COMPREHENSIVE ANNUAL FINANCIAL REPORT Arizona Department of Transportation For the fiscal year ended June 30, 2015 Comprehensive Annual Financial Report For the fiscal year ended June 30, 2015 Prepared by Financial Management Services State of Arizona Department of Transportation 206 S. 17th Avenue Phoenix, Arizona 85007 azdot.gov Arizona Department of Transportation Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal .............................................................................................................................................. i‐v Certificate of Achievement for Excellence in Financial Reporting .......................................................................... vi List of Principal Officials ......................................................................................................................................... vii Organization Chart ................................................................................................................................................ viii FINANCIAL SECTION Independent Auditors’ Report .............................................................................................................................. 1‐3 Management’s Discussion and Analysis .............................................................................................................. 4‐14 Basic Financial Statements Government‐wide Financial Statements: Statement of Net Position (Exhibit 1)........................................................................................................... 15 Statement of Activities (Exhibit 2)................................................................................................................ 16 Governmental Funds Financial Statements: Balance Sheet ‐ Governmental Funds (Exhibit 3) .................................................................................... 17‐18 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position (Exhibit 3.1) ......................................................................................... 19 Statement of Revenues, Expenditures, and Changes in Fund Balances ‐ Governmental Funds (Exhibit 4) ........................................................................................ 20‐23 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities (Exhibit 4.1) ........................... 24 Proprietary Funds Financial Statements: Statement of Net Position – Proprietary Funds (Exhibit 5) .......................................................................... 25 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds (Exhibit 6) ..... 26 Statement of Cash Flows – Proprietary Funds (Exhibit 7) ............................................................................ 27 Fiduciary Funds Financial Statement Statement of Net Position – Agency Fund (Exhibit 8) .................................................................................. 28 Index of Notes to the Financial Statements...................................................................................................... 29 Notes to the Financial Statements............................................................................................................... 30‐60 Required Supplementary Information (Other than MD&A) Budgetary Comparison Schedule – General Fund (State Highway Fund) ......................................................... 61 Note to Required Supplementary Information................................................................................................. 62 Information about Infrastructure Assets Reported Using the Modified Approach .....................................63‐67 Information about Pension Liability and Pension Contributions ...................................................................... 68 2015 Comprehensive Annual Financial Report Arizona Department of Transportation Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015 TABLE OF CONTENTS (continued) Page Supplementary Information Non‐Major Governmental Funds Financial Statements: Combining Balance Sheet (Exhibit 9) ...................................................................................................... 69‐70 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Exhibit 10) ...........71‐72 Fiduciary Funds Financial Statements: Combining Statement of Net Position – Agency Fund (Exhibit 11) .............................................................. 73 Statement of Changes in Assets and Liabilities – Agency Fund (Exhibit 12) ................................................ 74 STATISTICAL SECTION Overview ................................................................................................................................................................ 75 Index of Statistical Section ..................................................................................................................................... 76 Financial Trends: Change in Net Position (Table A‐1) .............................................................................................................. 77‐80 Statement of Revenues, Expenditures, and Changes in Fund Balances (Table A‐2) ....................................81‐84 Fund Balances of Governmental Funds (Table A‐3) ..................................................................................... 85‐86 Expenditures of Federal Awards (Table A‐4) .................................................................................................... 87 Government‐wide Expenses by Function (Table A‐5) .................................................................................. 88‐89 Government‐wide Revenues (Table A‐6) ..................................................................................................... 90‐91 Net Position by Component (Table A‐7) ...................................................................................................... 92‐93 Revenue Capacity: Highway User Revenue Fund Collections (Table B‐1) ....................................................................................... 94 Highway User Revenue Fund Distributions (Table B‐2) .................................................................................... 95 Fuel Tax Rates (Table B‐3) ................................................................................................................................. 96 Motor Vehicle Fuel Tax – Top Ten Suppliers (Table B‐4) .................................................................................. 97 Gasoline Volume Sold – Top Twenty‐Five Suppliers (Table B‐5).................................................................. 98‐99 Debt Capacity: Highway User Revenue Fund – Legal Debt Margin (Table C‐1) ...................................................................... 100 Highway Revenue Bonds – Bond Coverage (Table C‐2) .................................................................................. 101 Transportation Excise Tax Revenue Bonds – Bond Coverage (Table C‐3) ....................................................... 102 Transportation Excise Tax Revenue Bonds – Debt Service Revenue and Cost Per Capita (Table C‐4)............ 103 Ratios of Outstanding Debt by Type (Table C‐5) ......................................................................................104‐105 2015 Comprehensive Annual Financial Report Arizona Department of Transportation Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015 TABLE OF CONTENTS (continued) Page Demographic and Economic Information: Number of Vehicle Registrations Per Year (Table D‐1) ................................................................................... 106 Vehicle Registrations Per Year Compared to Fuel Sales (Table D‐2) ............................................................... 107 Demographic and Economic Statistics (Table D‐3) ......................................................................................... 108 Principal Employers (Table D‐4) ...................................................................................................................... 109 Operating Information: Full‐Time Equivalents (FTEs) (Table E‐1) ......................................................................................................... 110 Capital Assets – Schedule by Function and Activity (Table E‐2) ...................................................................... 111 Capital Assets – Schedule of Changes by Function and Activity (Table E‐3) ................................................... 112 Total Public Road Mileage by Highway Class and Governmental Ownership (Table E‐4) .............................. 113 Daily Vehicle Miles Traveled with Population Data (Table E‐5) ...................................................................... 114 Acknowledgments ..................................................................................................................................................... 115 2015 Comprehensive Annual Financial Report INTRODUCTORY SECTION 2015 Comprehensive Annual Financial Report Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Arizona Department of Transportation Text38: Text53: For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2014 Executive Director/CEO vi Arizona Department of Transportation List of Principal Officials John S. Halikowski Director Scott Omer Deputy Director Business Operations Kevin Biesty Deputy Director for Policy Dallas Hammit Deputy Director Transportation Kristine Ward Chief Financial Officer Sonya E. Herrera Assistant Director Administrative Services Division Terry W. Conner Assistant Director Enforcement and Compliance Division Eric Jorgensen Assistant Director Motor Vehicle Division Michael Kies Assistant Director Multimodal Planning Division Arizona State Transportation Board Member Kelly O. Anderson, Chairman Vacant Joseph E. La Rue, Vice Chairman Deanna L. Beaver William R. Cuthbertson Jack Sellers Michael S. Hammond Counties District 4 (Gila, Graham, and Pinal Counties) District 5 (Apache, Coconino, and Navajo Counties) District 1 (Maricopa County) District 6 (Yavapai, Yuma, Mohave, and LaPaz Counties) District 3 (Cochise, Greenlee, and Santa Cruz Counties) District 1 (Maricopa County) District 2 (Pima County) 2015 Comprehensive Annual Financial Report vii Term Expires 2016 2017 2018 2018 2019 2020 2021 State of Arizona Department of Transportation Organization Chart Citizens Governor State Transportation Board Director Direct Reports Deputy Director of Policy Deputy Director of Business Operations Deputy Director of Transportation CFO Motor Vehicle Division Government Relations Administrative Services Division Intermodal Transportation Division Budget, Planning & Research Enforcement & Compliance Division Communications P3 Initiatives and International Affairs Multimodal Planning Division Financial Management Services Support Services Public Affairs Support Services Administrative Rules & Agency Policy Information Technology Group Human Resources Arizona Highways Magazine viii FINANCIAL SECTION 2015 Comprehensive Annual Financial Report CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS' REPORT The Honorable Douglas A. Ducey Governor of the State of Arizona Members of the Arizona State Legislature Arizona Department of Transportation Phoenix, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the Arizona Department of Transportation (Department), as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Department’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. An independent member of Nexia International 1 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Arizona Department of Transportation as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter During the fiscal year ended June 30, 2015, the Department adopted Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—an amendment of GASB Statement No. 68. As a result of the implementation of GASB Statements No. 68 and No. 71, the District reported a restatement for a change in accounting principle (see Note 6.B.). Our auditor’s opinions were not modified with respect to these restatements. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 4 through 14, budgetary comparison information on pages 61 and 62, information about infrastructure assets reported using the modified approach on page 63 through 67, and the Department’s proportionate share of the net pension liability and contributions on page 68 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Arizona Department of Transportation’s basic financial statements. The accompanying supplementary information, the Introductory Section and Statistical Section, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. 2 The Supplementary Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have issued our report dated April 18, 2016, on our consideration of the Department’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Department’s internal control over financial reporting and compliance. a CliftonLarsonAllen LLP Phoenix, Arizona April 18, 2016 3 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 As management of the Arizona Department of Transportation (Department), we offer readers of the Department’s financial statements this narrative overview and analysis of the financial activities of the Department for the fiscal year ended June 30, 2015. We encourage readers to consider the information presented here in conjunction with the Letter of Transmittal, which can be found on pages i‐v, and the Department’s basic financial statements, which begin on page 15, with the accompanying notes and Required Supplementary Information (RSI). Financial Highlights Government‐wide:  The net position of the Department at the close of the fiscal year is 18.3 billion, compared to $17.9 billion for fiscal year 2014, an increase of 2.7 percent. Of this amount, <$57.5> million represents the unrestricted component as compared to $160.9 million at the end of 2014. For fiscal year 2015 the Department implemented Government Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date—An Amendment of GASB Statement No. 68. Refer to Note 4A for an explanation of the impact of GASB 68 on the 2015 unrestricted fund balance, however for purposes of this Management’s Discussion and Analysis, the 2014 comparative balances have not been changed.  The Department’s capital assets are $20.3 billion, compared to $19.7 billion for fiscal year 2014, an increase of 2.9 percent. This increase is attributable to the results of highway construction activity. The Department’s net investment in capital assets is $17.5 billion, compared to $16.8 billion for fiscal year 2014, an increase of 4.1 percent.  The Department’s non‐current liabilities are $3.1 billion, compared to $3.3 billion in 2014. The Department had $222.4 million less in bonds outstanding in 2015 than in 2014. During fiscal year 2015, there were no new money bonds issued and $222.4 million in bonds repaid. The long term liability decrease in FY15 was offset in part by the inclusion of the net pension liability as required by GASB 68 (see note 6B). Fund Level:  As of the close of the fiscal year, the governmental funds of the Department reported combined ending fund balances of approximately $1.2 billion, as compared to approximately $1.3 billion in 2014.  The total restricted fund balance is $1.0 billion; the majority of this amount is restricted for capital projects. Inventories of $6.3 million represent the non‐spendable portion of fund balance while $221.4 million represents the committed fund balance portion.  The proprietary funds reported net position at year‐end of $79.2 million, as compared to $80.0 million in 2014. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction of the Department’s basic financial statements. The Department’s basic financial statements consist of three components: 1) government‐wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other Required Supplementary Information, in addition to the basic financial statements. Government‐wide Financial Statements (Reporting the Department as a Whole) The government‐wide financial statements are designed to present an overall picture of the financial position of the Department. These statements consist of the Statement of Net Position and the Statement of Activities, and are prepared using the accrual basis of accounting, which is similar to the accounting used by most private sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid. The Statement of Net Position combines and consolidates the Department’s current financial resources with capital assets and long‐term obligations. This statement includes all of the Department’s non‐fiduciary assets and liabilities. 2015 Comprehensive Annual Financial Report 4 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 Net position is the difference between the Department’s assets and deferred outflows of resources less liabilities and deferred inflows of resources, and represents one measure of the Department’s financial health.  An increase or decrease in the Department’s net position from one year to the next is an indicator of whether its financial health is improving or declining.  Other indicators of the Department’s financial health include the condition of its roads and bridges (infrastructure) and economic trends affecting the Department’s future tax revenues. The Statement of Activities focuses on both the gross and net cost of various activities (governmental and business‐ type); these costs are paid by the Department’s general tax and other revenues. This statement summarizes the cost of providing specific Department services and includes all current year revenues and expenses. The Statement of Net Position and the Statement of Activities divide the Department’s activities into two types: Governmental Activities The Department’s basic services are reported here, including administration, highway, highway maintenance, and motor vehicle. Taxes, fees, and federal grants finance most of these activities. Business‐type Activities Activities for which the Department charges a fee to customers to pay for most or all of the costs of the services it provides are reported as business‐type activities. The Department’s Arizona Highways Magazine and Highway Expansion and Extension Loan Program (HELP) are reported here. The government‐wide financial statements can be found on pages 15‐16 of this report. This report includes two schedules (Exhibit 3.1 and Exhibit 4.1) that reconcile the amounts reported on the governmental fund financial statements (prepared using the modified accrual basis of accounting and current financial resources measurement focus) with governmental activities (prepared using the accrual basis of accounting and economic resources measurement focus) on the appropriate government‐wide statements. The following summarizes the impact of utilizing Governmental Accounting Standards Board Statement 34 (GASB 34), as amended, reporting:  Capital assets used in governmental activities are not reported on governmental fund statements.  Long‐term assets that are not available to pay for current period expenditures are not reported on governmental fund statements.  Internal service fund activities are reported as governmental activities, but reported as proprietary funds in the fund financial statements.  Bond issuance costs are expensed as governmental activities.  Unless currently due and payable, long‐term liabilities, such as capital lease obligations, compensated absences, bonds, notes payable, and others only appear as liabilities on the government‐wide statements.  Capital outlay spending results in capital assets on the government‐wide statements, but is reported as expenditures on the governmental fund statements. 2015 Comprehensive Annual Financial Report 5 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015  Bond and note proceeds result in liabilities on the government‐wide statements, but are recorded as other financing sources on the governmental fund statements.  Certain other outflows represent either increases or decreases in liabilities on the government‐wide statements, but are reported as expenditures on the governmental fund statements. Fund Financial Statements (Reporting the Department’s Major Funds) The fund financial statements begin on page 17 and provide detailed information about the major individual funds. A fund is an accounting entity with a self‐balancing set of accounts that the Department uses to keep track of specific sources of funding and spending for a particular purpose. The Department, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance‐related legal requirements. All of the funds of the Department can be divided into three categories: governmental, proprietary, and fiduciary. Governmental Funds: A majority of the Department’s activities are reported in governmental funds. Reporting of these funds focuses on how financial resources flow in and out of the funds, and amounts remaining at year‐end for future spending. Governmental funds are accounted for using the modified accrual basis of accounting, which measures cash and other assets that can be readily converted to cash. The governmental fund statements provide a detailed short‐term view of the Department’s general governmental operations and the basic services it provides. This information should help determine whether there are more or less current financial resources available for the Department’s programs. The reconciliations following the fund financial statements explain the differences between the government’s activities, reported in the government‐wide statement of activities, and the governmental funds. The Department maintains fifteen individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund (State Highway Fund), Maricopa Regional Area Road Construction Fund, Motor Vehicle Division Clearing Fund, Highway User Revenue Fund, Debt Service Fund, and Capital Projects Fund, which are considered to be major funds. Data from the other nine governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non‐major governmental funds are provided in the form of combining statements elsewhere in this report. The legislature appropriates an annual budget from the Department’s General Fund (State Highway Fund). The Budgetary Comparison Schedule – General Fund (State Highway Fund) has been provided to demonstrate compliance with this budget and is presented as Required Supplementary Information. The governmental funds financial statements can be found on pages 17‐24 of this report. Proprietary Funds: When the Department charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting, the same method used by most private sector businesses. Enterprise funds report activities that provide goods and services to outside customers, to other agencies, or to other divisions of the Department. The Department’s enterprise funds are the Arizona Highways Magazine Fund and the Highway Expansion and Extension Loan Program Fund. The internal service fund reports activities that provide supplies and services for the Department’s other programs and activities and other state agencies. The Equipment Revolving Fund is the Department’s only internal service fund. Internal service fund activities are reported as governmental activities on the government‐wide statements. The proprietary funds financial statements can be found on pages 25‐27 of this report. Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government‐wide financial statements because the 2015 Comprehensive Annual Financial Report 6 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 resources of those funds are not available to support the Department’s own programs. The fiduciary fund financial statement can be found on page 28. Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government‐wide and fund financial statements. The notes to the financial statements can be found on pages 30‐60 of this report. Required Supplementary Information: In addition to the basic financial statements, including accompanying notes, this section presents certain Required Supplementary Information including the Department’s Budgetary Comparison Schedule – General Fund (State Highway Fund), the modified approach to reporting infrastructure assets, and the Pension Liability and Pension Contributions as per GASB statement 68, as amended. Required Supplementary Information can be found on pages 61‐68 of this report. Supplementary Information: Other Supplementary Information includes the combining statements for the non‐major governmental funds and agency funds, and is presented immediately following the Required Supplementary Information on budget and infrastructure assets. Combining and individual fund statements and schedules can be found on pages 69‐74 of this report. Government‐wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the Department’s financial health. The following tables, graphs, and analyses address the net position and changes to net position for the Department as a whole as of and for the fiscal years ended June 30, 2015 and 2014. The Department’s combined net position increased by $479.3 million over the course of this fiscal year’s operations, an increase of 2.7 percent. The net position of the governmental activities increased by $480.2 million, or 2.7 percent; and business‐type activities decreased by $0.9 million, a decrease of 1.1 percent over the previous year. The overall increase in the Department’s net position was due primarily to an increase in the Department’s infrastructure. The following table reflects the condensed Statement of Net Position as of June 30, 2015 and 2014: The total assets of the Department (excluding deferred outflows of resources) were $21.9 billion, while total liabilities (excluding deferred inflows of resources) were $3.6 billion, resulting in a net position balance of $18.3 billion. The majority of the Department’s net position, $17.5 billion (95.4 percent), was invested in capital assets (e.g., land, infrastructure, buildings, machinery, and equipment), net of any related debt used to acquire those assets. The Department uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Department’s investment in its capital assets is reported net of related debt, it should 2015 Comprehensive Annual Financial Report 7 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves cannot be used to liquidate these liabilities. The governmental activities reported an increase in capital assets with the largest increase being in the area of infrastructure. The Department issued no new HURF bonds in Fiscal Year 2014 and one in Fiscal Year 2015. The following condensed financial information was derived from the government‐wide Statement of Activities and reflects how the Department’s net position changed during the year, compared to the prior year: 2015 Comprehensive Annual Financial Report 8 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 Governmental Activities The following chart depicts revenues of the governmental activities for the fiscal year ended June 30, 2015: Revenues ‐ Governmental Activities $3,021,385,973 Income from investments, 0.3% Transportation excise taxes, 8.4% Fuel and motor carrier taxes and fees, 22.7% Vehicle registration, title, license and related taxes, 34.4% Other revenues including flight property taxes and gain on sale of capital assets, 0.6% Charges for services, 4.8% Operating grants and contributions, 5.7% Capital grants and contributions, 23.1% $2.4 billion (or 80.1 percent) of the Department’s revenues are from the following three revenue sources:    Vehicle registration, title, license, and related taxes comprise the Department’s largest revenue source of $1,037 million (34.5 percent). Fuel and motor carrier taxes and fees represent the Department’s second largest revenue source of $686.0 million (22.7 percent). Capital grants and contributions represent the Department’s third largest revenue source of $696.9 million (23.0 percent). The Department’s two main funding sources, the Highway User Revenue Fund (HURF) and the Regional Area Road Fund (RARF), also known as the Maricopa County Transportation Excise Tax, posted positive year‐results in fiscal year 2015. HURF collections totaled approximately $1,290.4 million, 4.0 percent above fiscal year 2014 and 1.6 percent above the forecast. Maricopa County Transportation Excise Tax collections totaled $382.2 million, an increase of 4.5 percent over fiscal year 2014 and 1.0 percent above the Department’s estimate. The Transportation Excise Tax distribution to the Department was $254.9 million compared to $243.8 million for fiscal year 2014. 2015 Comprehensive Annual Financial Report 9 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 The following chart depicts expenses of the governmental activities for the fiscal year ended June 30, 2015: Expenses ‐ Governmental Activities $2,224,527,711 Distributions to other state agencies, 8.5% Local governmental assistance, 4.4% Bond issuance Costs, 0.0% Interest on longterm debt, 4.3% Administration, 4.4% Highway, 1.9% Distributions to Arizona counties and cities, 51.9% Non-capital, including asset preservation, 14.2% Motor Vehicle, 4.2% Highway Maintenance, 6.2% $1.6 billion (or 74.4 percent) of the Department’s expenses were for the following:    Distributions to Arizona counties and cities comprise the Department’s largest expense of $1.2 billion (51.9 percent). Non‐capital, including asset preservation, represents the Department’s second largest expense of $315.3 million (14.2 percent). Distributions to other state agencies represent the Department’s third largest expense of $189.5 million (8.5 percent). Distributions to Arizona counties and cities decreased in fiscal year 2015 as compared to fiscal year 2014 due to a decrease in fuel tax and vehicle license tax collections. The distributions to other government entities equal $1.4 billion (64.9 percent); making up more than half of the expenditures for fiscal year 2015. 2015 Comprehensive Annual Financial Report 10 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 Business‐type Activities Net position for business‐type activities increased by $0.9 million in fiscal year 2015. Total revenues were $5.7 million, with charges for services representing 89.2 percent and income from investments 10.8 percent. The total expenses for business‐type activities were $4.8 million. The Highway Expansion and Extension Loan Program did not approve or disburse any loans in Fiscal Year 2015. Interest revenue decreased this fiscal year due to the lower interest rates during the year. The Arizona Highways Magazine had a decrease in operating revenues of $91 thousand primarily due to a reduction in the purchases of related products such as calendars, books, and holiday gift catalog items. Typically magazine subscribers also purchase these related products. This decline in demand is consistent with industry trends for many other consumer periodicals with revenues based predominantly on annual subscriptions, as well as an overall weak economy, especially in Arizona where the majority of subscribers are located. Financial Analysis of the Department’s Funds As previously mentioned, the Department uses fund accounting to ensure and 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 Department’s governmental funds financial statements (pages 17‐24) is to provide information on near‐term inflows, outflows, and balances of spendable resources. All major governmental funds are discretely presented on these financial statements, while the non‐major governmental funds are combined into a single column. Combining statements for the non‐major governmental funds may be found on pages 69‐72. As of the end of the fiscal year, the fund balances of the governmental funds totaled $1.2 billion, a decrease of $51.1 million over the previous fiscal year. The majority of this amount is restricted for capital projects. The General Fund (State Highway Fund) is the primary operating fund of the Department. At the end of the current fiscal year, the non‐spendable fund balance was $6.3 million; the restricted fund balance was $344.3 million; and the committed fund balance was $177.4 million. The Maricopa Regional Area Road Construction Fund is a major special revenue fund that receives a portion of Maricopa County Transportation Excise Tax monies that are used to provide a funding source for the construction of new freeways and other routes, improvements to existing freeways and other routes, and improvements to the arterial street system within Maricopa County. Total revenues collected in the fund in fiscal year 2015 were $480.0 million; Transportation Excise Tax revenue of $254.9 million (or 53.1 percent) was the bulk of the revenue. The remaining revenue was mainly federal revenue and income from investments. The Debt Service Fund is used for the accumulation of resources for, and the payment of, general long‐term debt principal and interest of the governmental funds. The other financing sources of $137.3 million were transferred in from the General Fund (State Highway Fund), Maricopa Regional Area Road Construction Fund ($103.3 million), and Grant Anticipation Notes Fund ($64.9 million), and were used to pay the debt service. The Capital Projects Fund is used to account for financial resources used for the acquisition or construction of major capital facilities in the governmental funds. During the fiscal year, the Capital Projects Funds’ expenditures were $108.5 million. Capital outlay expenditures of $79.9 million (73.7 percent) accounted for the majority of the expenditures in the Capital Projects Fund. This expenditure for the acquisition and construction of new highways was converted to capital assets on the government‐wide statements. 2015 Comprehensive Annual Financial Report 11 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 Budget Variances The Department’s appropriated operating budget from the General Fund (State Highway Fund) increased by about $3.5 million from fiscal year 2014 to fiscal year 2015. The increase was primarily due to the increased cost to maintain and operate new lane miles. In fiscal year 2014, the Department spent 99.0% of its budget and in fiscal year 2015 the Department spent 97.5% of its budget. Ultimately, the Department spent about $1.5 million less in fiscal year 2015 than in fiscal year 2014 from its appropriated operating budget from the General Fund (State Highway Fund). Reference the budgetary comparison schedule on page 61. Capital Assets and Debt Administration Capital Assets (See Note 5A to the financial statements for additional information) The Department’s investment in capital assets for its governmental and business‐type activities as of June 30, 2015, amounts to $20.3 billion (net of accumulated depreciation), a $574.6 million increase over the previous fiscal year. Land Infrastructure Construction in progress Buildings and improvements Improvements other than buildings Machinery and equipment Mobile fleet and aircraft Total Governmental Activities 2015 2014 $ 2,977,145,531 $ 2,906,121,499 15,732,568,650 13,778,329,207 1,358,933,346 2,843,910,023 104,164,773 103,775,596 46,770,729 22,306,468 21,970,078 12,204,261 65,606,126 65,833,116 $ 20,307,159,233 $ 19,732,480,170 $ $ Business‐Type Activities 2015 2014 7,900 $ 7,900 ‐ ‐ ‐ ‐ 4,471 8,838 ‐ ‐ 5,957 6,966 ‐ ‐ 18,328 $ 23,704 $ $ $ $ $ $ $ Total 2015 2014 2,977,153,431 $ 2,906,129,399 15,732,568,650 $ 13,778,329,207 1,358,933,346 $ 2,843,910,023 104,169,244 $ 103,784,434 46,770,729 $ 22,306,468 21,976,035 $ 12,211,227 65,606,126 65,833,116 20,307,177,561 $ 19,732,503,874 As provided by accounting principles generally accepted in the United States (GAAP), the Department has elected to record its infrastructure assets using the modified approach, as defined in GASB Statement 34, as amended. Assets accounted for under the modified approach include 6,800 center line miles of roads (21,390 travel lane miles) and 4,798 bridges that the Department is responsible for maintaining. The Five‐Year Transportation Facilities Construction Program (Program) is a dynamic program and adjustments are made to the annual plans based on the needs of the Department to maintain the condition level of the roads and bridges at a level equal to, or greater than, the goals established by the Department. The Program is updated annually and adjustments are made monthly during the fiscal year, as circumstances may require. The Department manages its roads using the Present Serviceability Rating (PSR), which measures the condition of the pavement and its ability to serve the traveling public. The PSR uses a five‐point scale (5 excellent, 0 impassable) to characterize the condition of the roadway. The Department’s serviceability rating goal is 3.23 for the overall system. The Department’s most recent assessment indicated that an overall rating of 3.68 was achieved for fiscal year 2015. The Department manages its bridges using the Arizona Bridge Information and Storage System (ABISS). The Department determines the condition rating based on standards developed by the Federal Highway Administration and additional internal criteria. It is the policy of the Department to maintain a Condition Rating Index (CRI) of 92.5 percent or better. In fiscal year 2015, a CRI of 93.5 percent was achieved. 2015 Comprehensive Annual Financial Report 12 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 In addition to many smaller projects, the following major highway construction contracts in excess of $10 million were started during fiscal year 2015: Furthermore, the following major highway construction projects had expenditures in excess of $15 million in fiscal year 2015. These project expenditures include payments made to construction contractors (as shown below) as well as utility, design, right‐of‐way, and landscaping costs: 2015 Comprehensive Annual Financial Report 13 Arizona Department of Transportation Management’s Discussion and Analysis (continued) June 30, 2015 Non‐Current Liabilities (See Note 5F to the financial statements for additional information) The Department’s non‐current liabilities for its governmental and business‐type activities as of June 30, 2015, amount to $3.1 billion, a decrease of $209.8 million from the previous fiscal year. 1 2016 was the first year that Net pension liability information was captured. The Department has issued revenue bonds in 35 separate issues since 2000. All bonds outstanding as of June 30, 2015 are scheduled to mature on various dates, but none later than July 1, 2038. The bonds are obligations of the Transportation Board of the State of Arizona Department of Transportation (Transportation Board) and are not obligations of the State of Arizona. The senior lien Highway Revenue Bonds have been rated AAA/Aa1 by Standard & Poor’s Ratings Services and Moody’s Investors Service, respectively. The Department’s subordinate lien Highway Revenue Bonds are rated AA+/Aa2. The Department’s Transportation Excise Tax Revenue Bonds are rated AA+/Aa1. The Department’s Grant Anticipation Notes (“GARVEE bonds”) are rated AA/Aa2/AA with the additional rating provided by Fitch Ratings. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with an overview of the Department’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Controller, Arizona Department of Transportation, 206 S. 17th Avenue, Phoenix, Arizona, 85007, or by visiting our website at: http://www.azdot.gov/about/FinancialManagementServices/transportation-funding/financial-reports. 2015 Comprehensive Annual Financial Report 14 BASIC FINANCIAL STATEMENTS Government‐wide Financial Statements – include the Statement of Net Position and the Statement of Activities and use the accrual basis of accounting for financial reporting. Governmental Funds Financial Statements – include the Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances for the major governmental funds and use the modified accrual basis of accounting for financial reporting. Also include the reconciliations to the government‐wide financial statements. Proprietary Funds Financial Statements – include the Statement of Net Position, the Statement of Revenues, Expenses, and Changes in Fund Net Position and the Statement of Cash Flows for the business‐type activities and use the accrual basis of accounting for financial reporting. Statement of Fiduciary Net Position – includes the Statement of Net Position for assets being held for parties outside of the Department. Notes to the Financial Statements 2015 Comprehensive Annual Financial Report GOVERNMENT‐WIDE FINANCIAL STATEMENTS Statement of Net Position – combines and consolidates the Department’s current financial resources with capital assets and long‐term obligations. This statement includes all of the Department’s non‐fiduciary assets and liabilities. Statement of Activities – focuses on both the gross and net cost of various activities (governmental and business‐type); these costs are paid by the Department’s general tax and other revenues. This statement summarizes the cost of providing specific Department services and includes all current year revenues and expenses. 2015 Comprehensive Annual Financial Report Exhibit 1 Arizona Department of Transportation Statement of Net Position June 30, 2015 Governmental Activities Assets Unrestricted cash on deposit with State Treasurer Receivables: Subscriptions, net of allowance for doubtful accounts Taxes and fees Notes and loans Other, net of allowance for doubtful accounts Due from U.S. Government Due from other state agencies Due from Arizona counties and cities Internal balances Inventories Other assets/prepaid items Restricted cash with State Treasurer Capital assets not subject to depreciation (Note 5A) Capital assets subject to depreciation, net of accumulated depreciation (Note 5A) $ Primary Government Business‐Type Activities 172,197,471 $ 3,608,980 Total Primary Government $ 175,806,451 ‐ 80,334,429 3,904,207 13,576,515 50,634,156 22,111,972 416,567 141,204 9,020,703 ‐ 1,121,966,321 20,068,647,527 81,060 ‐ ‐ 166,184 ‐ 23,232 ‐ (141,204) 301,188 435,011 78,733,257 7,900 81,060 80,334,429 3,904,207 13,742,699 50,634,156 22,135,204 416,567 ‐ 9,321,891 435,011 1,200,699,578 20,068,655,427 238,511,706 10,428 238,522,134 21,781,462,778 83,226,036 21,864,688,814 41,295,969 67,812,978 227,258 ‐ 41,523,227 67,812,978 Total Deferred outflows of resources 109,108,947 227,258 109,336,205 Liabilities Accounts payable and other current liabilities Accrued payroll and other accrued expenses Due to other state agencies Due to Arizona counties and cities Unearned revenue (Note 5C) Long‐term obligations (Note 5F) Net pension liability (Note 6B) Total Liabilities 98,291,979 8,512,202 8,023,033 117,234,110 32,460 3,040,831,348 306,088,022 3,579,013,154 47,109 46,266 ‐ ‐ 1,963,826 156,652 1,759,983 3,973,836 98,339,088 8,558,468 8,023,033 117,234,110 1,996,286 3,040,988,000 307,848,005 3,582,986,990 53,525,346 307,767 53,833,113 53,525,346 307,767 53,833,113 17,496,121,617 18,328 17,496,139,945 20,907,137 2 798,538,379 (57,533,910) 78,770,273 ‐ ‐ 383,090 99,677,410 2 798,538,379 (57,150,820) $ 18,258,033,225 $ 79,171,691 $ 18,337,204,916 Total Assets Deferred Outflows of Resources Relating to pensions (Note 6B) Loss on debt refundings Deferred Inflows of Resources Relating to pensions (Note 6B) Total Deferred inflows of resources Net Position Net investment in capital assets Restricted: Loans and other financial assistance: Debt service Capital projects Unrestricted (deficit) Total Net Position The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 15 Exhibit 2 Arizona Department of Transportation Statement of Activities June 30, 2015 Program Revenues Expenses Functions/Programs Governmental Activities Administration Highway Highway maintenance Motor vehicle Non‐capital, including asset preservation Distributions to other state agencies Distributions to Arizona counties and cities Local government assistance Interest on long‐term debt Total Governmental Activities $ $ 8,144,635 $ 2,157,355 2,676,461 132,836,861 ‐ ‐ ‐ ‐ ‐ 145,815,312 4,739,367 5,073,108 ‐ ‐ 333,741 43,169 4,782,536 ‐ 5,073,108 ‐ ‐ ‐ ‐ (43,169) 290,572 2,229,310,247 $ 150,888,420 $ Net revenues General revenues: Transportation excise taxes Motor vehicle registration, title, and related taxes Fuel and motor carrier taxes and fees Flight property taxes Income from investments Gain on sale of capital assets Other Total General Revenues Changes in Net Position Net Position ‐ July 1, as restated (Note 6B) $ Net Position ‐ June 30 $ ‐ $ 72,166,581 ‐ ‐ ‐ ‐ ‐ 100,112,543 ‐ 172,279,124 Net Revenues 98,854,942 $ 41,835,681 137,473,410 92,519,607 315,348,743 189,517,017 1,155,651,075 98,371,365 94,955,871 2,224,527,711 Business‐type Activities: Arizona Highways Magazine Highway Expansion and Extension Loan Program Total Business‐type Activities Total Primary Government Capital Grants and Contributions Operating Grants and Contributions Charges for Services 172,279,124 $ $ (89,487,619) 728,142,522 (134,796,949) 40,317,254 (315,348,743) (189,517,017) (1,155,651,075) 1,741,178 (94,955,871) (1,209,556,320) 696,876,955 $ (1,209,265,748) Governmental Business‐type Activities Activities (1,209,556,320) $ 290,572 $ Total (1,209,265,748) $ 254,871,189 1,036,501,712 686,041,839 8,595,398 10,601,789 151,096 10,264,182 2,007,027,205 797,761,457 17,539,443,459 18,337,204,916 254,871,189 1,036,501,712 686,041,839 8,595,398 9,989,166 151,096 10,264,182 2,006,414,582 796,858,262 17,461,174,963 18,258,033,225 $ The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 16 1,222,688 695,654,267 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 696,876,955 ‐ ‐ ‐ ‐ 612,623 ‐ ‐ 612,623 903,195 78,268,496 79,171,691 GOVERNMENTAL FUNDS FINANCIAL STATEMENTS MAJOR FUNDS General Fund (State Highway Fund) This fund is used to account for all financial transactions applicable to the general operations of the Department. The fund receives money from the Highway User Revenue Fund including vehicle registration, title, license, and related fees and fuel and motor carrier taxes. Reimbursements for certain construction expenditures are received from the federal government, Arizona cities and counties, and other state agencies. The fund also receives interest and other revenues. The fund disburses money primarily for the design, construction, and maintenance of state highways, parts of highways forming state routes, and highways under cooperative agreements with the United States and day‐to‐day operating expenses. Maricopa Regional Area Road Construction Fund This fund receives certain Maricopa County transportation excise tax monies collected by the Department of Revenue. These monies are used for the construction of new freeways and other routes, improvements to existing freeways and other routes, and improvements to the arterial streets within Maricopa County. Motor Vehicle Division Clearing Fund This fund accounts for the collection and disbursement of Motor Vehicle Division revenues. Highway User Revenue Fund This fund receives all revenues collected by the Department and its agents that are not designated for other purposes. The revenues include: motor fuel taxes, a portion of vehicle license tax, vehicle registration fees, driver license fees, dealer fees, permits, and other miscellaneous fees. These monies are distributed to the General Fund (State Highway Fund), the Department of Public Safety, the Economic Strength Project Fund, incorporated cities, counties, and other legislatively appropriated entities. Debt Service Fund This fund is used to administer all payments of principal and interest on bonds and notes issued by the Arizona Transportation Board for Highway Revenue Bonds, Transportation Excise Tax Revenue Bonds, and Grant Anticipation Notes (GARVEE bonds). Capital Projects Fund This fund is used to administer bond proceeds for Arizona Transportation Board Highway Revenue Bonds, Arizona Transportation Board Transportation Excise Tax Revenue Bonds, Grant Anticipation Notes (GARVEE bonds). These monies are expended for the construction of projects in the Five‐Year Transportation Facilities Construction Program. NON‐MAJOR FUNDS Other Governmental Funds are the non‐major funds and are all special revenue funds. These funds can be found on Exhibit 9 and Exhibit 10. 2015 Comprehensive Annual Financial Report Exhibit 3 Page 1 of 2 Arizona Department of Transportation Balance Sheet Governmental Funds June 30, 2015 Special Revenue Funds Maricopa Motor Regional Vehicle Area Road Division Construction Clearing Fund Fund General Fund (State Highway Fund) Assets Unrestricted cash on deposit with the State Treasurer Receivables: Interfund (Note 5D) Taxes and fees Notes and loans Due from other State agencies Due from Arizona counties and cities Other (net) Amounts due from U.S. Government Inventories Restricted cash on deposit with the State Treasurer Total assets $ $ 84,500,242 ‐ 819,164 81,818 126,968 6,997,659 32,293,706 6,340,586 $ Liabilities, deferred inflows of resources and fund balances Liabilities: Accounts payable $ Accrued payroll and other accrued expenditures Interfund payables (Note 5D) Amounts due to: Other state agencies Arizona counties and cities Surety and rental deposits Total liabilities Deferred inflows of resources Unavailable revenue Fund balances : (Note 5G) Unassigned Nonspendable Restricted Committed Total fund balances Total liabilities, deferred inflows of resources and fund balances 130,980,157 $ 344,347,042 606,487,342 66,669,617 7,760,829 1,739,030 $ ‐ ‐ ‐ 21,666,594 ‐ 1,261,094 15,682,948 ‐ $ $ 437,642,369 476,253,005 21,638,842 258,840 ‐ ‐ 1,322,640 29,191,669 ‐ ‐ ‐ ‐ ‐ ‐ $ $ 41,118,423 71,632,732 1,359,185 ‐ 46,505,135 183,335 923,980 319,501 77,596,292 163,986 ‐ ‐ 22,061,668 4,603,687 27,097,148 196,000 79,761,155 819,164 ‐ ‐ ‐ 6,340,586 344,347,042 177,384,259 528,071,887 ‐ ‐ 447,491,337 6,700,000 454,191,337 606,487,343 $ The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 17 ‐ 476,253,005 <8,128,423> ‐ ‐ ‐ <8,128,423> $ 71,632,732 Exhibit 3 Page 2 of 2 Arizona Department of Transportation Balance Sheet Governmental Funds June 30, 2015 Special Revenue Funds Highway User Revenue Fund $ Debt Service Funds ‐ $ 43,817,245 51,142,759 ‐ ‐ ‐ ‐ ‐ ‐ $ $ $ 72,310,317 167,270,321 ‐ ‐ 84,138,580 Capital Projects Funds ‐ $ ‐ ‐ ‐ ‐ ‐ 68,630 ‐ ‐ $ $ Total Non‐Major Governmental Funds (See Exhibit 9) 88,009 156,639 20,192 ‐ ‐ ‐ $ ‐ ‐ ‐ ‐ ‐ 97,625 ‐ ‐ $ $ 210,963,354 211,060,979 5,149,804 54,537 ‐ Total Governmental Funds 39,751,823 $ 2,883,822 ‐ 3,085,042 325,915 289,599 5,148,954 2,657,502 ‐ $ $ 15,496,807 69,639,464 2,196,763 63,316 ‐ 170,731,980 132,523,949 80,334,428 3,904,206 22,074,327 416,567 13,573,962 50,634,156 6,340,586 $ $ 1,121,966,321 1,602,500,482 97,034,403 8,137,522 132,382,745 ‐ 83,131,741 ‐ 167,270,321 ‐ ‐ ‐ 20,192 ‐ 550 ‐ 5,204,891 3,072,025 6,080,691 ‐ 11,412,795 8,023,033 117,234,110 515,501 363,327,314 ‐ ‐ ‐ ‐ 819,164 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 136,447 ‐ 136,447 ‐ ‐ 205,856,088 ‐ 205,856,088 ‐ ‐ 20,907,139 37,319,530 58,226,669 167,270,321 $ 156,639 $ 211,060,979 $ 69,639,464 The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 18 <8,128,423> 6,340,586 1,018,738,053 221,403,789 1,238,354,005 $ 1,602,500,483 Exhibit 3.1 Arizona Department of Transportation Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2015 Total fund balances ‐ governmental funds (Exhibit 3) $ Amounts reported for governmental activities in the Statement of Net Position (Exhibit 1) are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds (Note 4 B1). Certain receivables are not available to pay for current period expenditures and, therefore, are reported as deferred inflows of resources in the funds (Exhibit 3). 1,238,354,005 20,241,004,879 819,164 Internal service funds are used by management to charge the costs of equipment rentals to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position (Exhibit 5). Deferred outflows of resources are not reported in the funds (Note 4 B2) Pension liabilities are not due and payable from current financial resources and, and, therefore, are not reported in the funds (Note 4 B3). Long‐term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds (Note 4 B4). Deferred inflows of resources related to pensions are not reported in the funds (Note 4 B5). Net position of governmental activities (Exhibit 1) The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 19 53,843,498 107,243,568 <292,071,337> <3,040,086,292> $ <51,074,260> 18,258,033,225 Exhibit 4 Page 1 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for the fiscal year ended June 30, 2015 Special Revenue Funds Maricopa Regional Area Road Construction Fund General Fund (State Highway Fund) Revenues Transportation excise taxes Vehicle registration, title, license, and related taxes and fees Fuel and motor carrier taxes and fees Flight property taxes Reimbursement of construction expenditures ‐ federal aid Other federal grants and reimbursements Reimbursements from Arizona counties and cities Distributions from other state agencies Interest on loans receivable Income from investments Grand Canyon National Park Airport Rental income Other Total revenues $ ‐ Expenditures Current: Administration Highway Highway maintenance Motor vehicle Total current expenditures $ 254,871,189 Motor Vehicle Division Clearing Fund $ ‐ 300,609,339 312,543,301 ‐ ‐ ‐ ‐ 488,251,343 16,788,869 ‐ 402,793,957 72,166,581 8,832,039 1,338,191 68,766 3,027,711 ‐ 5,205,268 2,853,457 1,109,438,610 217,871,413 ‐ 1,265,542 ‐ ‐ 3,982,164 ‐ 1,466,220 564,569 480,021,097 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 505,040,212 84,522,009 33,740,381 130,598,543 76,021,637 4,092,121 4,415,012 ‐ ‐ ‐ ‐ ‐ 2,025,243 324,882,570 8,507,133 2,025,243 (continued) The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 20 Exhibit 4 Page 2 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for the fiscal year ended June 30, 2015 Special Revenue Funds Highway User Revenue Fund $ Debt Service Fund ‐ $ Total Non‐Major Governmental Funds (See Exhibit 10) Capital Projects Fund ‐ $ ‐ $ Total Governmental Funds ‐ $ 254,871,189 370,184,359 321,466,003 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 10,293,532 35,243,666 8,595,398 1,169,338,573 686,041,839 8,595,398 ‐ ‐ ‐ ‐ ‐ 131,933 ‐ ‐ 3,737,664 695,519,959 ‐ ‐ ‐ ‐ ‐ 685,929 ‐ ‐ ‐ 685,929 ‐ ‐ ‐ ‐ ‐ 1,747,987 ‐ ‐ ‐ 1,747,987 65,157,603 90,534,284 10,534,660 ‐ 109,840 413,442 1,294,541 ‐ 3,108,492 225,285,458 685,822,973 162,700,865 20,632,241 1,338,191 178,606 9,989,166 1,294,541 6,671,488 10,264,182 3,017,739,252 ‐ ‐ ‐ 4,815,007 53,512 ‐ ‐ ‐ 556,456 ‐ ‐ ‐ 4,084,571 98,371,365 ‐ 4,433,719 93,308,669 136,526,758 130,598,543 87,295,606 4,815,007 53,512 556,456 106,889,655 447,729,576 (continued) The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 21 Exhibit 4 Page 3 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for the fiscal year ended June 30, 2015 Special Revenue Funds Maricopa Motor Regional Vehicle Area Road Division Construction Clearing Fund Fund General Fund (State Highway Fund) Expenditures (continued) Intergovernmental: Distributions to other state agencies Distributions to Arizona counties and cities Debt service: Principal Interest Bond issuance costs Non‐capital, including asset preservation Capital outlay Total expenditures $ 7,056,628 31,001,110 Excess of revenues over expenditures Other financing sources Transfers in Transfers out for debt service Sale of capital assets Insurance recovery Debt and capital lease issuances Refunding debt issuance Premium from debt issuance Payment to refunded bond escrow agent Total other financing sources Net changes in fund balances Fund balances ‐ July 1 Fund balances ‐ June 30 $ $ ‐ 55,977,663 $ 50,906,282 452,108,687 8,578,243 960,036 ‐ 195,624,900 310,241,082 878,344,569 77,835,000 ‐ ‐ 28,280,890 244,124,543 414,725,229 ‐ ‐ ‐ ‐ ‐ 505,040,212 231,094,041 65,295,868 ‐ ‐ <137,265,202> 258,519 2,676,461 ‐ ‐ ‐ ‐ <134,330,222> ‐ <103,250,301> ‐ ‐ 783,241 ‐ ‐ ‐ <102,467,060> ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 96,763,819 431,308,068 <37,171,192> 491,362,529 528,071,887 $ 454,191,337 ‐ <8,128,423> $ <8,128,423> (continued) The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 22 Exhibit 4 Page 4 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for the fiscal year ended June 30, 2015 Special Revenue Funds Highway User Revenue Fund $ Debt Service Fund 99,516,760 591,188,192 $ ‐ ‐ ‐ ‐ ‐ 695,519,959 $ Total Non‐Major Governmental Funds (See Exhibit 10) Capital Projects Fund ‐ ‐ $ ‐ ‐ $ 32,037,347 25,375,423 Total Governmental Funds $ 189,517,017 1,155,651,075 185,640,000 120,444,290 3,025,719 ‐ ‐ 309,163,521 ‐ ‐ ‐ 27,978,646 79,936,723 108,471,825 ‐ ‐ ‐ 68,873 1,023 164,372,321 ‐ <308,477,592> <106,723,838> 60,913,137 <57,898,384> ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 305,409,546 ‐ ‐ ‐ ‐ 754,285,001 149,553,515 <900,812,743> 308,435,319 ‐ <64,894,043> ‐ ‐ ‐ ‐ ‐ ‐ <64,894,043> 305,409,546 <305,409,546> 258,519 2,676,461 783,241 754,285,001 149,553,515 <900,812,743> 6,743,994 ‐ ‐ <42,273> 178,720 <3,980,906> 62,207,575 <51,154,390> 1,289,508,395 ‐ $ 136,447 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ <106,723,838> 312,579,926 $ 205,856,088 $ 58,226,669 The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 23 272,053,243 121,404,326 3,025,719 251,953,309 634,303,371 3,075,637,636 $ 1,238,354,005 Exhibit 4.1 Arizona Department of Transportation Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities for the fiscal year ended June 30, 2015 Net changes in fund balances ‐ total governmental funds (Exhibit 4) $ <51,154,390> Amounts reported for governmental activities in the Statement of Activities (Exhibit 2) are different because: Capital outlays are reported as expenditures in governmental funds (Note 4 C1). Bond proceeds provide current financial resources to governmental funds. However, issuing debt increases long‐term liabilities in the statement of net position. Governmental funds report the effect of 574,971,379 premiums, discounts, and similar items when the debt is first issued, whereas these amounts are deferred and amortized in the statement of activities (Note 4 C2). Repayment of long‐term debt is reported as an expenditure in governmental funds, but the repayment reduces long‐term liabilities in the statement of net position (Note 4 C2). Internal service funds are used by management to charge the cost of equipment <904,621,756> 1,192,974,940 rentals to individual funds. The net loss of the internal service funds is reported with governmental activities (Note 4 C3). Pension contributions are reported as expenditures in the governmental funds (Note 4 C4) <1,048,000> Some items reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as revenues or expenditures in governmental funds (Note 4 C5). <9,945,199> Changes in net position of governmental activities (Exhibit 2) <4,318,712> $ The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 24 796,858,262 PROPRIETARY FUNDS FINANCIAL STATEMENTS MAJOR FUNDS Highway Expansion and Extension Loan Program Fund This fund is an innovative financing mechanism to administer monies designated to provide loans and credit enhancement assistance to the Department and to sponsors of local transportation projects. Arizona Highways Magazine Fund The fund consists of receipts generated from the sale of the Arizona Highways Magazine and other branded products. The fund provides for the production and sale of the Magazine and related products that promote the State of Arizona. NON‐MAJOR FUND Internal Service Fund The Equipment Revolving Fund is primarily funded by the charges it collects from the Department of Transportation, other state agencies, and local organizations to support the repair and maintenance of vehicles and equipment. 2015 Comprehensive Annual Financial Report Exhibit 5 Arizona Department of Transportation Statement of Net Position Proprietary Funds June 30, 2015 Business‐type Activities ‐ Enterprise Funds Highway Expansion and Extension Loan Program Fund Assets Current assets: Unrestricted cash on deposit with the State Treasurer $ Receivables: Interfund (Note 5D) Subscriptions, net of allowance for doubtful accounts Due from other State agencies Other, net allowance for doubtful accounts Inventories Prepaid items Restricted cash on deposit with the State Treasurer Total current assets Arizona Highways Magazine Fund ‐ $ 3,608,980 $ Total Governmental Activities ‐ Internal Service Fund 3,608,980 $ 1,465,491 ‐ ‐ ‐ 37,016 ‐ ‐ 78,733,257 78,770,273 39,474 81,060 23,232 122,830 307,526 435,011 ‐ 4,618,113 39,474 81,060 23,232 159,846 307,526 435,011 78,733,257 83,388,386 ‐ ‐ 37,645 2,554 2,680,117 ‐ ‐ 4,185,807 ‐ 7,900 7,900 ‐ ‐ ‐ 78,770,273 10,428 18,328 4,636,441 10,428 18,328 83,406,714 66,154,354 66,154,354 70,340,161 Deferred outflows of resources ‐ 227,258 227,258 1,865,379 Liabilities Current liabilities: Accounts payable Accrued payroll and other accrued expenses Interfund payables (Note 5D) Unearned revenues (Note 5C) Compensated absences Total current liabilities ‐ ‐ ‐ ‐ ‐ ‐ 47,109 46,266 180,678 1,963,826 156,652 2,394,531 47,109 46,266 180,678 1,963,826 156,652 2,394,531 742,075 374,680 ‐ 32,460 745,056 1,894,271 Non‐current liabilities: Net pension liability Total non‐current liabilities Total liabilities ‐ ‐ ‐ 1,759,983 1,759,983 4,154,514 1,759,983 1,759,983 4,154,514 14,016,685 14,016,685 15,910,956 Deferred inflows of resources ‐ 307,767 307,767 2,451,086 ‐ 78,770,273 ‐ 18,328 ‐ 383,090 18,328 78,770,273 383,090 401,418 $ 79,171,691 Non‐current assets: Capital assets not subject to depreciation Capital assets subject to depreciation, net of accumulated depreciation Total non‐current assets Total assets Net position Net investment in capital assets Restricted for loans and other financial assistance Unrestricted Total net position $ 78,770,273 $ The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 25 66,154,354 ‐ <12,310,856> $ 53,843,498 Exhibit 6 Arizona Department of Transportation Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds for the fiscal year ended June 30, 2015 Business‐type Activities ‐ Enterprise Funds Highway Expansion and Extension Loan Program Fund Operating revenues Sales and charges for services (net of write off $ 4,082) Other $ Arizona Highways Magazine Fund Governmental Activities ‐ Internal Service Fund Total ‐ ‐ $ 4,427,817 645,291 Total operating revenues ‐ 5,073,108 5,073,108 24,378,568 Operating expenses Publication and promotional cost Repair and maintenance Fuel and lubricants Salaries and related benefits Shipping and postage Supplies Equipment purchase and rental Professional and outside services Travel Depreciation Other ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 1,770,119 817 ‐ 1,699,398 671,660 9,876 9,174 480,394 12,457 5,376 77,884 1,770,119 817 ‐ 1,699,398 671,660 9,876 9,174 480,394 12,457 5,376 77,884 ‐ ‐ 9,419,667 13,567,150 ‐ ‐ 381,445 234,169 63,565 10,488,644 4,375,147 Total operating expenses ‐ 4,737,155 4,737,155 38,529,787 ‐ 335,953 335,953 587,016 <43,169> ‐ ‐ ‐ 25,607 ‐ ‐ ‐ ‐ 612,623 <43,169> ‐ ‐ ‐ 4,074 ‐ 1,222,956 385,889 ‐ 543,847 25,607 569,454 1,612,919 ‐ ‐ ‐ 10,926,942 543,847 78,226,426 361,560 39,858 905,407 78,266,284 Operating income Non‐operating revenues Income from investments Investment expense Gain on sale/disposal of capital assets Insurance recoveries Distributions to other state agencies Total non‐operating revenues Capital contributions Changes in net position Total net position ‐ July 1, as restated (Note 6B) Total net position ‐ June 30 $ 78,770,273 $ The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 26 401,418 $ $ 4,427,817 645,291 79,171,691 $ 24,341,417 37,151 <14,151,219> <1,611,358> 55,454,856 $ 53,843,498 Exhibit 7 Arizona Department of Transportation Statement of Cash Flows Proprietary Funds for the fiscal year ended June 30, 2015 Business‐type Activities ‐ Enterprise Funds Highway Expansion and Extension Loan Program Fund Cash flows from operating activities Receipts from customers Payments to suppliers Payments to employees Other receipts Net cash provided by operating activities $ ‐ ‐ ‐ ‐ ‐ Arizona Highways Magazine Fund Governmental Activities ‐ Internal Service Fund Total $ 4,274,887 $ 4,274,887 $ 24,333,678 <3,013,104> <3,013,104> <13,280,806> <1,616,192> <1,616,192> <12,943,144> 645,291 645,291 37,151 290,882 290,882 <1,853,121> Cash flows from non‐capital financing activities: Transfer from other funds Distribution to other state agencies Net cash provided by capital and related financing activities ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cash flows from capital and related financing activities Proceeds from sale of capital assets Acquisition of capital assets Insurance recoveries Net cash provided by capital and related financing activities ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Cash flows from investing activities Income from investments Investment expense Net cash provided by investing activities 550,000 <43,169> 506,831 Net increase in cash Cash ‐ July 1 Cash ‐ June 30 Reconciliation of operating income to net cash provided by operating activities Operating income Adjustment to reconcile operating income to net cash provided by operating activities: Depreciation Net changes in assets and liabilities: Receivables Interfund receivables Due from other State agencies Inventories Prepaid items Deferred outflows of resources Accounts payable Accrued payroll and other accrued expenses Unearned revenues Compensated absences Interfund payables Net pension liability Deferred inflows of resources Net cash provided by operating activities 25,607 ‐ 25,607 2,009,702 <56,132> 385,889 2,339,459 575,607 <43,169> 532,438 4,074 ‐ 4,074 506,831 78,226,426 $ 78,733,257 316,489 3,292,491 $ 3,608,980 823,320 81,518,917 $ 82,342,237 $ $ $ $ $ <14,151,219> ‐ ‐ $ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 335,953 5,376 <47,532> <6,069> <23,232> <21,711> <134,101> <112,532> <5,589> 10,706 <76,097> 3,597 180,678 <126,332> 307,767 $ 290,882 $ Non‐cash capital and financing activities Certain vehicles were contributed to the Equipment Revolving Fund by the General Fund totaling: The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 27 ‐ ‐ ‐ 335,953 490,412 975,079 1,465,491 5,376 10,488,644 <47,532> <6,069> <23,232> <21,711> <134,101> <112,532> <5,589> 10,706 <76,097> 3,597 180,678 <126,332> 307,767 290,882 $ <2,554> ‐ <37,645> 441,933 ‐ <951,689> 751,254 61,837 32,460 <53,861> ‐ <883,367> 2,451,086 <1,853,121> $ 10,926,942 FIDUCIARY FUNDS FINANCIAL STATEMENT AGENCY FUNDS Highway Properties ‐ Privilege Tax Fund This fund collects monies from renters of properties previously acquired by the Department for use in future highway development. Monies collected are distributed to the Department of Revenue. Highway Properties ‐ 24 Percent Fund This fund collects 24 percent of the Department's rental income from properties for use in future highway development. Monies collected are distributed to the local counties. Special Plates Fund This group of funds collects revenues for the various special plates approved by the legislature. The Department retains an administrative fee and remits the balance of the special plate fee to the designated entity. 2015 Comprehensive Annual Financial Report Exhibit 8 Arizona Department of Transportation Statement of Net Position Agency Funds June 30, 2015 Assets Restricted cash on deposit with the State Treasurer Due from Other Agencies Total assets Liabilities Due to Department of Revenue Due to Arizona counties Total liabilities $ 1,357,704 1,449 $ 1,359,153 $ 394 1,358,759 $ 1,359,153 The notes to the financial statements are an integral part of this statement. 2015 Comprehensive Annual Financial Report 28 NOTES TO THE FINANCIAL STATEMENTS 2015 Comprehensive Annual Financial Report Arizona Department of Transportation Index – Notes to the Financial Statements June 30, 2015 Page Note 1 – Summary of Significant Accounting Policies ................................................................................................. 30 A – Reporting Entity ............................................................................................................................................ 30 B – Government‐wide and Fund Financial Statements ...................................................................................... 30 C – Measurement Focus, Basis of Accounting, and Financial Statement Presentation...................................... 31 D – Assets, Liabilities, and Net Position/Fund Balance ....................................................................................... 33 E – Revenues and Expenditures/Expenses ......................................................................................................... 37 F – Interfund Activity and Balances .................................................................................................................... 37 G – Use of Estimates ........................................................................................................................................... 38 Note 2 – Funds by Classification .................................................................................................................................. 38 Note 3 – Budgeting, Budgetary Control, and Legal Compliance.................................................................................. 38 Note 4 – Accounting Pronouncements and Reconciliation of Government‐wide and Fund Financial Statements .... 39 A – New Accounting Pronouncements. .............................................................................................................. 39 B – Explanations of Reconciling Items of the Balance Sheet of Governmental Funds to the Statement of Net Position ....................................................................................................................... 39 C – Explanations of Reconciling Items of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................. 40 Note 5 – Detailed Notes on all Funds and Activities.................................................................................................... 43 A – Capital Assets................................................................................................................................................ 43 B – Construction Commitments.......................................................................................................................... 44 C – Unearned Revenues...................................................................................................................................... 45 D – Interfund Receivables, Payables, Advances, and Transfers.......................................................................... 45 E – Leases ............................................................................................................................................................ 46 F – Non‐Current Liabilities .................................................................................................................................. 47 G – Fund Balances............................................................................................................................................... 55 Note 6 – Other Information ......................................................................................................................................... 55 A – Contingent Liabilities .................................................................................................................................... 55 B – Pension and Other Postemployment Benefits ............................................................................................. 55 C – Subsequent Events ....................................................................................................................................... 60 2015 Comprehensive Annual Financial Report 29 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the Arizona Department of Transportation (Department) conform in all material respects to accounting principles generally accepted in the United States of America (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the primary standard‐setting body for establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB’s Codification of Governmental and Financial Reporting Standards (GASB Codification). Following is a summary of the Department’s significant accounting policies. A. Reporting Entity The Department is a department of the State of Arizona (State) and is not a legally separate entity. The Department has no component units. The Director of the Department serves as the Chief Executive Officer and is directly responsible to the governor. The governor appoints a seven‐member Transportation Board of the State of Arizona Department of Transportation (Transportation Board), which has responsibility for establishing a complete system of state highway routes, approving all highway construction contracts, and distributing monies for local airport facilities’ projects through a grant program. The Department is responsible for the construction and maintenance of all state highways. The Department cooperates with the various cities and counties within the state in the construction and maintenance of state roads and with the Federal Highway Administration in the construction and maintenance of interstate and other highways. Assistance in the development of local airports, registering motor vehicles and aircraft, licensing drivers, and the publishing of the Arizona Highways Magazine are also responsibilities of the Department. B. Government‐wide and Fund Financial Statements The government‐wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non‐fiduciary activities of the government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by federal reimbursement, taxes, and intergovernmental revenues, are reported separately from business‐type activities, which rely to a significant extent on fees and charges for services. The Statement of Net Position presents the reporting entity’s non‐fiduciary assets and liabilities, with the difference reported as net position. Net position is reported in three categories: Net investment in capital assets consists of capital assets, net of accumulated depreciation and is reduced by outstanding balances for bonds, notes, and other debt that are attributed to the acquisition, construction, or improvement of those assets. Restricted results when constraints placed on asset use are either externally imposed by creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation. Unrestricted consists of those assets which do not meet the definition of the two preceding categories. Unrestricted often are designated to indicate that management does not consider them to be available for general operations. The unrestricted component often has constraints on resources which are imposed by management, but can be removed or modified by management or the Transportation Board. When both restricted and unrestricted resources are available for use, the Department generally expends the restricted resources first, and then unrestricted resources, as they are needed to maintain appropriate cash balances and finance the construction program. 2015 Comprehensive Annual Financial Report 30 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identified with a specific function. Program revenues include: charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function; and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. Fund Financial Statements Separate statements are provided 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 proprietary funds are reported as separate columns in the fund financial statements, with non‐major funds being reported in a single column. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government‐wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting, as are the proprietary funds. Revenues are recorded when earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash flows. Taxes are recognized as revenues in the year they are levied for transportation excise, aircraft licensing, aviation and motor fuel, flight property, and underground storage tanks. Motor carrier and vehicle license taxes are recognized when received. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. For the year ended June 30, 2015, the Department implemented the provisions through GASB Statement No. 68, updating the June 30, 2014, Codification of Governmental Accounting and Financial Reporting Standards. See note 4A. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Department considers revenues to be available if they are collected within 60 days of the end of the fiscal year, e.g., federal revenue reimbursements, vehicle license taxes, and highway user revenue taxes. Expenditures generally are recorded when a liability is incurred as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due and payable. Financial Statement Presentation The Department reports the following major governmental funds: The General Fund, known as the State Highway Fund, is the primary operating fund. It accounts for all financial resources except for those required to be accounted for in another fund. Expenditures are reported for general operations of the Department, including road and bridge repairs, maintenance and construction, planning and development, engineering, and administration. Revenues are received from the following primary sources: fuel and motor carrier taxes and fees; vehicle registrations, titles, licenses and related fees; and federal grants. The Maricopa Regional Area Road Construction Fund is a special revenue fund that receives a portion of Maricopa County Transportation Excise Tax monies collected by the Department of Revenue. These monies are expended for the construction of new freeways and other routes, improvements to existing freeways and 2015 Comprehensive Annual Financial Report 31 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 other routes, and improvements to the arterial street system, which are included in the Maricopa County Regional Transportation Plan. The Motor Vehicle Division Clearing Fund is a special revenue fund which accounts for the collection and disbursement of certain Motor Vehicle Division revenues (e.g., vehicle registration, title, license, and related taxes and fees, and fuel and motor carrier taxes and fees). The Highway User Revenue Fund is a special revenue fund which collects motor vehicle and liquid use fuel taxes and receives certain Motor Vehicle Division revenues from the Motor Vehicle Division Clearing Fund. These monies are distributed to the General Fund (State Highway Fund), the Department of Public Safety, the Economic Strength Project Fund, incorporated cities, towns, counties, and other legislatively appropriated entities. The Debt Service Fund is used to account for the accumulation of resources for, and the payments of, general long‐term debt principal and interest of the governmental funds. The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities in the governmental funds. The Department reports the following major proprietary funds: The Highway Expansion and Extension Loan Program Fund is an innovative financing mechanism to administer funds designated to provide loan and credit enhancement assistance to sponsors of local transportation projects. The Arizona Highways Magazine Fund publishes and markets the Arizona Highways Magazine and various other products that promote the State of Arizona. Additionally, the Department reports the following funds: The Internal Service Fund, which accounts for purchases and maintenance of equipment and materials to be used by other divisions in the Department and other government agencies. The Equipment Revolving Fund is the Department’s only internal service fund. The Agency Fund is custodial in nature (assets equal liabilities) and does not involve measurement of results of operations. The Department has three agency funds: the Highway Properties – Privilege Tax Fund; the Highway Properties – 24 Percent Fund and the Special Plates Funds – multiple funds treated as one for reporting purposes. None of these are included in the government‐wide statements. As a general rule, the effect of interfund activity has been eliminated from the government‐wide financial statements. Exceptions to this general rule are charges for services by the Equipment Revolving Fund to the other governmental functions. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include: charges for services, operating grants and contributions, and capital grants and contributions. Internally dedicated resources are reported as general revenues rather than program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non‐operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues are charges for services and magazine subscriptions. The Department also recognizes as operating revenues interest on loan receivables and 2015 Comprehensive Annual Financial Report 32 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 other revenues intended to recover the cost of services. Operating expenses for the enterprise funds and the internal service fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non‐operating revenues and expenses. D. Assets, Liabilities, and Net Position/Fund Balance Deposits and Investments The Department’s cash includes petty cash and deposits with the State Treasurer for pooled investments. All investments are carried in the name of the State of Arizona. State statutes require the State Treasurer to invest these pooled funds in collateralized time certificates of deposit, repurchase agreements, obligations of the U.S. Government, or other permitted investments. All investments are carried at fair value. These balances are not subject to GASB Statement No. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements, and GASB Statement No. 40, Deposit and Investment Risk Disclosures – an amendment of GASB Statement No. 3, classification because they are included in the state’s investment pool. The investment pool is not required to register (and is not registered) with the Securities and Exchange Commission under the 1940 Investment Advisors Act. The activity and performance of the pool is reviewed monthly by the State Board of Investment in accordance with Arizona Revised Statutes, §35‐311. The fair value of investments is measured on a monthly basis. Participant shares are purchased and sold based on the Net Asset Value (NAV) of the shares. The NAV is determined by dividing the fair value of the portfolio by the total shares outstanding. The State Treasurer does not contract with an outside insurer in order to guarantee the value of the portfolio or the price of shares redeemed. As of June 30, 2015, the State’s investment pool 2, pool 3, and pool 4 were not rated. The weighted average maturity at year end for investment pool 2 was 5.73 years while for investment pool 3 it was 2.91 years, and for investment pool 4 it was 4.54 years. State statutes require the State Treasurer to maintain separate investment accounts for the portions of the Highway Revenue Bond Proceeds Fund relating to the Highway Revenue Bond issues and the Maricopa Regional Area Road Bond Proceeds Fund relating to the Transportation Excise Tax Revenue Bond issues. These funds may be invested by the Treasurer in the state’s investment pool. The Department’s investments are included in the state investment pool and these investments are not shown in the Department’s name. From the perspective of the Department, the pool functions as both a cash management pool and a demand deposit account. Therefore, the Department presents its equity in the internal pool as required in GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, and carries the investments at amortized cost, which approximates fair value. The Department has restricted cash for payment of capital projects for Maricopa and Pima Counties, for future debt service payments, and for the Statewide Transportation Acceleration Needs account. Receivables, Payables and Advances Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as interfund receivables/payables. All other outstanding balances between the U.S. Government, Arizona counties and cities, and other state agencies are reported as due to/from. Any residual balances outstanding between the governmental activities and business‐type activities are reported in the government‐wide financial statements as internal balances. 2015 Comprehensive Annual Financial Report 33 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. The other receivables and subscriptions receivable are shown net of allowance for doubtful accounts. Other receivable amounts include funds held by third parties on behalf of the agency. For other receivables comprising recoverable insurance claims, the amount reserved for doubtful accounts is comprised of 100% of balances sent to the Attorney General’s Office for collection. The subscriptions receivable allowance for doubtful accounts is the portion of any receivable greater than 90 days that has been recognized as revenue. The remainder of the subscriptions receivable that has not been recognized is still unearned. Notes receivable represents loans made to parties purchasing assets previously owned by the Department for highway construction purposes. Inventories and Prepaid Items The governmental activities inventory is valued at cost, which approximates market, using the moving average method. This inventory is accounted for using the consumption method. Under this method, inventories are recorded as expenditures as they are used. The fund financial statement reports inventory as nonspendable for the like amount indicating it does not constitute available expendable resources. No reservation of net assets is shown in the government‐wide statements for inventories. The business‐type activities’ inventories are stated at the lower of cost or market. Costs of enterprise fund inventories consisting of resale products and supplies are generally determined by moving average cost and specific identification methods, respectively. Costs of the internal service fund’s inventories (consisting of vehicle parts and supplies, fuels and lubricants, and other supplies) are determined by moving average cost methods. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government‐wide and fund financial statements. Restricted Assets Certain proceeds of the Department’s governmental revenue bonds, as well as certain resources of the General Fund (State Highway Fund) and the Highway Expansion and Extension Loan Program Fund (enterprise fund) are classified as restricted assets on the balance sheet because they are maintained in separate accounts and their use is limited by applicable bond covenants or state statutes. State law requires 12.6 percent of the revenues allocated each year to the General Fund (State Highway Fund) from the Highway User Revenue Fund be allocated for design, purchase of right‐of‐way, or construction of controlled‐access highways, arterial streets, and local highways that are included in the regional transportation plan of counties with populations in excess of 400,000 (Maricopa and Pima counties). State Transportation Board policy further allocates 2.6 percent of the revenues for the same purpose as listed above. The debt service fund is used to report the resources set aside for payment of future debt service. Bond proceeds are deposited in the capital projects fund and are restricted for acquisitions of right‐of‐way and construction of federal, state, and local highways. Capital Assets Capital assets, which include land, buildings and improvements, improvements other than buildings, machinery and equipment, infrastructure, and construction in progress, are reported in the applicable governmental or business‐type columns in the government‐wide financial statements. Capital assets are defined by the Department as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of one year. Purchased capital assets are recorded at historical cost or estimated historical cost if historical cost is not available. Donated capital assets are recorded at estimated fair value at the date of donation. 2015 Comprehensive Annual Financial Report 34 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset’s life are not capitalized. Outlays for capital assets are capitalized at the time of the purchase or, in the case of infrastructure, at the time of final acceptance by the Department from the contractor. Asset preservation costs are expensed as incurred. The Department depreciates non‐infrastructure capital assets on a straight‐line basis using the following estimated useful lives: Assets Buildings and improvements Improvements other than buildings Machinery and equipment Mobile fleet and aircraft Years 20‐40 20‐40 5‐15 5‐15 Infrastructure was capitalized for the first time in fiscal year 2002. The infrastructure assets are reported in the governmental activities column of the Statement of Net Position. The Department’s infrastructure assets consist of roads and bridges and are presented using the modified approach and, therefore, are not depreciated. In order to utilize the modified approach, the Department is required to maintain an asset management system that includes an up‐to‐date inventory of eligible infrastructure assets, perform condition assessments of eligible assets and summarize the results using a measurement scale, estimate each year the annual amount to maintain and preserve the assets at the condition level established and disclosed by the Department, and document that the assets are being preserved approximately at or above the established condition level. Unearned Revenues In the government‐wide statements and proprietary fund financial statements, unearned revenues are recorded when cash, receivables, or other assets are received prior to revenue being recognized. In the governmental funds, amounts are reported as unearned revenues until they are available to liquidate liabilities of the current period. Unearned revenues are reported in the government‐wide statements for the business‐type activities and in the fund statements for both the governmental and proprietary funds. In the government‐wide statements, the unearned revenues relate to unearned subscription revenue for the Arizona Highways Magazine. Unearned subscription revenue is recorded when subscription orders are received and is amortized as revenue over the terms of the related subscriptions. Costs associated with the selling of subscriptions are expensed in the year incurred. In the fund statements for the General Fund (State Highway Fund), the unearned revenue represents the amount for the notes receivable for loans made to parties who purchased assets previously owned by the Department for highway construction purposes. For the Non‐Major Governmental Funds, the deferred revenue represents loans to various local governments for airport capital improvements designed to generate airport revenues and/or related airport economic development efforts. Loans are typically for construction of aircraft storage hangars, fuel dispensing and storage facilities, and terminal buildings. Loan rates vary and are based on the Bond Buyer Index (BBI) for 25 year national revenue bonds. Loan periods are typically 10 to 25 years in length. Compensated Absences It is the Department’s policy to permit employees to accumulate earned but unused sick leave and vacation benefits as well as compensatory time. There is no liability for unpaid accumulated sick leave for the Department. All vacation pay and compensatory time is accrued when incurred in the government‐wide and proprietary fund financial statements. Effective July 1, 1998, state employees are eligible to receive payment for an accumulated sick leave balance of 500 hours or more with a maximum of 1,500 hours, upon retirement directly from state service. The benefit value is calculated by taking the employee’s hourly rate of pay at the retirement date, multiplied by the number of sick 2015 Comprehensive Annual Financial Report 35 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 hours at the retirement date, times the eligibility percentage. The eligibility percentage varies based upon the number of accumulated sick hours from 25 percent for 500 hours to a maximum of 50 percent for 1,500 hours. The maximum benefit value is $30,000. Per Arizona Revised Statute 38‐615D, the benefit shall be paid either in a lump sum or in installments over three years. The Retiree Accumulated Sick Leave Fund is accounted for on the state’s financial statements as an Internal Service Fund. Most employees accrue vacation time which is paid when taken or upon termination of employment at the individual’s then current rate of pay. Additionally, some employees may earn compensatory time in lieu of overtime pay, which is paid in the same manner as vacation time. To limit the Department’s liability, employees are allowed to carry forward a maximum of 240 hours of vacation time if covered and 320 hours if uncovered at the end of each calendar year. Compensatory time accrual is capped at 240 hours at any time, however the agency policy has been to evaluate and pay quarterly to keep this accrual low. The liabilities for vacation and compensatory time outstanding as of June 30 for both the governmental and proprietary funds are reported on the Statement of Net Position. Long‐term Obligations In the government‐wide financial statements, long‐term debt and other long‐term obligations are reported as liabilities. Bond premiums and discounts are deferred and amortized using the straight‐line method. Bonds payable are reported net of the applicable premium or discount. Gains and losses related to refunding of debt are reported as deferred inflows of resources and deferred outflows of resources, respectively. Debt issuance costs are expensed in the current period. Other long‐term obligations also include amounts that other governmental entities advance the Department for highway road construction projects. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Advances from other governmental entities are recorded as debt issuance in other financing sources. Net Position/Fund Balance The difference between assets and liabilities is “Net Position” on the government‐wide and proprietary statements and “Fund Balance” on the governmental fund statements. Fund balances for governmental funds may be reported in classifications that comprise a hierarchy based primarily on the extent to which the Department is bound to honor constraints on the specific purposes for which amounts in those fund can be spent. Five classifications are available: Nonspendable fund balance ‐ describes that portion that cannot be spent because of its form (inventories, prepaid amounts, etc.) and are not expected to be converted to cash. Restricted fund balance ‐ describes that portion of fund balance that reflects resources that are subject to externally enforceable legal restrictions (voter initiatives, court orders, etc.) Committed fund balance ‐ describes that portion which can be used only for specific purposes pursuant to constraints imposed by a formal action of the Department’s highest level of decision‐making authority. This formal action is the passage of law by the Legislature creating, modifying or rescinding fund balance commitments. Assigned fund balance ‐ describes that portion of that reflects the Department’s intended use of resources for a specific purpose, but are neither restricted nor committed. 2015 Comprehensive Annual Financial Report 36 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Unassigned fund balance ‐ represents net resources in excess of what can properly be classified in one of the other categories. The Department’s highest level of Authority is the Arizona State Legislature where the legislative appropriations are determined, identifying the uses of funds for specific purposes. The Arizona State Legislature also grants authority to other Boards and Commissions to authorize fund uses. When an expenditure is incurred for purposes for which restricted, committed and unassigned fund balance is available, the Department considers restricted, committed and unassigned amounts to have been spent in that order. E. Revenues and Expenditures/Expenses In the government‐wide Statement of Activities, revenues and expenses are segregated by activity (governmental or business‐type), then further by function (e.g., Administration, Highway). Additionally, revenues are classified between program and general revenues. Program revenues include charges for services, operating grants and contributions, and capital grants and contributions. Internally dedicated resources are reported as general revenue rather than as program revenue. General revenue includes all taxes and income on investments. In the governmental fund financial statements, revenues are reported by source. Expenditures are reported by function (e.g., Administration, Distributions to Arizona counties and cities, Distributions to other state agencies, Debt service, Capital outlay). The distributions to Arizona counties and cities and distributions to other state agencies are shared tax revenues that are distributed based on statutory requirements. Debt service includes both interest and principal outlays related to bonds, loans, advances, board funding obligations, and capitalized leases. Capital outlay includes expenditures for real property or infrastructure (i.e., bridges and roads). Revenues and expenses of proprietary funds are classified as operating and non‐operating and are sub‐classified by object (e.g., salaries, equipment rental, depreciation). Operating revenues and expenses generally result from providing services and producing and delivering goods. All other revenues and expenses are reported as non‐ operating. Other Financing Sources Other financing sources are additions to the governmental fund balances in the fund financial statements and include resources and financing provided by bond issuance, sale of capital assets, capital leases, insurance recovery, and transfers from other funds. Other financing uses are reductions of governmental fund resources in fund financial statements normally resulting from transfers to other funds. F. Interfund Activity and Balances Interfund Activity As a general rule, the effect of interfund activity has been eliminated from the government‐wide statements. Exceptions to this rule are activities between the funds reported as governmental activities and the funds reported as business‐type activities (e.g., the transfer of the gain or loss from the Equipment Revolving Fund). 2015 Comprehensive Annual Financial Report 37 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Interfund Balances Interfund receivables and payables have been eliminated from the Statement of Net Position, except for the residual amounts due between governmental and business‐type activities. G. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make a number of estimates and assumptions that affect the reported amounts of assets, liabilities, and net assets, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. 2. FUNDS BY CLASSIFICATION The following table lists all of the funds whose balances are reflected in this financial report. FUND TYPES MAJOR FUNDS Governmental Funds: General Fund (State Highway Fund) Special Revenue Funds: Maricopa Regional Area Road Construction Fund Motor Vehicle Division Clearing Fund Highway User Revenue Fund Debt Service Fund Capital Projects Fund NON‐MAJOR FUNDS Special Revenue Funds: State Aviation Fund Safety Enforcement and Transportation Infrastructure Fund Motor Vehicle Liability Insurance Enforcement Fund Motor Vehicle Inspection and Title Enforcement Fund Motor Carrier Safety Revolving Fund Underground Storage Tank Fund Economic Strength Project Fund Grant Anticipation Notes Fund Local Agency Deposits Fund Proprietary Funds: Enterprise Funds: Arizona Highways Magazine Fund Highway Expansion and Extension Loan Program Fund Internal Service Fund Equipment Revolving Fund 3. BUDGETING, BUDGETARY CONTROL AND LEGAL COMPLIANCE An annual budget for the operating expenditures of the General Fund (State Highway Fund) is submitted to the governor in accordance with state law. The budget is legally enacted as appropriations after approval by the state legislature and signature of the governor. The legal level of control for operating expenditures is set at the agency level and expenditure budgets are appropriated using a lump‐sum by agency format with a special line‐item appropriation for highway maintenance. Expenditure details for personal services, employee‐related expenditures, and all other operating expenditures are specifically allocated within all divisions. In certain divisions, other specific programs are allocated in addition to these categories. Revenue budgets are developed internally by the Department and are not part of the appropriation process. Amendments to the approved appropriations require legislative approval. However, since the Department’s appropriation is a lump sum appropriation, the allocation of funds between personal services, employee‐related expenditures, and other operating expenditures is an internal decision. Accordingly, transfers between line items 2015 Comprehensive Annual Financial Report 38 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 such as personal services and other operating expenditures within a particular program may be made by the program manager. Expenditures may not exceed appropriations in total. All transfers of funds are reported to the Department’s Office of Strategic Planning and Budgeting for monitoring purposes. Budgets are prepared on the cash basis except that liabilities incurred before the end of the fiscal year and paid within the first month of the subsequent fiscal year are charged against the prior fiscal year’s budget. The Department’s appropriations lapse at fiscal year‐end unless exempted by the legislature. In addition, budgets for capital outlay, including land, building, and improvements for the State Highway Fund and State Aviation Fund, are also submitted to the governor in accordance with state law. The capital outlay appropriation includes state highway construction and land, building, and improvements for the State Highway Fund. A legal limitation is adopted for land, building, and improvements; however, legislation allows the Department to spend in excess of its appropriation for state highway construction up to the current fund balance. The Department monitors expenditures through an internal budgetary process and the Five‐Year Transportation Facilities Construction Program approved by the Transportation Board. 4. ACCOUNTING PRONOUNCEMENTS AND RECONCILIATION OF GOVERNMENT‐WIDE AND FUND FINANCIAL STATEMENTS A. New Accounting Pronouncements GASB Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—An Amendment of GASB Statement No. 68 and GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The Department implemented the above Government Accounting Standards Board (GASB) statements relating to Pension disclosures. As a result, the Department recognized a prior period adjustment of $ 318,424,958. Additional significant effects in the implementation of these statements can be seen under note 6B. B. Explanations of Reconciling Items of the Balance Sheet of Governmental Funds to the Statement of Net Position The governmental funds Balance Sheet includes reconciliation between total fund balances – governmental funds and net position of governmental activities as reported on the government‐wide Statement of Net Position. The following explanations are necessary to clarify these differences between the governmental fund Balance Sheet and the government‐wide Statement of Net Position: 1. Capital assets are not included on the fund statements, but are included on the government‐wide statement as follows: Capital assets not subject to depreciation $ 20,068,647,527 Capital assets subject to depreciation 238,511,706 20,307,159,233 Less Internal Service Fund (Equipment Revolving Fund) assets <66,154,354> $ 20,241,004,879 2015 Comprehensive Annual Financial Report 39 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 2. Deferred outflows of resources are not reported in the governmental funds, but are reported in the government‐wide Statement of Net Position. The detail for the difference is as follows: Deferred outflows of resources related to pensions Less: Internal Service Fund (Equipment Revolving Fund) deferred outflows of resources related to pensions $ 41,295,969 $ <1,865,379> 39,430,590 67,812,978 107,243,568 Deferred outflows of resources‐loss on debt refunding 3. Pension liabilities are not due and payable from current financial resources and, therefore, are not reported in the governmental funds. The detail for the difference is as follows: Net pension liability Less: Internal Service Fund (Equipment Revolving Fund) net pension liability $ <306,088,022> $ 14,016,685 <292,071,337> 4. Long‐term liabilities, including bonds payable, are not due and payable in the current period, and are not reported in the current period on the fund statements. The detail for the difference is as follows: Bonds payable (including unamortized premium) Capital leases Compensated absences Intergovernmental advances $ <2,968,965,619> <30,944,653> <17,997,377> <22,178,643> $ <3,040,086,292> 5. Deferred inflows of resources are not reported in the governmental funds. The detail for the difference is as follows: Deferred inflows of resources related to pensions Less: Internal Service Fund (Equipment Revolving Fund) deferred inflows of resources related to pensions $ <53,525,346> $ 2,451,086 <51,074,260> C. Explanations of Reconciling Items of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities The governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances includes a reconciliation between net change in fund balances – total governmental funds and changes in net position of governmental activities as reported on the government‐wide Statement of Activities. The following explanations are necessary to clarify these differences between the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the government‐wide Statement of Activities: 2015 Comprehensive Annual Financial Report 40 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 1. Governmental funds report capital outlay as expenditures. However, in the Statement of Activities, these costs are removed; some costs are capitalized as assets while other costs are expensed as follows: Capital outlay Reduction in construction in progress resulting from certain infrastructure projects being reclassified from capital to non‐capital Reduction in construction in progress resulting from certain infrastructure projects, previously identified as infrastructure, reclassified as non‐infrastructure Assets removed from service, net of accumulated depreciation Other Less: depreciation expense – governmental funds $ 634,303,371 <452,745> <89,711> <50,981,188> 93,360 <7,901,708> $ 574,971,379 2. The issuance of long‐term debt (e.g., bonds) provides current financial resources to governmental funds, while the repayment of principal of long‐term debt consumes current financial resources of the governmental funds. Neither transaction, however, has any effect on net position. Also, the government reports the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are amortized in the Statement of Activities. The details of this difference are as follows: Debt issued or incurred: Highway Revenue Refunding Bonds Transportation Excise Tax Revenue Refunding Bonds Premium on debt issued Advances and notes payable Principal repayments: Highway Revenue Bonds Transportation Excise Tax Revenue Bonds Grant Anticipation Notes (GARVEE bonds) Payment to refunded bond escrow agent Amortization of premium and discount Amortization of deferred loss on refunding Repayment of advances and notes payable Repayment of capital leases $ <377,500,000> <376,785,000> <149,553,515> <783,241> $ <904,621,756> $ 61,660,000 70,940,000 53,040,000 900,812,743 35,243,542 <5,769,369> 68,469,781 8,578,243 $ 1,192,974,940 3. The internal Service Fund (Equipment Revolving Fund) is used by the Department to charge the cost for purchases and maintenance of equipment and material to be used by other funds and state agencies. The gain in the Internal Service Fund (Equipment Revolving Fund) represents over billing and must be eliminated from the government‐wide Statement of Activities for the governmental activities. Internal Service Fund (Equipment Revolving Fund): Changes in net position Elimination of Business‐type activity share of Equipment Fund accumulated gain/loss $ <1,611,358> $ <2,707,354> <4,318,712> 4. Pension contributions are reported as expenditures in the governmental funds in the fiscal year contributed. However, current year contributions are reported as deferred outflows of resources in the government‐wide Statement of Net Position because the reported net pension liability is measured a year before the Department’s current fiscal year‐end financial statements. Pension expense, which is the change in net pension liability adjusted 2015 Comprehensive Annual Financial Report 41 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 for changes in deferred outflows and inflows of resources related to pensions, is reported in the Statement of Activities: Pension contributions Pension expense $ $ 19,724,881 <20,772,881> <1,048,000> 5. Some items reported in the Statement of Activities do not provide or require the use of current financial resources and, therefore, are not reported in the governmental funds. The details are as follows: Unavailable revenue recognized for government‐wide reporting Compensated Absences Assumption of Lease from Equipment Services fund by Highway fund $ $ 2015 Comprehensive Annual Financial Report 42 819,164 <564,987> <10,199,376> <9,945,199> Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 5. DETAILED NOTES ON ALL FUNDS AND ACTIVITIES A. Capital Assets Capital assets activity for the year ended June 30, 2015, was as follows: July 1, 2014 Beginning Balance Governmental Activities Capital assets, not being depreciated: Land Infrastructure Construction in progress $ Total capital assets, not being depreciated Decreases Including Transfers Increases 2,906,121,499 13,778,329,207 2,843,910,023 $ 74,039,479 2,014,581,215 492,764,487 $ June 30, 2015 Ending Balance <3,015,447> $ 2,977,145,531 <60,341,772> 15,732,568,650 <1,977,741,164> 1,358,933,346 19,528,360,729 2,581,385,181 <2,041,098,383> 20,068,647,527 195,762,933 33,909,001 49,914,230 170,074,795 4,526,464 12,791,132 12,855,403 10,840,439 ‐ 12,789,265 <3,050,838> <8,186,971> 200,289,397 59,489,398 59,718,795 172,728,263 449,660,959 41,013,438 1,551,456 492,225,853 Less accumulated depreciation for: Buildings and improvements Improvements other than buildings Machinery and equipment Mobile fleet and aircraft <91,987,337> <11,602,533> <37,709,969> <104,241,679> <4,137,287> <1,116,136> <2,860,970> <10,275,960> ‐ ‐ 2,822,222 7,395,502 <96,124,624> <12,718,669> <37,748,717> <107,122,137> Total accumulated depreciation <245,541,518> <18,390,353> 10,217,724 <253,714,147> 204,119,441 22,623,085 11,769,180 238,511,706 19,732,480,170 $ 2,604,008,266 Capital assets, being depreciated: Buildings and improvements Improvements other than buildings Machinery and equipment Mobile fleet and aircraft Total capital assets, being depreciated Total capital assets, being depreciated, net Governmental activities capital assets, net $ July 1, 2014 Beginning Balance Business‐type Activities Capital assets, not being depreciated: Land $ Capital assets, being depreciated: Buildings and improvements Machinery and equipment Total capital assets, being depreciated $ Increases 7,900 $ <2,029,329,203> $ 20,307,159,233 June 30, 2015 Ending Balance Decreases ‐ $ ‐ $ 7,900 981,157 43,663 ‐ ‐ ‐ ‐ 981,157 43,663 1,024,820 ‐ ‐ 1,024,820 Less accumulated depreciation for: Buildings and improvements Machinery and equipment <972,319> <36,697> <4,367> <1,009> ‐ ‐ <976,686> <37,706> Total accumulated depreciation <1,009,016> <5,376> ‐ <1,014,392> <5,376> ‐ <5,376> $ ‐ Total capital assets, being depreciated, net Business‐type activities capital assets, net 15,804 $ 23,704 $ 2015 Comprehensive Annual Financial Report 43 10,428 $ 18,328 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Depreciation expense was charged to functions/programs as follows: B. Construction Commitments The Department’s outstanding commitments for contracts at June 30, 2015, were $593,565,675. Expenditures To Date Construction Contracts: Rural Roadways Small Urban Roadways Urban Roadways Large Urban Roadways General Roadways $ Design Contracts Other Commitments $ Remaining Commitment 1,135,911,318 99,617,812 473,597,573 844,084,150 78,797,761 2,632,008,614 $ 177,763,658 18,653,232 65,617,026 149,424,507 9,413,090 420,871,513 348,657,418 484,597,224 3,465,263,256 46,119,667 126,574,495 593,565,675 $ Area type designations for highways and roads are primarily determined by geographic location and population, as noted below: Rural – outside of urbanized areas and urban clusters, generally long roads carrying little traffic Small urban – in areas of 5,000 to 49,999 in population Urban – interstate highways, freeways, expressways, principal arteries serving major centers of activity in metropolitan areas Large urban – in areas of equal to or greater than 200,000 in population General roadways – statewide projects that cross categories 2015 Comprehensive Annual Financial Report 44 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 C. Unearned Revenues The proprietary fund includes the amount for unearned subscriptions. The following schedule is a summary of the amounts outstanding as of June 30, 2015. Proprietary funds: Arizona Highways Magazine Fund D. $ 1,963,826 Interfund Receivables, Payables, Advances, and Transfers The balances of current interfund receivables and payables as of June 30, 2015, were: Receivables Governmental activities: General Fund (State Highway Fund) Highway User Revenue Fund Motor Vehicle Division Clearing Fund Non‐Major Governmental Funds Business‐type activities: Arizona Highways Magazine General Fund (State Highway Fund) Payables Amount Highway User Revenue Fund Motor Vehicle Division Clearing Fund Motor Vehicle Division Clearing Fund General Fund (State Highway Fund) General Fund (State Highway Fund) Motor Vehicle Division Clearing Fund $ Motor Vehicle Division Clearing Fund Arizona Highways Magazine Net Business‐type activities $ 84,138,580 180,984 43,400,855 416,390 1,322,640 2,883,822 132,343,271 (39,474) 180,678 141,204 132,484,475 The General Fund (State Highway Fund) receivable of $84,500,243 is an accrual for fuel taxes imposed in fiscal year 2015 from the Highway User Revenue Fund that will be collected in fiscal year 2016. The Highway User Revenue Fund receivable of $43,817,244 is an accrual for vehicle license taxes due in fiscal year 2015 from the Motor Vehicle Division Clearing Fund that will be collected in fiscal year 2016. Interfund transfers for the year ended June 30, 2015, consisted of the following: Interfund Transfers Out: Interfund Transfers In: General Fund (State Highway Fund) Maricopa Regional Area Road Construction Fund Non‐Major Governmental Funds Total Debt Service Fund $ $ 137,265,202 103,250,301 64,894,043 305,409,546 The General Fund (State Highway Fund) ($137,265,202), the Maricopa Regional Area Road Construction Fund ($103,250,301), and Non‐Major Governmental Funds ‐ Grant Anticipation Notes Fund ($64,894,043) made transfers to the Debt Service Fund to pay bond debt service. 2015 Comprehensive Annual Financial Report 45 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 E. Leases Operating Leases The Department leases data processing equipment, other equipment, and certain facilities from various lessors. The majority of these leases are for a one‐year term, renewable annually. Total rental expenditures (excluding interfund transactions) for the fiscal year ended June 30, 2015, approximated $5.0 million. During fiscal year 2015, the Department entered into rental agreements for four facilities, on which Motor Vehicle Division offices are housed, as well as one for the Executive Hearing Office. Additionally, agreements initiated in prior years, for office space in East Phoenix and a lab in Gilbert, remain in force. Future commitments on operating leases are as follows: Capital Leases The Department has entered into lease agreements as lessee for financing the acquisition of various vehicles. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Governmental Activities Machinery and equipment $ 50,748,114 Less accumulated depreciation <11,787,890> Total $ 38,960,224 2015 Comprehensive Annual Financial Report 46 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2015, were as follows: Capital outlay on Exhibit 4 includes $10.2 million of capital leases. F. Non‐Current Liabilities Arizona Transportation Board Highway Revenue Bonds The Transportation Board has issued Senior and Subordinate Lien Highway Revenue Bonds to provide funds for acquisition of right‐of‐way, design, and construction of federal and state highways. The balance of Highway Revenue Bonds issued in prior years and outstanding at the start of the fiscal year was $1,674,800,000. During the year, Highway Revenue Refunding Bonds were issued to (i) pay interest on any bonds issued for highway purposes, (ii) pay costs of issuing the bonds, and (iii) refund portions of the Board’s outstanding Senior Series 2005B Bonds ($7,325,000), Senior Series 2006 Bonds ($18,350,000), Senior Series 2008A Bonds ($193,950,000), and Senior Series 2008B Bonds ($181,050,000). The Highway Revenue Bonds are secured by a prior lien on and a pledge of motor vehicle and related fuel fees and taxes of the General Fund (State Highway Fund). On September 21, 2006, House Bill 2206 became effective and eliminated the restriction that limited the principal amount of Highway Revenue Bonds that could be outstanding at any time to $1.3 billion. Also, during fiscal year 2007, the Transportation Board received legislative authority to begin issuing Highway Revenue Bonds with maturities up to 30 years in length, replacing the 20‐year maturity requirement that had been in place since 1980. Highway Revenue Bonds currently outstanding are as follows: 2015 Comprehensive Annual Financial Report 47 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 OUTSTANDING HIGHWAY REVENUE BONDS As of June 30, 2015 2015 Comprehensive Annual Financial Report 48 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 OUTSTANDING HIGHWAY REVENUE BONDS As of June 30, 2015 (continued) 2015 Comprehensive Annual Financial Report 49 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Annual debt service requirements to maturity for Highway Revenue Bonds are as follows: The Department has pledged future motor vehicle and related fuel fees and taxes to repay $1,589,965,000 in outstanding Highway Revenue Bonds issued since 2005. Proceeds from the bonds finance portions of the Transportation Board’s Five‐Year Transportation Facilities Construction Program. The bonds are payable solely from motor vehicle and related fuel fees and taxes and are payable through 2038. The total principal and interest remaining to be paid on the bonds is $2,393.2 million. Principal and interest paid for the current year and total pledged revenues were $137.6 million and $566.4 million, respectively. The annual principal and interest payments on the bonds required 24.3 percent of the pledged revenues. Arizona Transportation Board Transportation Excise Tax Revenue Bonds The Maricopa Regional Area Road Construction Fund is used to record all payments of principal and interest for Transportation Excise Tax Revenue Bonds issued by the Transportation Board. These bonds are secured by a portion of transportation excise taxes collected by the Arizona Department of Revenue on behalf of Maricopa County. The balance of Transportation Excise Tax Revenue Bonds issued in prior years and outstanding at the start of the fiscal year was $867,375,000. During the year, Transportation Excise Tax Revenue Refunding Bonds were issued to (i) refund portions of the Board’s outstanding Senior Series 2007 Bonds ($200,475,000), Senior Series 2009 Bonds ($174,565,000), and Senior Series 2010 Bonds ($15,370,000), (ii) pay costs of issuing the bonds. All Transportation Excise Tax Revenue Bonds mature no later than July 1, 2025. Transportation Excise Tax Revenue Bonds currently outstanding are as follows: 2015 Comprehensive Annual Financial Report 50 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 OUTSTANDING TRANSPORTATION EXCISE TAX REVENUE BONDS As of June 30, 2015 Annual debt service requirements to maturity for Transportation Excise Tax Revenue Bonds are as follows: The Department has pledged future transportation excise taxes to repay $782,810,000 in outstanding Transportation Excise Tax Revenue Bonds issued since 2007. Proceeds from the bonds pay the costs of design, right‐of‐way purchase, or construction of certain freeways and other routes within Maricopa County. The bonds are payable solely from transportation excise taxes and are payable through 2025. The total principal and interest remaining to be paid on the bonds is $1,004.1 million. Principal and interest paid for the current year and total pledged revenues were $103.6 million and $254.9 million, respectively. The annual principal and interest payments on the bonds required 40.6 percent of the pledged revenues. Arizona Transportation Board Grant Anticipation Notes (GARVEE) The Grant Anticipation Notes Fund administers all payments of principal and interest for notes issued by the Transportation Board and is secured by revenues received from the Federal Highway Administration under grant agreements and certain other federal‐aid revenues. The balance of Grant Anticipation Notes (“GARVEE bonds”) issued in prior years and outstanding at the start of the fiscal year was $247,710,000. Grant Anticipation Notes (GARVEE) currently outstanding are as follows: 2015 Comprehensive Annual Financial Report 51 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 OUTSTANDING GRANT ANTICIPATION NOTES As of June 30, 2015 Annual debt service requirements to maturity for Grant Anticipation Notes (GARVEE) are as follows: 2015 Comprehensive Annual Financial Report 52 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 The Department has pledged federal revenues to repay $194,670,000 in outstanding Grant Anticipation Notes (“GARVEE bonds). Proceeds from the bonds pay the costs of design, right‐of‐way purchase, or construction of certain freeways and other routes within Arizona. The bonds are payable solely from federal revenues and are payable through 2026. The total principal and interest remaining to be paid on the bonds is $248.5 million. Principal and interest paid for the current year and total pledged revenues were $64.9 million and $795.9 million, respectively. The annual principal and interest payments on the bonds required 8.2 percent of the pledged revenues. Refunded Bonds Deposited with Escrow Agents In current and prior fiscal years, the Transportation Board refinanced various bond issues through refunding arrangements. Under the terms of the refunding bond issues, sufficient assets to pay all principal, redemption premium, if any, and interest on the refunded bond issues have been placed in irrevocable trust accounts at commercial banks and invested in U.S. Government securities which, together with interest earned thereon, will provide amounts sufficient for future payment of principal and interest of the issues refunded. The assets, liabilities, and financial transactions of these trust accounts and the liability for these legally defeased bonds are not reflected in the financial statements of the Department. On December 18, 2014, the Transportation Board issued $376.8 million of Transportation Excise Tax Revenue Refunding Bonds Series 2014 (2014 Bonds). The 2014 Bonds were issued at a premium of $74.0 million. The net proceeds were used to (i) advance refund $390.4 million of the Senior Series 2007, Senior Series 2009, and Senior Series 2010 Transportation Excise Tax Revenue Bonds with a combined outstanding principal balance of $735.6 million, and (ii) pay costs of issuance. The advance refunding resulted in a combined total debt service savings of $31.8 million, and a combined net present value economic gain of $27.6 million (difference between the present values of the old debt and new debt service payments). The advance refunding also resulted in difference between the reacquisition price and the net carrying amount of the refunded debt of $35.0 million. This difference, reported as a deferred outflow of resources, is being amortized to interest expense on a straight‐line basis through fiscal year 2025. On January 28, 2015, the Transportation Board issued $377.5 million of Highway Revenue Refunding Bonds, Series 2015 (2015 Bonds). The 2015 Bonds were issued at a premium of $75.5 million. The net proceeds were used to (i) advance refund $400.7 million of the Senior Series 2005B, Senior Series 2006, Senior Series 2008A, and Senior Series 2008B Highway Revenue Bonds with a combined outstanding principal balance of $441.8 million, and (ii) pay costs of issuance. The advance refunding resulted in a combined total debt service savings of $40.8 million, and a combined net present value economic gain of $31.5 million (difference between the present values of the old debt and new debt service payments). The advance refunding also resulted in difference between the reacquisition price and the net carrying amount of the refunded debt of $38.6 million. This difference, reported as a deferred outflow of resources, is being amortized to interest expense on a straight‐line basis through fiscal year 2033. Advances and Notes Payable The Department’s outstanding advances and notes payable as of June 30, 2015, were $22,178,643 in governmental activities. The advances and notes payable represent amounts for other intergovernmental advances. Annual debt service requirements to maturity for advances and notes payable are as follows: 2015 Comprehensive Annual Financial Report 53 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Changes in non‐current liabilities The activity for the fiscal year ended June 30, 2015, was as follows: The Internal Service Fund predominantly serves the governmental funds. Accordingly, long‐term liabilities for that fund are included as part of the above totals for governmental activities. At year‐end, $745,056 of the Internal Service Fund’s compensated absences is included in the above amounts. The capital leases will be liquidated by the General Fund (State Highway Fund). The General Fund (State Highway Fund) has paid compensated absences in the past while the advances and notes payable will be repaid with funds from the General Fund (State Highway Fund) and the Maricopa Regional Area Road Construction Fund. Bonds and notes issued by the Department require compliance with a number of covenants. The Department believes that it is in compliance with all such covenants. In addition, certain of the Department’s obligations are subject to Internal Revenue Service regulations pertaining to issuance of tax‐exempt debt by governmental entities. The Department does not have and has not accrued a liability under these regulations. 2015 Comprehensive Annual Financial Report 54 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 G. Fund Balances The Department’s fund balance, as of June 30, 2015, is composed of the following: Unassigned Administration Highway Operations Highway Maintenance Motor Vehicle Inventories $ Nonspendable Restricted Committed Total ‐ $ ‐ ‐ ‐ ‐ ‐ <8,128,423> ‐ 6,340,586 ‐ $ 167,269 1,018,570,784 ‐ ‐ ‐ $ 205,034,859 ‐ 9,830,183 6,538,747 ‐ $ 205,202,128 1,018,570,784 9,830,183 <1,589,676> 6,340,586 $ <8,128,423> $ 6,340,586 $ 1,018,738,053 $ 221,403,789 $ 1,238,354,005 The <$8.1> million in the unassigned portion of the fund balance is due to Arizona Revised Statutes, §28‐6542 (B), which prohibits adjustments more than 24 months after the original distribution. 6. OTHER INFORMATION A. Contingent Liabilities Risk Management Insurance Losses The Department is exposed to various risks of loss related to torts; thefts of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Department is a participant in the state’s self‐insurance program and, in the opinion of the Department’s management, any unfavorable outcomes from these claims and actions would be covered by the self‐insurance program. Accordingly, the Department has no risk of loss beyond adjustments to future years’ premium payments to the state’s self‐insurance program. All estimated losses for unsettled claims and actions of the state are determined on an actuarial basis and are included in the State of Arizona’s Comprehensive Annual Financial Report. Claims The Department has a variety of claims pending against it that arose during the normal course of its activities. Management of the Department believes, based on the advice of legal counsel, that losses, if any, resulting from settlement of these claims will not have a material effect on the financial position of the Department. Grants Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. 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 Department expects such amounts, if any, to be immaterial. Light Rail Transit System Arizona Revised Statutes, §28‐9201, requires the Department to establish, implement, and enforce minimum safety standards for light rail transit systems. If a violation of the safety standards is discovered, the Department shall report the violation in writing to the Federal Transit Administration. Furthermore, the organization that operates a light rail transit system shall include a safety oversight function and pay the Department’s costs resulting from administration. B. Pension and Other Postemployment Benefits Arizona State Retirement System 2015 Comprehensive Annual Financial Report 55 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Plan Descriptions – Employees of the Department participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost‐sharing, multiple‐employer defined benefit pension plan; a cost‐sharing, multiple‐ employer defined benefit health insurance premium benefit (OPEB); and a cost‐sharing, multiple‐employer defined benefit long‐term disability (OPEB). The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on its Web site at www.azasrs.gov. Benefits Provided – The ASRS provides retirement, health insurance premium supplement, long‐term disability, and survivor benefits. State statute establishes benefit terms. Retirement benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Years of service and age required to receive benefit Retirement Initial Membership Date: Before July 1, 2011 On or after July 1, 2011 Sum of years and age equals 80 30 years age 55 10 years age 62 25 years age 60 5 years age 50* 10 years age 62 Any years age 65 5 years age 50* Any years age 65 Final average salary is based on Highest 36 consecutive months of last 120 months Highest 60 consecutive months of last 120 months Benefit percent per year of service 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits. Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost‐ of‐living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost‐of‐living adjustments. Survivor benefits are payable upon a member’s death. For retired members, the survivor benefit is determined by the retirement benefit option chosen. For all other members, the beneficiary is entitled to the member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. Contributions – In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the year ended June 30, 2015, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.60 percent (11.48 percent for retirement and 0.12 percent for long‐term disability) of the members’ annual covered payroll, and the Department was required by statute to contribute at the actuarially determined rate of 11.60 percent (10.89 percent for retirement, 0.59 percent for the health insurance premium benefit, and 0.12 percent for long‐term disability) of the active members’ annual covered payroll. In addition, the Department was required by statute to contribute at the actuarially determined rate of 9.57 percent (9.31 percent for retirement, .20 percent for health insurance premium benefit, and 0.06 percent for long‐term disability) of annual covered payroll of retired members who worked for the Department in positions that would typically be filled by an employee who contributes to the ASRS. The Department’s contributions to the pension plan for the year ended June 30, 2015, were $20,753,085. The Department’s contributions for the current and two preceding years for OPEB, all of which were equal to the required contributions, were as follows: Year Health Benefit Long‐Term ended Supplement Disability June 30 Fund Fund 2015 $1,123,313 $224,308 2014 1,123,160 440,942 2013 1,175,752 424,121 2015 Comprehensive Annual Financial Report 56 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 During the fiscal year ended June 30, 2015, the Department paid for ASRS pension and OPEB contributions as follows: 97% from the General Fund, 1 percent from major funds, and 2 percent from other funds. The Department's total payroll for fiscal year 2015 was $205.16 million. The System is funded through payroll deductions from employees' gross earnings and amounts contributed by the Department. Retirement benefits, health care benefits, and long term disability benefits are obligations of the System and not of the Department. The Arizona Revised Statutes provide statutory authority for employee and employer contributions. The contribution requirement for fiscal year 2015 was $22.12 million each by both the employees and the Department. Presentation of Deferred Outflows and Deferred Inflows of Resources Deferred outflows and inflows of resources are reported in the basic statements of net position in a separate section following assets and liabilities, respectively. The Department elected the optional statement of net position presentation. The Department recognizes the consumption of net position that is applicable to a future reporting period as deferred outflows of resources. The deferred outflows of resources are related to the Department’s pension plan. The Department recognizes the acquisition of net position that is applicable to a future reporting period as deferred inflows of resources. The deferred inflows of resources relate to the Department’s pension plan. Change in Accounting Principle Net position as of July 1, 2014, has been restated as follows: FUND FINANCIAL STATEMENTS GOVERNMENT‐WIDE STATEMENTS 2015 Comprehensive Annual Financial Report 57 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Retirement Plans The Department contributes to the Arizona Statement Retirement System plan described below. The plan is a component unit of the State of Arizona. At June 30, 2015, the Department reported the following amounts related to the pension plan to which it contributes: Also, the Department reported $19,724,881 of pension contributions as expenditures in the governmental funds related to the pension plan to which it contributes. Changes in the Department’s net pension liability during the fiscal year ended June 30, 2015, were as follows: Pension Liability – At June 30, 2015, the Department reported a liability of $307,848,006 for its proportionate share of the ASRS’ net pension liability. The net pension liability was measured as of June 30, 2014. The total pension liability used to calculate the net pension liability was determined using update procedures to roll forward the total pension liability from an actuarial valuation as of June 30, 2013, to the measurement date of June 30, 2014. The Department’s reported liability at June 30, 2015, decreased by $30,644,304 from the prior year liability of $338,492,310 because of changes in the ASRS’ net pension liability and the Department’s proportionate share of that liability. The ASRS’ publicly available financial report provides details on the change in the net pension liability. The Department’s proportion of the net pension liability was based on the Department’s actual contributions to the plan relative to the total of all participating employers’ contributions for the year ended June 30, 2014. The Department’s proportion measured as of June 30, 2014, was 2.080532 percent, which was an increase of 0.044407 percent from its proportion measured as of June 30, 2013. 2015 Comprehensive Annual Financial Report 58 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 Pension Expense and Deferred Outflows/Inflows of Resources – For the year ended June 30, 2015, the Department recognized pension expense for ASRS of $22,486,018. At June 30, 2015, the Department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Differences between expected and actual experience Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between State contributions and proportionate share of contributions DOT contributions subsequent to the measurement date Total Deferred Inflows of Resources $15,645,737 $ ‐ ‐ 53,833,112 5,124,405 ‐ 20,753,085 $41,523,227 ‐ $53,833,112 The $20,753,085 reported as deferred outflows of resources related to ASRS pensions resulting from the Department contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions will be recognized in pension expense as follows: Year ending June 30 2016 2017 2018 2019 $(4,427,782) (4,427,782) (10,749,129) (13,458,277) Actuarial Assumptions – The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date Actuarial roll forward date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2013 June 30, 2014 Entry age normal 8% 3–6.75% 3% Included 1994 GAM Scale BB Actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial study for the 5‐year period ended June 30, 2012. The long‐term expected rate of return on ASRS pension plan investments was determined to be 8.79 percent using a building block method in which best‐estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long‐term expected rate of return by weighting the expected future real rates of return 2015 Comprehensive Annual Financial Report 59 Arizona Department of Transportation Notes to the Financial Statements (continued) June 30, 2015 by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Equity Fixed Income Real Estate Commodities Total Target Allocation 63% 25% 8% 4% 100% Long‐Term Expected Real Rate of Return 7.03% 3.20% 4.75% 4.50% Discount Rate – The discount rate used to measure the ASRS total pension liability was 8 percent, which is less than the long‐term expected rate of return of 8.79 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statutes. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long‐term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Department’s Proportionate Share of the ASRS Net Pension Liability to Changes in the Discount Rate – The following table presents the Department’s proportionate share of the net pension liability calculated using the discount rate of 8 percent, as well as what the Department’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (7 percent) or 1 percentage point higher (9 percent) than the current rate. Current 1% Decrease Discount Rate 1% Increase (7%) (8%) (9%) DOT’s proportionate share of the net pension liability $389,104,092 $307,848,006 $263,762,500 Pension Plan Fiduciary Net Position – Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. The most recent report may be obtained by writing the Arizona State Retirement System, 3300 North Central Avenue, P.O. Box 33910, Phoenix, AZ 85067‐3910, by calling (602) 240‐2000 or (800) 621‐3778 or visiting the website at www.azasrs.gov/content/annual‐reports. C. Subsequent Events South Mountain Freeway Contract Award Included in the current 5‐Year Transportation Facilities Program for FY16‐20 is the South Mountain Freeway Project (State Route 202L) which is the largest project ever undertaken by the agency. In March 2016, the Department entered into a Design‐Build contract for the construction of the South Mountain Freeway Project (State Route 202L). The fixed contract award was $916 million dollars, and includes both design and construction. The right of way portion of the contract is anticipated to cost approximately $550M. The project funding includes federal aid highway funds, bonds and Regional Area Road Funds. The 22‐mile freeway, expected to open by late 2019, will provide a long‐planned direct link between the East Valley and West Valley and a much‐needed alternative to Interstate 10 through downtown Phoenix. The South Mountain Freeway will complete the Loop 202 and Loop 101 freeway system. This project is a public‐private partnership. Connect 202 Partners, a private development group, will not only design and build this new freeway, but will also be responsible for maintenance for 30 years. 2015 Comprehensive Annual Financial Report 60 REQUIRED SUPPLEMENTARY INFORMATION (Other than MD&A) Budgetary Comparison Schedule – General Fund (State Highway Fund) Note to Required Supplementary Schedule Information about Infrastructure Assets Reported Using the Modified Approach Pension Liability and Pension Contributions 2015 Comprehensive Annual Financial Report Arizona Department of Transportation Required Supplementary Information June 30, 2015 Budgetary Comparison Schedule General Fund (State Highway Fund) ‐ Budgetary Basis for the fiscal year ended June 30, 2015 2015 Comprehensive Annual Financial Report 61 Arizona Department of Transportation Required Supplementary Information (continued) June 30, 2015 Note to Required Supplementary Information 1. Budgets and budgetary accounting An annual budget for the operating expenditures of the General Fund (State Highway Fund) is submitted to the governor in accordance with state law. The budget is legally enacted as appropriations after approval by the state legislature and signature of the governor. The legal level of control for operating expenditures is set at the agency level and expenditure budgets are appropriated using a lump‐sum by agency format. Revenue budgets are developed internally by the Department and are not part of the appropriation process. Amendments to the approved appropriations require legislative approval. However, since the Department’s appropriation is a lump sum appropriation by agency, the allocation of funds between personal services, employee‐ related expenditures, and other operating expenditures is an internal decision. Accordingly, transfers between line items such as personal services and other operating expenditures within a particular program may be made by the program manager. Expenditures may not exceed appropriations. All transfers of funds are reported to the Department’s Office of Strategic Planning and Budgeting for monitoring purposes. Budgets are prepared on the cash basis except that liabilities incurred before the end of the fiscal year and paid within the first month of the subsequent fiscal year are charged against the prior fiscal year’s budget. The Department’s appropriations lapse at fiscal year‐end unless exempted by the legislature. For financial reporting purposes, the accompanying financial statements present the legally adopted budget for the operations of the General Fund (State Highway Fund) that is subject to legislative appropriation. In addition, budgets for capital outlay, including land, building, and improvements for the General Fund (State Highway Fund) and State Aviation Fund, are also submitted to the governor in accordance with state law. The capital outlay appropriation includes state highway construction and land, building, and improvements for the General Fund (State Highway Fund). A legal limitation is adopted for land, building, and improvements; however, legislation allows the Department to spend in excess of its appropriation for state highway construction up to the current fund balance. The Department monitors expenditures through an internal budgetary process and the Five‐Year Transportation Facilities Construction Program approved by the Transportation Board. 2015 Comprehensive Annual Financial Report 62 Arizona Department of Transportation Required Supplementary Information (continued) June 30, 2015 Information about Infrastructure Assets Reported Using the Modified Approach As allowed by Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments (GASB 34), as amended, the Arizona Department of Transportation (Department) reports its roads and bridges using the modified approach. Assets accounted for under the modified approach include 6,800 center line miles (21,390 travel lane miles) of roads and 4,798 bridges that the Department is responsible to maintain. In order to utilize the modified approach, the Department is required to:  Maintain an asset management system that includes an up to date inventory of eligible infrastructure assets.  Perform condition assessments of eligible assets and summarize the results using a measurement scale.  Estimate each year the annual amount to maintain and preserve the assets at the condition level established and disclosed by the Department.  Document that the assets are being preserved approximately at or above the established condition level. As adopted by the Transportation Board of the State of Arizona Department of Transportation (Transportation Board) on an annual basis, the Five‐Year Transportation Facilities Construction Program (Program) contains estimated expenditures for highway system improvements and the preservation of existing roadway and bridges. Both of these factors impact the condition assessment of the roads and bridges as described in the following sections. The Program in effect for fiscal year 2015 and beyond was adopted by the Transportation Board on June 13, 2014. This Program is a dynamic instrument and adjustments are made to the annual plans based on the needs of the Department to maintain the condition level of the roads and bridges at a level equal to, or greater than, the goals established by the Department. In addition, not only are adjustments made during the life of the Program, circumstances may require that refinements to the individual components of the Program be made during the fiscal year. In comparing Estimated to Actual Expenditures in the tables that follow, significant variances can occur. These variances are primarily due to the methodology used in the preparation of the Program. In this Program, the Estimated Expenditures for the current year are based on “programmed” projects which may or may not be spent in the current year of the Program. Programmed expenditures consist of those items that are planned for the future, with contracts that have not yet been awarded. Furthermore, the Actual Expenditures will include projects that were programmed for a prior year’s Estimated Expenditures, but which did not occur, or were not completed, in the prior year. The following information pertains to the condition assessment and maintenance of infrastructure assets and reflects the Department’s success in achieving condition levels that exceed the established levels. Roads The mission of the Department’s Pavement Management Section (PMS) is to develop and provide a cost effective pavement rehabilitation construction program that preserves the state’s investment in its highway system and enhances public transportation and safety. The requirements of GASB 34 and the PMS both work toward the same basic goal, the efficient, effective management of the Department’s assets to produce long‐term benefits while minimizing expenditures. The PMS has developed performance goals for the condition level of the pavement in the state highway system. These goals require periodic assessment of pavement conditions and the budget level needed to meet that goal. The goal is expressed as a measure called “Serviceability” which can be defined as the ability of a pavement to serve the traveling 2015 Comprehensive Annual Financial Report 63 Arizona Department of Transportation Required Supplementary Information (continued) June 30, 2015 Information about Infrastructure Assets Reported Using the Modified Approach (continued) public (as documented in 1961 after American Association of State Highway and Transportation Officials (AASHTO) Road Test, 1956‐1961). Serviceability is based on detailed measurements of objective features of the pavement. Many surveys since the original road test have shown that these measurements closely track the subjective opinion of the traveling public. Most commonly, this number is called Present Serviceability Rating and abbreviated as PSR. PSR is a five‐point scale (5 excellent, 0 impassable), similar to the Weaver/AASHTO Scale shown as follows: Numerical Rating 5 4 3 2 1 0 Weaver/AASHTO Scale PSR Excellent Good Fair Poor Very Poor Impassable Perfect Very Good Good Fair Poor Very Poor The goal of the Department is to maintain a condition level (PSR) rating of 3.23 or better for all roads in the state highway system. Annually, Transportation Material Technicians drive over the system with inertial profiling equipment and measure the roughness of the pavement. This process is continuous throughout the year in order to assess the condition level of all pavement on an annual basis. As of the end of fiscal year 2015, an overall rating of 3.68 was achieved, as shown in the following graph: Condition Level‐Roads 5 PSR 4 3 Actual 2 Goal 1 0 2011 2012 2013 2014 2015 Fiscal Year Figure 1 Preservation of the roads is accomplished through programs managed primarily by the Department’s PMS, as well as other units within the Department. The estimated (as specified in the Program as programmed amounts) and actual expenditures for fiscal years 2011 through 2015 were as follows: 2015 Comprehensive Annual Financial Report 64 Arizona Department of Transportation Required Supplementary Information (continued) June 30, 2015 Information about Infrastructure Assets Reported Using the Modified Approach (continued) Fiscal Year 2011 2012 2013 2014 2015 Estimated Expenditures (in millions) $265.7 261.9 276.3 271.2 249.5 Actual Expenditures (in millions) $373.4 373.6 291.3 287.2 300.6 Bridges The Department’s bridge assets constitute a significant portion of all infrastructure assets in Arizona. As of June 30, 2015, the Department owned and maintained 4,798 bridges with an approximate total deck area of 49,753,220 square feet. Bridges, for purposes of this report, include all structures erected over an opening or depression with a centerline of 20 feet or more. Information related to these bridges is stored and updated in the Arizona Bridge Information and Storage System (ABISS). This system is used to efficiently manage the bridge inventory through storing all bridge related data and assisting bridge engineers in arriving at appropriate bridge preservation decisions. Also, ABISS is used for reporting bridge inventory and condition, on a biennial basis, to the Federal Highway Administration (FHWA). A Condition Rating Index (CRI) is used to track the condition of the bridge network. The CRI is based on four selected bridge inspection condition ratings, which in turn are based on standards established in the FHWA’s “Recording and Coding Guide for the Structural Inventory of the Nation’s Bridges.” The four selected condition ratings that are included in the CRI computation are: the bridge joints condition, the deck condition, the super‐structure condition, and the sub‐structure condition. The bridge joints condition rating is an Arizona‐specific rating item not included in the FHWA condition rating guidelines, whereas the other three condition ratings are federally mandated condition ratings. The CRI is computed by subtracting from one the ratio of the sum of the deck areas of all bridges with a condition rating of four or less (see table below), which indicates that the rated element is at best in a poor condition, to the total sum of the deck areas. The rating system in this guide is as follows: Numerical Rating 9 8 7 6 5 4 3 2 1 Condition Rating Excellent Very Good Good Satisfactory Fair Poor Serious Critical Imminent Failure Management of the bridge inventory is a major function of the Department’s Bridge Group and regularly scheduled biennial inspections are made of all bridges. A civil or structural engineer, licensed to practice in Arizona, performs these inspections. It is the policy of the Department to maintain state highway bridges so that the CRI exceeds 92.5%. In fiscal year 2015, the CRI was computed at 93.5%. 2015 Comprehensive Annual Financial Report 65 Arizona Department of Transportation Required Supplementary Information (continued) June 30, 2015 Information about Infrastructure Assets Reported Using the Modified Approach (continued) CRI Condition Levels‐Bridges 95.0% 94.5% 94.0% 93.5% 93.0% 92.5% 92.0% 91.5% 91.0% 90.5% 90.0% Actual Goal 2011 2012 2013 2014 2015 Fiscal Year Figure 2 Bridges represent a major public investment, and their inspection and maintenance is an essential function of the Department in its mission of providing products and services for a safe, efficient, and cost effective transportation system. Figure 3 indicates that approximately 56% of the bridges in the state were constructed prior to the 1970s while only 15% have been constructed since 2000. Age of Department's Bridge Population 30% 25% % of bridges built in corresponding decade 20% 15% 10% 5% 0% < 1930 30s 40s 50s 60s 70s 80s 90s 2000s 2010s Figure 3 2015 Comprehensive Annual Financial Report 66 Arizona Department of Transportation Required Supplementary Information (continued) June 30, 2015 Information about Infrastructure Assets Reported Using the Modified Approach (continued) Preservation of the bridges is accomplished through programs managed by the Bridge Group. The estimated (as specified in the Program as programmed amounts) and actual expenditures for fiscal years 2011 through 2015 were as follows: Fiscal Year 2011 2012 2013 2014 2015 Estimated Expenditures (in millions) $11.8 12.5 14.7 21.2 13.7 Actual Expenditures (in millions) $26.0 20.6 10.7 20.5 21.9 2015 Comprehensive Annual Financial Report 67 Arizona Department of Transportation Required Supplementary Information (continued) June 30, 2015 Pension Liability and Pension Contributions The Department implemented Government Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions and GASB Statement No. 71, GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date—An Amendment of GASB Statement No. 68. New required supplementary information as a result of this implementation are: Schedule of the Proportionate Share of the Net Pension Liability For the last fiscal year June 30, 2015 (1) Fiscal Year 2015 2.08% Proportion of the net pension liability Proportionate share of the net pension liability Covered‐employee payroll Proportionate share of the net pension liability as a percentage of its covered‐employee payroll Plan fiduciary net position as a percentage of the total pension liability $ 307,848,006 $ 187,545,346 164.15% 69.49% Schedule of Pension Contributions For the last two fiscal years ended (1) Fiscal Year 2015 2014 Statutorily required contribution Contributions in relation to the statutorily required contribution $ 20,753,085 $ 20,067,352 20,753,085 20,067,352 Contribution deficiency (excess) $ Covered-employee payroll Contributions as a percentage of covered-employee payroll $ 190,570,110 $ 187,545,346 10.89% 10.70% - $ - (1) The Department implemented GASB 68 in fiscal year 2015. Therefore, ten years of data is not available, but will be accumulated over time. See note 6B for further details. 2015 Comprehensive Annual Financial Report 68 NON‐MAJOR GOVERNMENTAL FUNDS FINANCIAL STATEMENTS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. The State Aviation Fund is appropriated by the legislature and receives monies from aviation gasoline taxes, sale of abandoned or seized aircraft, flight property taxes, and the operation of the Grand Canyon National Park Airport. The State Aviation Fund monies are used to build and maintain airport facilities throughout Arizona. The Safety Enforcement and Transportation Infrastructure Fund is appropriated by the legislature and receives monies from registration fees for non‐resident vehicles and single trip and limited use fuel tax permits. Monies are used for enforcement of vehicle safety requirements, and construction and maintenance of transportation facilities within twenty‐five miles of the border between Arizona and Mexico. The Motor Vehicle Liability Insurance Enforcement Fund is appropriated by the legislature and receives reinstatement fees for insurance‐related driver license and vehicle registration suspensions. Monies are used to administer the State's Mandatory Liability Insurance Program. The Motor Vehicle Inspection and Title Enforcement Fund is appropriated by the legislature and receives monies from the fees charged for certain vehicle inspections. Monies are used to defray the cost of investigations involving certificates of title, licensing fraud, registration enforcement, and other enforcement related issues. The Motor Carrier Safety Revolving Fund receives fees to administer and enforce the rules governing the safety operations of motor carriers, shippers, and vehicles transporting hazardous materials, substances, or waste. The Underground Storage Tank Fund receives certain Department revenues for distribution to the Department of Environmental Quality. The Economic Strength Project Fund receives monies from the Highway User Revenue Fund for use on approved economic strength projects recommended by the Department of Commerce and Economic Development Commission. The Grant Anticipation Notes Fund receives revenues from the Federal Highway Administration under various grant agreements for the repayment of Grant Anticipation Notes (GARVEE bonds). The Local Agency Deposits Fund receives monies from the U.S. Government and local agencies for the payment of local agency sponsored county secondary road construction projects. 2015 Comprehensive Annual Financial Report Arizona Department of Transportation Combining Balance Sheet Non‐Major Governmental Funds June 30, 2015 Assets Unrestricted cash on deposit with the State Treasurer Receivables: Interfund Notes and loans Due from other State agencies Due from Arizona counties and cities Other (net) Amounts due from U.S. Government Restricted cash on deposit with the State Treasurer Total assets $ State Aviation Fund Safety Enforcement and Transportation Infrastructure Fund Motor Vehicle Liability Insurance Enforcement Fund Motor Vehicle Inspection and Title Enforcement Fund 28,801,059 $ $ $ 15,110 3,085,042 ‐ 286,349 1,494,142 74,514 $ Liabilities, deferred inflows of resources and fund balances Liabilities: Accounts payable $ Accrued payroll and other accrued expenditures Interfund payables Amounts due to: Other state agencies Arizona counties and cities Total liabilities Deferred inflows of resources Unavailable revenue Fund balances: Restricted Committed Total fund balances Total liabilities, deferred inflows of resources and fund balances $ Exhibit 9 Page 1 of 2 456,948 4,016 ‐ ‐ ‐ ‐ ‐ 4,982,296 13,164 ‐ ‐ ‐ ‐ ‐ 907,072 22,140 ‐ ‐ ‐ ‐ ‐ ‐ 33,756,216 $ ‐ 460,964 $ ‐ 4,995,460 $ ‐ 929,212 1,310,972 $ 2,810 $ 1,524 $ 252 31,169 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 1,521,280 2,863,421 ‐ ‐ 2,810 ‐ ‐ 1,524 ‐ ‐ 252 ‐ ‐ ‐ ‐ ‐ 30,892,795 30,892,795 ‐ 458,154 458,154 ‐ 4,993,936 4,993,936 ‐ 928,960 928,960 33,756,216 $ 460,964 $ 2015 Comprehensive Annual Financial Report 69 4,995,460 $ 929,212 Arizona Department of Transportation Combining Balance Sheet Non‐Major Governmental Funds June 30, 2015 Motor Carrier Safety Revolving Fund $ Underground Storage Tank Fund 45,685 $ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Economic Strength Project Fund $ 2,829,392 ‐ ‐ ‐ 393 ‐ Grant Anticipation Notes Fund 4,558,763 $ Local Agency Deposits Fund ‐ ‐ ‐ ‐ ‐ ‐ ‐ Exhibit 9 Page 2 of 2 $ ‐ ‐ ‐ ‐ ‐ ‐ Total Non‐Major Governmental Funds ‐ $ ‐ ‐ 325,915 3,250 3,654,419 2,582,988 39,751,823 2,883,822 3,085,042 325,915 289,599 5,148,954 2,657,502 $ ‐ 45,685 $ 242,240 3,072,025 $ ‐ 4,558,763 $ 2 2 $ 15,254,565 21,821,137 $ 15,496,807 69,639,464 $ ‐ $ ‐ $ ‐ $ ‐ $ 881,205 $ 2,196,763 $ ‐ ‐ ‐ ‐ 32,147 63,316 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3,072,025 ‐ 3,072,025 ‐ 4,558,763 4,558,763 ‐ ‐ ‐ ‐ 648 914,000 3,072,025 6,080,691 11,412,795 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 45,685 45,685 ‐ ‐ ‐ ‐ ‐ ‐ 2 ‐ 2 20,907,137 ‐ 20,907,137 20,907,139 37,319,530 58,226,669 45,685 $ 3,072,025 $ 4,558,763 $ 2 $ 21,821,137 2015 Comprehensive Annual Financial Report 70 $ 69,639,464 Exhibit 10 Page 1 of 2 Arizona Department of Transportation Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non‐Major Governmental Funds for the fiscal year ended June 30, 2015 State Aviation Fund Revenues Vehicle registration, title, license, and related taxes and fees Fuel and motor carrier taxes and fees Flight property taxes Reimbursement of construction expenditures ‐ federal aid Other federal grants and reimbursements Reimbursements from Arizona counties and cities Interest on loans receivable Income from investments Grand Canyon National Park Airport Other Total revenues $ 6,226,476 284,004 8,595,398 Safety Enforcement and Transportation Infrastructure Fund Motor Vehicle Liability Insurance Enforcement Fund $ $ 2,510,567 ‐ ‐ ‐ 3,055,545 ‐ 266,287 56,597 899,804 109,840 374,331 1,294,541 3,072,218 21,179,496 ‐ ‐ ‐ ‐ 20 ‐ 1,300 2,511,887 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3,055,545 4,084,570 ‐ ‐ ‐ 4,084,570 ‐ ‐ ‐ 1,855,612 1,855,612 ‐ ‐ ‐ 950,374 950,374 Distributions to other state agencies Distributions to Arizona counties and cities Non‐capital, including asset preservation Capital outlay Total expenditures ‐ 24,347,877 ‐ ‐ 28,432,447 343,540 ‐ ‐ ‐ 2,199,152 1,040,000 ‐ 6,224 ‐ 1,996,598 Excess of revenues over expenditures <7,252,951> 312,735 1,058,947 ‐ ‐ ‐ ‐ ‐ ‐ 312,735 145,419 458,154 1,058,947 3,934,989 4,993,936 Expenditures Current: Administration Highway Highway maintenance Motor vehicle Total current expenditures Intergovernmental: Other financing sources Transfers in Transfers out for debt service Total other financing sources Net change in fund balances Fund balances ‐ July 1 Fund balances ‐ June 30 ‐ ‐ ‐ $ <7,252,951> 38,145,746 30,892,795 $ 2015 Comprehensive Annual Financial Report 71 $ Exhibit 10 Page 2 of 2 Arizona Department of Transportation Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non‐Major Governmental Funds for the fiscal year ended June 30, 2015 Motor Vehicle Inspection and Title Enforcement Fund $ $ 1,556,489 ‐ ‐ Motor Carrier Safety Revolving Fund $ Underground Storage Tank Fund ‐ ‐ ‐ $ ‐ 30,904,117 ‐ Economic Strength Project Fund $ Grant Anticipation Notes Fund ‐ 1,000,000 ‐ $ Local Agency Deposits Fund ‐ ‐ ‐ $ Total Non‐Major Governmental Funds ‐ ‐ ‐ $ 10,293,532 35,243,666 8,595,398 ‐ ‐ ‐ ‐ ‐ ‐ 31,641 1,588,130 ‐ ‐ ‐ ‐ ‐ ‐ 3,333 3,333 ‐ ‐ ‐ ‐ 9,348 ‐ ‐ 30,913,465 ‐ ‐ ‐ ‐ 29,727 ‐ ‐ 1,029,727 64,891,316 ‐ ‐ ‐ 16 ‐ ‐ 64,891,332 ‐ 90,477,687 9,634,856 ‐ ‐ ‐ ‐ 100,112,543 65,157,603 90,534,284 10,534,660 109,840 413,442 1,294,541 3,108,492 225,285,458 ‐ ‐ ‐ 1,365,894 1,365,894 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 259,658 259,658 ‐ ‐ ‐ 2,181 2,181 1 ‐ ‐ ‐ 1 ‐ 98,371,365 ‐ ‐ 98,371,365 4,084,571 98,371,365 ‐ 4,433,719 106,889,655 ‐ ‐ 62,649 ‐ 1,428,543 ‐ ‐ ‐ ‐ ‐ 30,653,807 ‐ ‐ ‐ 30,913,465 ‐ 1,027,546 ‐ ‐ 1,029,727 ‐ ‐ ‐ ‐ 1 ‐ ‐ ‐ 1,023 98,372,388 32,037,347 25,375,423 68,873 1,023 164,372,321 159,587 3,333 ‐ ‐ 64,891,331 1,740,155 60,913,137 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ <64,894,043> <64,894,043> 159,587 769,373 928,960 3,333 42,352 45,685 ‐ ‐ ‐ ‐ ‐ ‐ $ $ $ $ <2,712> 2,714 2 $ 2015 Comprehensive Annual Financial Report 72 ‐ ‐ ‐ ‐ <64,894,043> <64,894,043> 1,740,155 19,166,982 20,907,137 <3,980,906> 62,207,575 58,226,669 $ FIDUCIARY FUNDS FINANCIAL STATEMENTS Combining Statement of Net Position Statement of Changes in Assets and Liabilities AGENCY FUNDS Highway Properties ‐ Privilege Tax Fund collects monies from renters of properties previously acquired by the Department for use in future highway development. Monies collected are distributed to the Department of Revenue. Highway Properties ‐ 24 Percent Fund collects 24 percent of the Department's rental income from properties for use in future highway development. Monies collected are distributed to the local counties. Special Plates Fund This group of funds collects revenues for the various special plates approved by the legislature. The Department retains an administrative fee and remits the balance of the special plate fee to the designated entity. 2015 Comprehensive Annual Financial Report Exhibit 11 Arizona Department of Transportation Combining Statement of Net Position Agency Funds June 30, 2015 Highway Properties ‐ Privilege Tax Fund ASSETS Restricted cash on deposit with the State Treasurer Due from other agencies Total assets LIABILITIES Due to Department of Revenue Due to Arizona counties Total liabilities $ 394 ‐ 394 $ $ 394 ‐ 394 $ Highway Properties ‐ 24 % Lieu Tax Fund $ $ $ $ 451,521 1,077 452,598 ‐ 452,598 452,598 2015 Comprehsive Annual Financial Report 73 Special Plates Fund $ $ $ $ Total 905,789 372 906,161 $ ‐ 906,161 906,161 $ $ $ 1,357,704 1,449 1,359,153 394 1,358,759 1,359,153 Exhibit 12 Arizona Department of Transportation Statement of Changes in Assets and Liabilities Agency Funds for the fiscal year ended June 30, 2015 Balance July 1, 2014 Additions Deductions Balance June 30, 2015 Highway Properties ‐ Privilege Tax Fund Assets Restricted cash on deposit with the State Treasurer Due from Department of Revenue Total assets Liabilities Due to Department of Revenue Total liabilities $ $ 555 12 567 $ $ $ $ $ 8,047 ‐ 8,047 567 567 $ $ $ $ 463,751 ‐ 463,751 $ $ $ $ $ <8,208> $ <12> <8,220> $ 394 ‐ 394 8,047 8,047 $ $ <8,220> $ <8,220> $ 394 394 $ $ 455,076 1,077 456,153 $ <467,306> $ ‐ <467,306> $ 451,521 1,077 452,598 463,751 463,751 $ $ 456,153 456,153 $ $ <467,306> $ <467,306> $ 452,598 452,598 $ $ 2,694,852 372 2,695,224 $ $ ‐ ‐ ‐ $ <1,789,063> $ ‐ <1,789,063> $ 905,789 372 906,161 $ $ ‐ ‐ $ $ 2,695,224 2,695,224 $ $ <1,789,063> $ <1,789,063> $ 906,161 906,161 $ 464,306 12 464,318 $ 1,417,319 1,449 1,418,768 $ <523,921> $ <12> <523,933> $ 1,357,704 1,449 1,359,153 <8,220> $ <515,341> <523,561> $ 394 1,358,759 1,359,153 Highway Properties ‐ 24 Percent Fund Assets Restricted cash on deposit with the State Treasurer Due from other agencies Total assets Liabilities Due to Arizona counties Total liabilities Special Plates Fund Assets Restricted cash on deposit with the State Treasurer Interest Receivable Total assets Liabilities Due to Others Total liabilities Total Agency Funds Assets Restricted cash on deposit with the State Treasurer Due from other agencies Total assets $ $ $ Liabilities Due to Department of Revenue Due to Arizona counties Total liabilities $ $ 567 463,751 464,318 $ $ 8,047 1,410,349 1,418,396 2015 Comprehensive Annual Financial Report 74 $ $ STATISTICAL SECTION 2015 Comprehensive Annual Financial Report Arizona Department of Transportation Overview – Statistical Section for the fiscal year ended June 30, 2015 This part of the Arizona Department of Transportation’s (Department) Comprehensive Annual Financial Report provides detail in the form of graphs and tables intended to assist the reader of the report with understanding the information presented in the financial statements, note disclosures, and required supplementary information regarding the overall financial health of the Department. Financial Trends These schedules show trend information that gives an insight into the Department’s financial well‐being and performance over time. Revenue Capacity Information about the Motor Vehicle Fuel Tax and the Highway User Revenue Fund, the Department’s most significant own‐source revenues, is presented in these tables. Debt Capacity These tables present information to help the reader assess the affordability of the Department’s current levels of outstanding debt as well as the Department’s ability to issue additional debt in the future. Demographic and Economic Information The demographic and economic indicators presented in this section offer an understanding of the environment in which the Department’s financial activities take place. Operating Information The Department’s relationship of the financial report to the services provided as well as its activities is illustrated in these tables depicting service and infrastructure information. Sources: Unless otherwise stated, all information in the following tables is derived from the Comprehensive Annual Financial Reports for the years shown. 2015 Comprehensive Annual Financial Report 75 Arizona Department of Transportation Index – Statistical Section for the fiscal year ended June 30, 2015 Page STATISTICAL SECTION Financial Trends: Change in Net Position (Table A‐1) .............................................................................................................. 77‐80 Statement of Revenues, Expenditures, and Changes in Fund Balances (Table A‐2) ....................................81‐84 Fund Balances of Governmental Funds (Table A‐3) ..................................................................................... 85‐86 Expenditures of Federal Awards (Table A‐4) .................................................................................................... 87 Government‐wide Expenses by Function (Table A‐5) .................................................................................. 88‐89 Government‐wide Revenues (Table A‐6) ..................................................................................................... 90‐91 Net Position by Component (Table A‐7) ...................................................................................................... 92‐93 Revenue Capacity: Highway User Revenue Fund Collections (Table B‐1) ....................................................................................... 94 Highway User Revenue Fund Distributions (Table B‐2) .................................................................................... 95 Fuel Tax Rates (Table B‐3) ................................................................................................................................. 96 Motor Vehicle Fuel Tax – Top Ten Suppliers (Table B‐4) .................................................................................. 97 Gasoline Volume Sold – Top Twenty‐Five Suppliers (Table B‐5).................................................................. 98‐99 Debt Capacity: Highway User Revenue Fund – Legal Debt Margin (Table C‐1) ...................................................................... 100 Highway Revenue Bonds – Bond Coverage (Table C‐2) .................................................................................. 101 Transportation Excise Tax Revenue Bonds – Bond Coverage (Table C‐3) ....................................................... 102 Transportation Excise Tax Revenue Bonds – Debt Service Revenue and Cost Per Capita (Table C‐4)............ 103 Ratios of Outstanding Debt by Type (Table C‐5) ......................................................................................104‐105 Demographic and Economic Information: Number of Vehicle Registrations Per Year (Table D‐1) ................................................................................... 106 Vehicle Registrations Per Year Compared to Fuel Sales (Table D‐2) ............................................................... 107 Demographic and Economic Statistics (Table D‐3) ......................................................................................... 108 Principal Employers (Table D‐4) ...................................................................................................................... 109 Operating Information: Full‐Time Equivalents (FTEs) (Table E‐1) ......................................................................................................... 110 Capital Assets – Schedule by Function and Activity (Table E‐2) ...................................................................... 111 Capital Assets – Schedule of Changes by Function and Activity (Table E‐3) ................................................... 112 Total Public Road Mileage by Highway Class and Governmental Ownership (Table E‐4) .............................. 113 Daily Vehicle Miles Traveled with Population Data (Table E‐5) ...................................................................... 114 2015 Comprehensive Annual Financial Report 76 FINANCIAL TRENDS 2015 Comprehensive Annual Financial Report Table A‐1 Page 1 of 4 Arizona Department of Transportation Change in Net Position for fiscal year ended June 30 (Thousands of Dollars) Expenses Governmental Activities: Administration Aeronautics Highway1 Highway maintenance Motor vehicle Other Non‐capital, including asset preservation1 Distributions to other state agencies Distributions to Arizona counties and cities Local governmental assistance Issuance cost on long‐term debt2 Interest on long‐term debt Total governmental activities expenses Business‐type Activities: Arizona Highways Magazine Highway Expansion and Extension Loan Program Total business‐type activities expenses Total primary government expenses 2006 $ $ 2007 45,002 $ 51,667 10,705 5,418 118,147 138,788 114,119 120,163 96,937 105,961 9,394 ‐ <53,981> 113,569 206,903 114,795 1,095,671 1,219,208 36,771 48,760 ‐ ‐ 88,279 82,450 1,767,947 2,000,779 8,175 4,273 12,448 1,780,395 2008 $ 8,072 4,355 12,427 $ 2,013,206 $ $ $ 54,918 4,373 132,874 137,100 112,880 ‐ 187,004 176,692 1,238,383 37,285 ‐ 92,295 2,173,804 7,712 4,053 11,765 2,185,569 Program Revenues Governmental Activities: Charges for services: Administration Aeronautics Highway Highway maintenance Motor vehicle Other Local governmental assistance Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business‐type Activities: Charges for services: Arizona Highways Magazine Highway Expansion and Extension Loan Program Total business‐type activities program revenues Total primary governmental program revenues $ Net /revenues: Governmental Activities Business‐type Activities Total primary government net expense $ <1,179,023> $ <1,416,057> $ <1,420,304> <1,155> <1,458> <2,386> $ <1,180,178> $ <1,417,515> $ <1,422,690> $ ‐ 1,214 ‐ 537 121,179 7,099 4,040 67,241 387,614 588,924 8,012 3,281 11,293 600,217 $ 8,843 1,133 2,953 577 132,274 ‐ 12,239 72,679 354,024 584,722 8,060 2,909 10,969 595,691 $ 9,706 940 1,451 1,765 127,900 ‐ 8,263 79,747 523,728 753,500 7,624 1,755 9,379 762,879 NOTES: 1 Adjustments were made to Highway and Non‐capital, including asset preservation, for the years 2004 ‐ 2007 to conform to the current year's presentation. 2 Notes to Financial Statement (A), New Accounting Pronouncements, Statement Number 65. (continued) 2015 Comprehensive Annual Financial Report 77 Table A‐1 Page 2 of 4 Arizona Department of Transportation Change in Net Position for fiscal year ended June 30 (Thousands of Dollars) 2009 $ $ $ $ 56,066 10,993 116,742 110,963 133,415 ‐ 216,198 413,940 1,091,893 48,571 ‐ 114,683 2,313,464 7,410 2,112 9,522 2,322,986 8,752 936 1,765 887 117,267 ‐ 9,789 90,619 552,488 782,503 6,291 1,128 7,419 789,922 2010 $ $ $ $ 65,781 ‐ 34,721 102,932 102,926 ‐ 122,747 251,392 1,057,720 83,230 ‐ 129,626 1,951,075 6,288 147 6,435 1,957,510 9,766 ‐ 1,266 1,858 111,412 ‐ 5 146,936 575,448 846,691 5,975 556 6,531 853,222 2011 $ $ $ $ 93,040 ‐ 37,070 129,700 99,949 ‐ 345,590 254,702 1,024,756 163,035 ‐ 128,768 2,276,610 5,664 126 5,790 2,282,400 10,770 ‐ 2,798 2,667 117,427 ‐ ‐ 220,759 743,718 1,098,139 5,619 154 5,773 1,103,912 2012 $ $ $ $ 94,075 ‐ 39,632 125,331 116,095 ‐ 351,116 307,885 1,005,114 93,557 ‐ 164,081 2,296,886 4,979 75 5,054 2,301,940 11,947 ‐ 1,681 2,290 111,429 ‐ ‐ 161,992 775,976 1,065,315 5,581 2 5,583 1,070,898 2013 $ $ $ $ 101,370 ‐ 46,076 139,762 107,655 ‐ 257,126 213,394 1,074,086 102,332 ‐ 187,315 2,229,116 4,637 46 4,683 2,233,799 12,254 ‐ 842 1,887 119,733 ‐ ‐ 168,436 651,798 954,950 5,188 6 5,194 960,144 2014 $ $ $ $ 106,200 ‐ 51,074 122,977 111,397 ‐ 312,519 216,675 1,065,798 90,376 13,554 114,406 2,204,976 4,821 46 4,867 2,209,843 12,400 ‐ 864 2,418 122,042 ‐ ‐ 157,705 546,680 842,109 5,164 ‐ 5,164 847,273 2015 $ $ $ $ $ <1,530,961> $ <1,104,384> $ <1,178,471> $ <1,231,571> $ <1,274,166> $ <1,362,867> $ <2,103> 106 <17> 529 511 297 $ <1,533,064> $ <1,104,278> $ <1,178,488> $ <1,231,042> $ <1,273,655> $ <1,362,570> $ 98,855 ‐ 41,836 137,473 92,520 ‐ 315,349 189,517 1,155,651 98,371 ‐ 94,956 2,224,528 4,739 43 4,782 2,229,310 8,145 ‐ 2,157 2,676 132,837 ‐ ‐ 172,279 696,877 1,014,971 5,073 ‐ 5,073 1,020,044 <1,209,557> 291 <1,209,266> (continued) 2015 Comprehensive Annual Financial Report 78 Table A‐1 Page 3 of 4 Arizona Department of Transportation Change in Net Position for fiscal year ended June 30 (continued) (Thousands of Dollars) General Revenues and Other Changes in Net Position Governmental Activities: Transportation excise taxes Motor vehicle registration, title, and related taxes Fuel and motor carrier taxes and fees Flight property taxes Income from investments Other Transfers Governmental activities before accounting change Special Item ‐ State appropriation for Statewide Transportation Acceleration Needs (STAN) Total governmental activities Business‐type Activities: Income from investments Other Transfers Total business‐type activities Total primary government Changes in Net Position Governmental Activities Business‐type Activities Total primary government 2006 $ $ $ $ 316,491 994,052 770,596 13,686 28,538 11,026 ‐ 2,134,389 2007 $ 262,264 1,029,001 790,909 15,303 55,760 9,998 ‐ 2,163,235 2008 $ 253,742 1,033,505 766,394 13,822 59,528 38,772 ‐ 2,165,763 ‐ 2,134,389 245,000 2,408,235 ‐ 2,165,763 3,518 ‐ ‐ 3,518 2,137,907 5,563 <3> ‐ 5,560 $ 2,413,795 $ 4,788 <17> ‐ 4,771 2,170,534 955,366 2,363 957,729 $ $ 992,178 4,102 996,280 $ $ 745,459 2,385 747,844 (continued) 2015 Comprehensive Annual Financial Report 79 Table A‐1 Page 4 of 4 Arizona Department of Transportation Change in Net Position for fiscal year ended June 30 (continued) (Thousands of Dollars) $ $ $ $ 2009 2010 219,165 $ 976,075 667,200 11,975 33,588 22,831 <500> 1,930,334 199,672 893,287 690,503 9,527 16,347 8,966 ‐ 1,818,302 ‐ 1,930,334 1,612 <1> ‐ 500 2,111 1,932,445 $ 399,373 8 399,381 $ $ 2011 2012 206,545 $ 874,191 704,727 9,798 9,415 16,095 <851> 1,819,920 216,281 899,345 700,620 10,735 11,388 10,442 ‐ 1,848,811 ‐ 1,818,302 ‐ 1,819,920 ‐ 1,848,811 ‐ 1,882,464 ‐ 1,960,399 ‐ 2,006,414 514 554 ‐ 851 1,405 1,821,325 783 ‐ ‐ 783 1,849,594 747 ‐ ‐ 747 1,883,211 735 ‐ ‐ 735 1,961,134 613 ‐ ‐ 613 2,007,027 ‐ 514 1,818,816 713,918 620 714,538 $ $ $ $ 641,449 1,388 642,837 $ $ $ 617,239 1,313 618,552 2013 $ $ $ $ 227,800 913,326 708,062 8,084 11,781 13,411 ‐ 1,882,464 608,298 1,257 609,555 2015 Comprehensive Annual Financial Report 80 2014 $ $ $ $ 243,786 963,221 714,852 12,975 11,634 13,931 ‐ 1,960,399 597,532 1,032 598,564 2015 $ $ $ $ 254,871 1,036,502 686,042 8,595 9,989 10,415 ‐ 2,006,414 796,858 903 797,761 Table A‐2 Page 1 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for fiscal year ended June 30 (Thousands of Dollars) 2006 Revenues Transportation excise taxes Vehicle registration, title, license, and related taxes and fees Fuel and motor carrier taxes and fees Flight property taxes Reimbursement of construction expenditures ‐ federal aid Other federal grants and reimbursements Reimbursements from Arizona counties and cities Distributions from other state agencies Interest on loans receivable Income from investments Grand Canyon National Park Airport Rental income Other Total revenues Expenditures Current: Transportation: Administration Aeronautics Highway Highway maintenance Motor vehicle Other Total Transportation $ 2007 316,491 1,207,265 770,596 13,686 407,891 32,044 13,566 1,490 739 28,351 1,214 1,702 6,490 2,801,525 $ 43,372 10,470 161,496 111,378 95,198 2,309 424,223 Transportation not appropriated by State legislature: ‐ Intergovernmental: Distributions to other state agencies Distributions to Arizona counties and cities 2008 262,264 1,159,379 792,717 15,303 334,376 72,548 34,971 1,799 928 55,393 1,133 1,434 7,088 2,739,333 $ 44,875 3,876 184,240 118,940 103,801 ‐ 455,732 ‐ 253,742 1,159,474 768,046 13,822 494,584 79,747 38,609 463 697 59,197 940 1,367 6,206 2,876,894 44,322 4,089 171,134 135,629 110,982 ‐ 466,156 ‐ 206,903 1,190,962 114,795 1,217,883 173,405 1,241,110 Debt service: Principal Interest Bond issuance costs 173,745 83,017 1,252 100,395 90,836 1,592 192,663 102,583 3,447 Non‐capital, including asset preservation Capital outlay 250,736 663,316 63,273 741,506 158,991 989,882 2,994,154 2,786,012 3,328,237 Total expenditures Excess of revenues over expenditures $ <192,629> $ <46,679> $ <451,343> (continued) 2015 Comprehensive Annual Financial Report 81 Table A‐2 Page 2 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for fiscal year ended June 30 (Thousands of Dollars) 2009 $ 2010 219,165 1,064,147 696,075 11,975 531,981 94,521 27,498 876 427 33,221 936 1,788 21,579 2,704,189 $ 46,056 10,471 163,570 111,346 131,665 ‐ 463,108 ‐ $ 2011 199,672 1,002,312 692,632 9,527 544,498 146,936 31,503 936 596 15,853 866 1,800 6,370 2,653,501 $ 52,971 ‐ 115,061 94,014 101,142 ‐ 363,188 ‐ 2012 206,545 991,335 704,727 9,799 736,803 219,743 10,078 845 436 9,083 798 2,554 9,913 2,902,659 $ 81,477 ‐ 200,216 120,716 98,115 ‐ 500,524 2013 216,281 1,010,548 700,620 10,735 770,900 157,437 9,645 1,842 351 11,130 821 3,096 8,177 2,901,583 $ 80,627 ‐ 135,908 118,230 114,327 ‐ 449,092 ‐ 2014 227,800 $ 1,021,441 613,607 ‐ 597,762 66,217 <2,380> 989 93 11,282 ‐ 5,244 7,779 2,549,834 80,612 ‐ 42,996 125,199 100,993 ‐ 349,800 ‐ 243,786 1,085,166 714,852 12,975 536,192 148,902 19,314 915 228 11,500 1,170 6,025 11,959 2,792,984 2015 $ 254,871 1,169,339 686,042 8,595 685,823 162,701 20,632 1,338 179 9,989 1,295 6,671 10,264 3,017,739 92,966 ‐ 128,196 133,572 109,553 ‐ 464,287 93,309 ‐ 136,527 130,599 87,296 ‐ 447,731 ‐ 404,569 1,100,959 244,836 1,046,576 254,210 1,022,512 305,218 1,004,768 132,685 1,053,543 216,482 1,065,798 189,517 1,155,651 199,687 126,932 3,967 144,232 143,133 121 201,219 144,748 2,099 196,338 137,213 3,043 160,415 142,524 2,455 216,879 140,259 ‐ 272,053 121,404 3,026 142,604 1,077,835 217,338 998,502 313,179 709,250 286,217 701,657 242,039 677,236 223,572 563,428 251,953 634,303 3,519,661 3,157,926 3,147,741 3,083,546 2,760,697 2,890,705 3,075,638 <815,472> $ <504,425> $ <245,082> $ <181,963> $ <210,863> $ <97,721> $ <57,899> (continued) 2015 Comprehensive Annual Financial Report 82 Table A‐2 Page 3 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for fiscal year ended June 30 (continued) (Thousands of Dollars) 2006 Other financing sources Transfers in Transfers out for debt service Transfers out other Capital leases Sale of capital assets Insurance recovery Debt issuance Debt issuance ‐ refunding bond Amortized premium from debt issuance Payment to refunded bond escrow agent Total other financing sources $ 2007 262,216 $ <251,891> <10,325> ‐ 11,118 537 118,250 147,400 22,407 <161,726> 137,986 Net change in fund balances before accounting change <54,643> Special item ‐ State appropriation for Statewide Transportation Acceleration Needs (STAN) Net change in fund balances Fund balances ‐ July 1 Fund balances ‐ June 30 ‐ <54,643> 537,062 482,419 $ $ Debt service as a percentage of non‐capital expenditures Debt service as a percentage of total revenues 16.9% 14.5% 2008 225,499 $ <186,856> <38,643> 2,129 10,162 577 325,000 ‐ 26,201 ‐ 364,069 303,513 <231,563> <71,950> ‐ 28,233 1,765 711,479 ‐ 31,862 ‐ 773,339 317,390 321,996 245,000 562,390 482,419 1,044,809 ‐ 321,996 1,044,809 1,366,805 11.1% 9.2% $ 9.4% 7.0% (continued) 2015 Comprehensive Annual Financial Report 83 Table A‐2 Page 4 of 4 Arizona Department of Transportation Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds for fiscal year ended June 30 (continued) (Thousands of Dollars) 2009 $ 2010 239,447 $ <221,232> <17,252> ‐ 2,127 887 796,819 ‐ 58,123 ‐ 858,919 43,447 $ ‐ 43,447 1,366,805 1,410,252 12.8% 10.4% 2011 271,408 $ <266,934> <9,013> ‐ 3,088 1,765 32,628 ‐ ‐ ‐ 32,942 <471,483> $ ‐ <471,483> 1,410,252 938,769 $ 13.5% 12.2% 2012 331,547 $ <331,547> <2,400> ‐ 3,712 2,529 349,698 ‐ 38,876 ‐ 392,415 2013 330,856 $ <330,856> ‐ ‐ 1,815 1,818 269,001 499,725 90,753 <560,228> 302,884 2014 283,066 $ <227,996> ‐ ‐ 1,636 1,679 767,020 92,477 36,385 <611,874> 342,393 147,333 120,921 131,530 ‐ 147,333 938,769 1,086,102 ‐ 120,921 1,086,102 1,207,023 ‐ 131,530 1,169,853 1,301,383 $ 13.3% 10.8% $ 14.1% 12.1% 2015 Comprehensive Annual Financial Report 84 14.5% 10.4% 2015 303,030 $ <303,030> ‐ ‐ 900 2,328 42,366 ‐ ‐ ‐ 45,594 <52,127> $ ‐ <52,127> 1,341,636 1,289,509 $ 15.3% 12.8% 305,410 <305,410> ‐ ‐ 259 2,676 783 754,285 149,554 <900,813> 6,744 <51,155> ‐ <51,155> 1,289,508 1,238,353 16.1% 13.0% Table A‐3 Page 1 of 2 Arizona Department of Transportation Fund Balances of Governmental Funds for fiscal year ended June 30 (Thousands of Dollars) 2006 General Fund (State Highway Fund): Reserved Unreserved Nonspendable Restricted Committed Total General Fund $ $ All other governmental funds Reserved: Debt service Capital projects Unreserved, reported in: Non‐major special revenue funds Unassigned Nonspendable Restricted Committed Total all other governmental funds $ Total general and other governmental funds 2007 2008 172,784 $ 9,342 ‐ ‐ ‐ 182,126 $ 507,723 $ (10,032) ‐ ‐ ‐ 497,691 $ 505,691 57,899 ‐ ‐ ‐ 563,590 2,159 258,236 2,688 495,428 3,212 774,644 $ 39,898 ‐ ‐ ‐ ‐ 300,293 $ 482,419 $ $ 49,002 ‐ ‐ ‐ ‐ 547,118 $ 1,044,809 $ 2009 $ $ $ 230,885 94,686 ‐ ‐ ‐ 325,571 2,692 1,078,478 $ 25,359 ‐ ‐ ‐ ‐ 803,215 $ 3,574 ‐ ‐ ‐ ‐ 1,084,744 $ 1,366,805 $ 1,410,315 NOTE: GASB 54 rules state that Fund Balances should be reported with the categories listed in the above table for years beginning in 2011. Years 2006 ‐ 2010 will continue to be reported in the old format until 10 years of information is available. 2 Estimated in 2012 CAFR and have been revised for 2012 actuals. 1 (continued) 2015 Comprehensive Annual Financial Report 85 Table A‐3 Page 2 of 2 Arizona Department of Transportation Fund Balances of Governmental Funds for fiscal year ended June 30 (Thousands of Dollars) 2011 2010 $ $ $ 270,550 80,251 ‐ ‐ ‐ 350,801 $ 1,894 576,331 $ $ 9,743 ‐ ‐ ‐ ‐ 587,968 $ 938,769 $ 1 2012 ‐ $ ‐ 9,765 229,559 102,350 341,674 $ ‐ $ ‐ $ ‐ ‐ ‐ 719,966 24,462 744,428 $ $ 1,086,102 $ 2 2013 2014 2015 ‐ $ ‐ 8,235 240,444 25,229 273,908 $ ‐ $ ‐ 7,207 267,414 123,662 398,283 $ ‐ $ ‐ 6,833 295,361 129,115 431,309 $ ‐ ‐ ‐ ‐ ‐ ‐ $ ‐ (8,128) ‐ 789,547 37,352 818,771 $ 1,092,679 $ ‐ <8,128> ‐ 910,931 40,550 943,353 $ 1,341,636 2015 Comprehensive Annual Financial Report 86 $ $ $ ‐ <8,128> ‐ 816,591 49,738 858,201 $ 1,289,510 $ ‐ ‐ 6,341 344,347 177,384 528,072 ‐ ‐ ‐ <8,128> 6,341 1,018,738 221,404 1,238,355 1,766,427 Table A‐4 Arizona Department of Transportation Expenditures of Federal Awards1 for the fiscal year ended June 30 (Thousands of Dollars) Federal Agencys 1 Fiscal Year $ BJA BLM FAA FHWA FMCSA FRA FTA GSA NHTSA OST Total Federal USDA Expenditures ‐ $ ‐ $ ‐ $ 428 $ 837,698 $ 2,122 $ 48 $ 18,644 $ ‐ $ 103 $ 10,417 $ ‐ ‐ ‐ ‐ 454 660,644 2,204 65 18,107 234 112 1,512 ‐ ‐ 13 ‐ 198 794,912 2,747 611 19,056 ‐ 123 344 ‐ ‐ ‐ ‐ 488 840,649 1,518 ‐ 19,261 541 ‐ ‐ 80 ‐ ‐ 1,004 3,844 988,403 3,891 ‐ 21,451 ‐ 1,143 ‐ ‐ ‐ ‐ 124 7,938 574,068 4,148 ‐ 22,769 ‐ 120 ‐ ‐ ‐ ‐ 268 3,902 603,643 4,734 ‐ 13,853 ‐ 101 ‐ ‐ ‐ ‐ 57 715 555,282 2,642 ‐ 15,530 ‐ 106 ‐ ‐ <21> ‐ 544 610 393,751 1,769 ‐ 10,169 ‐ 101 ‐ ‐ ‐ ‐ 162 4,338 389,575 2,231 ‐ 8,837 ‐ 69 ‐ ‐ 869,460 683,332 818,004 862,537 1,019,736 609,167 626,501 574,332 406,923 405,212 SOURCE: Single Audit Reports ‐ fiscal years 2006 through 2015 NOTE: 1 Bureau of Indian Affairs (BIA); Bureau of Justice Assistance (BJA); Bureau of Land Management (BLM); Federal Aviation Administration (FAA); Federal Highway Administration (FHWA); Federal Motor Carrier Safety Administration (FMCSA); Federal Railroad Administration (FRA); Federal Transit Administration (FTA); General Services Administration (GSA); National Highway Transportation Safety Administration (NHTSA); Office of the Secretary Administration Secretariate (OST); United States Department of Agriculture (USDA). Total Expenditures of Federal Awards $1,200,000 $1,000,000 Thousands of Dollars 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 BIA $800,000 $600,000 $400,000 $200,000 $‐ 2006 2007 2008 2009 2010 2011 2012 Fiscal Year 2015 Comprehensive Annual Financial Report 87 2013 2014 2015 Table A‐5 Page 1 of 2 Arizona Department of Transportation Government‐wide Expenses by Function for the fiscal year ended June 30 (Thousands of Dollars) Distributions to Arizona Counties, Highway Admin. Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 $ 98,855 $ 106,200 101,370 94,075 93,040 65,781 56,282 54,918 51,667 45,002 Aeronautics ‐ $ ‐ ‐ ‐ ‐ ‐ 10,993 4,373 5,418 10,705 Highway 1 Maintenance 41,836 $ 51,074 46,076 39,632 37,070 34,721 116,697 132,874 138,788 118,147 Motor Vehicle 137,473 $ 122,977 139,762 476,447 475,290 225,679 311,605 324,104 233,732 60,138 Cities and Other State Agencies 92,520 $ 111,397 107,655 116,095 99,949 102,926 133,243 112,880 105,961 96,937 1,345,168 1,282,473 1,287,481 1,312,999 1,279,459 1,309,112 1,505,835 1,415,075 1,334,003 1,394,609 1 NOTE: Includes Non‐capital, including asset preservation. (continued) 2015 Comprehensive Annual Financial Report 88 Table A‐5 Page 2 of 2 Arizona Department of Transportation Government‐wide Expenses by Function for the fiscal year ended June 30 (Thousands of Dollars) Arizona Highways Local Governmental Assistance $ Premium on Interest on Long‐ Long‐Term Debt Term Debt 98,371 $ 90,376 102,332 93,557 163,035 83,230 48,571 37,285 48,760 36,771 ‐ $ ‐ ‐ 1,419 ‐ ‐ ‐ ‐ ‐ ‐ Other 94,956 $ 114,406 187,315 162,662 128,768 129,626 114,683 92,295 82,450 88,278 Magazine 315,349 $ 326,073 257,126 ‐ ‐ ‐ ‐ ‐ ‐ 9,394 Highway Expansion and Extension Loan Program 4,739 $ 4,821 4,637 4,978 5,664 6,288 7,410 7,712 8,072 8,175 Total 43 $ 46 46 75 126 147 2,110 4,053 4,355 4,273 Government‐wide Expenses Thousands of Dollars $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 2006 2007 2008 2009 2010 2011 2012 Fiscal Year 2015 Comprehensive Annual Financial Report 89 2013 2014 2015 2,229,310 2,209,843 2,233,800 2,301,939 2,282,401 1,957,510 2,307,429 2,185,569 2,013,206 1,872,429 Table A‐6 Page 1 of 2 Arizona Department of Transportation Government‐wide Revenues for the fiscal year ended June 30 (Thousands of Dollars) Program Revenues Governmental Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Charges for Services $ Operating Grants and Contributions 145,815 $ 137,725 134,716 127,347 133,661 124,307 139,396 150,024 158,019 134,068 Business‐Type Capital Grants and Contributions 172,279 $ 157,705 168,436 161,992 220,759 146,936 90,619 79,747 72,679 67,241 Charges for Services 696,877 $ 546,680 651,798 776,814 743,718 575,448 552,488 523,728 354,024 387,614 5,073 5,164 5,194 5,583 5,773 6,541 7,418 9,379 10,969 11,293 1 NOTE: Includes transfers for multiple years. (Continued) 2015 Comprehensive Annual Financial Report 90 Table A‐6 Page 2 of 2 Arizona Department of Transportation Government‐wide Revenues for the fiscal year ended June 30 (Thousands of Dollars) Total General Revenues Governmental Taxes $ Business‐Type 1 Other Revenues 1,986,010 $ 1,934,835 1,857,273 1,826,980 1,795,291 1,792,989 1,874,415 2,067,464 2,097,476 2,186,859 Income from Investments 10,264 $ 13,905 13,290 9,604 16,079 8,965 22,331 38,772 9,998 11,026 Income from Investments 1 Other Revenues 9,989 $ 11,634 11,781 11,388 9,402 16,347 33,588 59,528 57,760 28,538 151 $ 26 121 ‐ 851 ‐ 500 (18) (3) ‐ Government‐wide Revenues 613 $ 735 747 783 555 514 1,612 4,788 5,563 3,518 3,027,071 2,808,409 2,843,356 2,920,491 2,926,089 2,672,047 2,722,367 2,933,412 2,766,485 2,830,157 Government‐wide Revenues $3,100,000 Thousands of Dollars $3,000,000 $2,900,000 $2,800,000 $2,700,000 $2,600,000 $2,500,000 $2,400,000 2006 2007 2008 2009 2010 2011 2012 Fiscal Year 2015 Comprehensive Annual Financial Report 91 2013 2014 2015 Table A‐7 Page 1 of 2 Arizona Department of Transportation Net Position by Component for fiscal year ended June 30 (Thousands of Dollars) Business‐type Activities Net Investment in Governmental Activities Net Investment in Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Restricted Capital Assets $ 17,496,122 16,812,808 16,290,605 15,818,053 15,159,086 14,620,099 13,951,802 13,285,438 12,211,861 11,806,376 $ 819,446 805,893 738,969 666,828 669,811 566,794 534,535 704,929 1,006,512 466,337 Unrestricted $ (57,534) $ 159,127 150,721 106,932 125,860 126,415 113,053 209,650 236,186 189,669 Total 18,258,034 17,777,828 17,180,295 16,591,813 15,954,757 15,313,308 14,599,390 14,200,017 13,454,559 12,462,382 Capital Assets $ 18 24 30 43 54 92 131 173 225 249 (continued) 2015 Comprehensive Annual Financial Report 92 Table A‐7 Page 2 of 2 Arizona Department of Transportation Net Position by Component for fiscal year ended June 30 (Thousands of Dollars) Primary Government Business‐type Activities Net Investment in Unrestricted Restricted $ 78,770 78,226 77,564 76,882 76,192 75,619 74,703 74,115 71,708 67,713 $ Total 383 $ 1,790 1,414 825 192 (663) (406) 132 102 (30) Restricted Capital Assets 79,171 80,040 79,008 77,750 76,438 75,048 74,428 74,420 72,035 67,932 $ 17,496,140 16,812,832 16,290,635 15,818,096 15,159,140 14,620,191 13,951,933 13,285,611 12,212,086 11,806,625 $ 898,216 884,119 816,533 743,710 746,003 642,413 609,238 779,044 1,078,220 534,050 Unrestricted $ Total (57,151) $ 160,917 152,135 107,757 126,052 125,752 112,647 209,782 236,288 189,639 Primary Government Net Assets By Component $20,000,000 $18,000,000 Thousands of Dollars $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 2006 2007 2008 2009 2010 2011 Fiscal Year Invested in Capital Assets, net of related debt 2012 Restricted 2015 Comprehensive Annual Financial Report 93 2013 2014 Unrestricted 2015 18,337,205 17,857,868 17,259,303 16,669,563 16,031,195 15,388,356 14,673,818 14,274,437 13,526,594 12,530,314 REVENUE CAPACITY 2015 Comprehensive Annual Financial Report Table B‐1 Arizona Department of Transportation Highway User Revenue Fund Collections for the fiscal year ended June 30 (Thousands of Dollars) Motor Vehicle Fuel Tax Revenues Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 $ 634,245 632,544 647,858 538,352 636,507 633,771 637,054 697,771 725,787 710,115 Motor Vehicle Reg. Fee Revenues $ 188,793 182,492 180,115 180,685 175,179 170,453 178,953 196,151 194,308 178,112 Motor Vehicle Operators' License Fees and Other Fees Motor Carrier Tax Revenues $ 18,623 17,953 17,103 17,085 17,466 17,157 18,930 21,758 22,473 20,824 $ Motor Vehicle License (In Lieu) Tax Revenues 69,245 68,452 67,373 69,765 64,361 59,431 58,500 60,630 57,085 56,495 $ 366,607 345,603 321,864 228,317 275,132 331,080 349,399 400,787 389,503 372,168 Total Deposited to Arizona HURF $ 1,277,513 1,247,044 1,234,313 1,034,204 1,168,645 1,211,892 1,242,836 1,377,097 1,389,156 1,337,714 Highway User Revenue Fund Collections $1,500,000 $1,350,000 Thousands of Dollars $1,200,000 $1,050,000 $900,000 $750,000 $600,000 $450,000 $300,000 $150,000 $0 2006 2007 2008 2009 2010 2011 2012 Fiscal Year 2015 Comprehensive Annual Financial Report 94 2013 2014 2015 Table B‐2 Arizona Department of Transportation Highway User Revenue Fund Distributions for the fiscal year ended June 30 (Thousands of Dollars) Fiscal State Highway Department of Public Cities and Year Fund Towns Counties 2015 $ 580,993 $ 364,260 $ 226,928 $ 2014 559,765 340,718 212,251 2013 555,030 327,732 219,228 2012 401,172 306,376 190,857 2011 522,556 341,502 212,739 2010 520,484 399,900 211,741 2009 513,379 346,443 215,817 2008 680,530 415,556 258,871 2007 688,451 417,541 260,107 2006 636,094 385,759 240,309 Economic Strength 1 Other Safety Project Fund Total 89,255 $ 1,000 $ 15,077 $ 1,277,513 119,247 1,000 14,063 1,247,044 119,965 1,000 11,358 1,234,313 123,211 1,000 11,588 1,034,204 79,216 1,000 11,631 1,168,644 78,626 1,000 60,141 1,271,892 84,950 1,000 81,247 1,242,836 10,000 1,000 11,140 1,377,097 10,000 1,000 12,057 1,389,156 63,999 1,000 10,553 1,337,714 The Highway User Revenue Fund receives certain Motor Vehicle Division revenues from the Motor Vehicle Division Clearing Fund. These monies are distributed: 50.5% to the State Highway Fund, 27.5% to Cities and Towns, 3% to Cites with population over 300,000, and 19% to Couties based on Arizona Revised Statues ‐ Section 28‐6538. SOURCES: Basic Financial Statements ‐ fiscal years 2006 through 2015 NOTE: 1 An appropriation for Arizona State Parks is included. Fiscal years 2005, 2009, 2010, 2011 and 2012 include distributions to State General Fund. 2015 Comprehensive Annual Financial Report 95 Table B‐3 Arizona Department of Transportation Fuel Tax Rates for the fiscal year ended June 30 (Cents per Gallon) Fiscal Gasoline Year Tax 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 $ Use Fuel Tax 1 0.18 $ 0.26 0.18 0.26 0.18 0.26 0.18 0.26 0.18 0.26 0.18 0.26 0.18 0.26 0.18 0.26 0.18 0.26 0.18 0.26 SOURCE: Arizona Revised Statutes §28‐5606 Imposition of Motor Fuel Taxes NOTES: Gasohol is currently taxed at the same rate as gasoline and use fuel. Use fuel is primarily diesel. 1 Light class motor vehicles with a declared vehicle weight < 26,001 pounds and have less than three axles pay $.18 per gallon. 2015 Comprehensive Annual Financial Report 96 Table B‐4 Arizona Department of Transportation Motor Vehicle Fuel Tax ‐ Top Ten Suppliers for fiscal year ended June 30 (Thousands) Fiscal Year Gallons from Top Revenue from Top Ten Suppliers Ten Suppliers 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 3,298,612 3,138,450 3,110,955 3,025,722 2,898,241 2,905,890 2,871,995 2,839,622 2,807,989 2,588,981 $ 650,714 617,134 613,799 589,607 564,353 569,974 565,889 559,609 552,997 504,052 All Motor Vehicle Fuel Tax Revenue $ Revenue Percentage from Top Ten Suppliers 715,248 691,250 685,320 688,642 686,591 683,880 698,959 753,036 772,100 750,574 91.0% 89.3% 89.6% 85.6% 82.2% 83.3% 81.0% 74.3% 71.6% 67.2% SOURCE: Revenue & Fuel Tax Administration reporting, based on gallonage data reported by fuel suppliers. NOTE: Above data reflects a change in gasoline and use fuel gallons reported by the Revenue & Fuel Tax Administration for 2006 ‐ 2015. Motor Vehicle Fuel Tax Sources $800,000 $700,000 Thousands of Dollars $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fiscal Year All Fuel Tax Revenue Top Ten Suppliers 2015 Comprehensive Annual Financial Report 97 Table B‐5 Page 1 of 2 Arizona Department of Transportation Gasoline Volume Sold ‐ Top Twenty‐Five Suppliers for fiscal year ended June 30 2006 Range ‐ in Millions of Gallons Suppliers % of Total Suppliers Suppliers % of Total Suppliers % of Total within Gallons within within Gallons within Range Sold Range Gallons Sold Range Sold Range < 25 26 ‐ 50 51 ‐ 100 101 ‐ 200 201 ‐ 300 > 300 2010 % of Total Gallons Sold Suppliers % of Total within Gallons Range Sold 5 2 5 6 3 4 2.4% 2.4% 12.0% 21.8% 17.6% 38.5% 6 1 5 6 3 4 2.0% 1.0% 11.1% 24.5% 18.2% 40.4% 8 6 3 5 3 ‐ 1.5% 4.2% 12.1% 11.1% 34.8% 32.7% 7 5 2 3 3 5 3.3% 5.2% 3.2% 11.4% 17.9% 55.8% 7 8 1 2 3 4 2.7% 9.2% 1.5% 9.8% 21.7% 51.6% 25 94.7% 25 97.2% 25 96.4% 25 96.8% 25 96.5% Total Gallons of Gasoline (Thousands) Gasoline % of Total Total Gallons of Use Fuel (Diesel) (Thousands) Diesel % of Total 2009 2008 2007 2,781,197 2,871,528 2,797,714 2,634,840 2,607,660 74.3% 74.5% 74.5% 75.3% 76.0% 963,551 981,647 959,406 864,455 824,996 25.7% 25.5% 25.5% 24.7% 24.0% Note: Above data reflects a change in gasoline and use fuel gallon reported by the Revenue & Fuel Tax Administration for 2006 ‐ 2015. (continued) 2015 Comprehensive Annual Financial Report 98 Table B‐5 Page 2 of 2 Arizona Department of Transportation Gasoline Volume Sold ‐ Top Twenty‐Five Suppliers for fiscal year ended June 30 2011 Range ‐ in Millions of Gallons 2013 2015 2014 Suppliers % of Total Suppliers Suppliers % of Total Suppliers % of Total within Gallons within within Gallons within Range Sold Range Gallons Sold Range Sold Range < 25 26 ‐ 50 51 ‐ 100 101 ‐ 200 201 ‐ 300 > 300 % of Total Gallons Sold Suppliers % of Total within Gallons Range Sold 7 5 3 3 3 4 3.2% 4.9% 4.6% 15.3% 19.0% 49.8% 15 1 1 3 1 4 5.9% 1.3% 1.8% 16.1% 7.7% 65.3% 14 2 1 2 2 4 5.9% 2.4% 2.0% 10.2% 12.7% 64.2% 13 2 2 3 1 4 4.8% 2.0% 4.2% 15.0% 6.2% 65.0% 13 3 1 2 2 4 25 96.8% 25 98.1% 25 97.4% 25 97.2% 25 Total Gallons of Gasoline (Thousands) Gasoline % of Total Total Gallons of Use Fuel (Diesel) (Thousands) Diesel % of Total 2012 3.9% 3.4% 1.6% 9.1% 13.7% 66.1% 97.8% 2,616,186 2,616,570 2,612,577 2,644,667 2,745,426 75.9% 75.8% 76.0% 76.0% 76.0% 829,530 837,151 827,138 827,731 850,274 24.1% 24.2% 24.0% 24.0% 24.0% Note: Above data reflects a change in gasoline and use fuel gallon reported by the Revenue & Fuel Tax Administration for 2006 ‐ 2015. 2015 Comprehensive Annual Financial Report 99 DEBT CAPACITY 2015 Comprehensive Annual Financial Report Table C‐1 Arizona Department of Transportation Highway User Revenue Fund Legal Debt Margin for the fiscal year ended June 30 (Thousands of Dollars) Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Debt Limit $ 1,2 N/A N/A N/A N/A N/A N/A N/A N/A N/A 1,300,000 Total Principal Applicable to Limit $ N/A N/A N/A N/A N/A N/A N/A N/A N/A 1,223,425 Total Principal Applicable to the Limit Legal Debt as a Percentage of Margin Debt Limit $ N/A N/A N/A N/A N/A N/A N/A N/A N/A 76,575 N/A N/A N/A N/A N/A N/A N/A N/A N/A 94.11% 1 NOTES: The statutory limitation on the issuance of bonds, as outlined in ARS §28‐7510, applies only to the Highway User Revenue Fund (HURF). The only limitation on Maricopa County Regional Area Road Fund (RARF) and Grant Anticipation Notes (GARVEE) is the ability to secure the debts with available excise tax monies and available grant revenues, respectively, pursuant to the applicable bond resolutions. 2 As stated in House Bill 2206 of the Second Regular Session of the Forty‐seventh Legislature, the $1.3 billion debt limit is eliminated from ARS §28‐7510. The general effective date of this change was September 21, 2006. 2015 Comprehensive Annual Financial Report 100 Table C‐2 Arizona Department of Transportation Highway Revenue Bonds Bond Coverage for the fiscal year ended June 30 (Thousands of Dollars) Pledged Principal Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 $ 61,660 58,485 60,540 67,885 71,770 68,140 64,190 60,645 57,825 54,830 Interest 1,2 Total Revenues $ 75,937 $ 137,597 80,495 138,980 78,198 138,738 71,113 138,998 83,960 155,730 87,661 155,801 89,825 154,015 75,538 136,183 73,785 131,610 62,222 117,052 Coverage $566,352 537,768 512,971 392,648 504,175 502,874 509,183 658,616 635,140 624,408 4.1 3.9 3.7 2.8 3.2 3.2 3.3 4.8 4.8 5.3 SOURCES: Highway User Revenue Fund Schedule fiscal years 2006 through 2015; Debt Service Funds fiscal years 2006 through 2015. NOTES: 1 Includes vehicle license tax revenues distributed directly to the State Highway Fund. Fiscal year 2009 is net of $66 million, 2010 is net of $44 million and 2011 is net of $45 million distribution to the State General Fund. 2 The Highway Revenue Bonds are secured by a prior lien on and pledge of motor vehicle and related fuel fees and taxes. Highway Revenue Bonds ‐ Bond Coverage $700,000 Thousands of Dollars $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2006 2007 2008 2009 2010 2011 2012 Fiscal Year Revenue Debt Service 2015 Comprehensive Annual Financial Report 101 2013 2014 2015 Table C‐3 Arizona Department of Transportation Transportation Excise Tax Revenue Bonds Bond Coverage for the fiscal year ended June 30 (Thousands of Dollars) Fiscal Pledged Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Principal $ 70,940 58,600 55,870 55,460 45,970 33,315 13,825 19,045 ‐ 80,375 Interest $ 32,652 44,988 47,721 48,129 42,496 38,225 17,193 10,673 ‐ 1,566 1 Total Revenues Coverage 103,592 103,588 103,591 103,589 88,466 71,540 31,018 29,718 ‐ 81,941 $ 254,871 243,786 227,800 216,281 206,545 199,672 219,165 253,742 262,264 316,491 2.5 2.4 2.2 2.1 2.3 2.8 7.1 8.5 N/A 3.9 SOURCE: Maricopa County Regional Area Road Fund Report NOTES: Bond coverage ratio is based upon total Maricopa County Transportation Excise Tax collections. 1 The Transportation Excise Tax Revenue Bonds are secured by transportation excise taxes collected by the Department of Revenue on behalf of Maricopa County. Transportation Excise Tax Revenue Bonds ‐ Bond Coverage Thousands of Dollars $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 2006 2007 2008 2009 2010 2011 2012 Fiscal Year Revenue Debt Service 2015 Comprehensive Annual Financial Report 102 2013 2014 2015 Table C‐4 Arizona Department of Transportation Transportation Excise Tax Revenue Bonds Debt Service Revenue and Cost Per Capita for the fiscal year ended June 30 (Thousands) Fiscal Maricopa County Total Year Principal 2014 2013 2012 2011 2010 2009 2008 2007 2006 $ 58,600 55,870 55,460 45,970 33,315 13,825 19,045 ‐ 80,375 Interest $ 44,988 47,721 48,129 42,496 38,225 17,193 10,673 ‐ 1,567 1 Cost Revenue $ 103,588 103,591 103,589 88,466 71,540 31,018 29,718 ‐ 81,942 $ 243,786 227,800 216,281 206,545 199,672 219,165 253,742 262,264 316,491 Cost Revenue Population per capita per capita 4,087 4,009 3,942 3,880 3,817 4,023 3,955 3,907 3,793 25 26 26 23 19 8 8 ‐ 22 SOURCES: Maricopa County Regional Area Road Fund Report; population data from the U.S. Census Bureau available only through 2014. NOTE: 1 Based upon total Maricopa County Transportation Excise Tax collections. Transportation Excise Tax Revenue and Cost Per Capita $90 $80 Thousands of Dollars $70 $60 $50 $40 $30 $20 $10 $0 2006 2007 2008 2009 2010 2011 2012 Fiscal Year Revenue Cost 2015 Comprehensive Annual Financial Report 103 2013 2014 60 57 55 53 52 54 64 67 83 Table C‐5 Page 1 of 2 Arizona Department of Transportation Ratios of Outstanding Debt by Type for the fiscal year ended June 30 (Thousands of Dollars) 2006 2005 Governmental Activities Highway Revenue Bonds $ Transportation Excise Tax Revenue Bonds Grant Anticipation Notes (GARVEE) Premium on bonds Capital leases Advances and notes payable Total Governmental activities Business‐Type Activities Notes payable Total Business‐type Activities Total Primary Government $ Debt as a Percentage of Personal Income Amount of Debt per Capita1 2008 1,161,355 $ 1,223,425 $ 1,490,600 $ 1,623,905 80,375 363,970 76,721 5,910 169,473 1,857,804 ‐ 325,430 90,852 11,130 195,018 1,845,855 ‐ 282,860 108,034 10,601 168,287 2,060,382 350,955 298,280 128,586 7,535 56,739 2,466,000 146,454 146,454 150,494 150,494 154,534 154,534 2,170 2,170 2,004,258 $ 1.07% $ 2007 335 $ 1,996,349 $ 0.96% 322 $ 2,214,916 $ 2,468,170 1.01% 1.10% 348 $ 380 SOURCES: U.S. Bureau of Economic Analysis (for population, personal income, and per capita personal income figures); U.S. Bureau of the Census (also for population) population data only available through 2014 NOTE: 1 The Arizona population data are midyear population estimates of the U.S. Bureau of the Census. Year 2005 through 2009 have been revised to reflect revisions made by the U.S. Bureau of the Census. Per capital personal income is total personal income divided by total midyear population estimates of the U.S. Bureau of the Census. Previous years have been revised to reflect revisions in personal income and population estimates. (continued) 2015 Comprehensive Annual Financial Report 104 Table C‐5 Page 2 of 2 Arizona Department of Transportation Ratios of Outstanding Debt by Type for the fiscal year ended June 30 (Thousands of Dollars) 2010 2009 $ $ 2012 2013 2014 1,740,765 $ 1,672,625 $ 1,600,855 $ 1,619,965 $ 1,733,285 $ 1,674,800 777,130 329,650 173,313 4,326 42,668 3,067,852 743,815 304,480 158,601 1,304 60,711 2,941,536 877,845 392,495 180,225 4,910 59,892 3,116,222 981,845 335,230 248,892 10,729 55,666 3,252,327 925,975 296,240 350,739 22,271 105,816 3,434,326 867,375 247,710 323,356 29,324 108,096 3,250,661 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 3,067,852 $ 1.40% $ 2011 465 $ 2,941,536 $ 1.31% 441 $ 3,116,222 $ 1.37% 481 $ 3,252,327 $ 1.38% 496 $ 2015 Comprehensive Annual Financial Report 105 3,434,326 $ 1.40% 518 $ 3,250,661 1.27% 483 DEMOGRAPHIC AND ECONOMIC INFORMATION 2015 Comprehensive Annual Financial Report Table D‐1 Arizona Department of Transportation Number of Vehicle Registrations Per Year for fiscal year ended June 30 (Thousands) Change in Number of Registered Fiscal Year Total Vehicles 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Vehicles 7,453 7,181 6,975 6,840 6,741 6,693 6,734 6,609 6,318 5,945 Arizona Population 272 205 136 99 48 ‐41 125 290 373 306 1 Change in Vehicles Population Per Person 6,731 6,627 6,553 6,483 6,413 6,596 6,499 6,362 6,192 5,975 105 73 71 69 ‐183 96 137 170 217 215 1.107 1.084 1.064 1.055 1.051 1.015 1.036 1.039 1.020 0.995 SOURCE: Vehicle registrations from Motor Vehicle Division's annual reports. NOTES: 1 The Arizona population data are midyear population estimates of the U.S. Bureau of the Census. Year 2010 has been revised to reflect revisions made by the U.S. Bureau of the Census. Year 2012 Vehicles has been revised to reflect revisions made by MVD. Population data available only through fiscal year 2014. Change in Vehicles Registered Compared to Population Change 500,000 400,000 Change 300,000 200,000 100,000 ‐ <100,000> <200,000> <300,000> 2005 2006 2007 2008 2009 Vehicles 2010 2011 Population 2015 Comprehensive Annual Financial Report 106 2012 2013 2014 Table D‐2 Arizona Department of Transportation Vehicle Registrations Per Year Compared to Fuel Sales for fiscal year ended June 30 (Thousands) Fiscal Year Vehicle Percentage Registrations Change 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 3.2% 7,694 7,453 7,181 6,824 6,840 6,741 6,693 6,734 6,609 6,318 3.8% 5.2% ‐0.2% 1.5% 0.7% ‐0.6% 1.9% 4.6% 6.3% Fuel 1 Sales Percentage Change 3,506,176 3,389,934 3,360,587 3,409,594 3,411,652 3,369,732 3,398,866 3,731,808 3,759,465 3,636,195 3.4% 0.9% ‐1.4% ‐0.1% 1.2% ‐0.9% ‐8.9% ‐0.7% 3.4% 2.6% SOURCES: Vehicle registrations from Motor Vehicle Division's annual reports; fuel sales from Motor Vehicle Division data reported by fuel suppliers 1 NOTES: Fuel sales include both gasoline and use fuel (primarily diesel) sales. Fuel Sales numbers for 2009 and 2010 have been revised to reflect revisions made to the Motor Vehicle Division data. Percentage Change in Vehicle Registrations and Fuel Sales 8.0% 6.0% Percentage Change 4.0% 2.0% 0.0% <2.0%> <4.0%> <6.0%> <8.0%> <10.0%> 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Year Vehicle Registrations Fuel Prices 2015 Comprehensive Annual Financial Report 107 2014 2015 Table D‐3 Arizona Department of Transportation Demographic and Economic Statistics for the Last Ten Calendar Years Calendar Year Ended December 31 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Personal Income 2 Population 6,731,484 6,626,624 6,553,255 6,482,505 6,676,627 6,587,653 6,499,207 6,360,238 6,190,987 5,973,970 1 (in thousands) $ 255,092,928 245,070,457 235,780,739 227,286,519 223,716,314 219,026,704 223,961,131 218,587,551 206,958,398 188,152,439 Per Capita Personal Unemployment 3 Income $ 37,895 36,983 35,979 35,062 33,507 33,248 34,460 34,368 33,429 31,495 4 Rate 6.9% 7.8% 8.4% 9.5% 10.4% 9.9% 6.1% 3.9% 4.2% 4.7% SOURCES: U.S. Bureau of Economic Analysis (for population, personal income, and per capita personal income figures); U.S. Bureau of the Census (also for population); Arizona Department of Economic Security's website, www.workforce.az.gov (for unemployment rates) 1 NOTES: The Arizona population data are midyear population estimates of the U.S. Bureau of the Census. Previous years have been revised to reflect revisions made by the U.S. Bureau of the Census. 2 Personal income estimates for previous years were revised to reflect revisions made by the U.S. Bureau of the Census. 3 Per capita personal income is total personal income divided by total midyear population estimates of the U.S. Bureau of the Census. Previous years have been revised to reflect revisions in personal income and population estimates. 4 The unemployment rates were revised to reflect a revision made by the Arizona Department of Commerce website, www.workforce.az.gov. 2015 Comprehensive Annual Financial Report 108 Table D‐4 Arizona Department of Transportation Principal Employers Current and Ten Years Ago Employer Calendar Year Ended December 31, 2014 Full‐Time Percentage Equivalent of Total State Calendar Year Ended December 31, 2004 Full‐Time Percentage Equivalent of Total State Employees Rank Employment Employees Rank Employment State of Arizona Wal‐Mart Stores Inc. Banner Health City of Phoenix Wells Fargo Maricopa County Arizona State University Intel Corp. Scottsdale Lincoln Health Netw Honeywell U.S. Postal Service Raytheon Co. 48,910 32,438 30,266 14,875 14,126 13,341 12,229 11,700 10,500 10,000 Total 198,385 1 2 3 4 5 6 7 8 9 10 1.58% 1.05% 0.98% 0.48% 0.46% 0.43% 0.40% 0.38% 0.34% 0.32% 6.42% 49,147 19,510 14,447 13,617 11,000 15,218 10,530 1 2 4 5 8 3 9 1.76% 0.70% 0.52% 0.49% 0.39% 0.54% 0.38% 12,000 11,406 10,300 6 7 10 0.43% 0.41% 0.37% 167,175 5.99% SOURCES: Resources: Bizjournals.com for 2014 employers, Business Journal, Book of Lists 2004 for employers; Arizona Department of Commerce website, www.workforce.az.gov (for annual State employment). The sources are those most current at the time of printing. Note: Beginning with fiscal year 2014 a 10 year range is used. Prior years reflect a 9 year range. 2015 Comprehensive Annual Financial Report 109 OPERATING INFORMATION 2015 Comprehensive Annual Financial Report Table E‐1 Arizona Department of Transportation Full‐Time Equivalents (FTEs) for the fiscal year ended June 30 Appropriated Fiscal Year Admin. 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 792 792 792 756 745 692 692 692 692 692 Highways 2,235 2,235 2,235 2,262 2,267 2,153 2,255 2,255 2,223 2,223 Multimodal Planning Division 78 78 78 87 52 46 46 46 46 46 Motor Vehicle Division 1,075 1,060 1,075 1,075 1,111 1,657 1,755 1,751 1,730 1,688 Non‐appropriated Enforcement & Total Compliance Appropriated 1 FTEs Division 368 383 368 368 373 ‐ ‐ ‐ ‐ ‐ Arizona Highways Magazine 4,548 4,548 4,548 4,548 4,548 4,548 4,748 4,744 4,691 4,649 1 NOTES ECD FTE total was included in the Motor Vehicle Division 2006‐2010. 2015 Comprehensive Annual Financial Report 110 18 20 18 23 22 23 28 28 60 72 HELP Other 1 1 ‐ 1 2 2 ‐ ‐ 3 3 44 44 45 44 44 43 24 24 49 38 Total Non‐ Appropriated Total All FTEs FTEs 63 65 63 68 68 68 52 52 112 113 4,611 4,613 4,611 4,616 4,616 4,616 4,800 4,796 4,803 4,762 Table E‐2 Arizona Department of Transportation Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity1 June 30, 2015 (Thousands of Dollars) Buildings and Improvements Land Function and Activity Administration Highway: Administrative and other services Highway construction Highway development Materials engineering Traffic engineering Transportation planning and research Highway maintenance Motor vehicle $ 879 Total governmental funds capital assets $ 2,977,146 $ 53,840 Improvements other than Buildings $ 44,187 Machinery and Equipment $ 10,456 Infrastructure $ ‐ Construction in Progress $ ‐ Total $ 109,362 936 37,855 1,798 3,279 ‐ ‐ 43,868 2,956,756 710 ‐ ‐ 10,567 105 4,908 357 384 ‐ 7 22 4,470 2,667 4,301 1,218 15,732,569 ‐ ‐ ‐ 1,358,934 ‐ ‐ ‐ 20,063,680 3,482 9,216 1,597 ‐ 153 123 316 ‐ ‐ 592 5,068 12,797 45,260 47,244 9,396 3,572 9,013 20,251 ‐ ‐ ‐ ‐ 68,737 83,864 55,971 $ 15,732,569 $ 200,289 $ 59,489 $ $ 1,358,934 Note: 1 This schedule presents only the cost of the capital asset balances related to governmental funds. Accordingly, the cost of the capital assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service fund are included as governmental activities in the statement of net assets. 2015 Comprehensive Annual Financial Report 111 $ 20,384,398 Table E‐3 Arizona Department of Transportation Capital Assets Used in the Operation of Governmental Funds 1 Schedule of Changes by Function and Activity for the fiscal year ended June 30, 2015 Governmental Funds Capital Assets July 1, 2014 Function and Activity Administration Highway: Administrative and other services Highway construction Highway development Materials engineering Traffic engineering Transportation planning and research Highway maintenance Motor Vehicle $ 81,167,858 $ 43,868,820 16,679,640,470 3,482,394 9,216,462 1,596,148 591,681 68,576,678 72,068,368 Functional sub‐total Construction in progress Total governmental funds capital assets Additions $ 28,199,763 Deductions $ Governmental Funds Capital Assets June 30, 2015 <5,613> $ 109,362,008 2,078,481,849 <53,376,911> 106,346 34,989 <106,000> <34,000> 191,017 11,888,516 <31,000> <93,000> 43,868,820 18,704,745,408 3,482,394 9,216,808 1,597,137 591,681 68,736,695 83,863,884 16,960,208,879 2,118,902,480 <53,646,524> 19,025,464,835 2,843,910,023 492,764,487 <1,977,741,164> 1,358,933,346 19,804,118,902 $ 2,611,666,967 $ <2,031,387,688> $ 1 NOTE: This schedule presents only the capital asset balances (not net of depreciation) related to governmental funds. Accordingly, the capital assets reported in the internal service fund are excluded from the above amounts. Generally, the capital assets of the internal service fund are included as governmental activities in the statement of net assets. 2015 Comprehensive Annual Financial Report 112 20,384,398,181 Table E‐4 Arizona Department of Transportation Total Public Road Mileage by Highway Class and Governmental Ownership for the calendar year ended December 31 (In Center Line Miles) 2006 Functional Classification Rural: Interstate Freeway 981 2007 2008 981 2009 980 980 2010 2011 980 2012 980 2013 2014 2015 980 982 921 921 25 43 18 18 1 Principal Arterial Freeways & Expressways Additional categorization beginning 2011 Principal Arterial Minor Arterial Major Collector Minor Collector Local Total Rural 1,167 1,363 4,332 2,188 27,015 37,046 1,168 1,359 4,303 2,186 27,819 37,816 1,167 1,357 4,301 2,185 27,685 37,675 1,167 1,358 4,302 2,191 27,525 37,523 1,167 1,378 4,342 2,134 30,845 40,846 1,259 1,276 4,338 1,735 31,157 40,745 1,267 1,328 4,413 2,032 31,548 41,593 ‐ 1,267 1,308 6,416 31,370 41,386 1,174 1,173 4,179 1,794 30,870 40,129 1,207 1,200 4,127 1,807 30,104 39,384 188 188 188 188 188 188 188 187 248 248 Urban: Interstate freeway 2 Principal Arterial Freeways & Expressways Principal arterial Minor arterial Urban collector Local Total urban 156 168 171 176 176 175 178 181 208 215 1,400 1,790 1,645 17,564 22,743 1,400 1,791 1,632 17,380 22,559 1,400 1,792 1,632 17,735 22,918 1,399 1,807 1,632 17,735 22,937 1,400 1,808 1,649 17,817 23,038 1,390 1,752 1,631 17,806 22,942 1,435 1,788 1,653 18,256 23,498 1,437 1,786 1,642 18,645 23,878 1,491 1,957 2,100 20,308 26,312 846 2,633 2,103 20,165 26,210 Statewide composite: Freeways and expressways Arterials Collectors Locals Total statewide composite 1,325 5,720 8,165 44,579 59,789 1,337 5,718 8,121 45,199 60,375 1,339 5,716 8,118 45,420 60,593 1,344 5,731 8,125 45,260 60,460 1,344 5,753 8,125 48,662 63,884 1,343 5,677 7,704 48,963 63,687 1,346 5,843 8,098 49,804 65,091 1,350 4,533 9,366 50,015 65,264 1,377 5,813 8,073 51,178 66,441 1,384 5,904 8,037 50,269 65,594 SOURCE: Arizona's Highway Performance Monitoring System (HPMS) 1 Additional category created for 2011 reporting. 2 Before 2012 this category was titled "Urban Expressway". Total Public Road Mileage 70,000 60,000 Miles 50,000 40,000 30,000 20,000 10,000 0 2006 2007 2008 2009 2010 2011 2012 Calendar Year Rural 2013 Urban 2015 Comprehensive Annual Financial Report 113 2014 2015 Table E‐5 Arizona Department of Transportation Daily Vehicle Miles Traveled with Population Data for calendar year ended December 31 (Thousands) Calendar1 Year Ended Non‐State3 State3 All Public Arizona2 December 31 Highways Highways Highways Population 2014 ‐ ‐ 171,591 6,731 2013 88,153 77,837 165,990 6,627 2012 85,285 79,003 164,288 6,553 2011 83,955 79,312 163,267 6,467 2010 84,427 79,699 164,126 6,413 2009 87,608 76,714 164,322 6,588 2008 86,886 81,496 168,382 6,499 2007 91,042 81,456 172,498 6,360 2006 89,016 82,178 171,194 6,191 2005 85,352 78,473 163,825 5,974 Daily Miles per capita 25.5 25.0 25.1 25.2 25.6 24.9 25.9 27.1 27.7 27.4 SOURCES: Arizona's Highway Performance Monitoring System (HPMS); ADOT Multimodal Planning Division office records. The Arizona population data are midyear population estimates of the U.S. Bureau of the Census. 1 NOTES: Year 2014 is the latest population information available at the time of publication. 2 Years 2005 through 2009 and 2011 population information has been revised to reflect revisions made by the U.S. Bureau of the Census. 3 At the time of publishing, this information was not available. Daily Vehicle Miles Traveled 200,000 180,000 160,000 120,000 Not Available Thousands of Miles 140,000 100,000 80,000 60,000 40,000 20,000 0 2005 2006 2007 2008 2009 2010 Calendar Year State Highways 2011 Non‐State Highways 2015 Comprehensive Annual Financial Report 114 2012 2013 2014 ACKNOWLEDGMENTS The Comprehensive Annual Financial Report was prepared by Financial Management Services, Fiscal Operations: Tim Newton, CPA Anita Kleinman, CPA Anne Ball, CPA Christopher M. Freitag, CPA Mary Ann Miller, CPA John Jones Joel Konopken Larry Ehrke Yolanda Flores Leisa Garton Greg Martin Winifred Gettings Special acknowledgment goes to: All Financial Management Services staff whose cooperation and hard work contributed to the compilation of financial information that appears in this report. The staff of the State of Arizona, General Accounting Office for their consultation on GAAP and other technical matters of the Government‐wide financial statements. 2015 Comprehensive Annual Financial Report 115