ 583,818 $ 583,818 Explanation of differences between budgetary basis and GAAP basis Excess revenues over expenses - budgetary basis Capital outlay is an expense for budgetary purposes, but assets are capitalized and are not an expense for GAAP purposes 32,004,792 Contributed capital is not a budgeted revenue, but is revenue for GAAP purposes 1,157,839 Depreciation is not a budgeted expense, but is an expense for GAAP purposes (8,438,269) Proceeds from disposition of assets increase financial resources for budgetary basis, but is not a revenue for GAAP basis (496,852) The gain on disposal of capital assets is not a budgeted expense, but is a revenue for GAAP purposes Changes in net assets per the statement of revenues, expenses and changes in fund net assets 346,999 $ 25,158,327 This schedule is prepared on a budgetary basis for the operating accounts of the proprietary fund and as such does not present the results of operations on the basis of generally accepted accounting principles, but is presented for supplemental information. 53 $ (4,485,506) Valley Metro Regional Public Transportation Authority Schedule of Revenues, Expenses and Changes in Net Assets - Budget to Actual Valley Metro Rail Fund Fiscal Year Ended June 30, 2008 Actual Amounts (budgetary basis) Budgeted Amounts Original Final Operating Revenues: Charges for services Total operating revenues $ Operating Expenses: Light rail staff and administration Total operating expenses Operating income (loss) 7,519,323 7,519,323 $ 7,519,323 7,519,323 $ 6,421,524 6,421,524 Variance with Final Budget Over (Under) $ (1,097,799) (1,097,799) 7,519,323 7,519,323 - 7,519,323 7,519,323 - 6,421,524 6,421,524 - (1,097,799) (1,097,799) - (60,776,560) (60,776,560) (56,409,320) (56,409,320) (55,320,060) 536,116 (54,783,944) 1,089,260 536,116 1,625,376 Income (loss) before transfers (60,776,560) (56,409,320) (54,783,944) 1,625,376 Transfers in: General fund Transfers from public transportation fund Total transfers in 500,000 60,276,560 60,776,560 500,000 55,909,320 56,409,320 500,000 54,622,329 55,122,329 (1,286,991) (1,286,991) Non-Operating Revenues (Expenses): Lead agency disbursements Interest income Total nonoperating revenues (expenses) Excess revenues over expenses budgetary basis $ - $ - $ 338,385 $ 338,385 Explanation of differences between budgetary basis and GAAP basis Excess revenues over expenses - budgetary basis Under the GAAP basis, expenses and liabilities for the lead agency disbursements are reported regardless of when financial resources are used. However, for budgetary purposes, these expenditures are not recognized as the transactions are not paid with expendable available financial resources: Changes in net assets per the statement of revenues, expenses and and changes in fund net assets (3,501,782) $ (3,163,397) This schedule is prepared on a budgetary basis for the operating accounts of the proprietary fund and as such does not present the results of operations on the basis of generally accepted accounting principles, but is presented for supplemental information. 54 $ 338,385 Statistical Section The Statistical Section presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Authority’s overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the Authority’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the Authority’s most significant local revenue source, the sales tax. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Authority’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Authority’s financial report relates to the services the Authority provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The Authority implemented GASB Statement No. 34 in FY 2001-2002; schedules presenting government-wide information include information beginning in that year. 55 Valley Metro Regional Public Transportation Authority Net Assets by Component Last Seven Fiscal Years (accrual basis of accounting) FY 2001/02 FY 2002/03 FY 2003/04 FY 2004/05 FY 2005/06 FY 2006/07 FY 2007/08 Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net asset $ 152,674 2,303,561 $ 2,456,235 $ 175,418 2,303,561 $ 2,478,979 $ 199,619 3,300,859 $ 3,500,478 $ 161,090 3,300,859 $ 3,461,949 $ 249,177 12,224,193 $ 12,473,370 $ 1,362,413 42,677,444 $ 44,039,857 1,467,040 28,106,773 $ 29,573,813 Business-type activities Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets $ 17,034,467 726,021 12,075 $ 17,772,563 $ 14,186,807 1,116,356 943,423 $ 16,246,586 $ 11,497,494 1,559,108 1,250,277 $ 14,306,879 $ 12,283,769 1,827,192 1,299,780 $ 15,410,741 $ 27,042,048 5,301,289 17,159,298 $ 49,502,635 $ 47,945,807 1,778,889 21,142,003 $ 70,866,699 $ 72,537,461 2,332,524 17,991,644 $ 92,861,629 Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets $ 17,187,141 726,021 2,315,636 $ 20,228,798 $ 14,362,225 1,116,356 3,246,984 $ 18,725,565 $ 11,697,113 1,559,108 4,551,136 $ 17,807,357 $ 12,444,859 1,827,192 4,600,639 $ 18,872,690 $ 27,291,225 5,301,289 29,383,491 $ 61,976,005 $ 49,308,220 1,778,889 63,819,447 $ 114,906,556 $ 74,004,501 2,332,524 46,098,417 $122,435,442 56 $ Valley Metro Regional Public Transportation Authority Changes in Net Assets Last Seven Fiscal Years (accrual basis of accounting) FY 2001/02 Expenses Governmental activities: Regional planning: Long range planning $ 212,391 Short range planning 256,925 Capital planning 307,518 Program support 29,746 Transportation demand management: Trip reduction 853,216 Ridesharing 608,955 Other programs 497,885 Regional customer services: Marketing Call center Other programs Administration: Executive director's office 262,172 Communications & government relations 162,556 Finance & management services 87,255 Community funded transportation 1,000,000 Capital outlay 134,200 Total governmental activities expenses 4,412,819 Business-type activities: Transit service operations Regional customer services Light rail transit Total business-type activities expenses Total primary government expenses FY 2002/03 $ FY 2003/04 367,279 274,302 118,161 43,722 $ 167,057 242,945 163,818 53,199 FY 2004/05 $ 162,287 145,690 236,219 171,169 FY 2005/06 $ 187,496 322,430 197,256 534,285 FY 2006/07 $ 403,337 558,664 164,722 1,298,591 FY 2007/08 $ 316,147 735,888 224,767 1,113,474 820,699 589,798 294,016 784,056 656,311 267,869 931,196 514,977 486,102 865,290 645,052 326,903 719,854 594,549 385,257 819,553 592,460 373,833 - - - - 2,578,094 3,087,948 1,623,744 3,110,366 3,599,018 1,857,934 226,215 207,283 91,684 51,652 94,589 3,179,400 238,134 247,948 106,305 51,652 90,972 3,070,266 400,777 161,979 293,648 51,652 180,099 3,735,795 514,158 207,304 549,635 4,349,809 1,712,451 260,965 715,001 14,103,177 1,033,066 908,275 14,684,781 28,475,928 5,010,019 16,765,586 50,251,533 30,011,849 4,229,972 5,033,179 39,275,000 30,650,723 4,710,645 2,982,701 38,344,069 34,834,292 5,123,118 3,667,400 43,624,810 38,578,007 5,767,760 16,909,968 61,255,735 60,090,164 63,225,727 123,315,891 96,796,902 65,243,366 162,040,268 $ 54,664,352 $ 42,454,400 $ 41,414,335 $ 47,360,605 $ 65,605,544 $137,419,068 $176,725,049 (Continued) 57 Valley Metro Regional Public Transportation Authority Changes in Net Assets (Continued) Last Seven Fiscal Years (accrual basis of accounting) FY 2001/02 Program revenues Governmental activities: Charges for services Operating grants and contributions Capital grants and contributions Total governmental activities program revenues $ 2,486,448 122,392 2,608,840 FY 2002/03 $ 3,370 2,259,396 94,488 2,357,254 FY 2003/04 $ 32,501 1,949,879 92,140 2,074,520 FY 2004/05 $ 49,642 2,288,916 172,438 2,510,996 FY 2005/06 $ FY 2006/07 FY 2007/08 75,295 2,358,485 48,382 2,482,162 $ 25,046 2,494,611 198,777 2,718,434 $ 2,062,602 2,062,602 20,131,861 2,118,843 685,743 36,729 5,565,540 642,313 19,041,093 48,222,122 50,940,556 $ 19,861,844 2,043,104 844,115 6,421,524 1,421,891 16,237,008 46,829,486 48,892,088 Business-type activities: Charges for services Transit service operations: Local & express bus service Paratransit service Vanpool service Other activities Regional customer services Light rail transit Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues $ 11,474,892 4,603,962 319,875 53,288 4,683,109 5,323,908 13,324,905 5,374,355 45,158,294 $ 47,767,134 $ 14,423,963 4,623,029 594,796 56,957 3,997,064 2,569,035 4,108,637 609,542 30,983,023 $ 33,340,277 $ 15,487,044 4,640,901 534,764 70,001 4,378,852 2,982,701 1,834,067 820,223 30,748,553 $ 32,823,073 $ 18,135,892 5,344,925 526,891 49,550 4,962,128 3,667,400 5,140,813 387,845 38,215,444 $ 40,726,440 $ 18,963,733 4,075,963 692,342 182,809 3,376,143 5,209,939 1,186,038 17,286,134 50,973,101 $ 53,455,263 $ Net (Expense)/Revenue Governmental activities Business-type activities Total primary government net expense $ (1,803,979) (5,093,239) $ (6,897,218) $ (822,146) (8,291,977) $ (9,114,123) $ (995,746) (7,595,516) $ (8,591,262) $ (1,224,799) (5,409,366) $ (6,634,165) $ (1,867,647) (10,282,634) $ (12,150,281) $ (11,384,743) (75,093,769) $ (86,478,512) $ (12,622,179) (115,210,782) $ (127,832,961) General Revenues and Other Changes in Net Assets Governmental activities: Sales taxes Interest earnings Other income Transfers in (out) Total governmental activities $ 1,941,168 167,272 (789,672) 1,318,768 $ 2,587,302 64,528 21,603 (1,828,543) 844,890 $ 3,071,725 83,977 966 (1,139,423) 2,017,245 $ 1,154,022 103,981 1,047 1,259,050 $ 55,084,706 124,312 (44,329,950) 10,879,068 $ 134,235,260 1,664,357 (92,948,387) 42,951,230 $ 130,490,779 2,503,935 142,810 (134,981,389) (1,843,865) 5,400,322 45,490 16,775 789,672 6,252,259 $ 7,571,027 4,914,755 22,702 1,828,543 6,766,000 $ 7,610,890 4,516,066 320 1,139,423 5,655,809 $ 7,673,054 6,559,344 2,774 6,562,118 $ 7,821,168 44,578 44,329,950 44,374,528 $ 55,253,596 945,155 2,564,291 92,948,387 96,457,833 $ 139,409,063 536,116 1,688,207 134,981,389 137,205,712 $ 135,361,847 $ $ $ 1,021,499 (1,939,707) $ (918,208) $ $ $ $ (14,466,044) 21,994,930 $ 7,528,886 Business-type activities: Sales taxes Interest earnings Other income Transfers in (out) Total business-type activities: Total primary government Change in net assets: Governmental activities Business-type activities Total primary government net expense (485,211) 1,159,020 $ 673,809 22,744 (1,525,977) $ (1,503,233) 58 34,251 1,152,752 $ 1,187,003 9,011,421 34,091,894 $ 43,103,315 $ $ 31,566,487 21,364,064 52,930,551 $ Valley Metro Regional Public Transportation Authority Fund Balances of Governmental Funds Last Seven Fiscal Years (modified accrual basis of accounting) General fund: Reserved Unreserved, designated Unreserved, undesignated Total general fund All other governmental funds: Reserved Unreserved, designed, reported in Special revenue funds Unreserved, undesignated, reported in Special revenue funds Total all other governmental funds FY 2001/02 FY 2002/03 FY 2003/04 FY 2004/05 $ 238,405 2,065,156 $ 2,303,561 $ 318,191 1,985,370 $ 2,303,561 $ 384,887 2,915,972 $ 3,300,859 $ 350,173 2,950,686 $ 3,300,859 $ 649,225 1,638,892 $ 2,288,117 $ 1,002,229 1,433,788 $ 2,436,017 $ $ $ $ $ $ $ $ - $ - - $ - - $ 59 - $ - FY 2005/06 - FY 2006/07 - FY 2007/08 233,480 2,888,105 $ 3,121,585 - - - 21,059,001 410,974 - 9,936,076 $ 9,936,076 19,182,426 $ 40,241,427 25,218,669 $ 25,629,643 Valley Metro Regional Public Transportation Authority Changes in Fund Balances of Governmental Funds Last Seven Fiscal Years (modified accrual basis of accounting) Revenues Sales taxes Intergovernmental: State & county grants Federal Transit Administration CMAQ Other federal grants Charges for services Interest earnings Other Total revenues FY 2001/02 FY 2002/03 FY 2003/04 FY 2004/05 FY 2005/06 FY 2006/07 $ 1,941,168 $ 2,587,302 $ 3,071,725 $ 1,154,022 $ 55,084,706 $ 134,235,260 409,000 553,492 1,604,348 42,000 167,272 4,717,280 400,000 599,460 1,312,424 42,000 3,370 64,528 21,603 5,030,687 400,000 335,365 1,264,654 42,000 32,501 83,977 966 5,231,188 400,000 526,176 1,493,178 42,000 49,642 103,981 1,047 3,770,046 400,000 569,622 1,395,577 41,668 75,295 124,312 57,691,180 400,000 993,727 1,298,056 1,604 25,046 1,664,357 138,618,050 422,887 268,661 1,287,054 84,000 2,503,935 144,672 135,201,988 212,391 256,925 307,518 29,746 367,279 274,302 118,161 43,722 167,057 242,945 163,818 53,199 162,287 145,690 236,219 171,169 187,496 322,430 197,256 534,285 403,337 558,664 164,722 1,298,591 311,129 733,017 222,439 1,104,198 853,216 608,955 497,885 820,699 589,798 294,016 784,056 656,311 267,869 931,196 514,977 486,102 865,290 645,052 326,903 719,854 594,549 385,257 816,128 601,220 370,142 - - - - - 2,578,094 3,087,948 1,511,164 3,084,872 3,563,629 1,380,563 262,172 226,215 238,134 400,777 514,158 1,712,451 1,030,804 162,556 87,255 1,000,000 153,369 4,431,988 207,283 91,684 51,652 117,333 3,202,144 247,948 106,305 51,652 115,173 3,094,467 161,979 293,648 51,652 214,350 3,770,046 207,304 419,571 218,151 4,437,896 260,965 580,415 765,641 14,621,652 318,945 1,078,709 14,615,795 285,292 1,828,543 2,136,721 - 53,253,284 123,996,398 120,586,193 (789,672) (789,672) (1,828,543) (1,828,543) (1,139,423) (1,139,423) - 814,701 (45,144,651) (44,329,950) 9,349,388 (102,892,535) (93,543,147) 11,165,777 (146,147,166) (134,981,389) Expenditures Governmental activities: Regional planning: Long range planning Short range planning Capital planning Program support Transportation demand management: Trip reduction Ridesharing Other programs Regional customer services: Marketing Call center Other programs Administration: Executive director's office Communications & government relations Finance & management services Community funded transportation Capital outlay Total expenditures Excess of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances $ (504,380) $ - $ 60 997,298 $ - $ 8,923,334 $ 30,453,251 FY 2007/08 $ $ 130,490,779 (14,395,196) Valley Metro Regional Public Transportation Authority Sales Tax Revenues by Component (1) Last Ten Fiscal Years (accrual basis of accounting) Governmental activities Regional area road funds Public transportation funds Total governmental activities sales taxes FY 1998/99 FY 1999/00 FY 2000/01 FY 2001/02 $ 7,019,772 $ 7,019,772 $ 7,090,674 $ 7,090,674 $ 7,193,836 $ 7,193,836 $ 1,941,168 $ 1,941,168 $ $ $ - $ 5,400,322 $ 5,400,322 $ 7,193,836 $ 7,193,836 $ 7,341,490 $ 7,341,490 Business-type activities Regional area road funds Public transportation funds Total business-type activities sales taxes $ Primary government Regional area road funds Public transportation funds Total primary government sales taxes $ 7,019,772 $ 7,019,772 - $ - $ 7,090,674 $ 7,090,674 $ (1) With the implementation of GASB Statement #34 in FY 2002, activities related to transit service operations, light rail transit and regional customer services were changed from general governmental to proprietary (business-type). Therefore, the functional expenditures listed for FY 2000/01 and earlier include the activities of these functions as part of general governmental, and the activities listed for FY 2001/02 and later exclude these activities from general governmental. As a result, most revenue categories will be greater for FY 2000/01 and prior years and should not be used as comparative data against FY 2001/02 activity and beyond. (2) With the implementation of the Public Transportation sales tax in January 2006, several changes to sales tax distributions were made. The regional area road fund sales tax distribution was reduced to one-half of the amount distributed in prior years. The collections of sales taxes under the new statute are distributed 33.3% to the Authority on a monthly basis. During FY 2005/06, only six months of collections were reported. (Continued) 61 FY 2002/03 FY 2003/04 FY 2004/05 FY 2005/06 (2) FY 2006/07 (2) FY 2007/08 (2) $ 2,587,302 $ 2,587,302 $ 3,071,725 $ 3,071,725 $ 1,154,022 $ 1,154,022 $ 3,938,570 51,146,136 $ 55,084,706 $ 4,047,593 130,187,667 $ 134,235,260 $ 4,167,168 126,323,611 $ 130,490,779 $ 4,914,755 $ 4,914,755 $ 4,516,066 $ 4,516,066 $ 6,559,344 $ 6,559,344 $ - $ - $ $ 7,502,057 $ 7,502,057 $ 7,587,791 $ 7,587,791 $ 7,713,366 $ 7,713,366 $ 3,938,570 51,146,136 $ 55,084,706 $ 4,047,593 130,187,667 $ 134,235,260 $ $ 62 $ $ - 4,167,168 126,323,611 $ 130,490,779 Valley Metro Regional Public Transportation Authority Maricopa County Transportation Excise Tax Revenue Distributions Last Ten Fiscal Years (in thousands) Regional area road funds Freeways Regional Public Transportation Authority / Maricopa Association of Governments (1) Arterial streets Total regional area road fund distributions FY 1998/99 FY 1999/00 FY 2000/01 FY 2001/02 $ $ $ $ 222,450 260,222 7,091 7,194 7,341 229,470 248,596 264,723 267,563 - $ 257,529 7,020 Public transportation funds Total Maricopa County transportation excise tax revenue distributions 241,505 229,470 - $ 248,596 - $ 264,723 - $ 267,563 Source: The Maricopa County Transportation Excise Tax Year-End Report for Fiscal Year 2008, dated July 2008, prepared by the Arizona Department of Transportation, Financial Management Services, Office of Financial Planning. Note: (1) (2) The Maricopa County Transportation Excise Tax, often referred to as the "1/2 cent sales tax," is levied upon business activities in Maricopa County, including retail sales, contracting, utilities, rental of real and personal property, restaurant and bar receipts, and other activities. Under Proposition 300 (passed by the voters in 1985 becoming effective on January 1, 1986), the transportation excise tax revenues are deposited in the Maricopa County Regional Area Road Fund (RARF) which is administered by the Arizona Department of Transportation. The revenues deposited into the RARF account are the principal sources of funding for the Regional Freeway System in Maricopa County and the Regional Public Transportation Authority and are dedicated through December 31, 2005. In November 2004, Maricopa County's voters approved Proposition 400, Maricopa County Transportation Excise Tax, which became effective on January 1, 2006, and extends the 1/2 cent sales tax for another 20 years through December 31, 2025. The sales tax extension will be used for construction of new freeways, widening of existing freeways and highways, improvements to the arterial street system, regional bus service and high capacity transit services such as light rail. The collections of the Maricopa County Transportation Excise Tax are as follows: Freeways 56.2%, Public Transportation Fund 33.3%, and Arterial Streets 10.5%. The Authority received a portion of the RARF excise tax funds for transit costs through December 31, 2005. On January 1, 2006 these funds are distributed evenly to the Authority and the Maricopa Association of Governments to be used for administrative and planning purposes per Proposition 400. These funds are netted from the Freeway funds. Distributions are a mix of both Proposition 300 and Proposition 400 collections. (Continued) 63 FY 2002/03 FY 2003/04 FY 2004/05 $ $ $ 261,219 309,092 $ 292,487 FY 2006/07 (2) $ 213,119 FY 2007/08 $ 205,576 7,502 7,588 7,713 7,877 8,095 8,334 268,721 288,600 316,805 16,127 316,491 41,050 262,264 39,832 253,742 51,146 130,188 126,324 - $ 281,012 FY 2005/06 (2) 268,721 - $ 288,600 - $ 316,805 $ 367,637 64 $ 392,452 $ 380,066 Valley Metro Regional Public Transportation Authority Maricopa County Transportation Excise Tax Revenue Collections by Category Last Ten Fiscal Years (in thousands) Fiscal Year Retail Sales 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 (1) 2006/07 (1) 2007/08 (1) Source: Note: (1) $ 113,528 124,428 131,608 131,393 133,922 144,817 158,179 182,378 187,817 177,845 Contracting $ 35,632 37,384 38,820 41,218 38,894 43,524 52,325 64,822 73,864 66,046 Utilities $ 15,680 16,437 17,862 18,432 18,485 19,980 20,813 23,600 26,697 28,630 Restaurant and Bar Rental Real Property $ $ 18,304 20,005 21,395 21,748 22,646 24,807 27,191 30,656 33,073 33,021 20,266 22,080 24,112 24,529 25,747 27,163 29,310 32,949 36,398 38,605 Rental Personal Property Other Total $ 12,787 13,434 14,416 13,928 12,834 12,631 12,624 13,923 15,053 15,111 $ 13,273 14,828 16,509 16,315 16,193 15,678 16,363 19,309 19,550 20,808 $ 229,470 248,596 264,722 267,563 268,721 288,600 316,805 367,637 392,452 380,066 The Maricopa County Transportation Excise Tax Year-End Report for Fiscal Year 2006, dated August 2006, prepared by the Arizona Department of Transportation, Financial Management Services, Office of Financial Planning. The Maricopa County Transportation Excise Tax, often referred to as the "1/2 cent sales tax," is levied upon business activities in Maricopa County, including retail sales, contracting, utilities, rental of real and personal property, restaurant and bar receipts, and other activities. Under Proposition 300 (passed by the voters in 1985 becoming effective on January 1, 1986), the transportation excise tax revenues are deposited in the Maricopa County Regional Area Road Fund (RARF) which is administered by the Arizona Department of Transportation. The revenues deposited into the RARF account are the principal sources of funding for the Regional Freeway System in Maricopa County and the Regional Public Transportation Authority and are dedicated through December 31, 2005. In November 2004, Maricopa County's voters approved Proposition 400, Maricopa County Transportation Excise Tax, which became effective on January 1, 2006, and extends the 1/2 cent sales tax for another 20 years through December 31, 2025. The sales tax extension will be used for construction of new freeways, widening of existing freeways and highways, improvements to the arterial street system, regional bus service and high capacity transit services such as light rail. The collections of the Maricopa County Transportation Excise Tax are as follows: Freeways 56.2%, Public Transportation Fund 33.3%, and Arterial Streets 10.5%. Fiscal year collections are a mix of both Proposition 300 and Proposition 400 collections. Revenue Category Definitions: Retail Sales Includes retail sales of automobiles, durable goods and other general merchandise, apparel, building materials, furniture and other tangible personal property. The tax on food was repealed in July 1980. Contracting Includes prime contracting and dealership of manufactured buildings and owner-builder operations. Utilities Includes producing and/or furnishing to consumers electricity, natural or artificial gas, and water. Restaurant and Bar Includes operations of restaurants and drinking establishments. Rental of Real Property Includes leasing or renting real property, hotels and motels. Rental of Personal Property Includes leasing or renting tangible personal property such as leased vehicles and construction equipment. Other Includes intrastate transportation of persons, freight or operations of property, intrastate telecommunication services, intrastate operation of pipelines for oil or natural or artificial gas, job printing, engraving, embossing and publication, publication of newspapers, magazines and other periodicals, operations of amusement places and miscellaneous other revenues. 65 Valley Metro Regional Public Transportation Authority Arizona Transaction Privilege Tax Excise Tax Rates by Category Last Ten Fiscal Years Retail sales Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Contracting Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Rental of Real Property (including hotels and motels) (1) Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Restaurants and Bars Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Utilities Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Rental of Personal Property Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Communications Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Amusements Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Publishing and Printing Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Other Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate Mining Percent of Total Maricopa County Transaction Privilege Tax Collections Transaction Privilege Tax Rate Transportation Excise Tax Rate FY 1998/99 FY 1999/00 FY 2000/01 FY 2001/02 49.5400% 5.0000% 0.5000% 50.0500% 5.0000% 0.5000% 49.7200% 5.0000% 0.5000% 49.1100% 5.0000% 0.5000% 15.5000% 5.0000% 0.5000% 15.0400% 5.0000% 0.5000% 14.6600% 5.0000% 0.5000% 15.4000% 5.0000% 0.5000% 9.2500% 1.8200% 0.5120% 8.8800% 1.8200% 0.5120% 9.1100% 1.8200% 0.5120% 9.1700% 1.8200% 0.5120% 8.0000% 5.0000% 0.5000% 8.0500% 5.0000% 0.5000% 8.0800% 5.0000% 0.5000% 8.1300% 5.0000% 0.5000% 6.8800% 5.0000% 0.5000% 6.6100% 5.0000% 0.5000% 6.7500% 5.0000% 0.5000% 6.8900% 5.0000% 0.5000% 5.4700% 5.0000% 0.5000% 5.4000% 5.0000% 0.5000% 5.4500% 5.0000% 0.5000% 5.2100% 5.0000% 0.5000% 3.2400% 5.0000% 0.5000% 3.4100% 5.0000% 0.5000% 3.7200% 5.0000% 0.5000% 3.7300% 5.0000% 0.5000% 1.0900% 5.0000% 0.5000% 1.1400% 5.0000% 0.5000% 1.0800% 5.0000% 0.5000% 1.1200% 5.0000% 0.5000% 0.9300% 5.0000% 0.5000% 0.8700% 5.0000% 0.5000% 0.7800% 5.0000% 0.5000% 0.7000% 5.0000% 0.5000% 0.1100% 5.0000% 0.5000% 0.5500% 5.0000% 0.5000% 0.6500% 5.0000% 0.5000% 0.5600% 5.0000% 0.5000% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% Source: The Maricopa County Transportation Excise Tax Year-End Report for the applicable fiscal year prepared by the Arizona Department of Transportation, Financial Management Services, Office of Financial Planning. (1) In 1990 and 1993, legislation reduced the transaction privilege tax rate for real property rentals; however, for transportation excise tax purposes, the rate was retained at its prior level. (Continued) 66 FY 2002/03 FY 2003/04 FY 2004/05 FY 2005/06 FY 2006/07 49.8400% 5.0000% 0.5000% 50.1800% 5.0000% 0.5000% 49.9300% 5.0000% 0.5000% 49.9300% 5.0000% 0.5000% 47.8600% 5.0000% 0.5000% 46.8000% 5.0000% 0.5000% 14.4700% 5.0000% 0.5000% 15.0800% 5.0000% 0.5000% 16.5200% 5.0000% 0.5000% 16.5200% 5.0000% 0.5000% 18.8200% 5.0000% 0.5000% 17.4000% 5.0000% 0.5000% 9.5800% 1.8200% 0.5120% 9.0500% 1.8200% 0.5120% 9.2500% 1.8200% 0.5120% 9.2500% 1.8200% 0.5120% 9.2700% 1.8200% 0.5120% 10.1000% 1.8200% 0.5120% 8.4300% 5.0000% 0.5000% 8.6000% 5.0000% 0.5000% 8.5800% 5.0000% 0.5000% 8.5800% 5.0000% 0.5000% 8.4300% 5.0000% 0.5000% 8.7000% 5.0000% 0.5000% 6.8800% 5.0000% 0.5000% 6.9200% 5.0000% 0.5000% 6.5700% 5.0000% 0.5000% 6.5700% 5.0000% 0.5000% 6.8000% 5.0000% 0.5000% 7.5000% 5.0000% 0.5000% 4.7800% 5.0000% 0.5000% 4.3800% 5.0000% 0.5000% 3.9800% 5.0000% 0.5000% 3.9800% 5.0000% 0.5000% 3.8400% 5.0000% 0.5000% 4.0000% 5.0000% 0.5000% 3.4500% 5.0000% 0.5000% 3.3400% 5.0000% 0.5000% 3.2000% 5.0000% 0.5000% 3.2000% 5.0000% 0.5000% 2.9300% 5.0000% 0.5000% 3.3000% 5.0000% 0.5000% 1.1100% 5.0000% 0.5000% 1.0600% 5.0000% 0.5000% 1.0500% 5.0000% 0.5000% 1.0500% 5.0000% 0.5000% 1.0600% 5.0000% 0.5000% 1.1000% 5.0000% 0.5000% 0.7000% 5.0000% 0.5000% 0.6300% 5.0000% 0.5000% 0.6100% 5.0000% 0.5000% 0.6100% 5.0000% 0.5000% 0.5300% 5.0000% 0.5000% 0.5000% 5.0000% 0.5000% 0.7600% 5.0000% 0.5000% 0.7600% 5.0000% 0.5000% 0.3100% 5.0000% 0.5000% 0.3100% 5.0000% 0.5000% 0.4600% 5.0000% 0.5000% 0.6000% 5.0000% 0.5000% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 0.0000% 3.1250% 0.3125% 67 FY 2007/08 Valley Metro Regional Public Transportation Authority Regional Population Statistics Last Ten Fiscal Years FY 1998/99 (1) Maricopa County Avondale Chandler El Mirage Gilbert Glendale Goodyear (3) Mesa Peoria Phoenix Queen Creek (3) Scottsdale Surprise (3) Tempe 2,806,100 28,650 160,165 5,885 91,290 196,820 N/A 361,895 89,930 1,220,710 N/A 195,495 N/A 159,220 FY 1999/00 (1) FY 2000/01 (2) FY 2001/02 (1) FY 2002/03 (1) 2,913,475 32,270 169,000 5,860 100,850 208,095 N/A 374,560 101,235 1,240,775 N/A 204,660 N/A 161,995 3,072,149 35,883 176,581 7,609 109,697 218,812 N/A 396,375 108,364 1,321,045 N/A 202,705 30,848 158,625 3,192,125 40,445 186,875 11,915 122,360 224,970 N/A 414,075 117,200 1,344,775 N/A 209,960 38,400 159,435 3,296,250 47,610 194,390 20,645 133,640 227,495 N/A 427,550 122,655 1,365,675 N/A 214,090 45,125 159,425 (1) Source: Maricopa Association of Governments, Resident Population Estimates Documentation (2) Source: U.S. Census (3) Data for fiscal years prior to membership of the Authority was not available. The Regional Public Transportation Authority ("Authority") was established in 1985 to develop a regional transit plan and to develop and operate a regional transit system in Maricopa County, Arizona. The Authority is governed by a fourteen-member Board of Directors consisting of a member of the Maricopa County Board of Supervisors, and the mayors (or their designees) of the cities of Avondale, Chandler, El Mirage, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Surprise, Tempe, and the towns of Gilbert and Queen Creek. Any municipality in Maricopa County may join the Authority and have one elected official serve on the Board of Directors by committing a portion of its local transportation assistance funds to local public transportation. State legislation designates that 100% of the proceeds received by participating municipalities with 300,000 or more in population from the Arizona State Lottery, known as local transportation assistance funds, must be expended for public transportation in the respective municipalities to maintain a position on the Authority's Board of Directors. For all other municipalities, the requirement is 33.3% for cities with a population between 60,000 and 300,000 and 75% for cities with less than 60,000 population. Local transportation assistance funds ("LTAF") and minimum public transportation expenditures for participating municipalities for the last ten years are on the LTAF statistics table. (Continued) 68 FY 2003/04 (1) FY 2004/05 (1) FY 2005/06 (1) FY 2006/07 (1) FY 2007/08 (1) 3,406,170 54,200 209,140 25,550 151,975 231,150 N/A 435,380 126,815 1,390,830 N/A 218,095 51,885 159,905 3,537,630 60,490 221,555 28,420 165,325 234,225 N/A 448,845 132,805 1,421,450 N/A 221,980 64,210 161,420 3,648,545 66,110 231,785 29,630 178,000 236,030 N/A 452,355 137,285 1,452,825 N/A 223,835 78,265 160,735 3,792,675 72,210 235,450 32,605 185,030 243,540 49,720 451,360 145,135 1,505,265 18,690 237,120 98,140 165,890 3,907,492 75,256 241,205 33,583 203,656 246,076 55,954 456,344 151,541 1,538,568 21,363 240,126 104,895 167,871 69 Valley Metro Regional Public Transportation Authority Local Transportation Assistance Funds Last Ten Fiscal Years FY 1998/1999 Avondale Local transportation assistance funds received Minimum local expenditures required Percentage required Chandler Local transportation assistance funds received Minimum local expenditures required Percentage required El Mirage Local transportation assistance funds received Minimum local expenditures required Percentage required Gilbert Local transportation assistance funds received Minimum local expenditures required Percentage required Glendale Local transportation assistance funds received Minimum local expenditures required Percentage required Goodyear (1) Local transportation assistance funds received Minimum local expenditures required Percentage required Mesa Local transportation assistance funds received Minimum local expenditures required Percentage required Peoria Local transportation assistance funds received Minimum local expenditures required Percentage required Phoenix Local transportation assistance funds received Minimum local expenditures required Percentage required Queen Creek (1) Local transportation assistance funds received Minimum local expenditures required Percentage required Scottsdale Local transportation assistance funds received Minimum local expenditures required Percentage required Surprise (1) (2) Local transportation assistance funds received Minimum local expenditures required Percentage required Tempe Local transportation assistance funds received Minimum local expenditures required Percentage required $ 164,641 123,481 75.0% FY 1999/2000 $ 175,624 131,718 75.0% FY 2000/2001 $ 190,883 143,162 75.0% FY 2001/2002 $ 203,685 152,764 75.0% 960,480 320,160 33.3% 981,869 327,290 33.3% 999,497 333,166 33.3% 1,002,340 334,113 33.3% 36,510 27,383 75.0% 35,891 26,918 75.0% 34,647 25,985 75.0% 43,192 32,394 75.0% 501,832 167,277 33.3% 560,035 186,678 33.3% 596,742 198,914 33.3% 622,681 207,560 33.3% 1,209,213 1,209,213 33.3% 1,206,502 402,167 33.3% 1,230,349 410,116 33.3% 1,242,059 414,020 33.3% NA NA NA NA NA NA NA NA NA NA NA NA 2,218,130 739,377 100.0% 2,220,982 2,220,982 100.0% 2,216,247 2,216,247 100.0% 2,249,873 2,249,873 100.0% 528,376 176,125 33.3% 551,269 183,756 33.3% 598,664 199,555 33.3% 616,116 205,372 33.3% 7,626,417 7,626,417 100.0% 7,483,045 7,483,045 100.0% 7,336,182 7,336,182 100.0% 7,498,747 7,498,747 100.0% NA NA NA NA NA NA NA NA NA NA NA NA 1,180,771 393,590 33.3% 1,198,380 399,460 33.3% 1,210,039 403,346 33.3% 1,150,630 383,543 33.3% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 1,000,596 333,532 33.3% 976,015 325,338 33.3% 957,785 319,262 33.3% 800,415 266,805 33.3% Source: State of Arizona, Office of the Treasurer (1) Data for fiscal years prior to membership of the Authority was not available. The Regional Public Transportation Authority ("Authority") was established in 1985 to develop a regional transit plan and to develop and operate a regional transit system in Maricopa County, Arizona. The Authority is governed by a fourteen-member Board of Directors consisting of a member of the Maricopa County Board of Supervisors, and the mayors (or their designees) of the cities of Avondale, Chandler, El Mirage, Glendale, Goodyear, Mesa, Peoria, Phoenix, Scottsdale, Surprise, Tempe, and the towns of Gilbert and Queen Creek. Any municipality in Maricopa County may join the Authority and have one elected official serve on the Board of Directors by committing a portion of its local transportation assistance funds to local public transportation. State legislation designates that 100% of the proceeds received by participating municipalities with 300,000 or more in population from the Arizona State Lottery, known as local transportation assistance funds, must be expended for public transportation in the respective municipalities to maintain a position on the Authority's Board of Directors. For all other municipalities, the requirement is 33.3% for cities with a population between 60,000 and 300,000 and 75% for cities with less than 60,000 population. Local transportation assistance funds ("LTAF") and minimum public transportation expenditures for participating municipalities for the last ten years are shown above. (2) Percentages of proceeds designated for expenditures have been revised according to the reported population starting FY2004/2005 (Continued) 70 FY 2002/2003 $ 220,818 165,614 75.0% FY 2003/2004 $ 252,589 189,442 75.0% FY 2004/2005 $ 277,421 208,066 75.0% FY 2005/2006 $ 299,299 224,474 75.0% FY 2006/2007 $ 317,127 237,845 75.0% FY 2007/2008 $ 331,478 248,609 75.0% 1,020,285 340,095 33.3% 1,031,314 343,771 33.3% 1,072,387 357,462 33.3% 1,096,287 365,064 33.3% 1,111,863 370,250 33.3% 1,080,826 359,915 33.3% 65,053 48,790 75.0% 109,530 82,148 75.0% 130,312 97,734 75.0% 140,622 105,467 75.0% 142,134 106,600 75.0% 149,672 112,254 75.0% 668,051 222,684 33.3% 709,012 236,337 33.3% 778,323 259,441 33.3% 818,025 272,402 33.3% 853,858 284,335 33.3% 849,374 282,842 33.3% 1,228,273 409,424 33.3% 1,206,948 402,316 33.3% 1,186,391 395,464 33.3% 1,158,998 385,946 33.3% 1,132,226 377,031 33.3% 1,117,962 372,281 33.3% NA NA NA NA NA NA NA NA NA NA NA NA 197,755 148,316 75.0% 228,238 171,179 75.0% 2,260,734 2,260,734 100.0% 2,268,317 2,268,317 100.0% 2,233,853 2,233,853 100.0% 2,220,987 2,220,987 100.0% 2,169,928 2,169,928 100.0% 2,071,953 2,071,953 100.0% 639,879 213,293 33.3% 650,732 216,911 33.3% 650,326 216,775 33.3% 657,162 218,835 33.3% 658,598 219,313 33.3% 666,237 221,857 33.3% 7,342,097 7,342,097 100.0% 7,245,430 7,245,430 100.0% 7,138,976 7,138,976 100.0% 7,033,839 7,033,839 100.0% 6,969,140 6,969,140 100.0% 6,909,870 6,909,870 100.0% NA NA NA NA NA NA NA NA NA NA NA NA 76,224 57,168 75.0% 85,796 64,347 75.0% 1,146,323 382,108 33.3% 1,135,830 378,610 33.3% 1,119,229 373,076 33.3% 1,098,399 365,767 33.3% 1,073,727 357,551 33.3% 1,088,492 362,468 33.3% N/A N/A N/A 239,405 179,554 75.0% 265,383 88,373 33.3% 317,703 105,795 33.3% 375,434 125,019 33.3% 450,508 150,019 33.3% 870,471 290,157 33.3% 845,811 281,937 33.3% 821,152 273,717 33.3% 798,826 266,009 33.3% 771,039 256,756 33.3% 761,513 253,584 33.3% 71 Valley Metro Regional Public Transportation Authority Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year Population (1,2) 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 3,992,887 3,792,675 3,648,545 3,537,630 3,498,587 3,388,711 3,293,441 3,195,893 3,096,692 3,004,985 Income (1,2) $124,229,595 120,716,738 117,663,888 114,336,690 111,103,576 102,277,852 96,998,974 93,544,549 89,771,608 80,924,901 Per Capita Income (1,2) Median Age (1,3) School Enrollment (4) Unemployment Rate (5) $31,113 31,829 32,250 32,320 31,757 30,182 29,452 29,270 28,990 26,930 33.7 33.4 33.0 33.0 33.0 33.0 33.0 33.0 32.0 32.0 732,146 707,771 689,411 652,333 626,461 600,577 565,517 544,617 519,222 N/A 4.2% 3.5% 3.6% 4.1% 4.4% 5.2% 5.6% 4.2% 3.3% 3.0% (1) Calendar year (2) Source: Arizona Workforce Informer, Labor Market Information, for Maricopa County Population for fiscal years 2005, 2006 and 2008 are estimates from the Department of Economic Security Personal income for fiscal years 2005 through 2008 were not available. The income amounts provided are estimates based on a 2.91% growth rate. (3) For years through 2000, median age is based on the 1990 U.S. Census. For 2001 through 2008, median age is based on the 2000 U.S. Census. (4) Source: Arizona Department of Education, Research and Evaluation Section. School enrollment is based on the census at the start of the school year. (5) Maricopa County Labor Force and NonFarm Employment June 2008. 72 Valley Metro Regional Public Transportation Authority Full-time Equivalent Employees (FTE) by Function/Program Last Ten Fiscal Years 1999 2000 2001 2002 2003 2004 2005 2006 2007 Function/Program Governmental activities: Regional planning Transportation demand management Regional customer services Administration Total governmental activities FTE 4.85 9.33 8.00 22.18 4.85 9.33 8.00 22.18 4.26 10.91 7.90 23.07 3.58 10.25 7.80 21.63 4.45 10.25 7.90 22.60 4.59 10.25 4.72 7.90 27.46 4.54 10.25 4.67 8.90 28.36 7.91 10.25 4.20 14.75 37.11 7.88 9.00 71.50 20.10 108.48 8.13 10.50 74.60 22.20 115.43 Business-type activities: Transit service operations Light rail transit (1) Total business-type activities FTE 7.70 2.12 9.82 7.70 2.12 9.82 7.60 4.33 11.93 6.09 21.28 27.37 6.40 31.00 37.40 4.54 33.00 37.54 4.64 42.00 46.64 4.89 47.00 51.89 10.52 51.00 61.52 8.57 58.00 66.57 32.00 32.00 35.00 49.00 60.00 65.00 75.00 89.00 170.00 182.00 Total primary government FTE Source: Adopted Valley Metro Operating Budgets for the applicable years. (1) Light rail transit staff report to the Valley Metro Rail, Inc. Board of Directors. 73 2008 Valley Metro Regional Public Transportation Authority Operating Indicators by Program - Fixed Route System Last Ten Fiscal Years FY 1998/1999 Fixed Route System (1) City of Phoenix Transit System Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Regional Public Transportation Authority (2) Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Tempe Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Glendale - Luke Link Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Total fixed route system Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio $ $ $ $ $ $ 32,113,786 10,922,938 748,623 50,700,937 1.58 33.4% 3,978,393 4,096,443 290,119 11,531,961 2.90 21.7% 1,482,694 1,178,837 101,952 3,385,613 2.30 11.6% FY 1999/2000 $ $ $ $ $ $ $ $ $ $ 37,574,873 16,198,218 1,140,694 65,618,511 1.75 30.2% $ $ 30,656,284 11,261,534 756,527 54,726,226 1.79 35.3% 4,266,198 4,305,173 311,975 12,618,457 2.96 22.1% 2,394,572 2,350,597 192,313 6,902,393 2.88 12.8% 50,530 121,712 8,069 249,717 4.94 8.7% 37,367,584 18,039,016 1,268,884 74,496,793 1.99 30.9% FY 2000/2001 $ $ $ $ $ $ $ $ $ $ 31,897,150 12,525,236 801,069 65,946,654 2.07 33.5% 4,179,015 4,702,350 320,533 15,585,768 3.73 18.3% 3,201,550 3,302,089 246,388 12,028,529 3.76 13.9% 35,978 103,338 5,530 245,369 6.82 10.1% 39,313,693 20,633,013 1,373,520 93,806,320 2.39 28.4% FY 2001/2002 $ $ $ $ $ $ $ $ $ $ 34,642,732 14,498,806 941,752 76,314,996 2.20 25.5% 4,979,305 4,727,196 321,379 17,271,336 3.47 16.3% 3,865,511 3,730,509 350,657 12,485,395 3.23 17.2% 36,404 89,650 3,876 136,565 3.75 22.3% 43,523,952 23,046,161 1,617,664 106,208,292 2.44 23.0% Source: Reports prepared by the Regional Public Transportation Authority (RPTA): Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for FY2007/2008 dated 12-2-2008 pending RPTA Board approval. (1) Fixed route systems are comprised of various operators and contractors of service in Maricopa County; as the regional authority, the Regional Public Transportation Authority in its role compiles and reports on system efficiency and effectiveness performance indicators. (2) The Regional Public Transportation Authority statistics include the City of Mesa fixed route system and the City of Scottsdale fixed route system that were separately managed through fiscal year 2004 and fiscal year 2001, respectively. (3) Shuttle/Circulator System statistics were included in the Fixed Route System statistics through fiscal year 2000. See Operating Indicators by Program - Shuttle / Circulator System. (4) NA - City of Glendale did not run a fixed route in FY 2007/2008. (Continued) 74 FY 2002/2003 $ $ $ $ $ $ $ $ $ $ 37,543,692 16,479,011 1,089,891 90,376,532 2.41 23.0% 5,688,992 4,799,475 379,892 17,059,807 3.00 19.7% 4,906,953 3,814,559 267,347 13,110,640 2.67 20.6% 51,246 106,326 4,630 163,768 3.20 30.5% 48,190,883 25,199,371 1,741,760 120,710,747 2.50 22.3% FY 2003/2004 $ $ $ $ $ $ $ $ $ $ 40,427,904 16,956,333 1,115,462 93,661,178 2.32 24.8% 6,503,504 4,971,133 375,171 18,200,836 2.80 18.3% 4,813,237 3,826,195 314,932 14,864,954 3.09 18.2% 70,823 131,400 7,088 228,160 3.22 20.9% 51,815,468 25,885,061 1,812,653 126,955,128 2.45 23.1% FY 2004/2005 $ $ $ $ $ $ $ $ $ $ FY 2005/2006 42,909,890 17,420,722 1,146,819 89,543,836 2.09 27.0% 6,203,696 4,379,307 276,517 16,445,778 2.65 23.1% 4,805,598 3,797,053 311,852 15,738,112 3.27 17.3% 93,024 139,789 7,962 218,243 2.35 26.8% 54,012,208 25,736,871 1,743,150 121,945,969 2.26 25.2% 75 $ $ $ $ $ $ $ $ $ $ 44,182,683 17,166,702 1,166,967 93,058,555 2.11 26.6% 6,484,886 4,956,352 389,349 19,613,325 3.02 20.7% 5,063,284 3,868,790 297,027 16,738,459 3.31 17.9% 101,444 142,109 8,121 232,802 2.29 27.5% 55,832,297 26,133,953 1,861,464 129,643,141 2.32 24.6% $ $ $ $ $ $ $ $ FY 2006/2007 FY 2007/2008 44,101,320 18,412,020 1,166,986 108,350,712 2.46 27.0% 42,670,621 18,826,324 998,142 117,350,016 2.75 27.5% 6,772,065 5,521,319 381,620 22,493,215 3.32 20.2% 6,808,547 4,497,200 364,249 19,496,217 2.86 16.2% $ $ $ $ $ 7,908,819 6,218,876 377,267 30,076,788 3.80 18.1% 4,896,103 4,372,291 326,640 19,947,661 4.07 16.6% 227,702 252,413 19,455 435,099 1.91 227.5% NA NA NA NA NA NA 57,909,634 28,682,952 1,932,310 150,775,243 4.32 224.6% 55,475,543 29,417,491 1,702,049 167,374,465 3.02 24.5% $ $ Valley Metro Regional Public Transportation Authority Operating Indicators by Program - Dial-a-Ride System Last Ten Fiscal Years FY 1998/1999 Dial-a-Ride System (1) Phoenix Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Phoenix Reserve-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio East Valley Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Maricopa County STS Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Sun Cities Area Transit Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio $ $ $ $ $ $ $ $ $ $ FY 1999/2000 175,195 2,452,257 157,024 4,309,829 24.60 7.4% $ $ 173,572 620,628 45,408 1,890,985 10.89 4.4% $ $ 260,951 1,430,233 108,216 3,052,064 11.70 11.2% $ $ 134,640 791,449 63,279 1,549,359 11.51 5.5% $ $ 65,279 228,163 20,046 525,182 8.05 28.4% $ $ 179,094 2,113,092 140,909 4,733,615 26.43 7.2% 221,991 646,039 53,846 2,289,621 10.31 3.2% 258,880 1,841,774 115,478 4,423,962 17.09 7.7% 132,490 818,046 56,405 1,691,032 12.76 3.2% 59,777 219,408 18,838 498,481 8.34 30.5% FY 2000/2001 $ $ $ $ $ $ $ $ $ $ 237,886 2,961,140 191,525 6,909,752 29.05 6.4% 203,616 567,565 50,909 2,442,020 11.99 2.6% 266,624 1,952,587 115,673 4,524,032 16.97 8.0% 141,541 634,593 45,553 1,653,677 11.68 4.3% 61,317 222,535 18,847 617,129 10.06 25.3% FY 2001/2002 $ $ $ $ $ $ $ $ $ $ 270,493 3,238,681 230,951 9,462,730 34.98 5.2% 193,986 550,850 51,559 2,589,906 13.35 3.3% 252,441 1,995,550 116,884 4,772,217 18.90 7.6% 124,822 455,897 56,251 1,379,719 11.05 4.5% 60,400 218,313 17,998 656,655 10.87 22.9% Source: Reports prepared by the Regional Public Transportation Authority: Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for FY2007/2008 dated 12-2-2008 pending RPTA Board approval. (1) Dial-a-ride systems are comprised of various operators and contractors of service in Maricopa County; as the regional authority, the Regional Public Transportation Authority in its role compiles and reports on system efficiency and effectiveness performance indicators. NR Not reported (Continued) 76 FY 2002/2003 $ $ $ $ $ $ $ $ $ $ 333,860 3,687,477 255,922 10,385,900 31.11 4.9% 162,760 540,282 47,155 2,689,066 16.52 3.2% 240,879 1,371,852 117,217 5,076,798 21.08 7.0% 106,395 732,376 70,238 1,587,982 14.93 1.1% 60,345 226,194 19,226 671,365 11.13 22.4% FY 2003/2004 $ $ $ $ $ $ $ $ $ $ 369,791 3,901,614 262,372 11,150,114 30.15 4.8% 153,697 540,388 50,754 2,757,131 17.94 3.1% 222,736 2,048,542 111,514 4,963,617 22.28 6.5% 103,533 730,180 67,836 1,534,951 14.83 1.0% 61,147 229,917 20,015 671,410 10.98 22.7% FY 2004/2005 $ $ $ $ $ $ $ $ $ $ FY 2005/2006 393,053 4,084,991 274,099 12,375,324 31.49 4.0% $ $ 415,733 4,276,365 285,137 12,452,214 29.95 5.0% FY 2006/2007 $ $ 410,838 NA 287,882 13,655,624 33.24 4.7% FY 2007/2008 $ $ 391,420 4,806,031 292,601 14,759,075 37.71 4.1% 152,631 518,616 47,282 2,853,105 18.69 2.7% NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR NR 223,130 1,622,795 118,032 5,338,924 23.93 6.6% 220,153 1,796,728 121,607 6,596,249 29.96 5.2% 226,050 NA 126,131 7,685,324 34.00 5.0% 240,424 NA 131,842 8,461,088 35.19 4.6% $ $ 105,342 523,119 41,189 3,249,859 30.85 0.4% $ $ 58,069 254,897 22,648 714,915 12.31 21.3% $ $ 100,243 913,009 56,585 3,312,076 33.04 0.3% 57,091 230,472 21,802 689,473 12.08 23.5% $ $ $ $ $ $ 91,082 NA 49,524 3,368,464 36.98 0.0% 45,612 NA 16,526 697,877 15.30 18.0% $ $ $ $ $ $ 87,134 NA 47,511 3,350,837 38.46 0.0% 34,924 NA 12,974 560,024 16.04 22.0% (Continued) 77 Valley Metro Regional Public Transportation Authority Operating Indicators by Program - Dial-a-Ride System (Continued) Last Ten Fiscal Years FY 1998/1999 Dial-a-Ride System (1) Glendale Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Peoria Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio El Mirage Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Surprise Dial-a-Ride Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Total Dial-a-Ride System Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio $ $ $ $ $ $ $ $ $ $ FY 1999/2000 70,032 274,698 20,574 1,218,900 17.40 6.2% $ $ 39,492 294,828 7,206 495,866 12.56 9.4% $ $ 3,469 9,154 2,080 49,055 14.14 4.5% $ $ 7,046 38,742 3,370 69,390 9.85 9.7% $ $ 929,676 6,140,152 427,203 13,160,630 14.16 8.4% $ $ 69,081 280,529 21,174 1,312,716 19.00 6.1% 30,395 125,632 6,466 506,767 16.67 7.1% 3,318 9,820 2,080 41,355 12.46 5.7% 7,261 40,772 3,080 76,997 10.60 9.2% 962,287 6,095,112 418,276 15,574,546 16.18 7.0% FY 2000/2001 $ $ $ $ $ $ $ $ $ $ 66,536 281,461 20,718 1,442,170 21.68 5.4% 33,540 169,360 8,352 598,195 17.84 6.1% 2,054 12,698 2,080 88,592 43.13 1.7% 5,777 38,834 2,726 77,418 13.40 8.5% 1,018,891 6,840,773 456,383 18,352,985 18.01 6.7% FY 2001/2002 $ $ $ $ $ $ $ $ $ $ 76,622 316,961 22,662 1,807,835 23.59 4.9% 32,176 196,224 9,457 624,322 19.40 5.4% 1,204 6,020 750 93,178 77.39 1.5% 7,775 45,800 2,818 105,800 13.61 6.2% 1,019,919 7,024,296 509,330 21,492,362 21.07 6.0% Source: Reports prepared by the Regional Public Transportation Authority: Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for FY2007/2008 dated 12-2-2008 pending RPTA Board approval. (1) Dial-a-ride systems are comprised of various operators and contractors of service in Maricopa County; as the regional authority, the Regional Public Transportation Authority in its role compiles and reports on system efficiency and effectiveness performance indicators. NR Not reported (Continued) 78 FY 2002/2003 $ $ $ $ $ $ $ $ $ $ 81,768 376,504 25,782 2,074,611 25.37 4.7% 30,399 189,984 9,276 727,770 23.94 5.0% 1,103 9,172 1,834 93,632 84.89 0.9% 7,094 43,716 3,881 162,931 22.97 4.6% 1,024,603 7,177,557 550,531 23,470,055 22.91 5.4% FY 2003/2004 $ $ $ $ $ $ $ $ $ $ 86,132 387,531 26,252 2,255,038 26.18 4.7% 29,258 158,456 7,920 738,683 25.25 4.5% 1,061 7,230 NR 76,813 72.40 1.0% 7,387 48,768 4,891 185,646 25.13 4.3% 1,034,742 8,052,626 551,554 24,333,403 23.52 5.2% FY 2004/2005 $ $ $ $ $ $ $ $ $ $ FY 2005/2006 87,831 386,587 29,554 2,247,156 25.58 5.0% $ $ 33,805 153,805 8,258 827,786 24.49 4.0% $ $ 1,558 10,017 NR 70,459 45.22 1.7% $ $ 8,181 68,291 5,016 283,624 34.67 3.5% $ $ 1,063,600 7,623,118 546,078 27,961,152 26.29 4.5% $ $ 79 89,055 390,561 29,594 2,387,554 26.81 4.6% 42,560 159,903 9,975 927,312 21.79 5.1% 1,466 12,284 1,613 74,023 50.49 2.0% 12,578 86,045 6,554 367,093 29.19 3.5% 938,879 7,865,367 532,887 26,805,994 28.55 4.9% FY 2006/2007 $ $ $ $ $ $ $ $ $ 84,132 NA 29,448 2,446,602 29.08 3.3% 45,790 NA 12,663 1,045,445 22.83 4.5% 1,947 NA 1,820 99,256 50.98 3.7% 17,339 NA 8,037 506,921 29.24 3.6% 922,790 NA 532,031 29,505,513 31.97 4.4% FY 2007/2008 $ $ $ $ $ $ $ $ $ 88,638 NA 30,642 2,878,740 32.48 3.8% 40,122 NA 14,875 1,239,982 30.91 3.2% 1,131 NA 1,764 97,262 86.00 2.3% 20,075 NA 8,698 589,469 29.36 3.7% 903,868 NA 540,907 31,936,477 35.33 4.1% Valley Metro Regional Public Transportation Authority Operating Indicators by Program - Shuttle / Circulator System Last Eight Fiscal Years FY 2000/2001 Shuttle/Circulator System City of Phoenix Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Tempe Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Scottsdale Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio City of Glendale Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio Total Shuttle/Circulator System Total boardings Revenue miles Revenue hours Operating cost Operating cost per boarding Farebox recovery ratio $ $ $ $ $ $ $ $ $ $ 154,226 83,402 9,184 354,932 2.30 0.0% 690,451 449,658 37,691 1,632,164 2.36 0.0% 56,046 29,952 5,028 277,700 4.95 0.0% 36,431 55,758 4,647 136,334 3.74 4.8% 937,154 618,770 56,550 2,401,130 2.56 N/A FY 2001/2002 $ $ $ $ $ $ $ $ $ $ 437,421 361,830 26,505 1,058,452 2.42 0.0% 1,222,122 601,509 61,681 1,995,345 1.63 0.0% 42,456 30,060 4,676 290,066 6.83 0.0% 51,180 66,784 8,055 267,801 5.23 4.6% 1,753,179 1,060,183 100,917 3,611,664 2.06 N/A FY 2002/2003 $ $ $ $ $ $ $ $ $ $ 770,348 604,325 40,480 1,619,238 2.10 0.0% 1,445,714 441,587 30,949 1,517,734 1.05 0.0% 49,498 33,129 4,683 308,684 6.24 0.0% 54,093 78,895 6,361 185,407 3.43 5.7% 2,319,653 1,157,936 82,473 3,631,063 1.57 N/A FY 2003/2004 $ $ $ $ 747,351 577,579 37,636 1,435,044 1.92 0.0% 1,705,025 487,780 40,149 1,771,216 1.04 0.0% 52,599 37,272 6,185 377,726 7.18 0.0% $ $ 59,692 93,794 7,897 203,149 3.39 5.9% $ $ $ $ 2,564,667 1,196,425 91,867 3,787,135 1.48 N/A Source: Reports prepared by the Regional Public Transportation Authority: Performance Management Analysis System for fiscal years 2001 through 2007. Annual Transit Performance Report for FY2007/2008 dated 12-2-2008 pending RPTA Board approval. (1) (2) (3) (4) (5) City of Phoenix - Alex, Dart, Dash, Deer Run, Durango Shuttle, Mart & Smart; prior to FY 07-08 included only Dash and Alex. City of Tempe - FLASH, Orbit-Earth, Jupiter, Mars, Mercury, Neighborhood FLASH & Venus; prior to FY 07-08 included only Flash, Neighborhood Flash. City of Scottsdale - Neighborhood Trolley and Downtown Trollye; prior to FY 07-08 included only Roundup. City of Scottsdale did not track revenue miles. City of Glendale - GUS 7 Luke Link (Continued) 80 FY 2004/2005 $ $ $ $ $ $ $ $ $ $ 794,945 601,547 38,156 2,386,820 3.00 0.0% 1,999,795 475,609 39,831 1,835,387 0.92 0.0% 92,139 57,696 8,167 547,764 5.94 0.0% 82,569 100,295 8,301 144,934 1.76 11.0% 2,969,448 1,235,147 94,455 4,914,905 4.20 N/A FY 2005/2006 $ $ $ $ $ $ $ $ $ $ 766,676 580,884 36,923 1,812,780 2.36 0.0% 2,034,656 479,595 48,794 1,954,659 0.96 0.0% 125,435 80,489 14,025 953,477 7.60 0.0% FY 2006/2007 $ $ $ $ $ $ 735,941 580,080 36,710 1,889,393 2.57 0.0% 1,616,729 482,538 52,379 2,091,895 1.29 0.0% 274,961 219,861 33,828 1,887,546 6.86 0.0% 96,258 96,838 7,969 158,442 1.65 10.3% 97,681 NR NR NR NR NR 3,023,025 1,237,806 107,711 4,879,358 1.61 N/A 2,725,312 1,282,479 122,917 $5,868,834 2.15 N/A $ FY 2007/2008 $ $ $ $ $ $ $ $ 81 1,799,974 1,614,317 79,529 7,173,722 3.99 0.1% 2,456,646 1,613,904 150,171 6,833,012 2.78 0.0% 384,000 0 48,240 2,400,000 6.25 0.0% 110,941 110,005 8,858 $176,574 1.59 16.25% 4,751,561 3,338,226 286,798 $16,583,308 3.49 0.18% Valley Metro Regional Public Transportation Authority Capital Asset Statistics by Function/Program Revenue Vehicles for Transit Service Operations Last Ten Fiscal Years Fiscal Year 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Source: Local and Express Bus Paratransit / Dail-a-Ride 51 85 98 72 72 80 80 133 181 172 192 52 73 86 63 63 67 62 61 57 75 76 Vanpool NA NA NA NA NA NA NA 250 303 308 347 National Transit Data Base (1) For years FY98 through FY04, the NTD reported numbers included vans that were owned by the contractor, thus those assets are not reported. (2) The numbers of vans for 2006/07 Vanpool have been updated. 82 Valley Metro Regional Public Transportation Authority Supplementary Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2008 Federal Grantor Agency and Program Title CFDA Number Pass-Through Grantor Pass-Through Identifying Number Awards Expended Department of Transportation Federal Transit Administration Urbanized Area Formula Urbanized Area Formula Urbanized Area Formula Urbanized Area Formula Urbanized Area Formula Urbanized Area Fixed Guideway Formula New Freedoms Ajo/Phoenix Regional Transit Connector Service Ajo/Phoenix Regional Transit Connector Service Federal Transit Technical Studies Grant 20.507 20.507 20.507 20.507 20.507 20.507 20.507 20.507 20.507 20.505 City of Phoenix City of Phoenix City of Phoenix City of Phoenix City of Phoenix City of Phoenix City of Phoenix ADOT ADOT MAG AZ-90-X068 AZ-90-X070 AZ-90-X074 AZ-90-X080 AZ-90-X088 AZ-05-0201 AZ-57-X001 JPA 06-011T JPA 06 024T 0118 $ Total Federal Transit Administration 16,769,721 Federal Highway Administration Congestion Mitigation and Air Quality Improvement Program Funds: Regional Ridesharing Program 20.205 MAG Regional Ridesharing Program 20.205 MAG Trip Reduction Program 20.205 Maricopa County Trip Reduction Program 20.205 Maricopa County Telework 20.205 MAG Telework 20.205 MAG Bike Education 20.205 MAG Bike Education 20.205 MAG State Planning and Research Funds: Clean Air Promotional Campaign Clean Air Promotional Campaign Total Federal Highway Administration 41,222 618,691 1,142,220 834,392 11,734,146 1,790,072 65,597 205,158 113,503 224,720 20.205 ADOT 20.205 ADOT Total Expenditures of Federal Awards 0099 0264 C85-07-003-1-02 C-85-07-009-3-01 0115 270 0252 0359 57,268 525,223 107,374 241,807 75,487 222,577 38,431 18,887 JPA 04-017P JPA 07-004P 42,000 42,000 1,371,054 $ See accompanying notes to the Supplementary Schedule of Expenditures of Federal Awards. 83 18,140,775 Valley Metro Regional Public Transportation Authority Notes to the Supplementary Schedule of Expenditures of Federal Awards Fiscal Year Ended June 30, 2008 1. General The Schedule of Expenditures of Federal Awards presents the activity of all federal award programs of the Regional Public Transportation Authority (the “Authority”). All federal awards received are passed through the City of Phoenix, Arizona Department of Transportation, Maricopa County and Maricopa Association of Governments. Federal financial award activities are reported in the special revenue and enterprise funds in the Authority's fund financial statements. 2. Basis of Accounting and Reporting Entity The accompanying Schedule of Expenditures of Federal Awards is presented using a basis of accounting that is consistent with the basic financial statements, as is described in Note 1 of the Authority's basic financial statements. The Authority, for purposes of the Schedule of Expenditures of Federal Awards, includes all funds of the primary government as defined by Governmental Accounting Standards Board Statement No. 14, The Financial Reporting Entity. 3. Catalog of Federal Domestic Assistance (CFDA) Numbers The program titles and CFDA numbers were obtained from the 2008 Catalog of Federal Domestic Assistance. 4. Pass-Through Grantors Reference The Authority receives all federal awards as pass-through from other governmental and non-profit agencies. Abbreviations are as follows: ADOT MAG 5. Arizona Department of Transportation Maricopa Association of Governments Period of Award There is no specified time period in which the grant award must be spent. 84