City of Eloy, Arizona Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2015 _____________________ 628 North Main Street – Eloy, Arizona 85131 City of Eloy, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2015 Prepared by the Finance Department Brian M. Wright, Finance Director CITY OF ELOY, ARIZONA TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal Page i GFOA Certificate of Achievement ix Organizational Chart x List of Elected and Principal Officials xi FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 1 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 5 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position 23 Statement of Activities 24 Fund Financial Statements: Balance Sheet – Governmental Funds 28 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 31 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 32 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities 35 Statement of Net Position – Proprietary Funds 36 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds 38 Statement of Cash Flows – Proprietary Funds 40 Notes to Financial Statements 41 CITY OF ELOY, ARIZONA TABLE OF CONTENTS FINANCIAL SECTION Page REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues Expenditures and Changes in Fund Balances – Budget and Actual: General Fund 76 Highway User Revenue Fund 78 Grants Fund 79 Schedule of Proportionate Share of the Net Pension Liability 80 Schedules of Changes in the Net Pension Liability and Related Ratios 81 Schedule of Contributions 82 Schedule of Funding Progress 83 Notes to Required Supplementary Information 84 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Combining Balance Sheet – Non-Major Governmental Funds 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Non-Major Governmental Funds 90 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual Public Works Facility 92 Local Transportation Assistance Fund (LTAF) 93 Impact Fee 94 Judicial Collection Enhancement Fund (JCEF) 95 Court Recovery 96 Cemetery 97 Airport 98 Capital Projects 99 Perpetual Care 100 CITY OF ELOY, ARIZONA TABLE OF CONTENTS STATISTICAL SECTION Page Financial Trends: Net Position by Component 103 Changes in Net Position 104 Fund Balances of Governmental Funds 106 Changes in Fund Balance of Governmental Funds 107 Revenue Capacity: Assessed, Limited and Full Cash Value of Taxable Property 108 Property Tax Rates – Direct and Overlapping Governments 109 Real and Personal Property Tax Levies and Collections 110 Sales Tax Revenues by Industry 111 Direct and Overlapping Sales Tax Rates 112 Actual Excise Tax Collections 113 Debt Capacity: Ratios of Outstanding Debt by Type 114 Computation of Direct and Overlapping Debt 115 Legal Debt Margin Information 116 Pledged Revenue Coverage 117 CITY OF ELOY, ARIZONA TABLE OF CONTENTS STATISTICAL SECTION Page Demographic and Economic Information: Demographic and Economic Statistics 118 Principal Employers 119 Authorized Full-time Government Employees by Function/Program 120 Operating Information: Operating Indicators by Function/Program 122 Capital Assets Statistics by Function/Program 124 (This page intentionally left blank) INTRODUCTORY SECTION (This page intentionally left blank) 628 North Main Street, AZ 85122, (520) 466-9201, (520) 466-3760 Fax, (520) 466-7455 TDD December 11, 2015 To the Honorable Mayor, Members of the City Council and Citizens of Eloy, Arizona: State Statues require that cities and towns publish a complete set of financial statements presented in conformity with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards accepted in the United States by a certified public accounting firm licensed in the State of Arizona. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) of the City of Eloy, Arizona (the City), for the fiscal year ended June 30, 2015. This report consists of management’s representations concerning the finances of the City of Eloy. Consequently, management assumes full responsibility for the accuracy of the data, and the completeness and fairness of all of the information presented in this report. To provide a reasonable basis for making these representations, the City has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the basic financial statements in conformity with accounting principles generally accepted in the United States of America. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City’s financial statements have been audited by Heinfeld, Meech & Co., P.C., certified public accounting firm. The goal of the independent audit is to prove reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2015 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement preparation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s statements for the fiscal i year ended June 30, 2015, are fairly presented in conformity with accounting principles generally accepted in the United States of America. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City was part of a boarder, federally mandated Single Audit as required by the provisions of the Single Audit Act Amendments of 1996 and U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the City’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in a separately issued Single Audit Reporting Package. Accounting principles generally accepted in the United States of America require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE CITY OF ELOY The City was incorporated in 1949 with an estimated population of 4,700. In 1965, the Toltec area was annexed increasing the City’s incorporated area to 11 square miles. By the year 2000, the city limits had increased to 71 square miles. As of June 2015, the incorporated city limits is 113.28 square miles with a planning area of 511.45 square miles and has an estimated population of 16,531. Located in central Pinal County, the City is along Interstate 10 (I-10) approximately halfway between the cities of Phoenix and Tucson. Historically, the City’s economy has been largely dependent upon agriculture. The area is part of the Santa Cruz Basin which is one of Arizona’s most fertile soil and agricultural areas. The economy has diversified, with over three-quarters of its businesses and nearly half its employment now in the industrial, wholesale/retail trade, and service sector. The City operates under a Council-Manager form of government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor and six Council Members. Council Members are elected to four-year staggered terms. The citizens elect the Mayor then the Council, from among its members, selects the Vice-Mayor. The City Council is responsible, among other things, for the adoption of local ordinances, budget adoption, the development of citizen advisory committees, the hiring and removal of the City Manager, City Attorney, City Magistrate, and City Clerk. The City Manager is responsible for the implementation of the policies of the City Council. The City Manager appoints all other department heads except those mentioned above under the City Council responsibilities. ii The City provides a full range of municipal services, including police protection, the construction and maintenance of streets and infrastructure; as well as recreational and cultural activities. The City’s three enterprise funds provide water, wastewater, and solid waste disposal. The City also operates a library, a cemetery, and general aviation airport. As with all cities in the State of Arizona, the City is required to comply with Article IX, Section 20(1) of the Arizona Constitution, which sets limits on the City’s legal budget capacity. The City of Eloy currently operates under the Alternative Expenditure Limitation – Home Rule Option. This option allows the City Council to establish the budgetary limits locally, rather than being restricted by the State-imposed expenditure limitation. The voter must authorize this option every four years. The Citizens of Eloy last authorized it in August 2014. The annual operating budget serves as the foundation for the City’s financial planning and control. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual operating budget approved by the City Council. The City’s proposed operating budget is presented to the City Council for review throughout the budget cycle starting in January with final approval in June. The City Council is required to hold a public hearing on the proposed budget and to adopt the final budget by no later than the second Monday in August. Budget amendments and Transfers requiring the approval of the City Council include the following: budget transfers between funds; transfers to fund additional personnel or increased expenditures as a result of personnel reclassifications; transfers that would reduce or eliminate funding for items designated in the adopted Capital Improvement Plan; and transfers that would reduce or eliminate funding for debt service. All other operational budget amendments that involve transfers between line items or expenditure categories require approval by the City Manager. ECONOMIC CONDITIONS The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City operates. The local economy of Eloy is a diverse combination of agriculture, manufacturing, commercial, private prisons, and service activities. Majority of the local tax bases is located along Interstate 10, which is supported by restaurants, truck stops and local business. Local indicators continue to point towards stagnant growth. Revenues in the General Fund decreased by 1% overall with the primary growth in intergovernmental revenues which grew by 7%. Local taxes, charges for services and permits/fees all decreased from the prior fiscal year. The City, like most municipalities, is significantly dependent upon local sales taxes, which are subject to economic fluctuations. Local sales taxes, also known as city sales tax, comprised of 41% of general fund revenues. Local sales taxes are comprised of retail, construction, restaurant/bar, hotel/motel, and other taxing categories. Of those revenues, retail, construction and restaurant/bars comprised 62% of the total local sale tax revenues. iii The local tax base is stable however; a few of the taxing categories are volatile. One those taxing category is retail tax. Retail tax has decrease 21% from the prior year. The major reason for this decrease was the elimination of the tax on food for home base consumption. Construction sales tax is the other category. Since 2011, construction sales tax has decrease 54%. Much of this decline is due to the slowing of construction of housing along with the decline in economic development projects. In 2014-15, local sales collections were $4,788,947 or $724,278 less than that of the prior year. Much of this fluctuation was from retail and construction sales taxes. Construction Sales Tax represents one of the largest taxing sources from the City’s local tax base. It is also the most volatile and unstable tax. The tax rate is 4.5% with 3.0% dedicated to one-time capital projects and 1.5% dedicated to Street Improvements. The City does not budget construction sales tax into the operations and maintenance of city services, but uses this one-time revenue source to fund capital projects or one-time expenses. The graph to the right shows the fluctuations in construction sales tax collected from 20112015. In 2014-2015, construction sales tax was $877,930 or 18.33% of overall tax collected. iv Retail sales tax is collected on items such as supplies, tools, clothing, materials, and etc. The tax rate for retail sales is 3%. In July 2015, Eloy’s City Council approved the elimination of tax on food for home base consumption. This reduction had a negative impact on the retail tax collected of approximately $250,000. Since 2011, retail sales tax has increased 4% over the last five years. A few of the contributing factors is the continual residential growth in Robson Ranch subdivision and the I-10 corridor. Property Tax is one of the most stable sources of revenue because it is not subject to the same fluctuations sometimes experienced with other excise taxes. Eloy has a primary property tax rate but no secondary property tax rate. The primary property tax rate has increased from .1.1378 in 2013-2014 to 1.1484 in 2014-15 per $100 of assessed valuation. v MAJOR INTITIATIVES AND ACCOMPLISHMENTS FOR THE YEAR In 2014-2015, the City continued to invest in programs and infrastructure that makes Eloy a better community. The following are some of the efforts and accomplishments during the year: General Administration o Redesigned the official City website and implemented a City Facebook page o Obtained Foreign Trade Zone Designation for Sunshine Industrial Park o Developed and adopted a Financial Investment Policy o Partnered with Pinal Hispanic Council to open the Eloy Veterans Center Community Development o Designed new community signage o Adopted the 2012 International Building Codes o Adopted and Implemented the revised Development Fees to comply with State law o Issued 74 residential building permits Parks and Recreation o Renovated the Main Street Recreation Center o Replaced playground equipment and ramada’s at Jones Park o Constructed decorative block fence at the Eloy Memorial Park o Afterschool Program participation increased to 300 or a 20% increase Police o o o o Obtain grant funding for the purchase of body cameras for police officers Purchase 4 new police vehicles and 1 new animal control truck Initiated “Coffee with a Cop” program for citizens to engage with local officers 6 animal were adopted while 35 were turned over to a no kill shelters for adoption Airport o Developed and Adopted a master drainage plan for the Airport o Obtained a grant for design and construction of 3 new taxi-lanes at Airport o Remodel the pilot lounge at Airport Public Works o Implemented GIS program and purchase new image plotter o Expanded Sewer Main on Shedd Road o Double Chip Seal 11,400 linear feet of roads in the Toltec area o Reconstructed Shedd Road and Giles Street o Slurry Sealed 16.6 miles of streets throughout Eloy o Negotiated new contract with Right-Away Disposal for sanitation and implementing curbside residential recycling vi FUTURE ECONOMIC OUTLOOK The City’s responsiveness to emerging economic challenges and its careful long-range planning have been key factors in Eloy’s fiscal health. The City will continue to use General Fund onetime revenue to fund capital projects along with constructing, repairing and maintaining city road ways. The City will be undertaking strategic planning to set newly revised long-term plans for the City during the City’s budgeting sessions. The City is dedicated to enhancing the quality of life for its citizens and to provide municipal services in the most effective and efficient manner while exercising fiscal responsibility. For FY 15-16, the City will continue on investing in the very elements of our operation that provide the highest return on investment for the future – our employees, our infrastructure, and continued delivery of quality community services. A few of the strategies are: o Employee performance merit and step increases have been budgeted for FY 15-16, along with continuing to fund all employee healthcare benefits and 70% of dependents benefits. o The FY 15-16 budget includes more than $1.1 million for street projects to Main Street, Toltec Road, Sunshine Boulevard, Alsdorf Road and 11th Street. o The FY 15-16 budget includes more than $1.3 million in capital related projects and equipment for Parks, Police, and Water. o The Water and Wastewater Departments have received a combined $5.4 million, from the Water Infrastructure Finance Authority of Arizona (WIFA), to replace water mains, reconstruction Pump Station 1, rehabilitation of the reservoir at Pump Station 2, closure of the sludge basin, and the rehabilitation of lift stations. o The City will be instituting curbside recycling starting on November 1, 2015. This will be the City’s first recycling program. o The City received a grant, from ADOT, for design and construction of three (3) new taxilanes, which will allow for future expansion of T-Hangers at the Airport. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Eloy for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. This was the third year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. vii The preparation of the Comprehensive Annual Financial Report would not have been possible without the efficient and dedicated staff of the Finance Department and to the many members of other departments who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor and City Council for their leadership and support for maintaining the highest standards of professionalism in the management of the City of Eloy’s finances. Respectfully submitted, Harvey Krauss City Manager Brian M. Wright Finance Director viii ix x CITY OF ELOY List of Elected and Principal Officials for Fiscal Year Ended June 30, 2015 City Council Joel G. Belloc Mayor Micah Powell Vice Mayor J.W. Tidwell Augustine Sauceda J.R. Nagy Andrew Rodriguez JoAnne Galindo City Manager Harvey Krauss Finance Director Brian Wright xi (This page intentionally left blank) FINANCIAL SECTION (This page intentionally left blank) 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718 INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of the City Council City of Eloy, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of City of Eloy, Arizona (City), as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’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. Auditor’s 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 auditor’s 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. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Eloy, Arizona, 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. Change in Accounting Principle As described in Note 1, the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date,, for the year ended June 30, 2015, which represents a change in accounting principle. Our opinion is not modified with respect to this matter. Page 1 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, budgetary comparison information, and net pension liability information, as listed in the table of contents, 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The Introductory Section, Combining and Individual Fund Financial Statements and Schedules, and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Combining and Individual Fund Financial Statements and Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Combining and Individual Fund Financial Statements and Schedules 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 also issued our report dated December 11, 2015, on our consideration of City of Eloy, Arizona’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 the 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 City of Eloy, Arizona’s internal control over financial reporting and compliance. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants December 11, 2015 Page 2 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) Page 3 (This page intentionally left blank) Page 4 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 As management of the City of Eloy, Arizona (the City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ending June 30, 2015. The management’s discussion and analysis is presented as required supplementary information to supplement the basic financial statements. We encourage readers to consider the information presented here in conjunction with additional information we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The financial statements, which follow Management’s Discussion and Analysis, provide those significant key financial highlights for 2015 as follow:  Assets exceeded liabilities at the close of the most recent fiscal year by $39,904,793 (net position). Of this amount, $4,810,980 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors.  General revenues from governmental activities, excluding transfers, accounted for $10,352,451 or 72% of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $3,965,519 or 28% of total governmental activities revenues. The City had $6,178,420 of program revenues and $8,837 in general revenues related to business-type activities.  As of the close of the current fiscal year, governmental funds reported a combined ending fund balances of $19,671,373, a decrease of $657,691 in comparison with the prior year.  At the end of the current fiscal year, the unassigned fund balance for the General Fund was $13,284,750 or 144% of the total general fund expenditures.  As of June 30, 2015, the net capital assets were $41,739,740, an increase of $1,173,148 from the prior year. Governmental activities increased by $1,496,322 while businesstype activities decreased by $323,174.  General Fund revenues exceeded expenditures by $1,977,634 before transfers. After transfers of $735,120, a positive change in fund balance occurred in the amount of $1,242,514. This positive change was due to local sales tax and intergovernmental revenue exceeding budget estimates along with conservative spending.  Total business-type revenues exceeded total business-type expenses (excluding transfers and capital contributions) by $242,242 due to rate and fee increases to the water and sewer funds.  The current year net loss before transfers in the HURF Fund was $1,032,009 due to the road improvements to Shedd Road, Algadon, Juniper, Bandelier, and Mateo Drive. Page 5 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) governmentwide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide reporting – while governments have traditionally focused reporting on groupings of funds (i.e. General Fund, Special Revenue Funds, Capital Project Funds, etc.), the new model also contains financial statements on a government-wide basis. Fund financial statements – the reporting model maintains governmental, proprietary and fiduciary fund financial statements, but the focus is on major funds within each fund. Focus of governmental activities – in the government-wide financial statements all activities, including the governmental activities, are reported using the economic resources measurement focus and accrual basis of accounting. The current financial resources focus and modified accrual basis of accounting are maintained for the governmental fund and financial statements. Infrastructure reporting – the new model requires governments to report the value of infrastructure assets of governmental activities (roads, bridges, storm drainage systems, parks, street lighting, etc.). These assets are reported in the governmental-wide financial statements. Changes in budgetary reporting – the reporting model requires the display of both the original adopted budget and the amended budget in the budgetary comparison schedules. These schedules are only required for the general fund and major special revenue funds, although they may be presented for other funds as additional information. Required narrative analysis – The reporting model requires that the financial statements be accompanied by narrative introduction and analytical overview of the government’s financial activities in the form of “management’s discussion and analysis” (MD&A). Government-wide Financial Statements The government-wide financial statements (see pages 23-25) are designed to provide a broad overview of the City’s finances in a manner similar to those used by private businesses. All of the activities of the City, except those of a fiduciary nature, are included in these statements. The activities of the City are broken into two columns on these statements – governmental activities and business-type activities. A total column for the City is also provided. Page 6 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 OVERVIEW OF FINANCIAL STATEMENTS The governmental activities include the basic services of the City including general government, culture and recreation, public safety, airport, and public works. Taxes and general revenues generally support these activities. The business-type activities include the private sector activities such as water, sewer, and sanitation. User charges and fees predominantly support these activities. The statement of net position presents information on all of the City’s assets and liabilities, both current and long-term, with the difference between the two reported as net position. The focus of net position is designed to be similar to the emphasis for businesses. Over time any increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. To assess the overall health of the City, other indicators, including non-financial indicators like the City’s infrastructure condition should be considered. The statement of activities presents information showing how the City’s net position changed over the most recent fiscal year. Since full accrual is used for the government-wide financial statements, all changes to net position are reported at the time that the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also focuses on both the gross and net costs of the various functions of the City, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general taxes and revenues for support. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds - Governmental funds are used to account for most of the City’s basic services. Unlike the governmental activities column on the government-wide financial statements, these fund financial statements (pages 28-35) focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in looking at the City’s near-term financing requirements. Since the governmental fund financial statements focus on near-term spendable resources, while the government activities on the government-wide financial statements have a long-term focus, a reconciliation of the differences between the two is provided with the fund financial statements. Page 7 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 OVERVIEW OF FINANCIAL STATEMENTS Fund Balance Reporting and Governmental Fund Type Definitions, also known as GASB 54, is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. GASB 54 establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Clarifications of the governmental fund type definitions, in Note 2 (page 48-49), will reduce uncertainty about which resources can or should be reported in the respective fund types. Proprietary funds – Proprietary funds are used to account for business-type activities of the City. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. Enterprise funds are used for activities that primarily serve customers outside the governmental unit for which fees are charged. The City has three enterprise funds: the sewer, water and sanitation funds. The basic proprietary fund financial statements can be found on pages 36-40 of this report. Notes to the financial statements - The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 41-74 of this report. Required supplementary information other than MD&A – Governments have an option of including the budgetary comparison statements for the general fund and major special revenue funds as either part of the fund financial statements or as required supplementary information after the notes. The City has chosen to present these budgetary statements as part of the required supplementary information after the notes. Additionally, governments are required to disclose certain information about employee pension funds. The City has disclosed this information starting on page 76 of the financial statements. Page 8 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables, graphs and analysis present a summary of the City’s net position for the fiscal years ended June 30, 2015 and June 30, 2014. Current and Other Assets Capital Assets Total Assets Pension Plan Items Total Deferred Outflows Current Liabilities Noncurrent Liabilities Total Liabilities Pension Plan Items Total Deferred Inflows Net Position: Net Investments in Capital Assets Restricted Unrestricted Total Net Position Governmental Activities 2015 2014 $ 21,220,827 $ 21,335,835 23,054,282 21,557,960 44,275,109 42,893,795 1,681,916 1,681,916 1,803,797 10,856,337 12,660,134 1,180,772 1,180,772 20,268,071 4,629,220 7,218,828 $ 32,116,119 1,257,345 3,369,061 4,626,406 - 18,543,869 4,489,679 15,233,841 $ 38,267,389 Business-Type Activities 2015 2014 $ 4,207,697 $ 3,356,845 18,685,458 19,008,632 22,893,155 22,365,477 154,235 154,235 1,115,829 13,876,777 14,992,606 266,110 266,110 876,837 12,914,645 13,791,482 - 9,479,546 9,575,240 716,976 715,299 (2,407,848) (1,716,544) $ 7,788,674 $ 8,573,995 Total 2015 2014 $ 25,428,524 $ 24,692,680 41,739,740 40,566,592 67,168,264 65,259,272 1,836,151 1,836,151 2,919,626 24,733,114 27,652,740 1,446,882 1,446,882 29,747,617 5,346,196 4,810,980 $ 39,904,793 2,134,182 16,283,706 18,417,888 - 28,119,109 5,204,978 13,517,297 $ 46,841,384 The largest portion of the City’s net position (75%) reflects its investment in capital assets (e.g. land, building, infrastructure, vehicles, and equipment), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported of net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position (13%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $4,810,980 is unrestricted and may be used to meet the City’s ongoing obligations to its citizens and creditors. The following are significant current year transactions, which had affected the change in net position.     Page 9 Completed 95 percent of the Shedd Road reconstruction project from Estrella Road to Giles with final completion anticipated by October 2015 for $1,143,075. Completed double chip seal road work projects on Algadon, Juniper, Bandelier and Mateo Drive from Tonto Road to Shedd Road for $232,852 Purchase of a new Vacuum Truck for the Sewer Division for $382,509. Recognition of $9.0 million of net pension liabilities due to the implementation of GASB 68. CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 GOVERNMENT-WIDE FINANCIAL ANALYSIS Changes in Net Position The City’s total revenue for the year ended June 30, 2015 was $19,261,962. The total cost of all programs and services was $17,782,483. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2015 and June 30, 2014. Governmental Activities 2015 2014 REVENUES Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenue: City Sales Tax Property Taxes Franchise Taxes Share of State Income Tax Share of State Sales Tax County of Auto Lieu Tax Investment Income Other Revenue Total Revenues EXPENSES Program Expenses: General Government Public Safety Public Works Culture and Recreation Community Development Health and Welfare Interest on Long-Term Debt Water Sewer Sanitation $ 1,243,265 $ 1,181,715 2,065,313 Business-Type Activities 2015 2014 Totals 2015 2014 $ 6,178,420 $ 5,686,813 2,065,313 1,963,469 $ 4,935,155 $ 4,505,098 1,963,469 - - 656,941 1,378,869 - 6,170 656,941 1,385,039 4,801,113 951,247 144,163 2,013,285 1,519,806 831,046 37,981 53,810 $ 14,317,970 5,516,526 918,511 141,905 1,853,736 1,447,688 774,269 49,941 33,058 $ 15,259,687 8,837 $ 4,943,992 1,726 $ 4,512,994 4,801,113 951,247 144,163 2,013,285 1,519,806 831,046 46,818 53,810 $ 19,261,962 5,516,526 918,511 141,905 1,853,736 1,447,688 774,269 51,667 33,058 $ 19,772,681 $ 3,413,448 4,260,754 2,380,812 1,493,063 1,021,468 191,679 82,075 - $ 3,323,730 4,004,661 2,221,837 1,380,982 1,119,187 260,682 83,892 - - - $ 3,413,448 4,260,754 2,380,812 1,493,063 1,021,468 191,679 82,075 2,207,156 1,222,770 1,509,258 $ 3,323,730 4,004,661 2,221,837 1,380,982 1,119,187 260,682 83,892 1,961,170 1,213,669 1,497,411 2,207,156 1,222,770 1,509,258 1,961,170 1,213,669 1,497,411 Total Expenses Excess before Transfers Transfers Change in Net Position 12,843,299 1,474,671 (618,537) 856,134 12,394,971 2,864,716 (1,658,577) 1,206,139 4,939,184 4,808 618,537 623,345 4,672,250 (159,256) 1,658,577 1,499,321 17,782,483 1,479,479 1,479,479 17,067,221 2,705,460 2,705,460 Net Position, 6/30/14 as previously reported Net Pension Liability Net Position, 7/1/14 as restated 38,267,389 (7,007,404) 31,259,985 37,061,250 - 8,573,995 (1,408,666) 7,165,329 7,074,674 - 46,841,384 (8,416,070) 38,425,314 44,135,924 - Net Position, 6/30/15 Page 10 $ 32,116,119 $ 38,267,389 $ 7,788,674 $ 8,573,995 $ 39,904,793 $ 46,841,384 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 GOVERNMENT-WIDE FINANCIAL ANALYSIS Government Activities During the year, net position for governmental activities increased, before restating Net Position for Pension Liability, $856,134 from the prior fiscal year, which was $350,005 less (-29%) than the change in net position last year. Significant variances between fiscal year 2015 and 2014 program revenues are explained below:  Capital grants and contributions decreased $721,928 or 52% over the prior fiscal year as the City receiving fewer federal grants during the fiscal year for Housing Rehabilitation.  General revenues decreased $383,183 to $10,352,451, which comprised 72% of all governmental activities revenue sources. Explanations for the primary impacts follow: o City Sales Taxes were $715,413 less (13%) than last year. The decrease is primarily attributed to the elimination of tax on food for home base consumption. o Intergovernmental Revenues (State Income, State Sales, and Auto Lieu Tax) were $288,444 more (7%) than last year. The State distributes these revenues based upon proportional population figures. As shown on the chart below, all functions had great program expenses than program revenues. Accordingly, general revenues were used to fund each of these functions. Page 11 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 GOVERNMENT-WIDE FINANCIAL ANALYSIS Business-Type Activities Business-Type activities increased, before restating Net Position for Pension Liability, the City’s net position by $623,345 in fiscal year 2015. Last year, the change in net position was a positive $1,499,321, a difference of $875,976 when compared to the current year change. Significant variances between fiscal year 2015 and 2014 program revenues are explained below:  Charges for services were $430,057 more (10%) than last year. The primary cause was attributed to increases to the water and sewer rates in October 2014.  Transfers were $1,040,040 less (63%) than last year. The primary cause for the decrease was the completion of the Houser Water Line Project, which had General Fund subsidy. Page 12 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The following is a brief discussion of financial highlights from the fund financial statements. Governmental funds The focus of the City’s governmental fund financial statements (pages 28-35) is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, discretionary (i.e., unassigned, committed and assigned) fund balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. For fiscal year ending June 30, 2015, the governmental funds reflect a combined fund balance of $19,671,373, a decrease of $657,691 compared to last fiscal year. Approximately 68% of this total amount, $13,284,750, constitutes fund balance of the General Fund, which is available for contribution to assigned or committed fund balance. Page 13 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 FINANCIAL ANALYSIS OF THE CITY’S FUNDS The General fund is the principal operating fund of the City and accounts for many functions of the government, including public safety, culture and recreation, and general government. The general fund revenues total $11,215,143 for fiscal year ending June 30, 2015. The expenditures before other financing sources and uses totaled $9,237,509. The net change of fund balance for the General Fund was $1,242,514 after other financing sources and uses. This positive change was due to fiscal spending constraints, conservative budgeting forecasts, along with an increase in revenue from property taxes, permits and fees and intergovernmental revenue. The Highway User Revenue Fund (HURF) is required by state statute to track the state allocation of gasoline taxes and other state revenues shared with local governments and are required to be used for transportation purposes. Revenues in this fund totaled $1,846,363, while expenses totaled $2,878,372 for the fiscal year ending June 30, 2015. The net change of fund balance for the HURF Fund, prior to transfers, was a negative $1,032,009. The primary causes of this negative decrease were road projects to Shedd Road, Algadon, Juniper, Bandelier, and Mateo Drive. In the Grants fund, the net change in fund balance for June 30, 2015, prior to transfers, was a negative $136,268. This negative variance is attributed to completing grants which the funds where received in the prior fiscal year. Other non-major governmental funds of the City include the Airport Fund, LTAF Fund, Impact Fee Fund, Public Works Fund, JCEF Fund, Court Recovery Fund, Cemetery Fund, and Capital Projects Fund. All non-major funds of the City are combined into one column on the governmental fund statements. The fund balance for all other major governmental funds has decreased by $1,467,048. This decrease can be attributed to capital and infrastructure projects completed during the fiscal year. Proprietary Funds The proprietary fund financial statements are prepared on the same accounting basis and measurement focus as the government-wide financial statements, but provide additional detail since each major enterprise fund is shown discreetly on the fund statements. Net position of the Proprietary Funds was $7,788,674 as of June 30, 2015. Total revenues in fiscal year 2015 were $4,935,155, while total expenses totaled $4,690,913 resulting in an operating income of $244,242 before transfers. Page 14 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 FINANCIAL ANALYSIS OF THE CITY’S FUNDS BUDGETARY HIGHLIGHTS The City’s annual budget is the legally adopted expenditure control document of the City. Budgetary comparison statements are required for the General Fund and all major special revenue funds and may be found on pages 76-79. These statements compare the original adopted budget, the budget as amended throughout the fiscal year, and the actual expenditures prepared on a budgetary basis. Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see page 50 for more information on budget policies). No amendments increasing the City’s total adopted budget of $78,020,175 occurred during fiscal year 2015. Budget amendments between funds or from budgeted contingencies into operational expense/expenditures accounts did not occur. Page 15 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 BUDGETARY HIGHLIGHTS Budgetary comparison highlights for the major governmental funds are as follows:  General fund expenditures of $9,237,509 were only 84% of budgeted expenditures. Reduced expenditures and unfunded personnel resulted from unspent budget items.  In the Highway User Revenue Fund, expenditures were 38% under budget yielding a $1,807,493 positive variance from budget to actual. This is primary due to reduce construction costs on Shedd Road along with lower than anticipated street maintenance expenditures. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets As of June 30, 2015, the City had invested $29,747,617 in various capital assets, net of accumulated depreciation and related debt. The capital assets of the City (net of depreciation, but not capital debt) are $41,739,740. This is a net increase of $1,173,148. There was an increase in capital assets of $1,496,322 within governmental activities. While within businesstype activities capital assets decreased by $323,174. The following table provides a breakdown of capital assets of the City at June 30, 2015 and 2014. Additional information on the City’s capital assets can be found in Note 6 on pages 53-54. Land Land Improvements Construction In Progress Buildings and Improvements Infrastructure Furniture, equipment and vehicles Sewer lines and equipment Water lines and equipment Total Page 16 Governmental Activities 2015 2014 $ 7,163,628 $ 7,151,128 664,757 416,444 1,229,466 81,026 4,609,988 4,534,943 7,224,659 7,321,566 2,161,784 2,052,853 $ 23,054,282 $ 21,557,960 Business-Type Activities 2015 2014 $ 347,468 $ 347,468 31,564 1,533 1,623 876,880 1,160,517 8,408,477 8,680,031 8,735,899 9,102,630 $ 18,685,458 $ 19,008,632 Totals 2015 2014 $ 7,511,096 $ 7,498,596 664,757 416,444 1,261,030 81,026 4,611,521 4,536,566 7,224,659 8,198,446 3,322,301 2,052,853 8,408,477 8,680,031 8,735,899 9,102,630 $ 41,739,740 $ 40,566,592 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 CAPITAL ASSETS AND DEBT ADMINISTRATION Major additions to capital assets during the fiscal year included the following:        The City purchased five vehicles for the Police Department for an amount of $207,621. The City completed 2.16 miles of double chip seal of residential roadways in the Toltec area for an amount of $232,852. The City completed 95% of the Shedd Road reconstruction for an amount of $1,143,075. The City completed the expansion of the Sewer Main in the Toltec area for $184,226. The City completed the construction of a decorative wall at the Cemetery for an amount of $246,083. The City completed the renovation of the Recreation Building for an amount of $156,583. The City purchased a new Sewer Vacuum Truck for an amount of $382,509. Long-term Debt The City’s outstanding long-term debt, including compensated absences, bonds, loans, leases, landfill costs, and pension liability, was $25,678,595 at June 30, 2015. Of this total, $11,139,657 was in governmental activities. All outstanding debt is secured by pledges of specific revenue sources of the City. The following schedule shows the outstanding debt of the City (both current and long-term) as of June 30, 2015 and 2014. Revenue Bonds Loans Payable Capital Leases Compensated Absences Landfill closure and post-closure costs payable Net Pension Liability Governmental Activities 2015 2014 $ $ 2,786,211 3,001,503 12,587 654,022 644,729 - - 7,699,424 $11,139,657 7,007,404 $ 10,666,223 Business-Type Activities 2015 2014 $ 545,411 $ 568,870 8,660,501 8,864,520 56,683 53,411 Totals 2015 2014 $ 545,411 $ 568,870 11,446,712 11,866,023 12,587 710,705 698,140 4,004,446 3,894,673 4,004,446 3,894,673 1,271,897 $14,538,938 1,920,908 $15,302,382 8,971,321 $ 25,678,595 8,928,312 $25,968,605 During 2015, business-type activities of the City secured funding for WIFA Loans 920256-15 and 910164-15. Additional information on the City’s long-term debt can be found in Notes 7-9 on pages 55-59. Page 17 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2015 ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The City’s officials have considered many factors during the process of developing the budget for fiscal year 2015-2016. Four primary factors that were considered when developing the budget. Those factors were a stagnant revenue base, the increasing cost to conduct business, aging infrastructure and failure of roadways. Also, considered in the development of the budget was the local economy. The adopted fiscal year 2015-2016 budget expects general fund revenues to increase by $426,670. The primary cause of this increase is from a new contract for fiscal administration between the City and Corporation Corrections of America (CCA). The overall budget, for fiscal year 2015-2016 is expected to increase by $1,444,370 over fiscal year 2014-2015. The primary reasons for this increase are from a $5,450,000 loan for Water and Wastewater Improvements and rate increases for water and sewer. The City’s population should remain stable in the upcoming year. The unemployment rate in Eloy should remain stable at 11.1%, which is above the national average of 5.3% and Pinal County of 7.4%. These indicators were considered when adopting the budget for fiscal year 2015-2016. FINANCIAL CONTACT This financial report is designed to provide a general overview of the City of Eloy, Arizona’s finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information, contact the Finance Department, City of Eloy, 624 North Main Street, Eloy, AZ 85131. Page 18 BASIC FINANCIAL STATEMENTS Page 19 (This page intentionally left blank) Page 20 GOVERNMENT-WIDE FINANCIAL STATEMENTS Page 21 (This page intentionally left blank) Page 22 CITY OF ELOY, ARIZONA STATEMENT OF NET POSITION JUNE 30, 2015 Governmental Activities ASSETS Current assets: Cash and Cash Equivalents Other Receivables Property Taxes Receivable Due from Governmental Entities Accounts Receivable (Net of Allowance) Loan Proceeds Receivable Inventory Internal Balances Total current assets $ Noncurrent assets: Restricted Cash and Investments Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net) Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES Pension Plan Items LIABILITIES Current liabilities: Accounts Payable Accrued Salaries and Wages Payable Customer Deposits Bonds Payable Loans Payable Compensated Absences Interest Payable Other Current Liabilities Total current liabilities $ DEFERRED INFLOWS OF RESOURCES Pension Plan Items $ 2,707,176 $ 22,740,144 7,058 49,204 804,944 687,236 239,313 106,639 249,643 21,143,817 77,010 8,393,094 14,661,188 23,131,292 44,275,109 716,976 379,032 18,306,426 19,402,434 22,893,155 793,986 8,772,126 32,967,614 42,533,726 67,168,264 1,681,916 154,235 1,836,151 932,153 496,061 92,263 1,803,797 169,953 33,686 145,956 24,536 632,471 5,154 103,723 350 1,115,829 1,102,106 529,747 145,956 24,536 850,389 70,556 103,723 92,613 2,919,626 10,856,337 10,856,337 12,660,134 13,876,777 13,876,777 14,992,606 24,733,114 24,733,114 27,652,740 1,180,772 266,110 1,446,882 20,268,071 9,479,546 29,747,617 716,976 716,976 2,354,568 130,875 1,898,685 245,092 4,810,980 39,904,793 2,354,568 130,875 1,898,685 245,092 7,218,828 32,116,119 $ (2,407,848) 7,788,674 The notes to the basic financial statements are an integral part of this statement. Page 23 Total 687,236 239,313 106,639 (249,643) 3,490,721 217,918 65,402 Noncurrent liabilities: Noncurrent Portion of Long-Term Obligations Total noncurrent liabilities Total liabilities NET POSITION Net Investment in Capital Assets Restricted for: Debt Service Highways and Streets Grants Capital Projects Other Purposes Unrestricted Total net position 20,032,968 7,058 49,204 804,944 Business-type Activities 24,634,538 $ CITY OF ELOY, ARIZONA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2015 Net (Expense) Revenue and Changes in Net Position Program Revenues Functions/Programs Primary Government Governmental activities: General Government Public Safety Public Works Community Development Health and Welfare Culture and Recreation Interest on Long Term Debt Total governmental activities Business-type activities: Water Sewer Sanitation Total business-type activities Total primary government Expenses $ $ Charges for Services 790,722 $ 53,755 154,961 213,971 Operating Grants and Contributions Capital Grants and Contributions $ Governmental Activities 3,413,448 $ 4,260,754 2,380,812 1,021,468 191,679 1,493,063 82,075 12,843,299 29,856 21,497 1,243,265 2,065,313 656,941 (2,622,726) (3,829,504) (342,566) (578,572) 19,373 (1,441,710) (82,075) (8,877,780) 2,207,156 1,222,770 1,509,258 4,939,184 17,782,483 $ 2,195,416 1,217,763 1,521,976 4,935,155 6,178,420 $ 2,065,313 $ 656,941 (8,877,780) 207,995 1,835,821 $ 169,500 47,464 228,925 211,052 General revenues: Taxes: Sales Taxes Propert Taxes Levied for General Purposes Franchise Taxes County Auto Lieu Tax Unrestricted State Revenues Investment Income Other Revenues Transfers Total general revenues and transfers 4,801,113 951,247 144,163 831,046 3,533,091 37,981 53,810 (618,537) 9,733,914 Changes in net position 856,134 Net position, beginning of year, as restated Net position, end of year The notes to the basic financial statements are an integral part of this statement. Page 24 31,259,985 $ 32,116,119 Net (Expense) Revenue and Changes in Net Position Business-type Activities $ Totals $ (11,740) (5,007) 12,718 (4,029) (4,029) 8,837 $ (2,622,726) (3,829,504) (342,566) (578,572) 19,373 (1,441,710) (82,075) (8,877,780) (11,740) (5,007) 12,718 (4,029) (8,881,809) 4,801,113 951,247 144,163 831,046 3,533,091 46,818 53,810 618,537 627,374 10,361,288 623,345 1,479,479 7,165,329 38,425,314 7,788,674 $ 39,904,793 Page 25 (This page intentionally left blank) Page 26 FUND FINANCIAL STATEMENTS Page 27 CITY OF ELOY, ARIZONA BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2015 General ASSETS Cash and Cash Equivalents Restricted Cash and Investments Other Receivables Property Taxes Receivable Due from Governmental Entities Due from Other Funds Total assets LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts Payable Accrued Salaries and Wages Payable Due to Other Funds Other Current Liabilities Total liabilities $ $ $ Highway User Revenue Fund 13,318,209 77,010 700 49,204 442,106 283,177 14,170,406 $ $ 3,016,528 $ 195,434 292,206 472,210 $ 571,925 19,449 $ 26,768 4,257 33,534 591,374 64,559 2,354,568 70,586 130,875 13,284,750 13,284,750 2,425,154 130,875 $ 14,170,406 $ 3,016,528 The notes to the basic financial statements are an integral part of this statement. Page 28 195,434 28,977 Fund balances: Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances $ 167,404 92,263 856,679 Deferred inflows of resources: Unavailable Revenue - Property Taxes 2,849,124 Grants $ 195,434 Non-Major Governmental Funds Total Governmental Funds $ $ 3,865,635 6,358 $ 3,871,993 $ $ 41,254 145 $ 41,399 20,032,968 77,010 7,058 49,204 804,944 283,177 21,254,361 932,153 496,061 33,534 92,263 1,554,011 28,977 2,143,777 496,082 1,190,735 4,629,220 566,668 1,190,735 13,284,750 19,671,373 3,830,594 $ 3,871,993 Page 29 $ 21,254,361 (This page intentionally left blank) Page 30 CITY OF ELOY, ARIZONA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2015 Total governmental fund balances $ 19,671,373 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Less accumulated depreciation $ 31,791,444 (8,737,162) Property taxes collected 60 days after fiscal year end will not be available to pay for current period expenditures and, therefore, are reported as unavailable revenues in the governmental funds 23,054,282 28,977 Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds. Deferred outflows of resources related to pensions Deferred inflows of resources related to pensions 1,681,916 (1,180,772) 501,144 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Compensated absences payable Loans payable Net pension liability (654,022) (2,786,211) (7,699,424) Net position of governmental activities The notes to the basic financial statements are an integral part of this statement. Page 31 (11,139,657) $ 32,116,119 CITY OF ELOY, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 General Revenues: Sales Taxes Property Taxes Franchise Taxes Licenses, Permits, and Fees Intergovernmental Revenue Charges for Services Fines and Forfeitures Investment Income Impact Fees Other Revenues Total revenues $ 4,640,658 961,454 144,163 276,596 4,431,578 451,713 244,576 22,732 Highway User Revenue Fund $ $ 1,835,847 808,662 10,516 41,673 11,215,143 Expenditures: Current General Government Public Safety Public Works Community Development Health and Welfare Culture and Recreation Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Total expenditures Grants 1,846,363 2,343,944 3,471,307 597,775 589,070 808,662 322,346 1,259,036 1,451,487 593,470 1,589,796 498,101 89,707 21,040 13,736 123,330 67,126 9,237,509 19,733 9,807 2,878,372 944,930 Excess (deficiency) of revenues over expenditures 1,977,634 (1,032,009) (136,268) Other financing sources (uses): Transfers In Transfers Out Total other financing sources (uses): 250,000 130,000 (735,120) (735,120) 250,000 130,000 Changes in fund balances 1,242,514 (782,009) (6,268) 12,042,236 3,207,163 137,143 Fund balances, beginning of year Fund balances, end of year $ 13,284,750 $ 2,425,154 The notes to the basic financial statements are an integral part of this statement. Page 32 $ 130,875 Non-Major Governmental Funds Total Governmental Funds $ $ 160,455 27,571 228,342 4,733 24,771 12,137 458,009 80,759 $ 4,801,113 961,454 144,163 276,596 7,103,658 680,055 244,576 37,981 24,771 53,810 14,328,177 1,754,340 2,424,703 3,793,653 1,856,811 1,087,171 89,707 1,472,527 3,951,342 84,816 5,142 1,925,057 227,879 82,075 14,985,868 (1,467,048) (657,691) 358,061 (2,941) 355,120 738,061 (738,061) (1,111,928) (657,691) 4,942,522 20,329,064 3,830,594 Page 33 $ 19,671,373 (This page intentionally left blank) Page 34 CITY OF ELOY, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2015 Net changes in fund balances - total governmental funds $ (657,691) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report the portion of capital outlay for capitalized assets as expenditures. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. Expenditures for capitalized assets Less current year depreciation $ 2,410,390 (914,068) 1,496,322 Property taxes collected 60 days after fiscal year end do not provide current financial resources are not reported as revenues in the funds. (10,207) Repayments of long-term debt principal are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. Capital lease principal retirement Loan principal retirement 12,587 215,292 227,879 602,388 (793,264) (190,876) Governmental funds report pension contributions as expenditures. However, they are reported as deferred outflows of resources in the Statement of Net Position. The change in the net pension liability, adjusted for deferred pension items, is reported as pension expense in the Statement of Activities. Current year pension contributions Pension expense Expenses for compensated absences reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Change in net position in governmental activities The notes to the basic financial statements are an integral part of this statement. Page 35 (9,293) $ 856,134 CITY OF ELOY, ARIZONA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2015 Enterprise Funds Water ASSETS Current assets: Cash and Cash Equivalents Accounts Receivable (Net of Allowance) Loan Proceeds Receivable Inventory Total current assets $ Noncurrent assets: Restricted Cash and Investments Capital Assets, Non-Depreciable Capital Assets, Depreciable (Net) Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES Pension Plan Items LIABILITIES Current liabilities: Accounts Payable Accrued Salaries and Wages Payable Customer Deposits Due to Other Funds Bonds Payable Loans Payable Compensated Absences Interest Payable Other Current Liabilities Total current liabilities $ $ 1,391,932 102,080 191,714 1,494,012 86,517 29,798 8,881,544 8,997,859 11,052,497 630,459 349,234 8,864,218 9,843,911 10,035,625 560,664 560,664 2,054,676 84,128 14,022 56,085 149,715 17,660 145,956 11,339 6,332 8,899 9,694 249,643 367,221 899 62,516 697,051 19,492 42,544 DEFERRED INFLOWS OF RESOURCES Pension Plan Items $ 8,985 4,004,446 520,875 2,082,903 693,762 3,340,084 3,989,013 5,945,127 115,627 6,060,754 6,757,805 462,508 4,475,939 4,495,431 145,151 24,192 96,767 6,017,778 2,901,104 560,664 86,517 898,166 7,002,461 630,459 (263,913) 3,267,650 $ The notes to the basic financial statements are an integral part of this statement. Page 36 Sanitation 142,437 49,277 24,536 265,250 4,255 41,207 350 648,929 Noncurrent liabilities: Compensated Absences Landfill Closure and Post Closure Costs Bonds Payable Loans Payable Net Pension Liability Total noncurrent liabilities Total liabilities NET POSITION Net Investment in Capital Assets Restricted for: Debt Service Unrestricted Total net position 1,315,244 442,719 190,036 106,639 2,054,638 Sewer $ (3,042,101) (2,481,437) Enterprise Funds Totals $ 2,707,176 687,236 239,313 106,639 3,740,364 716,976 379,032 18,306,426 19,402,434 23,142,798 154,235 169,953 33,686 145,956 249,643 24,536 632,471 5,154 103,723 350 1,365,472 51,529 4,004,446 520,875 8,028,030 1,271,897 13,876,777 15,242,249 266,110 9,479,546 $ 716,976 (2,407,848) 7,788,674 Page 37 CITY OF ELOY, ARIZONA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2015 Enterprise Funds Water Operating revenues: Charges for Services Rent and Other Revenues Total operating revenues $ 2,195,416 Sewer $ 1,217,763 Sanitation $ 1,512,408 9,568 1,521,976 2,195,416 1,217,763 442,129 194,109 1,106,696 124,927 48,687 401,992 381,280 2,124,214 481,835 1,057,441 322,507 154,616 830,917 109,773 91,445 1,509,258 71,202 160,322 12,718 Nonoperating revenues (expenses): Investment Income Interest Expense and Fiscal Charges Total nonoperating revenues (expenses) 824 (82,942) (82,118) 8,013 (165,329) (157,316) Income (loss) before capital contributions (10,916) 3,006 Capital Contributions 50,038 568,499 Changes in net position 39,122 571,505 12,718 6,963,339 2,696,145 (2,494,155) Operating expenses: Salaries Employee Benefits Service, Supplies and Other Landfill Closure and Post Closure Expense Depreciation Total operating expenses Operating income (loss) Total net position, beginning of year, as restated Total net position, end of year $ 7,002,461 $ 3,267,650 The notes to the basic financial statements are an integral part of this statement. Page 38 12,718 $ (2,481,437) Enterprise Funds Totals $ 4,925,587 9,568 4,935,155 889,563 397,412 2,339,605 109,773 954,560 4,690,913 244,242 8,837 (248,271) (239,434) 4,808 618,537 623,345 7,165,329 $ 7,788,674 Page 39 CITY OF ELOY, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 Enterprise Funds Increase (Decrease) in Cash and Cash Equivalents Cash flows from operating activities: Cash received from Customers, Service Fees Cash received from Customers, Other Cash paid to Supplies Cash paid to Employees $ Water Wastewater 2,113,322 $ (1,214,823) (454,047) Net cash provided by (used for) operating activities 444,452 Cash flows from non-capital financing activities: Proceeds/Payments (to)/from other funds Net cash provided by (used for) non-capital financing activities Cash flows from capital and related financing activities: Acquisition of capital assets Principal paid on debt Interest paid on debt Net cash used for capital and related financing activities Cash flows from investing activities: Investment income Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 1,208,393 Sanitation $ (475,955) (126,809) 1,526,097 9,568 (993,814) (338,042) 605,629 203,809 Total $ 4,847,812 9,568 (2,684,592) (918,898) 1,253,890 (89,289) (89,289) (89,289) (89,289) (125,967) (78,877) (12,850) (340,825) (169,166) (12,850) (466,792) (248,043) (204,844) (522,841) (727,685) 824 824 8,013 8,013 240,432 1,512 203,809 445,753 1,161,329 628,947 1,188,123 2,978,399 $ 1,401,761 $ Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash $ Restricted cash and investments Total cash and cash equivalents $ 1,315,244 86,517 1,401,761 $ 630,459 8,837 8,837 $ 1,391,932 $ 3,424,152 $ 1,391,932 $ $ 630,459 630,459 $ 1,391,932 $ 2,707,176 716,976 3,424,152 $ 160,322 $ 12,718 $ 244,242 Reconciliation of Operating Income to Net Cash Provided by (Used for) Operating Activities Operating income (loss) $ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation Changes in assets and liabilities: (Increase) decrease in accounts receivable Increase in inventory Increase in compensated absences payable Decrease in deposits held for others Increase in accrued payroll and employee benefits Increase (decrease) in accounts payable Increase (Decrease) in landfill closure and post closure payable Increase (Decrease) in pension items Total adjustments Net cash provided by (used for) operating activities Noncash investing, capital, and financing activities: Capital contributions Page 40 71,202 381,280 481,835 (85,366) 4,551 2,416 3,272 (756) 81,431 (9,370) 382 (25,276) (13,578) 373,250 (2,264) 445,307 91,445 954,560 13,688 (81,048) 4,551 (2,032) 3,272 (2,409) 47,874 109,773 (24,893) 1,009,648 (4,448) (2,035) (8,281) 109,773 (9,051) 191,091 $ 444,452 $ 605,629 $ $ 50,038 $ 568,499 $ The notes to the basic financial statements are an integral part of this statement. 203,809 $ 1,253,890 $ 618,537 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Eloy, Arizona have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. During the year ended June 30, 2015, the City implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. This Statement requires governments providing defined benefit pensions to recognize the long-term obligation for pension benefits as a liability, and to more comprehensively and comparably measure the annual costs of pension benefits. This Statement also enhances accountability and transparency through revised note disclosures and new required supplementary information. A. Reporting Entity The City is a municipal entity governed by an elected mayor and council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations and so data from these units are combined with data of the City, the primary government. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The City is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, component units combined with the City for financial statement presentation purposes, and the City, are not included in any other governmental reporting entity. Consequently, the City’s financial statements include the funds of those organizational entities for which its elected governing body is financially accountable. Blended Component Unit – Eloy Municipal Property Corporation (MPC). The MPC Board of Directors consists of six members which are appointed by the City of Eloy, Arizona, City Council. The MPC, which is a nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the sole purpose of assisting the City in obtaining financing for various projects of the City. For financial reporting purposes, transactions of the MPC are combined together and included as if they were part of the City’s operations. Page 41 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) present financial information about the City as a whole. The reported information includes all of the nonfiduciary activities of the City. For the most part, the effect of internal activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, investment income and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. The City does not present funds that do not have activity. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-Wide Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of internal activity has been eliminated from the government-wide financial statements; however, the effects of interfund services provided and used between functions are reported as expenses and program revenues at amounts approximating their external exchange value. Page 42 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fund Financial Statements – 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 City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. 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. Property taxes, sales taxes, franchise taxes, licenses and permits, charges for services, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. Unearned revenue arise when resources are received by the City before it has legal claim to them, as when grant monies are received prior to meeting all eligibility requirements imposed by the provider. Delinquent property taxes and other receivables that will not be collected within the available period have been reported as unavailable revenues on the governmental fund financial statements. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The City reports the following major governmental funds. General Fund – This fund accounts for all financial resources of the City, except those required to be accounted for in other funds. Highway User Revenue (HURF) Fund – This fund accounts for state and county shared revenue sources that are legally restricted for road construction and maintenance. Grants Fund – This fund accounts for federal and state grants and other contributions that are restricted for a specific use. Page 43 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City reports the following major proprietary funds. Water Fund – This fund is used to account for the activities related to the City’s water storage and distribution system. Sewer Fund – This fund is used to account for the activities related to the City’s sewer collection and treatment operations. Sanitation Fund – This fund is used to account for the activities related to the City’s garbage collection and treatment operations. The Proprietary Fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting and are presented in a single column. Proprietary funds distinguish operating revenues and expenses from nonoperating 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 of the City’s enterprise fund are charges to customers for water, sewer and sanitation. Operating expenses for these funds include the cost of sales and services and depreciation expense. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Cash and Investments For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at year end were cash on hand, restricted and unrestricted cash in bank and investments. E. Inventory Water Fund inventories consist of supplies and fixtures used in the Water Department’s operations and are valued using the first in/first out (FIFO) method. Inventories are recorded as expenses when consumed in the government-wide and fund financial statements. Page 44 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Arizona statute requires a pooled collateral program for public deposits and a Statewide Collateral Pool Administrator (Administrator) in the State Treasurer’s Office. The purpose of the pooled collateral program is to ensure that governmental entities’ public deposits placed in participating depositories are secured with collateral of 102 percent of the public deposits, less any applicable deposit insurance. An eligible depository may not retain or accept any public deposit unless it has deposited the required collateral with a qualified escrow agent or the Administrator. The Administrator manages the pooled collateral program, including reporting on each depository’s compliance with the program. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. F. Investment Income Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. G. Receivables and Payables Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Interfund balances between governmental funds are eliminated on the Statement of Net Position. All trade and property tax receivables, are shown net of an allowance for uncollectibles. H. Property Tax Calendar The County Treasurer is responsible for collecting property taxes for all governmental entities within the county. The county levies real and personal property taxes are levied on or before the third Monday in August, that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. Page 45 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Pursuant to A.R.S., a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. I. Capital Assets Capital assets, which include land, land improvements, buildings and improvements, sewer plant, water mains and lines, sewer collection system, vehicles, machinery, equipment, construction in progress, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at estimated fair market value at the date of donation. General government infrastructure capital assets include only those assets acquired or constructed since July 1, 2003. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Certain capital assets of the City are depreciated using the straight line method over the following estimated useful lives: Assets Buildings and Improvements Improvements other than Buildings Furniture, Equipment, and Vehicles Streets Infrastructure Water and Sewer Plant J. Years 40 5-50 5-20 10-50 50 Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position may report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. Page 46 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until that time. K. Compensated Absences For governmental funds, amounts of vested or accumulated vacation and sick leave that are not expected to be liquidated with expendable available financial resources are reported as liabilities in the government-wide statement of net position and as expenses in the government-wide statement of activities. No expenditures are reported for these amounts in the fund financial statements. Vested or accumulated vacation and sick leave in the proprietary fund are recorded as an expense and a liability of that fund as the benefits accrue to the employees and are thus recorded in both the government-wide financial statements and the individual fund financial statements. Generally, resources from the General Fund are used to pay for compensated absences. L. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. M. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities on the statement of net position. Debt premiums and discounts, as well as, the difference between the reacquisition price and the net carrying amount of the old debt, are deferred and amortized over the life of the debt using the straight-line method over the term of the related debt. In the fund financial statements, governmental fund types recognize debt premiums and discounts, as well as debt issuance costs, during the current period. The face amount of 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. Page 47 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES N. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. O. Net Position Flow Assumption In the government-wide and proprietary fund financial statements the City applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted amounts are available. P. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. NOTE 2 – FUND BALANCE CLASSIFICATIONS Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. Nonspendable. The nonspendable fund balance classification includes amounts that cannot be spent because they are not in spendable form, or legally or contractually required to be maintained intact. Restricted. Restricted fund balance is reported when constraints placed on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or is imposed by law through constitutional provisions or enabling legislation. Page 48 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 2 – FUND BALANCE CLASSIFICATIONS Committed. Committed fund balance can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision making authority, the City Council. A resolution or ordinance are equally binding actions of the City Council which is required to establish, modify or rescind a fund balance commitment. Assigned. Assigned fund balance is constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed. The City Manager is authorized to assign amounts to a specific purpose in accordance with the City’s budget policy. Unassigned. Unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had be restricted, committed, or assigned. The City applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. The table below provides detail of the major components of the City’s fund balance classifications at year end. General Fund Fund Balances: Restricted: Highways and Streets Grants Capital Projects Court Equipment Cemetery Committed: Highways and Streets Airport Cemetery Assigned: Capital Projects Unassigned Total Fund Balances Page 49 $ Highway User Revenue Fund $ Grants Fund 2,354,568 $ Non-Major Governmental Funds $ 130,875 1,898,685 123,623 121,469 70,586 192,798 221,259 82,025 1,190,735 13,284,750 $ 13,284,750 $ 2,425,154 $ 130,875 $ 3,830,594 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 3 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Stewardship, compliance, and accountability are key concepts in defining the responsibilities of the City. The use of budgets and monitoring of equity status facilitate the City’s compliance with legal requirements. Budgets and Budgetary Accounting – The City Council follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In accordance with Arizona Revised Statutes, the City Manager submits a proposed budget, for the fiscal year commencing the following July 1 to the City Council. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain public comment. 3. Prior to the third Monday in August, the expenditure limitation for the City is legally enacted through passage of an ordinance. To ensure compliance with the expenditure limitation, a uniform expenditure report must be filed with the State each year. This report, issued under a separate cover, reconciles total City expenditures from the audited financial statements to total expenditures for reporting in accordance with the State’s uniform expenditure reporting system (A.R.S. §41-1279.07). 4. The City follows a voter-approved alternative expenditure limitation that was adopted on September 8, 2014. 5. Expenditures may not legally exceed the expenditure limitation of all fund types as a whole. For management purposes, the City adopts a budget by department for the General Fund and in total by fund for other funds. The City Manager subject to City Council approval, may at any time transfer any unencumbered appropriation balance or portion thereof between a department or activity. The adopted budget cannot be amended in any way without City Council approval. 6. Formal budgetary integration is employed as a management control device during the year for the General and Special Revenue Funds on essentially the same modified accrual basis of accounting used to record actual revenues and expenditures. The City is subject to the State of Arizona’s Spending Limitation Law for Cities and Towns. This law does not permit the City to spend more than budgeted revenues plus the carry-over unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the combined funds. The City complied with this law during the year. No supplementary budgetary appropriations were made during the year. Individual Deficit Net Position – At year end, the Sanitation Fund, a major fund, reported a deficit of $2,481,437 in net position. The deficit arose because of operations during the year and prior years. Additional revenues received in future fiscal years due to user rate increases are expected to eliminate the deficit. Page 50 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 4 – CASH AND INVESTMENTS Arizona statutes authorize the City to invest public monies in the State Treasurer’s local government investment pools, the County Treasurer’s investment pool, in obligations of the U.S. Government and its agencies, obligations of the State and certain local government subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized repurchase agreements, certain obligations of U.S. corporations, and certain other securities. By identification of permitted investments, all other investments are prohibited by the same statutes. The statutes do not include any requirements for credit risk, custodial credit risk, concentration of credit risk, interest rate risk, or foreign currency risk for the City’s investments. The City has implemented an investment policy to address these areas of risk. Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of bank failure the City’s deposits may not be returned to the City. The City does not have a deposit policy for custodial credit risk. At year end, the carrying amount of the City’s deposits was $23,334,536 and the bank balance was $24,000,302. At year end $23,750,302 of the City’s deposits were covered by collateral held by the pledging financial institution in the City’s name. Additionally, the City had cash on hand of $1,200. The State Treasurer’s pools are external investment pools, the Local Government Investment Pool (Pool 5) and Local Government Investment Pool-Government (Pool 7), with no regulatory oversight. The pools are not required to register (and are not registered) with the Securities and Exchange Commission. The activity and performance of the pools are reviewed monthly by the State Board of Investment. The fair value of each participant’s position in the State Treasurer investment pools approximates the value of the participant’s shares in the pool and the participants’ shares are not identified with specific investments. At year end, the City’s investments consisted of the following: Investment Type State Treasurer’s Investment Pool 5 State Treasurer’s Investment Pool 7 Total Average Maturities 40 days 47 days Fair Value 32,467 167,127 $ 199,594 $ Interest Rate Risk. The City has implemented an investment policy that will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will decline due to increases in market interest rates by the following: 1. Investing funds primarily in shorter-term securities or similar investment pools and limiting the weighted average duration of the investment portfolio; and 2. Utilizing external research and advice regarding the current interest rate outlook and global economic condition to optimize portfolio duration strategy. Page 51 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 4 – CASH AND INVESTMENTS Credit Risk. The City has implemented an investment policy that will minimize credit risk, which is the risk of loss due to the insolvency of the security issuer or underlying borrower by the following: 1. Limiting investments in the portfolio to the asset classes designated as acceptable in A.R.S. §35-323; 2. Diversifying the investment portfolio so that the impact of potential losses from any one individual issuer held in the portfolio will be limited; 3. Utilizing external research and advice regarding the current global economic condition and its impact on the outlook for domestic corporate credit quality. As of year-end, the City’s investment in the State’s investment pool 5 received a credit quality rating of AAAf/S1+ from Standard & Poor’s and the State’s investment pool 7 had a weighted average rating of AAA at year end as it was invested in obligations of the U.S. Government or obligations guaranteed by the U.S. Government. Custodial Credit Risk – Investments. The City’s investment in the State Treasurer’s investment pools represents a proportionate interest in the pool’s portfolio; however, the City’s portion is not identified with specific investments and is not subject to custodial credit risk. NOTE 5 – RECEIVABLES Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and presented separately in the financial statements with the exception of due from governmental entities. Due from governmental entities, net of allowance for uncollectibles, as of year end for the City’s individual major funds and non-major governmental and proprietary funds in the aggregate were as follows: General Fund Due from Other Governmental Entities: Due from federal government Due from state government Due from county government Net Due from Governmental Entities Page 52 $ $ Highway User Revenue Fund $ 405,914 36,192 442,106 $ $ 110,011 57,393 167,404 $ Grants Fund 144,960 9,884 40,590 195,434 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 6 – CAPITAL ASSETS A summary of capital asset activity for the current fiscal year follows: Governmental Activities Capital Assets, not being Depreciated: Land Construction in Progress Total Capital Assets, not being Depreciated Capital Assets, being Depreciated: Buildings and Improvements Furniture, Equipment and Vehicles Land Improvements Infrastructure Total Capital Assets being Depreciated Less Accumulated Depreciation for: Buildings and Improvements Furniture, Equipment and Vehicles Land Improvements Infrastructure Total Accumulated Depreciation Total Capital Assets, being depreciated, net Governmental Activities Capital Assets, net Beginning Balance $ 7,151,128 81,026 7,232,154 $ Decrease 12,500 1,148,440 1,160,940 $ Ending Balance $ 7,163,628 1,229,466 8,393,094 7,010,151 5,772,529 458,258 8,907,962 22,148,900 270,545 482,138 260,658 236,109 1,249,450 7,280,696 6,254,667 718,916 9,144,071 23,398,350 (2,475,208) (3,719,676) (41,814) (1,586,396) (7,823,094) (195,500) (373,207) (12,345) (333,016) (914,068) (2,670,708) (4,092,883) (54,159) (1,919,412) (8,737,162) 14,325,806 $ 21,557,960 335,382 $ 1,496,322 14,661,188 $ 23,054,282 Governmental activities: General Government Public Safety Public Works Health and Welfare Total Depreciation Expense Page 53 Increase $ $ 93,692 183,779 534,625 101,972 $ 914,068 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 6 – CAPITAL ASSETS Business-Type Activities Capital Assets, not being Depreciated: Land and Water Rights Construction in Progress Total Capital Assets, being Depreciated: Water System Sewer System Buildings and Improvements Furniture, Equipment and Vehicles Total Capital Assets being Depreciated Less Accumulated Depreciation for: Water System Sewer System Buildings and Improvements Furniture, Equipment and Vehicles Total Accumulated Depreciation Total Capital Assets, being Depreciated, net Business-Type Activities Capital Assets, net Beginning Balance $ 347,468 Increase $ $ Business-type activities: Water Sewer Sanitation Total Depreciation Expense $ 31,564 31,564 347,468 Ending Balance Decrease $ 347,468 31,564 379,032 14,044,701 14,537,849 32,704 2,696,330 31,311,584 402,749 599,823 14,044,701 14,734,923 32,704 3,099,079 31,911,407 (4,942,071) (5,857,818) (31,081) (1,819,451) (12,650,421) (366,731) (468,628) (90) (119,111) (954,560) (5,308,802) (6,326,446) (31,171) (1,938,562) (13,604,981) 18,661,163 19,008,631 (354,737) (323,173) 18,306,426 $ 18,685,458 197,074 $ $ $ 381,280 481,835 91,445 $ 954,560 Construction Commitments – At year end, the City had contractual commitments related to a capital project for the construction of infrastructure improvements. At year end, the City had spent $1.3 million on the project and had an estimated remaining contractual commitment of $1.6 million. Page 54 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 7 – LONG-TERM DEBT Bonds Payable - Business-Type Activities: Water Revenue Bonds, Series 1997A, bearing interest at 4.5% due in semiannual principal and interest installments, maturing January 1, 2031. $ 216,799 Water Revenue Bonds, Series 1997B, bearing interest at 4.5% due in semiannual principal and interest installments, maturing January 1, 2031. 328,612 Total Revenue Bonds Payable 545,411 Less Current Portion 24,536 Total revenue bonds, net of current portion $ 520,875 Principal and interest payments on the business-type activities bonds payable at year end are summarized as follows: Year Ending June 30: 2016 2017 2018 2019 2020 2021-25 2026-30 2031 Total Business-Type Activities Principal Interest $ 24,536 $ 24,544 25,664 23,439 26,843 22,284 28,076 21,076 29,365 19,814 168,348 77,988 210,735 36,466 31,844 1,432 $ 545,411 $ 227,043 Pledged Revenues – Business-Type Activities. The City has pledged future water and sewer revenues to repay the outstanding Water Revenue Bonds loans of $794,709. Proceeds from the original bond issuances provided financing for improvements to the City’s water and sewer systems infrastructure. The bonds are paid solely from water and sewer revenues and are payable through 2031. The total principal and interest to be paid on the bonds is $772,454. The current total customer gross revenues were $3.4 million and the total principal and interest paid on the bonds was $48,350, or 1.5 percent of gross revenues. Page 55 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 7 – LONG-TERM DEBT Loans Payable - Business-Type Activities: Water Infrastructure Finance Authority (WIFA) Loan 910103-09, bearing interest at 2.312% to 3.24% due in semiannual principal and interest installments, maturing July 1, 2021. $ 5,291,226 Water Infrastructure Finance Authority (WIFA) Loan 92A150-10, bearing interest at 2.933% due in semiannual principal and interest installments, maturing on July 1, 2029. 396,199 Water Infrastructure Finance Authority (WIFA) Loan 920216-12, bearing interest at 2.625% due in semiannual principal and interest installments maturing July 1, 2031. 1,761,918 Water Infrastructure Finance Authority (WIFA) Loan 910164-15 bearing interest at 2.168% due in semiannual principal and interest installments. $950,000 has been authorized by WIFA with a $475,000 forgivable portion; however, at June 30, 2015, the City had only drawn down $49,277. The City made no repayments during the current fiscal year leaving an outstanding balance of $49,277 at June 30, 2015, which matures at July 1, 2015. The City expects to draw down the remaining balance during fiscal year 2016, and debt will then be scheduled to mature at July 1, 2034. 49,277 Water Infrastructure Finance Authority (WIFA) Loan 920256-15 bearing interest at 2.033% due in semiannual principal and interest installments. $4,500,000 has been authorized by WIFA with a $600,000 forgivable portion; however, at June 30, 2015, the City had only drawn down $190,036. The City made no repayments during the current fiscal year leaving an outstanding balance of $190,036 at June 30, 2015, which matures at July 1, 2015. The City expects to draw down the remaining balance during fiscal year 2016, and debt will then be scheduled to mature at July 1, 2034. 190,036 United States Department of Agriculture (USDA), bearing interest at 4.125% due in annual principal and interest installments beginning September 1, 2008, maturing September 1, 2045. 971,845 Total Loans Payable 8,660,501 Less Current Position Total Loans Payable, net of Current Position Page 56 632,471 $ 8,028,030 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 7 – LONG-TERM DEBT Principal and interest payments on the business-type activities bonds payable at year end are summarized as follows: Year Ending June 30: 2016 2017 2018 2019 2020 2021-25 2026-30 2031-35 2036-40 2041-45 Total Business-Type Activities Principal Interest $ 632,471 $ 182,924 523,524 222,871 473,817 217,637 484,460 206,173 495,352 194,446 2,649,360 840,060 2,520,539 498,108 418,745 164,573 207,629 95,017 254,604 52,121 $ 8,660,501 $ 2,673,930 Pledged Revenues – Business-Type Activities. The City has pledged future excise, transaction privilege, franchise, and income tax revenues to repay outstanding WIFA loan 910103-09 and 92A150-10 of $7.5 million. Proceeds from the original loan issuances provided financing for improvements to the City’s water and sewer systems infrastructure. The loans are paid solely from excise, transaction privilege, franchise, and income tax revenues and are payable through 2029 and 2021, respectively. The total principal and interest to be paid on the loans is $6.8 million. The current total excise, transaction privilege, franchise, and income tax revenues were $8.3 million and the total principal and interest paid on the loans was $482,455, or 5.8 percent of gross revenues. The City has pledged future water revenues to repay WIFA loan 920216-12, 910164-15, and 920256-15 of $7.5 million. Proceeds from the original loan issuances provided financing for improvements to the City’s water and sewer systems infrastructure. The loans are paid solely from water revenues and are payable through 2034. The total principal and interest to be paid on the loans is $2.4 million. The current total water customer gross revenues were $3.4 million and the total principal paid on the loans was $127,676, or 3.8 percent of gross revenues. Page 57 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 7 – LONG-TERM DEBT The City has pledged future excise, transaction privilege, franchise, and income tax revenues to repay the outstanding USDA loan of $1.1 million. Proceeds from the original loan issuances provided financing for improvements to the City’s sewer system infrastructure. The loan is paid solely from excise, transaction privilege, franchise, and income tax revenues and is payable through 2045. The total principal and interest to be paid on the loans is $1.7 million. The current total excise, transaction privilege, franchise, and income tax revenues were $8.3 million and the total principal and interest paid on the loan was $56,831, or .68 percent of gross revenues. Loans Payable – Governmental Activities: Great Western Bank, bearing interest at 0.05%, due in monthly principal and interest installments, maturing October 1, 2022. The interest rate is variable and will be adjusted on September 1, 2017. Great Western Bank, bearing interest at 3.1%, due in monthly principal and interest installments, maturing November 1, 2027. $ 279,139 2,507,072 Total Loans Payable 2,786,211 Less Current Portion 217,918 Total Loans Payable, net of Current Portion $ 2,568,293 Principal and interest payments on the governmental activities bonds payable at year end are summarized as follows: Year Ending June 30: 2016 2017 2018 2019 2020 2021-25 2026-28 Total Page 58 Governmental Activities Principal Interest $ 217,918 $ 89,832 223,712 84,563 229,476 79,342 235,412 73,547 241,380 67,785 1,057,704 247,423 580,609 81,816 $ 2,786,211 $ 724,308 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 8 – LANDFILL CLOSURE AND POSTCLOSURE COSTS State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and postclosure care costs as an addition to long term liabilities on the Statement of Net Position in each period based on the landfill capacity the City used as of fiscal year end. The $4,004,446 reported as landfill closure and postclosure care liability at year end, represents the cumulative amount reported to date based on prior closure and post closure costs recognized and the use of 56 percent of the estimated additional capacity added to the landfill during the fiscal year. The City will recognize the remaining estimated cost of closure and postclosure care of $3,099,712 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in the current fiscal year. Resources from the Landfill Fund will be used to liquidate the landfill closure and postclosure payable. The estimated remaining life of the landfill site is 30 years. NOTE 9 – CHANGES IN LONG-TERM LIABILITIES Long-term liability activity for the current fiscal year was as follows: Beginning Balance Governmental activities: Loans Payable Compensated Absences Obligations under Capital Leases Net pension liability Governmental Activity LongTerm Liabilities Business-type activities: Compensated Absences Revenue Bonds Loans Payable Landfill Closure and Post-Closure Costs Payable Net pension liability Business-Type Activities LongTerm Liabilities Page 59 $ Additions 3,001,503 $ 644,729 12,587 7,007,404 Ending Balance Reductions $ 300,989 215,292 291,696 12,587 $ 692,020 Due Within One Year 2,786,211 $ 654,022 217,918 65,402 7,699,424 $ 10,666,223 $ 993,009 $ 519,575 $ 11,139,657 $ 283,320 $ $ 41,027 $ 37,755 23,459 443,332 $ 5,154 24,536 632,471 53,411 568,870 8,864,520 239,313 3,894,673 1,920,908 $ 15,302,382 109,773 649,011 $ 390,113 $ 1,153,557 56,683 $ 545,411 8,660,501 4,004,446 1,271,897 $ 14,538,938 $ 662,161 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 10 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS At year end, interfund balances were as follows: Due To/From Other Funds: Grants Fund Sewer Fund Total Due from Other Funds General Fund $ 33,534 249,643 $ 283,177 Interfund balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Residual balances outstanding between the governmental activities and the business-type activities are netted and reported in the government-wide financial statements as internal balances. The terms for repayment of the interfund balances will be determined by the City Council and any amounts expected to be repaid within one year have not been determined as of the date of the financial statements. Interfund Transfers: Transfers Out General Fund Non-Major Governmental Funds Total Highway User Revenue Fund $ 250,000 $ 250,000 Transfers In Non-Major Grants Governmental Fund Funds $ 130,000 $ 355,120 2,941 $ 130,000 $ 358,061 $ $ Total 735,120 2,941 738,061 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and (2) use unrestricted revenues collected in certain funds to finance various programs accounted for in other funds in accordance with budgetary authorizations. Capital Contributions – During the fiscal year $618,537 of capital assets were capitalized in the Water and Sewer Fund utilizing resources from governmental funds and reported as capital contributions on the proprietary fund financial statements. The transaction is reported as a transfer between governmental and business-type activities on the Statement of Activities. Page 60 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 11 – CONTINGENT LIABILITIES Lawsuits – The City is a party to a number of various types of lawsuits, many of which normally occur in governmental operations. The ultimate outcome of the actions is not determinable, however, City management believes that the outcome of these proceedings, either individually or in the aggregate, will not have a materially adverse effect on the accompanying financial statements. NOTE 12 – RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City’s insurance protection is provided by the Arizona Municipal Risk Retention Pool, of which the City is a participating member. The limit for basic coverage is $2.0 million per occurrence on a claims made basis. Excess coverage is for an additional $8.0 million per occurrence on a follow form, claims made basis. The aggregate limit is also $2.0 million. The Arizona Municipal Risk Retention Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the Pool to meet its expected financial obligations. The Pool has the authority to assess its member’s additional premiums should reserves and annual premiums be insufficient to meet the Pool’s obligations. No significant reduction in insurance coverage occurred during the year and no settlements exceeded insurance coverage during any of the past three fiscal years. The City is insured by Arizona Municipal Workers Compensation Pool for potential worker related accidents. The City continues to carry commercial insurance for all other risks of loss to include employee health and accident insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Page 61 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS The City contributes to the pension plans described below. The plans are component units of the State of Arizona. The City reported $602,388 of pension expenditures in the governmental funds and $89,593 in enterprise funds related to all pension plans to which it contributes. A. Arizona State Retirement System Plan Description. City employees not covered by the other pension plans described after this section participate in the Arizona State Retirement System (ASRS). The ASRS administers a cost-sharing multiple-employer defined benefit pension plan, a cost-sharing multipleemployer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on the ASRS website 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 months of last 120 months Highest 60 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 Page 62 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT 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 costof-living adjustments. Survivor benefits are payable upon a members’ 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 current fiscal year, 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 City was required by statute to contribute at the actuarially determined rate of 11.60 percent (10.89 percent for retirement, 0.59 percent for health insurance premium benefit, and 0.12 percent for long-term disability) of the members’ annual covered payroll. The City’s contributions to the pension plan for the year ended June 30, 2015 were $407,243. The City’s contributions for the current and two preceding years for the Arizona State Retirement System OPEB, all of which were equal to the required contributions, were as follows: Health Benefit Supplement Fund Long-Term Disability Fund $ $ Year ending June 30: 2015 2014 2013 Page 63 22,073 21,133 24,842 4,489 8,453 9,172 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Pension Liability. At June 30, 2015, the City reported a liability of $5.8 million for its proportionate share of the net pension liability of the ASRS. 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 City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2014, the City’s proportion was 0.039 percent, which was a decrease of 0.002 from its proportion measured as of June 30, 2013. Pension Expense and Deferred Outflows/Inflows of Resources. For the year ended June 30, 2015, the City recognized pension expense for ASRS of $294,092 and reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources $ 293,825 $ Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date Total 1,010,980 198,612 $ 407,243 701,068 $ 1,209,592 The deferred outflows of resources related to ASRS pensions resulting from contributions subsequent to the measurement date as reported in the table above 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 Page 64 $ (211,348) (211,348) (240,326) (252,745) CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Actuarial Assumptions. The significant actuarial assumptions used to measure the total ASRS pension liability are as follows: Actuarial valuation date Actuarial roll forward date Actuarial cost method Investment rate of return Projected salary increases Inflation Permanent base increases Mortality rates June 30, 2013 June 30, 2014 Entry age normal 8.0% 3.0-6.75% 3.0% Included 1994 GAM Scale BB The actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial experience study for the five-year period ended June 30, 2011. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2013, actuarial valuation. The study did not include an analysis of the assumed investment rate of return. The long-term expected rate of return on ASRS pension plan investments was determined to be 8.79 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class of ASRS are summarized in the following table: Asset Class Equity Fixed income Real estate Commodities Total Page 65 Target Allocation 63% 25% 8% 4% 100% Long-Term Expected Real Rate of Return 7.03% 3.20 4.75 4.50 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Discount Rate. The discount rate used to measure the ASRS total pension liability was 8.0 percent, which is less than the long-term expected rate of return of 8.79 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate. The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 8.0 percent, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1percentage-point lower or 1-percentage-point higher than the current rate: 1% Decrease (7.0%) City’s proportionate share of the net pension liability $7,307,330 Current Discount Rate (8.0%) $5,781,350 1% Increase (9.0%) $4,953,429 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 report is available on the ASRS website at www.azasrs.gov. B. Public Safety Personnel Retirement System Plan Descriptions. City public safety employees who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multipleemployer defined benefit health insurance premium benefit (OPEB) plan. A seven-member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. The report is available on the PSPRS website at www.psprs.com. Page 66 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Benefits Provided. The PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Certain retirement and disability benefits are calculated on the basis of age, average monthly compensation, and service credit as follows. See the publicly available PSPRS financial report for additional benefits information. Years of service and age required to receive benefit Retirement Initial Membership Date: Before January 1, 2012 On or After January 1, 2012 20 years any age 25 years and age 52.5 15 years age 62 Final average salary is based on Highest 36 months of last 20 years Normal retirement 2.5% per year of credited service, 50% less 2.0% for each year of not to exceed 80% credited service less than 20 years or plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 50% or normal retirement, whichever is greater Accidental disability retirement Survivor benefit: Retired members Active members Highest 60 months of last 20 years 80% of retired member’s pension benefit 80% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. PSPRS also provides temporary disability benefits of 50 percent of the member's compensation for up to 12 months. Employees Covered by Benefit Terms. At June 30, 2015, the following employees were covered by the agent pension plan’s benefit terms: Retirees and beneficiaries Inactive, non-retired members Active members Total Page 67 PSPRS – Police 8 7 26 41 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Contributions and Annual OPEB Cost. State statutes establish the pension contribution requirements for active PSPRS employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS pension and health insurance premium benefits. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contributions rates for the year ended June 30, 2015, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active members – pension City: Pension Health insurance PSPRS – Police 11.05% 16.38% 1.02% In addition, the City was required by statute to contribute at the actuarially determined rate of 19.65 percent for the PSPRS of annual covered payroll of retired members who worked in positions that would typically be filled by an employee who contributes to the PSPRS. For the agent plans, the contributions to the pension plan and annual OPEB cost and contributions for the health insurance premium benefit for the year ended were: PSPRS – Police Pension: Contributions made Health insurance premium benefit: Annual OPEB cost Contributions made $ 284,738 17,731 17,731 Pension Liability. At June 30, 2015, the City reported $3,189,971 in net pension liability for police. The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The total pension liability as of June 30, 2014, reflects changes of benefit terms and actuarial assumptions for a court ruling for funding permanent benefit increases and a decrease in the wage growth assumption. Page 68 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Actuarial Assumptions. The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date Actuarial cost method Discount rate Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2014 Entry age normal 7.85% 4.0 - 8.0% 4.0% Included RP-2000 mortality table, adjusted by 105% for both males and females Actuarial assumptions used in the June 30, 2014, valuation were based on the results of an actuarial experience study for the 5-year period ended June 30, 2011. The long-term expected rate of return on PSPRS pension plan investments was determined to be 7.85 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Asset Class Short-term investments Absolute return Risk parity Fixed income Real assets GTAA Private equity Real estate Credit opportunities Non-U.S. equity U.S. equity Total Page 69 Target Allocation 2% 4% 4% 7% 8% 10% 11% 11% 13% 14% 16% 100% Long-Term Expected Real Rate of Return 3.25% 6.75% 6.04% 4.75% 5.96% 5.73% 9.50% 6.50% 8.00% 8.63% 7.60% CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Pension Discount Rates. The discount rate of 7.85 percent was used to measure the total pension liability. The projection of cash flows used to determine the PSPRS discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate. Based on those assumptions, the pension PSPRS plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Agent Plans Net Pension Liability PSPRS – Police Balances at June 30, 2014 Changes for the year: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Contributions – employer Contributions – employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at June 30, 2015 Page 70 Total Pension Liability $ 7,548,661 Increase/Decrease Plan Fiduciary Net Position $ 5,229,433 326,003 590,306 130,020 326,003 590,306 130,020 120,039 882,961 306,183 220,644 725,455 120,039 882,961 (306,183) (220,644) (725,455) (383,684) (5,842) (67,854) 794,902 6,024,335 5,842 67,854 870,743 3,189,971 (383,684) $ Net Pension Liability $ 2,319,228 1,665,645 9,214,306 $ $ CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the City’s net pension liability calculated using the discount rates noted above, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: PSPRS – Police: Rate Net pension liability 1% Decrease 6.85% $4,417,431 Current Discount Rate 7.85% $3,189,971 1% Increase 8.85% $2,180,576 Pension Plan Fiduciary Net Position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued PSPRS financial report. The report is available on the PSPRS website at www.psprs.com. Pension Expense. For the year ended June 30, 2015, the City recognized $806,816 as pension expense. Pension Deferred Outflows/Inflows of Resources. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS – Police Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between contributions and proportionate share of contributions Contributions subsequent to the measurement date Total Page 71 Deferred Deferred Outflows of Inflows of Resources Resources $ 101,769 $ 748,576 237,290 284,738 $ 1,135,083 $ 237,290 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS The amounts reported as deferred outflows of resources related to pension resulting from 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 pensions will be recognized in pension expense as follows: Year Ending June 30: 2016 2017 2018 2019 2020 Thereafter $ 93,333 93,333 93,333 93,333 152,655 87,068 Agent Plan OPEB Trend Information. The table below presents the annual OPEB cost information for the health insurance premium benefit for the current and two preceding years: Fiscal Year Ended PSPRS – Police: June 30, 2015 June 30, 2014 June 30, 2013 Annual OPEB Cost $17,731 17,179 20,228 Percentage of Annual Cost Contributed Net OPEB Obligation 100% 100% 100% $-0-0-0- Agent Plan OPEB Actuarial Assumptions. Actuarial valuations involve estimates of the reported amounts’ value and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress for the health insurance premium benefit presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of the plan’s assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Page 72 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Projections of benefits are based on (1) the plan as understood by the City and plan’s members and include the types of benefits inforce at the valuation date, and (2) the pattern of sharing benefit costs between the City and plan’s members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The actuarial methods and assumptions used to establish the fiscal year 2015 contribution requirements, are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation at June 30, 2013 Entry age normal Level percent of pay closed 23 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value (80%/120% market) 7.85% 4.5%-8.5% 4.5% Agent Plan OPEB Funded Status. The following table presents the funded status of the health insurance premium benefit plan as of the most recent valuation date, June 30, 2015. Actuarial value of assets Actuarial accrued liability Funding excess Funded ratio Annual covered payroll Funding excess as a percentage of covered payroll Page 73 PSPRS – Police $ 321,427 203,892 117,535 157.65% 1,851,727 6.3% CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 NOTE 13 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS The funded status of the PSPRS health insurance premium benefit plan in the June 30, 2015, actuarial valuation was determined using the following actuarial methods and assumptions, applied to all periods included in the measurement. Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases includes inflation at June 30, 2015 Entry age normal Level percent of pay closed 21 years for unfunded actuarial accrued liability, 20 years for funding excess 7-year smoothed market value (80%/120% market) 7.85% 4%-8% 4% Beginning Net Position Restatement. The implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, represents a change in accounting principle. Net position as of July 1, 2014, has been restated as follows for this change in accounting principle: Statement of Activities Net position, June 30, 2014, as previously reported Net pension liability Net position, July 1, 2014, as restated Page 74 Business-Type Activities $ 38,267,389 $ 8,573,995 (7,007,404) (1,408,666) $ 31,259,985 $ 7,165,329 REQUIRED SUPPLEMENTARY INFORMATION Page 75 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2015 Budgeted Amounts Variance with Final Budget Original & Final Actual Positive (Negative) Revenues: Sales Taxes Property Taxes Franchise Taxes Licenses, Permits, and Fees Intergovernmental Revenue Charges for Services Fines and Forfetures Investment income Other Revenues Total revenues $ 4,250,000 958,680 142,915 295,350 4,004,820 465,130 377,100 28,900 61,600 10,584,495 $ 4,640,658 961,454 144,163 276,596 4,431,578 451,713 244,576 22,732 41,673 11,215,143 $ 390,658 2,774 1,248 (18,754) 426,758 (13,417) (132,524) (6,168) (19,927) 630,648 Expenditures: Current General Government Mayor and Council City Clerk Magistrate City Manager Finance Legal and Professional Contingency Total General Government Public Safety Law Enforcement Total Public Safety Public Works Vehicle Maintenance Facilities Maintenance Public Works Administration Total Public Works Community Development Community Development Total Community Development 187,890 360,735 384,420 519,105 502,175 133,000 981,290 3,068,615 162,888 320,072 375,699 437,695 470,127 132,674 444,789 2,343,944 25,002 40,663 8,721 81,410 32,048 326 536,501 724,671 3,819,605 3,819,605 3,471,307 3,471,307 348,298 348,298 214,365 287,735 147,815 649,915 190,866 263,866 143,043 597,775 23,499 23,869 4,772 52,140 774,485 589,070 185,415 774,485 589,070 185,415 (Continued) See accompanying notes to this schedule. Page 76 Budgeted Amounts Variance with Final Budget Original & Final Culture and Recreation Park Maintenance Parks and Recreation Library Recreation Total Culture and Recreation Capital Outlay Total Capital Outlay Debt Services Principal Retirement Interest and Fiscal Charges Loan issuance Costs Total Debt Services Total expenditures Excess (deficiency) of revenues over expenditures Actual Positive (Negative) 353,920 526,995 292,700 360,795 1,534,410 1,001,170 1,001,170 353,691 457,241 286,420 354,135 1,451,487 593,470 593,470 123,330 59,785 123,330 67,126 (7,341) 183,115 190,456 (7,341) 11,031,315 9,237,509 1,793,806 1,977,634 (2,424,454) (446,820) 229 69,754 6,280 6,660 82,923 407,700 407,700 Other financing sources (uses): Transfers Out Loan Proceeds Total other financing sources (uses) Change in fund balances Page 77 (735,120) 1,624,230 (600,000) (1,759,350) (735,120) 1,024,230 (2,206,170) Fund balances, beginning of year Fund balances (deficits), end of year (2,359,350) 600,000 (3,448,684) 2,206,170 $ 12,042,236 $ 12,042,236 9,836,066 $ 12,042,236 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL HIGHWAY USER REVENUE FUND YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue Investment Income Other Revenues Total revenues $ Expenditures: Current Public Works Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Total other financing sources (uses): Changes in fund balances Fund balances, beginning of year Fund balances, end of year $ 1,773,035 14,500 500 1,788,035 Actual $ 1,846,363 62,812 (3,984) (500) 58,328 1,911,315 2,745,010 1,259,036 1,589,796 652,279 1,155,214 19,733 9,807 4,685,865 19,733 9,807 2,878,372 1,807,493 (2,897,830) (1,032,009) 1,865,821 250,000 250,000 250,000 250,000 (2,647,830) (782,009) 1,865,821 2,647,830 3,207,163 559,333 $ 1,835,847 10,516 2,425,154 See accompanying notes to this schedule. Page 78 Variance with Final Budget Positive (Negative) $ $ 2,425,154 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GRANTS YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue Total revenues $ 3,368,185 3,368,185 Actual $ 808,662 808,662 Variance with Final Budget Positive (Negative) $ (2,559,523) (2,559,523) Expenditures: Current Public Safety Community Development Health and Welfare Culture and Recreation Capital Outlay Total expenditures 391,885 653,000 2,250,000 3,300 200,000 3,498,185 322,346 498,101 89,707 21,040 13,736 944,930 69,539 154,899 2,160,293 (17,740) 186,264 2,553,255 Excess (deficiency) of revenues over expenditures (130,000) (136,268) (6,268) 130,000 130,000 130,000 130,000 Other financing sources (uses): Transfers In Total other financing sources (uses): Changes in fund balances Fund balances, beginning of year Fund balances, end of year $ $ (6,268) (6,268) 137,143 137,143 130,875 See accompanying notes to this schedule. Page 79 $ 130,875 CITY OF ELOY, ARIZONA SCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITY ARIZONA STATE RETIREMENT SYSTEM YEAR ENDED JUNE 30, 2015 2015 City's proportion of the net pension liability (asset) Page 80 0.039% City's proportionate share of the net pension liability (asset) $ 5,781,350 City's covered-employee payroll $ 3,556,425 City's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 162.56% Plan fiduciary net position as a percentage of the total pension liability 69.49% See accompanying notes to this schedule. CITY OF ELOY, ARIZONA SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM - POLICE YEAR ENDED JUNE 30, 2015 2015 Total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds Net change in total pension liability Total pension liability—beginning Total pension liability—ending Plan fiduciary net position Contributions—employer Contributions—employee Net investment income Benefit payments, including refunds Administrative expense Other Net change in plan fiduciary net position Plan fiduciary net position—beginning Plan fiduciary net position—ending Net pension liability—ending $ $ $ $ 306,183 220,644 725,455 (383,684) (5,842) (67,854) 794,902 5,229,433 6,024,335 $ 3,189,971 65.38% Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll $ Net pension liability as a percentage of covered-employee payroll Page 81 See accompanying notes to this schedule. 326,003 590,306 130,020 120,039 882,961 (383,684) 1,665,645 7,548,661 9,214,306 1,760,803 181.17% CITY OF ELOY, ARIZONA SCHEDULE OF CONTRIBUTIONS ALL PENSION PLANS YEAR ENDED JUNE 30, 2015 2015 Arizona State Retirement System: Actuarially determined contribution $ Contributions in relation to the actuarially determined contribution 407,409 Contribution deficiency (excess) $ City's covered-employee payroll $ Contributions as a percentage of covered-employee payroll Public Safety Personnel Retirement System - Police: Actuarially determined contribution 3,801,163 10.72% $ Contributions in relation to the actuarially determined contribution 284,738 284,738 Contribution deficiency (excess) $ City's covered-employee payroll $ Contributions as a percentage of covered-employee payroll Page 82 407,409 See accompanying notes to this schedule. 1,851,727 15.38% CITY OF ELOY, ARIZONA SCHEDULE OF FUNDING PROGRESS PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM OTHER POSTEMPLOYMENT BENEFITS LAST THREE ACTUARIAL VALUATIONS Actuarial Valuation Date Actuarial Valuation of Assets Actuarial Accrued Liability (AAL) Unfunded AAL (UAAL) Public Safety Personnel Retirement System - Police: 2015 $ 321,427 $ 203,892 $ 117,535 2014 292,853 189,537 103,316 2013 187,325 (187,325) Page 83 Funded Ratio 157.65 154.51 See accompanying notes to this schedule. Covered Payroll $ 1,851,727 1,760,803 1,747,297 UAAL as a percentage of Covered Payroll (6.35) % (5.87) 10.72 CITY OF ELOY, ARIZONA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2015 NOTE 1 – BUDGETARY BASIS OF ACCOUNTING The adopted budget of the City is prepared on a basis of accounting consistent with accounting principles generally accepted in the United States of America. NOTE 2 – PENSION PLAN SCHEDULES Actuarial Assumptions for Valuations Performed. The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated, which is the most recent actuarial valuation. The actuarial assumptions used are disclosed in the notes to the financial statements. Factors that Affect Trends. The actuarial assumptions used in the June 30, 2013, valuation for ASRS were based on the results of an actuarial experience study for the five-year period ended June 30, 2012. The purpose of the experience study was to review actual experience in relation to the actuarial assumptions in effect. The ASRS Board adopted the experience study recommended changes which were applied to the June 30, 2013, actuarial valuation. The study did not include an analysis of the assumed investment rate of return. The actuarial assumptions used in the June 30, 2014, valuation for PSPRS were based on the results of an actuarial experience study for the 5-year period ended June 30, 2011. The total pension liability used to calculate the net pension liability for PSPRS was determined by an actuarial valuation as of that date. The total pension liability as of June 30, 2014, reflects changes of benefit terms and actuarial assumptions for a court ruling for funding permanent benefit increases and a decrease in the wage growth assumption from 4.5% to 4.0%. Page 84 (This page intentionally left blank) Page 85 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Page 86 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds account for the proceeds of specific revenue sources, other than major capital projects, that are restricted to expenditures for specified purposes. Public Works Facility – accounts for the collection of sales tax revenues which are set aside for the maintaining, repairing, and upgrading of streets. Local Transportation Assistance (LTAF) – accounts for the City’s share of lottery proceeds which are set aside for transportation costs and the maintaining, repairing, and upgrading of streets. Impact Fee – accounts for the collection of impact fees and the various infrastructure projects they fund. Judicial Collection Enhancement (JCEF) – accounts for monies received to improve the city’s court operations. Court Recovery – accounts for court enhancement fee revenues and the capital outlays funded by these revenues. Cemetery – accounts for the activities of the city’s cemetery. Airport – accounts for fuel sales, charges for services and related costs and expenses for operation of the City airport. Capital Projects Fund Capital Projects Funds are used to account for the construction and acquisition of capital assets. Capital Projects – accounts for the construction and acquisition of capital assets to be utilized by the City’s governmental funds. Permanent Fund Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government’s programs. Perpetual Care – accounts for principal trust amounts received and related interest income. The interest portion of the trust can be used to maintain the community cemetery. Page 87 CITY OF ELOY, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Special Revenue Public Works Facility ASSETS Cash and Cash Equivalents Other Receivables Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Accrued Salaries and Wages Payable Total liabilities Page 88 Impact Fee JCEF $ 192,798 $ 9,722 $ 1,898,685 $ $ 192,798 $ 9,722 $ 1,898,685 $ $ Fund balances: Restricted Committed Assigned Total fund balances Total liabilities and fund balances LTAF $ $ 75,675 397 76,072 $ 9,722 1,898,685 76,072 9,722 1,898,685 76,072 192,798 192,798 $ 192,798 $ 9,722 $ 1,898,685 $ 76,072 Special Revenue Capital Projects Cemetery Capital Projects Court Recovery $ $ $ 40,703 1,530 42,233 $ 4,404 Airport $ $ 82,650 2,693 85,343 $ 3,318 $ 4,404 Permanent Perpetual Care Total NonMajor Governmental 221,004 1,738 222,742 $ 1,222,929 $ 121,469 $ $ 1,222,929 $ 121,469 $ $ 32,194 $ 3,318 1,338 145 1,483 82,025 221,259 82,025 221,259 $ 32,194 37,829 121,469 37,829 $ Page 89 42,233 $ $ 85,343 $ 222,742 1,190,735 1,190,735 $ 1,222,929 121,469 41,254 145 41,399 2,143,777 496,082 1,190,735 3,830,594 121,469 $ 3,865,635 6,358 3,871,993 $ 3,871,993 CITY OF ELOY, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Special Revenue Public Works Facility Revenues: Sales Taxes Intergovernmental Revenue Charges for Services Investment Income Impact Fees Other Revenues Total revenues $ 160,455 LTAF JCEF Impact Fee $ $ $ 7,350 160,455 Expenditures: Current General Government Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Total expenditures Excess (deficiency) of revenues over expenditures 256 4,059 24,771 256 28,830 7,350 692,397 8,818 692,397 8,818 (531,942) 256 28,830 (1,468) (531,942) 256 28,830 (1,468) 724,740 9,466 1,869,855 77,540 Other financing sources (uses): Transfers In Transfers Out Total other financing sources (uses): Changes in fund balances Fund balances, beginning of year Fund balances, end of year Page 90 $ 192,798 $ 9,722 $ 1,898,685 $ 76,072 Special Revenue Capital Projects Cemetery Capital Projects Court Recovery $ $ Airport $ $ Permanent Perpetual Care Total NonMajor Governmental $ $ 20,221 73,406 154,936 269 149 12,137 85,543 155,205 149 46,546 46,083 34,213 8,380 50,852 1,997 52,849 (32,628) 20,221 998,662 80,759 1,754,340 92,629 33,964 3,145 79,702 998,662 84,816 5,142 1,925,057 (7,086) 75,503 (998,662) 149 (1,467,048) 325,770 2,941 325,770 2,941 358,061 (2,941) 355,120 29,350 $ Page 91 160,455 27,571 228,342 4,733 24,771 12,137 458,009 29,350 (2,941) (2,941) (3,278) (10,027) 75,503 (672,892) 3,090 (1,111,928) 41,107 92,052 145,756 1,863,627 118,379 4,942,522 37,829 $ 82,025 $ 221,259 $ 1,190,735 $ 121,469 $ 3,830,594 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL PUBLIC WORKS FACILITY YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Sales Taxes Total revenues $ Expenditures: Current General Government Capital Outlay Total expenditures Changes in fund balances Fund balances, beginning of year Fund balances, end of year Page 92 $ 280,000 280,000 Actual $ 160,455 160,455 Variance with Final Budget Positive (Negative) $ (119,545) (119,545) 280,000 550,000 830,000 692,397 692,397 280,000 (142,397) 137,603 (550,000) (531,942) 18,058 550,000 724,740 174,740 $ 192,798 $ 192,798 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL LTAF YEAR ENDED JUNE 30, 2015 Variance with Final Budget Positive (Negative) Budgeted Amounts Original & Final Revenues: Investment Income Total revenues $ Expenditures: Current Public Works Total expenditures Fund balances, beginning of year Page 93 $ 256 256 $ 9,250 9,250 Changes in fund balances Fund balances, end of year 250 250 Actual $ 6 6 9,250 9,250 (9,000) 256 9,256 9,000 9,466 466 $ 9,722 $ 9,722 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL IMPACT FEE YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Investment Income Impact Fees Total revenues $ Expenditures: Current Capital Outlay Total expenditures Fund balances, beginning of year Page 94 $ 4,059 24,771 28,830 $ 2,592,740 2,592,740 Changes in fund balances Fund balances, end of year 5,270 47,450 52,720 Actual Variance with Final Budget Positive (Negative) $ (1,211) (22,679) (23,890) 2,592,740 2,592,740 (2,540,020) 28,830 2,568,850 2,540,020 1,869,855 (670,165) $ 1,898,685 $ 1,898,685 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL JCEF YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue Total revenues $ Expenditures: Current Capital Outlay Total expenditures Changes in fund balances Fund balances, beginning of year Fund balances, end of year Page 95 $ 11,200 11,200 Actual $ 7,350 7,350 Variance with Final Budget Positive (Negative) $ (3,850) (3,850) 56,200 56,200 8,818 8,818 47,382 47,382 (45,000) (1,468) 43,532 45,000 77,540 32,540 $ 76,072 $ 76,072 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL COURT RECOVERY YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue Total revenues $ Expenditures: Debt service Principal Retirement Interest and Fiscal Charges Total expenditures 23,500 23,500 Actual $ 52,850 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Total other financing sources (uses): 20,221 20,221 Variance with Final Budget Positive (Negative) $ (3,279) (3,279) 52,850 50,852 1,997 52,849 1,998 (1,997) 1 (29,350) (32,628) (3,278) 29,350 29,350 29,350 29,350 Changes in fund balances (3,278) (3,278) Fund balances, beginning of year 41,107 41,107 Fund balances, end of year Page 96 $ $ 37,829 $ 37,829 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL CEMETERY YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Charges for Services Other Revenues Total revenues $ 74,105 12,500 86,605 Actual $ 73,406 12,137 85,543 Variance with Final Budget Positive (Negative) $ (699) (363) (1,062) Expenditures: Current General Government Capital Outlay Total expenditures 62,745 71,000 133,745 46,546 46,083 92,629 16,199 24,917 41,116 Excess (deficiency) of revenues over expenditures (47,140) (7,086) 40,054 (2,860) (2,860) (2,941) (2,941) (81) (81) (50,000) (10,027) 39,973 50,000 92,052 42,052 Other financing sources (uses): Transfers Out Total other financing sources (uses): Changes in fund balances Fund balances, beginning of year Fund balances, end of year Page 97 $ $ 82,025 $ 82,025 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL AIRPORT YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Revenues: Charges for Services Investment Income Total revenues Expenditures: Current General Government Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Total expenditures Changes in fund balances $ Fund balances, beginning of year Fund balances, end of year Page 98 $ 139,550 400 139,950 Actual $ 154,936 269 155,205 Variance with Final Budget Positive (Negative) $ 15,386 (131) 15,255 54,330 84,000 34,213 8,380 20,117 75,620 37,110 175,440 33,964 3,145 79,702 3,146 (3,145) 95,738 (35,490) 75,503 110,993 35,490 145,756 110,266 $ 221,259 $ 221,259 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL CAPITAL PROJECTS YEAR ENDED JUNE 30, 2015 Budgeted Amounts Original & Final Expenditures: Current Capital Outlay Total expenditures $ Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Total other financing sources (uses): Changes in fund balances Fund balances, beginning of year Fund balances, end of year Page 99 $ 2,216,500 2,216,500 Actual $ 998,662 998,662 Variance with Final Budget Positive (Negative) $ 1,217,838 1,217,838 (2,216,500) (998,662) 1,217,838 450,000 450,000 325,770 325,770 (124,230) (124,230) (1,766,500) (672,892) 1,093,608 1,766,500 1,863,627 97,127 $ 1,190,735 $ 1,190,735 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL PERPETUAL CARE YEAR ENDED JUNE 30, 2015 Variance with Final Budget Positive (Negative) Budgeted Amounts Original & Final Revenues: Investment Income Total revenues $ Expenditures: Current General Government Total expenditures 400 400 Actual $ Other financing sources (uses): Transfers In Total other financing sources (uses): (2,800) 149 2,949 2,800 2,800 2,941 2,941 141 141 3,090 3,090 118,379 118,379 Fund balances, beginning of year $ (251) (251) 3,200 3,200 Changes in fund balances Page 100 $ 3,200 3,200 Excess (deficiency) of revenues over expenditures Fund balances, end of year 149 149 $ 121,469 $ 121,469 STATISTICAL SECTION The statistical section presents financial statement trends as well as detailed financial and operational information not available elsewhere in the report. The statistical section is intended to enhance the reader’s understanding of the information presented in the financial statements, notes to the financial statements, and other supplementary information presented in this report. The statistical section is comprised of the five categories of statistical information presented below. Contents: Page Financial Trends These schedules contain information on financial trends to help the reader understand how the City’s financial position and financial activities have changed over time. 103 Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City’s ability to generate revenue. 108 Debt Capacity These schedules present information to help the reader evaluate the City’s current levels of outstanding debt as well as assess the City’s ability to make debt payments and/or issue additional debt in the future. 114 Demographic and Economic Information These schedules present various demographic and economic indicators to help the reader understand the environment in which the City’s financial activities take place and to help make comparisons with other municipalities. 118 Operating Information These schedules contain information about the City’s operations and various resources to help the reader draw conclusions as to how the City’s financial information relates to the services provided by the City. 122 Fiscal year 2012 was the first year a comprehensive annual financial report was prepared by the City. Due to cost considerations for the accumulation of data, the City has elected to present less than ten years of data, or data from less than nine years prior, for certain statistical schedules or schedule elements. This information will be accumulated and reported each year until the complete ten years of data is presented. Page 101 (This page intentionally left blank) Page 102 CITY OF ELOY, ARIZONA Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Governmental Activities Net Investment in Capital Assets: Restricted Unrestricted Total Governmental Activities Net Position Business-type activities Net Investment in Capital Assets: Restricted Unrestricted Total Business-Type Activities Net Position Primary government Net Investment in Capital Assets: Restricted Unrestricted $ $ $ $ $ $ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 8,746,981 $ 3,821,864 2,827,121 15,395,966 $ 10,520,431 $ 5,556,173 4,480,947 20,557,551 $ 10,963,272 $ 8,049,208 8,617,832 27,630,312 $ 13,325,913 $ 10,268,206 7,964,489 31,558,608 $ 16,151,406 $ 7,273,444 8,009,711 31,434,561 $ 15,002,289 $ 5,429,281 13,164,747 33,596,317 $ 15,985,323 $ 4,978,419 14,507,592 35,471,334 $ 16,961,904 $ 4,510,233 15,589,113 37,061,250 $ 18,543,869 $ 4,489,679 15,233,841 38,267,389 $ 20,268,071 4,629,220 7,218,828 32,116,119 5,061,783 $ 269,560 (1,465,858) 3,865,485 $ 5,024,582 $ 311,257 (3,145,956) $ 2,189,883 $ 5,415,998 $ 380,056 (3,195,169) 2,600,885 $ 7,665,730 $ 379,454 (2,739,943) 5,305,241 $ 9,775,100 $ 343,584 (2,965,864) 7,152,820 $ 9,532,520 $ 289,448 (2,760,273) 7,061,695 $ 9,090,283 $ 291,532 (2,496,712) 6,885,103 $ 8,089,091 $ 559,631 (1,574,048) 7,074,674 $ 9,575,240 $ 715,299 (1,716,544) 8,573,995 $ 9,479,546 716,976 (2,407,848) 7,788,674 13,808,764 $ 4,091,424 1,361,263 19,261,451 $ 15,545,013 $ 5,867,430 1,334,991 22,747,434 $ 16,379,270 $ 8,429,264 5,422,663 30,231,197 $ 20,991,643 $ 10,647,660 5,224,546 36,863,849 $ 25,926,506 $ 7,617,028 5,043,847 38,587,381 $ 24,534,809 $ 5,718,729 10,404,475 40,658,013 $ 25,075,606 $ 5,269,951 12,010,880 42,356,437 $ 25,050,995 $ 5,069,864 14,015,065 44,135,924 $ 28,119,109 $ 5,204,978 13,517,297 46,841,384 $ 29,747,617 5,346,196 4,810,980 39,904,793 Source: The source of this information is the City's financial records Note: The change in net position in fiscal year 2015 is due to the recognition of net pension liabilities. Page 103 CITY OF ELOY, ARIZONA Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental Activities: General Government Public Safety Public Works Culture and Recreation Community Development Health and Welfare Interest on Long-Term Debt Total Governmental Activities Expenses Business-Type Activities: Water Sewer Sanitation and Other Memorial Park Airport Total Business-Type Activities Expenses Total Primary Government Expenses 2006 2007 $ 2,374,656 $ 4,118,612 3,769,710 4,010,314 2,045,436 2,390,394 1,108,839 1,077,769 86,907 24,067 190,454 128,102 9,576,002 11,749,258 2008 2009 $ 3,712,010 3,805,011 2,914,884 1,248,404 103,896 179,565 11,963,770 $ 3,771,718 4,591,751 3,170,470 1,303,247 84,934 175,834 13,097,954 2010 $ 1,931,084 2,449,351 1,906,929 1,978,848 993,279 1,232,493 1,094,058 1,476,568 1,175,389 1,270,086 1,188,915 1,178,667 4,099,752 4,951,930 4,189,902 4,634,083 $ 13,675,754 $ 16,701,188 $ 16,153,672 $ 17,732,037 $ Program Revenues Governmental Activities: Charges for Services: General Government Public Safety Public Works Community Development Culture and Recreation Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues 825,414 588,580 187,878 20,571 2,593,428 1,306,561 5,522,432 Business-Type Activities: Charges for Services: Water Sewer Sanitation and Other Memorial Park Airport Operating Grants and Contributions Capital Grants and Contributions Total Business-Type Activities Program Revenues Total Primary Government Program Revenues 1,681,997 835,754 1,010,678 2,474,963 6,003,392 $ 11,525,824 $ 922,983 656,561 290,368 24,896 2,893,405 931,184 5,719,397 954,171 1,315,283 86,457 25,185 3,372,261 1,090,919 6,844,276 873,656 289,858 402,654 24,407 2,398,640 3,103,924 7,093,139 1,496,447 1,623,516 1,838,440 819,109 925,591 1,025,676 1,202,242 1,239,003 1,329,058 512,508 113,016 2,314,606 4,030,306 3,901,126 6,507,780 9,749,703 $ 10,745,402 $ 13,600,919 $ Fiscal Year 2011 3,818,804 4,574,432 1,797,012 1,178,676 18,618 93,818 11,481,360 $ 2,878,214 3,744,811 2,609,546 1,570,243 63,294 10,866,108 2012 2013 2014 $ 2,451,503 4,106,470 2,509,477 1,438,463 597,877 290,000 58,225 11,452,015 $ 2,535,814 4,141,860 2,007,422 1,290,178 805,789 147,876 79,484 11,008,423 $ 3,323,730 4,004,661 2,221,837 1,380,982 1,119,187 260,682 83,892 12,394,971 2015 $ 3,413,448 4,260,754 2,380,812 1,493,063 1,021,468 191,679 82,075 12,843,299 2,207,156 1,938,888 1,800,394 1,950,484 1,921,729 1,961,170 1,442,414 1,308,335 2,264,921 1,275,294 1,213,668 1,222,770 5,398,863 1,375,054 1,379,485 1,498,467 1,497,411 1,509,258 8,780,165 4,483,783 5,594,890 4,695,490 4,672,249 4,939,184 20,261,525 $ 15,349,891 $ 17,046,905 $ 15,703,913 $ 17,067,220 $ 17,782,483 650,814 282,085 89,682 21,863 2,324,873 674,887 4,044,204 1,867,418 1,053,803 1,331,779 2,821,830 7,074,830 11,119,034 $ 618,181 380,459 72,434 19,598 2,195,747 1,314,342 4,600,761 589,588 332,861 79,779 18,350 1,860,034 1,251,911 4,132,523 531,214 116,604 120,518 314,702 26,199 1,891,725 572,622 3,573,584 572,950 85,214 131,316 361,925 30,310 1,963,469 1,378,869 4,524,053 790,722 53,755 154,961 213,971 29,856 2,065,313 656,941 3,965,519 1,734,300 977,215 1,312,906 69,930 4,094,351 8,695,112 $ 1,781,941 945,290 1,476,130 792,051 4,995,412 9,127,935 $ 1,662,936 978,252 1,523,766 10,688 4,175,642 7,749,226 $ 1,893,647 1,141,294 1,470,157 6,170 4,511,268 9,035,321 $ 2,195,416 1,217,763 1,521,976 4,935,155 8,900,674 (continued) Page 104 CITY OF ELOY, ARIZONA Changes in Net Position Last Ten Fiscal Years Fiscal Year 2006 Net (Expense)/Revenues Governmental Activities Business-Type Activities Total Primary Government Net Expense General Revenues and Other Changes in Net Position Governmental Activities: City Sales Tax State Sales Taxes Auto Lieu Tax State Sales Taxes-Revenue Sharing Property Tax Franchise Tax Unrestricted Investment Earnings Gain on Sale of Assets Other Revenues Transfers Total Governmental Activities Business-Type Activities: Unrestricted Investment Earnings Transfers Total Business-Type Activities Total Primary Government Change in Net Position Governmental Activities Business-Type Activities Total Primary Government $ $ $ $ $ $ (4,053,570) $ 1,903,640 (2,149,930) $ 2007 2009 2010 2011 2012 2013 2014 2015 (6,029,861) $ (921,624) (6,951,485) $ (5,119,494) $ (288,776) (5,408,270) $ (6,004,815) $ 1,873,697 (4,131,118) $ (7,437,156) $ (1,705,335) (9,142,491) $ (6,265,347) $ (389,432) (6,654,779) $ (7,319,492) $ (599,478) (7,918,970) $ (7,434,839) $ (519,848) (7,954,687) $ (7,870,918) $ (160,982) (8,031,900) $ (8,877,780) (4,029) (8,881,809) 7,113,852 $ 1,057,403 696,508 1,263,084 476,317 112,137 297,313 174,832 11,191,446 8,444,552 $ 1,022,432 753,544 1,565,622 580,882 135,324 373,733 (683,834) 12,192,255 6,446,587 $ 885,140 728,472 1,665,549 648,196 129,343 232,670 (802,846) 9,933,111 3,787,899 $ 816,412 696,980 1,436,354 713,073 121,542 137,475 (396,626) 7,313,109 5,087,733 $ 887,563 682,530 1,082,827 786,184 132,653 63,965 (296,353) 8,427,102 5,160,839 $ 1,299,551 703,979 1,403,669 846,923 135,939 64,587 (420,978) 9,194,509 4,797,681 $ 1,361,278 724,822 1,698,821 897,160 139,478 56,673 56,513 (707,671) 9,024,755 5,516,526 $ 1,447,688 774,269 1,853,736 918,511 141,905 49,941 33,058 (1,658,577) 9,077,057 4,801,113 1,519,806 831,046 2,013,285 951,247 144,163 37,981 53,810 (618,537) 9,733,914 11,580 33,638 79,961 91,541 33,638 8,367,935 $ 11,225,084 $ 15,944 683,834 699,778 12,892,033 $ 27,813 802,846 830,659 10,763,770 $ 4,152 396,626 400,778 7,713,887 $ 1,954 296,353 298,307 8,725,409 $ 1,908 420,978 422,886 9,617,395 $ 1,748 707,671 709,419 9,734,174 $ 1,725 1,658,577 1,660,302 10,737,359 $ 8,837 618,537 627,374 10,361,288 7,072,761 $ 411,002 7,483,763 $ 3,928,296 $ 2,704,356 6,632,652 $ (124,047) $ (1,304,557) (1,428,604) $ 2,161,755 $ (91,125) 2,070,630 $ 1,875,017 $ (176,592) 1,698,425 $ 1,589,916 $ 189,571 1,779,487 $ 1,206,139 $ 1,499,320 2,705,459 $ 856,134 623,345 1,479,479 4,734,172 1,101,748 639,807 1,086,256 558,062 118,019 118,291 (79,961) 8,276,394 4,222,824 $ 1,995,181 6,218,005 $ 5,161,585 $ (887,986) 4,273,599 $ Source: The source of this information is the City's financial records Page 105 2008 CITY OF ELOY, ARIZONA Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) General Fund Reserved Unreserved Total General Fund All other Governmental Funds Restricted: Roads and Highways Capital Projects Court Equipment Cemetery Other Purposes Committed for: Airport Cemetery Roads and Highways Assigned for: Capital Projects Unassigned: Total all other Governmental Funds $ $ $ $ Fiscal Year 2011 2006 2007 2008 2009 2010 - $ 3,908,190 3,908,190 $ - $ 6,130,614 6,130,614 $ - $ 8,421,061 8,421,061 $ - $ 7,954,418 7,954,418 $ - $ 8,009,884 8,009,884 $ - $ 8,766,677 8,766,677 $ - $ 9,855,191 9,855,191 $ 1,283,364 637,788 114,111 25,923 522,661 1,954,498 $ 1,167,674 147,972 446,995 4,387,854 $ 3,051,765 77,675 531,914 7,926,530 $ 4,077,563 87,644 542,002 5,391,080 $ 3,646,925 95,200 434,694 2,885,592 2,171,477 101,915 108,605 161,692 2,379,018 2,225,845 114,621 111,354 147,581 $ 2012 $ 2013 $ - $ 10,968,659 10,968,659 $ 2,363,657 1,883,212 116,956 114,339 146,408 $ 2015 - $ 12,042,236 12,042,236 $ 2,364,034 1,869,855 118,647 118,379 137,143 $ 13,284,750 13,284,750 2,364,290 1,898,685 113,901 121,469 130,875 131,349 - 140,451 23,371 - 140,925 39,896 - 114,271 48,702 - 140,275 42,794 - 148,855 34,250 2,684,334 152,519 23,642 2,684,334 157,852 46,337 2,364,158 145,756 92,052 852,595 221,259 82,025 70,586 - - - - - 1,942,442 2,249,392 2,387,358 2,588,367 1,383,533 2,715,196 $ 3,880,961 $ 8,230,029 $ 12,796,712 $ 9,750,968 $ 10,239,162 $ 10,088,306 $ 9,580,277 Source: The source of this information is the City's financial records Note: The provisions of the Governmental Accounting Standards Board (GASB) Statement No. 54 were adopted in fiscal year 2011. The standard replaces the previous reserved and unreserved fund balances categories with the following four fund balance classifications; restricted, committed, assigned and unassigned fund balance. Page 106 2014 $ 8,286,828 $ 6,386,623 CITY OF ELOY, ARIZONA Changes in Fund Balance of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2006 Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Impact Fees Fines and Forfeitures Interest Other Revenues Total Revenues Expenditures Current: General Government Public Safety Public Works Health and Welfare Community Development Culuture and Recreation Capital Outlay Debt Service Principal Interest and Fiscal Charges Loan Issuance Costs Total Expenditures $ $ $ 2,250,642 $ 3,606,255 2,052,251 10,798 1,040,826 2,733,783 3,652,678 $ 3,824,777 2,179,189 24,071 1,010,410 2,043,192 2009 2010 2011 2012 9,164,388 $ 1,352,303 6,648,617 114,303 715,465 381,384 373,733 973,802 19,723,995 $ 7,193,555 $ 654,224 7,416,635 119,015 59,193 340,520 232,670 130,040 16,145,852 $ 4,605,355 $ 311,252 6,002,186 118,283 110,755 292,267 137,475 159,211 11,736,784 $ 6,008,308 $ 415,189 6,069,630 105,856 114,901 277,601 63,965 270,504 13,325,954 $ 3,490,572 $ 3,644,286 2,572,959 103,790 1,163,310 1,249,583 3,093,046 $ 3,959,263 2,787,310 84,842 1,209,750 2,649,461 2,588,439 $ 3,717,712 2,401,112 18,587 1,239,954 2,281,142 2,729,089 $ 3,462,398 2,038,234 1,209,228 1,421,235 2013 2,262,749 $ 3,727,083 2,057,173 290,000 597,877 1,270,781 1,485,800 2,419,367 $ 3,966,748 1,661,507 59,249 802,369 1,279,326 3,043,354 740,497 153,928 13,628,742 578,008 151,198 12,953,706 508,096 151,198 14,442,966 1,996,608 86,882 14,330,436 855,204 69,226 11,784,614 641,584 79,082 12,412,129 1,576,959 82,515 12,425 14,903,819 1,332,598 3,111,360 6,770,289 1,702,886 (2,593,652) 1,541,340 1,358,635 (1,586,892) 276,832 276,832 3,388,192 $ 3,060 550,000 (683,834) (130,774) 6,639,515 $ 3,200,000 (802,846) 2,397,154 4,100,040 $ (396,626) (396,626) (2,990,278) $ (296,353) (296,353) 1,244,987 $ 1,557,132 $ $ Expenditures for capitalized assets $ 4,993,067 $ 12.81% 8.00% Source: The source of this information is the City's financial records 740,438 6.35% $ 3,167,747 6.21% $ 1,491,989 19.37% $ 660,283 9.06% $ 2014 6,166,452 $ 5,845,236 $ 361,173 374,593 6,616,153 6,482,176 113,925 221,980 50,521 43,833 264,739 235,923 64,587 56,673 133,214 56,513 13,770,764 $ 13,316,927 $ 684,011 174,494 12,553,060 (79,960) (79,960) 1,252,638 $ Page 107 2008 5,417,124 $ 7,706,397 $ 724,423 897,405 6,482,258 6,653,899 118,662 103,595 432,400 530,406 292,066 364,033 118,291 297,313 300,434 187,054 13,885,658 $ 16,740,102 $ Revenues Over (Under) Expenditures Other Finance Sources (Uses) Sale of Assets Bond Proceeds Transfers In (Out) Total other Finance Scources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures 2007 (420,978) (420,978) 937,657 $ 948,465 $ 6.71% 3,010,266 16.23% 6,580,455 $ 5,906,730 421,266 276,596 7,586,717 7,103,658 250,749 680,055 49,941 24,771 290,289 244,576 50,725 37,981 33,058 53,810 15,263,200 $ 14,328,177 2,446,351 $ 3,764,016 1,743,665 166,926 1,112,418 1,355,418 3,561,908 231,411 83,892 14,466,005 797,195 2,900,000 (707,671) 2,192,329 605,437 $ $ 2015 (1,017,067) (1,017,067) (219,872) $ 2,170,080 $ 2.63% 2,424,703 3,793,653 1,856,811 89,707 1,087,171 1,472,527 3,951,342 227,879 82,075 14,985,868 (657,691) (657,691) 2,410,390 2.53% CITY OF ELOY, ARIZONA Assessed, Limited and Full Cash Value of Taxable Property Last Ten Fiscal Years Limited Property Value - Primary Net Assessed Value Fiscal Year 2006 $ 33,084,566 Total Limited Property Value $ 239,929,880 Net Assessed Value $ 34,074,814 Total Full Cash Value $ Ratio of Net Assessed to Total Values 246,154,691 14% 2007 35,488,716 264,545,940 36,833,437 271,302,992 13% 2008 47,148,069 353,590,419 63,489,149 456,137,673 14% 2009 70,389,857 530,151,332 119,026,192 842,248,039 14% 2010 81,605,192 616,477,382 125,354,097 900,434,027 14% 2011 101,317,831 747,069,356 115,615,201 821,585,705 14% 2012 90,183,109 659,116,219 94,517,290 675,875,514 14% 2013 86,329,516 624,646,309 88,241,336 633,233,534 14% 2014 83,479,765 620,299,568 86,184,886 629,832,601 14% 2015 86,528,930 652,106,522 95,031,182 705,184,275 13% Source: The source of this information is the Pinal County Assessor Page 108 Full Cash Value - Secondary CITY OF ELOY, ARIZONA Property Tax Rates - Direct and Overlapping Governments (Inclusive of Primary & Secondary Tax Rates) Per $100 of Assessed Value Last Ten Fiscal Years 2006 2007 2008 2009 Fiscal Year 2010 2011 2012 2013 2014 2015 City of Eloy 1.3266 1.2917 1.2326 0.9514 0.8363 0.8195 0.9562 1.0387 1.1378 1.1484 Pinal County 4.4532 4.3035 4.0183 3.4355 3.2316 3.9999 3.9999 3.7999 3.7999 3.7999 Eloy Fire District 1.9546 1.9792 1.9533 1.6388 1.6881 1.9655 2.2835 2.3358 2.4735 2.4693 Pinal County Jr. College 2.1000 2.0528 1.8000 1.4100 1.4636 1.5854 1.8529 1.8786 2.2507 2.2633 Toltec Elementary School District 4.8805 3.6983 3.1657 3.0585 2.3283 2.3255 2.3255 2.9326 3.7556 3.7556 Casa Grande Union High School District 2.9355 2.8074 3.2091 2.8887 2.3972 2.3624 2.486 2.5266 3.0509 3.0509 Santa Cruz Unified School District 4.4050 4.2236 4.0708 3.9656 3.7581 3.6517 3.7308 4.4195 4.3045 4.1508 Eloy Elementary School District 6.8010 6.2520 5.5102 5.4636 4.0013 3.9656 4.1156 4.7645 4.9345 4.9299 Other Taxing Authorities 0.8383 0.3834 0.3692 0.4008 0.7516 0.7878 0.8664 0.9182 0.9881 0.9433 Tax Authority Source: The source of this information is the Pinal County Treasurer Page 109 CITY OF ELOY, ARIZONA Real & Personal Property Tax Levies and Collections Last Ten Fiscal Years Collected to June 30th End of Tax Fiscal Year (a) Tax Levy $ 439,629 Collections $ 439,143 Taxes Receivable $ 485 2007 467,813 467,248 565 99.88% 2008 580,518 579,923 595 99.90% (7,702) 2009 657,801 655,255 2,546 99.61% (13,501) 2010 719,780 716,489 3,291 99.54% (4,028) 2011 818,773 814,982 3,791 99.54% (14,377) 2012 832,235 827,199 5,036 99.39% (18,016) 2013 872,554 866,971 5,583 99.36% (11,545) 2014 928,999 900,027 28,972 96.88% (195) 2015 954,816 923,665 31,151 96.74% (1,025) Fiscal Year 2006 Percent of Tax Levy 99.89% Adjustments $ (1,744) (a) Reflects collections made through June 30th, the end of the fiscal year, on such a year's levy. Property taxes are payble in two installments. The first installment is due the first day of October and becomes delinquent on November 1st. The second installment becomes due the 1st day of March and is deliquent on May 1st. The penalty for late payments is 16% per year prorated monthly as of the 1st day of the month. Penalities for delinquent payments are not included in the above collection figures. Source: The source of this information is the Pinal County Treasuer. Page 110 685 CITY OF ELOY, ARIZONA Sales Tax Revenues by Industry Fiscal Years 2008 throught 2015 Fiscal Year 2008 Tax Paid Construction $ Manufacturing Transportation/Communication/ Utilities Wholesale Trade Retail Trade Restaurants/Bars Insurance/Real Estate Hotel/Lodging Services All Other Total $ 4,909,603 162,936 677,648 33,601 926,918 1,062,237 129,904 127,598 305,641 105,883 8,441,969 Fiscal Year 2009 Percentage of Total 58.16% 1.93% Tax Paid $ 8.03% 0.40% 10.98% 12.58% 1.54% 1.51% 3.62% 1.25% 100.00% $ Fiscal Year 2012 Percentage of Tax Paid Total Construction $ Manufacturing Transportation/Communication/ Utilities Wholesale Trade Retail Trade Restaurants/Bars Insurance/Real Estate Hotel/Lodging Services All Other Total $ 1,257,602 268,820 24.59% 5.26% 638,519 118,652 1,172,126 1,107,200 202,784 82,686 156,361 109,512 5,114,262 Percentage of Total 2,998,610 215,210 46.51% 3.34% 683,760 10.61% 63,534 1,071,019 942,401 101,791 87,157 129,296 153,807 6,446,586 0.99% 16.61% 14.62% 1.58% 1.35% 2.01% 2.39% 100.00% Tax Paid $ $ Fiscal Year 2013 Percentage of Tax Paid Total $ 986,143 223,290 20.60% 4.66% 12.49% 646,302 2.32% 22.92% 21.65% 3.97% 1.62% 3.06% 2.14% 100.00% 150,107 1,181,505 959,115 247,337 71,811 170,100 150,885 4,786,595 $ 830,116 286,748 20.15% 6.96% 684,547 91,143 940,694 836,373 121,700 84,893 154,429 88,512 4,119,155 Tax Paid $ 31.17% 5.21% 16.62% 659,001 12.55% 2.21% 22.84% 20.30% 2.95% 2.06% 3.75% 2.15% 100.00% 124,332 981,398 1,042,401 219,347 84,651 126,222 104,424 5,253,077 2.37% 18.68% 19.84% 4.18% 1.61% 2.40% 1.99% 100.00% $ Fiscal Year 2014 Percentage of Tax Paid Total $ 13.50% 669,495 3.14% 24.68% 20.04% 5.17% 1.50% 3.55% 3.15% 100.00% 98,775 1,278,677 1,037,957 259,296 73,479 143,231 145,546 5,513,225 $ Percentage of Total 1,637,402 273,899 27.09% 5.68% Note: The categories presented are intended to provide alternative information regarding the source of the City's revenue. Fiscal Year 2011 Percentage of Total 1,493,389 313,380 Source: The source of this information is the Arizona Department of Revenue Page 111 Fiscal Year 2010 Fiscal Year 2015 Percentage of Tax Paid Total $ 877,930 354,911 18.33% 7.41% 12.14% 705,863 14.74% 1.79% 23.19% 18.83% 4.70% 1.33% 2.60% 2.64% 100.00% 115,576 1,019,897 1,064,795 272,974 94,408 143,607 138,984 4,788,945 2.41% 21.30% 22.23% 5.70% 1.97% 3.00% 2.90% 100.00% $ City of Eloy Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years (Unaudited) City of Eloy Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Local Sales Tax 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Bed Tax 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% Construction Sales Tax 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% Restaurant and Bar Tax 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% 6.00% Use Tax 0.00% 0.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% State of Arizona Tax (a) 5.60% 5.60% 5.60% 5.60% 6.60% 6.60% 6.60% 5.60% 5.60% 5.60% Sources: The sources of this information is the City of Eloy Finance Department and Arizona Department of Revenue. (a) In 2010 voters passed a temporary State Sales Tax increase of 1% beginning in June 1, 2010 and expiring on May 31, 2013. Page 112 Pinal County Tax 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% 1.1% CITY OF ELOY, ARIZONA Actual Excise Tax Collections Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 City Sales Tax $ 4,734,172 7,113,848 16,883,938 12,893,172 4,119,155 10,506,154 5,114,262 4,786,595 5,513,225 4,788,947 State Shared Sales Tax $ 1,101,748 1,057,403 1,022,432 885,140 816,413 887,563 1,229,551 1,361,278 1,447,688 1,519,806 Urban Revenue Share $ 1,086,256 1,263,084 1,565,622 1,665,549 1,436,354 1,082,827 1,403,669 1,698,821 1,853,736 2,013,285 Franchise Tax $ 118,018 112,137 135,324 129,343 121,542 132,654 135,939 139,478 141,905 144,163 Vehicle License Tax $ 639,807 696,508 753,544 728,472 696,980 682,530 703,979 724,822 774,269 831,046 Sources: The source of this information is the City's financial records and Arizona Department of Revenue Page 113 Total $ 7,680,001 10,242,980 20,360,860 16,301,676 7,190,444 13,291,728 8,587,400 8,710,994 9,730,823 9,297,247 CITY OF ELOY, ARIZONA Ratios of Outstanding Debt by Type Last Ten Fiscal Years Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental Activities General Capital Obligation Leases Bonds $ 1,959,931 $ 1,528,160 $ 1,584,470 1,141,332 1,436,419 746,845 1,295,853 333,208 1,149,118 176,179 1,059,802 965,877 36,569 12,587 - Loans Payable 536,932 3,711,329 2,076,403 1,516,872 956,583 3,208,932 3,001,503 2,786,211 Capital Leases $ 304,247 172,586 93,123 35,687 12,163 - Business-Type Activities General Obligation Revenue Bonds Bonds $ 466,841 $ 1,083,010 348,668 1,001,632 228,155 914,502 101,792 826,585 53,821 732,845 633,244 612,743 591,299 568,870 545,411 Notes: Details regarding the City's outstanding debt can be found in the financial statements. (a) See Demographic and Economic Statistics Section for population data. Page 114 $ Loans Payable 4,784,338 4,573,580 4,351,499 7,548,401 8,023,437 7,735,700 7,389,455 7,526,941 8,864,520 8,660,501 Total Primary Government $ 10,126,527 8,822,268 8,307,475 13,852,855 12,223,966 10,945,618 9,924,658 11,363,741 12,447,480 11,992,123 Per Capita (a) $ 966 824 650 948 735 658 585 652 731 725 CITY OF ELOY, ARIZONA Computation of Direct and Overlapping Debt As of June 30, 2015 Jurisdiction State of Arizona 2014-2015 Secondary Assessed Valuation $ 55,352,051,074 Amount Applicable to the City of Eloy $ - 2014-2015 Combined Tax Rate Per $100 Assessed $ N/A Pinal County 2,040,749,841 Pinal County Community College District 2,040,749,841 Central Arizona Valley Institute of Technology 1,298,686,315 - 0.0500 Eloy Fire District 86,868,066 - 2.4693 Toltec ESD #022 71,419,297 1,593,113 3.7556 512,786,865 2,112,230 3.0509 22,082,291 821,639 4.9299 111,314,340 1,696,301 4.1508 Casa Grande UHS #82 Eloy ESD #011 Santa Cruz Valley UHS #840 City of Eloy 3,745,131 86,184,886 $ 61,622,892,816 4.7832 2.2633 $ 9,968,414 1.1484 $ Source: Assessed value data used to estimate applicable percentages provided by Pinal County Assessor's Office. Debt outstanding data provided by each governmental agency. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Eloy. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsibility for repaying the debt, of each overlapping government. The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining there portion of Pinal County's taxable assessed value that is within the government's boundaries and dividing it by the County's total taxable assessed value. Page 115 26.6014 CITY OF ELOY, ARIZONA Legal Debt Margin Information Last Ten Fiscal Years Fiscal Year Secondary Assessed Value 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ 34,074,814 $ 36,833,437 $ 63,489,149 $ 119,026,192 $ 125,354,097 $ 115,615,201 $ 94,517,290 $ 88,241,336 $ 86,184,886 $ 95,031,182 6,814,963 7,366,687 12,697,830 23,805,238 25,070,819 23,123,040 18,903,458 17,648,267 17,236,977 19,006,236 20% Limitation (a) Debt Limit Equal to 20% of Assessed Valuation Total Debt Applicable to 20% Limit Legal 20% Debt Margin (Available Borrowing Capacity) Total Net Debt Applicable to the 20% Limit as a Percentage of 20% Debt Limit - $ 6,814,963 - $ - 7,366,687 $ 12,697,830 0.00% 0.00% 0.00% - $ 23,805,238 - - - - - - $ 25,070,819 $ 23,123,040 $ 18,903,458 $ 17,648,267 $ 17,236,977 $ 19,006,236 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 6% Limitation (b) Debt Limit Equal to 6% of Assessed Valuation Total Debt Applicable to 6% Limit Legal 6% Debt Margin (Available Borrowing Capacity) Total Net Debt Applicable to the 6% Limit as a Percentage of 6% Debt Limit $ 2,044,489 $ 2,210,006 - $ 2,044,489 $ 3,809,349 - $ 2,210,006 0.00% - $ 3,809,349 0.00% Source: The source of this information is the Pinal County Assessor's records (a) 20% Debt Limitation can be used for Water, Sewer, Light, Parks, and Open Space Purposes. (b) 6% Debt Limitation can be used for all other General Obligation Bonds. Page 116 $ 0.00% 7,141,572 $ - $ 7,141,572 0.00% 7,521,246 $ - $ 7,521,246 0.00% 6,936,912 $ - $ 6,936,912 0.00% 5,671,037 - $ 5,671,037 0.00% $ 5,294,480 - $ 5,294,480 0.00% $ 5,171,093 - $ 5,171,093 0.00% $ 5,701,871 - $ 5,701,871 0.00% CITY OF ELOY, ARIZONA Pledged Revenue Coverage Last Ten Fiscal Years Fiscal Year Ended June 30th 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Utility Service Charges 1,614,248 1,454,039 1,593,681 1,819,378 1,846,457 1,715,288 1,761,118 1,662,936 1,893,647 2,195,416 Less: Operating Expenses 1,580,737 2,097,765 1,560,635 1,543,338 1,362,606 1,386,245 1,553,018 1,529,528 1,529,720 1,742,934 Water Revenue Bonds Net Available Debt Service Revenue Principal Interest 33,511 75,628 53,888 (643,726) 76,378 50,167 33,046 81,378 46,163 276,040 87,917 41,875 483,851 93,740 37,550 329,043 99,601 32,937 208,100 20,501 28,035 133,408 21,443 27,091 363,927 22,428 26,104 452,482 23,458 25,071 Coverage 0.26 (5.09) 0.26 2.13 3.69 2.48 4.29 2.75 7.50 9.32 Fiscal Year Ended June 30th 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Utility Service Charges 2,447,742 2,273,148 2,519,272 2,845,054 2,900,260 2,692,503 2,706,408 2,641,188 3,034,941 3,413,179 Water Infrastructure Finance Authority Loans Less: Net Debt Service Operating Available Principal Interest Expenses Revenue 2,309,863 137,879 209,415 97,109 2,840,329 (567,181) 214,257 91,620 2,154,518 364,754 219,211 86,003 2,583,412 261,642 135,316 128,110 1,977,559 922,701 344,979 137,050 2,000,169 692,334 328,493 136,349 3,124,769 (418,361) 409,349 131,488 2,121,607 519,581 418,205 124,960 2,040,588 994,353 427,256 160,486 2,318,540 1,094,639 615,715 176,960 Coverage 0.45 (1.85) 1.20 0.99 1.91 1.49 (0.77) 0.96 1.69 1.38 Fiscal Year Ended June 30th 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Utility Service Charges 925,591 1,025,676 1,053,803 977,215 945,290 978,252 1,141,294 1,217,763 United States Department of Agriculture Loan Less: Net Debt Service Operating Available Principal Interest Expenses Revenue 593,883 331,708 7,824 79,008 1,040,074 (14,398) 12,559 44,172 614,953 438,850 13,087 43,654 613,924 363,291 13,637 43,124 1,571,751 (626,461) 14,210 42,551 592,079 386,173 14,662 41,714 510,868 630,426 15,279 41,097 575,606 642,157 16,079 40,752 Source: The source of this information is the City's financial records Page 117 Coverage 3.82 (0.25) 7.73 6.40 (11.04) 6.85 11.18 11.30 CITY OF ELOY, ARIZONA Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 City Population 10,480 10,701 12,781 14,620 16,620 16,631 16,964 17,423 17,020 16,531 County Population 235,708 271,328 306,174 335,311 349,830 385,751 383,690 387,020 389,350 396,237 County Personal Income (in thousands) 5,601,116 6,529,426 7,335,187 8,293,496 8,246,026 8,830,620 9,469,873 9,793,208 9,932,684 10,181,001 County Per Capita Personal Income 23.76 24.06 23.96 24.73 23.57 22.89 24.68 25.30 25.51 25.69 School Enrollment 2,248 2,200 2,207 2,120 2,077 2,015 1,914 1,822 1,852 1,832 City Unemployment Rate 7.8% 6.4% 10.6% 18.5% 17.4% 16.1% 13.5% 13.4% 13.4% 11.1% Sources: Population, County Per Capita Income and City Unemployment Rate - Bureau of Economic Analysis and Arizona Department of Administration. School Enrollment - Toltec Elementary School District, Eloy Elementary School District and Santa Cruz Valley High School District based on 100th day count. Note: Amount for fiscal year 2015 is based on an Bureau of Economic Analysis for personal income percent change from the proceeding year. Page 118 Pinal County Unemployment Rate 5.2% 4.2% 7.1% 12.8% 12.0% 11.1% 9.2% 9.3% 8.1% 7.4% CITY OF ELOY, ARIZONA Principal Employers, Current Year and Nine Years Ago Employer Corporation Corrections of America Eloy Elementary School District Schuff Steel Republic Plastics City of Eloy Travel Center of America Otto Plastics Arizona, LLC Curiel Primary School Santa Cruz Valley High School District Iron Skillet Restaurant Pilot Travel Center Employees 1,587 175 150 125 118 100 68 63 56 55 46 2,543 2015 Percentage of Total City Employment 61.56% 6.79% 5.82% 4.85% 4.58% 3.88% 2.64% 2.44% 2.17% 2.13% 1.78% 98.64% 2006 Employees 410 145 130 92 58 56 66 62 60 1,079 Source: The source of this information is from Access Arizona and various employers Page 119 Percentage of Total City Employment 22.29% 7.88% 0.00% 0.00% 7.07% 5.00% 3.15% 3.05% 3.59% 3.37% 3.26% 58.67% CITY OF ELOY, ARIZONA Authorized Full-time Government Employees by Function/Program Last Ten Fiscal Years Function/Program Fiscal Year General Government Public Safety Culture & Recreation Public Works/Admin. Public Works/Streets Public Works/Water Public Works/Sewer Public Works/Sanitation 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 31 31 34 31 27 27 26 27 27 28 52 51 48 46 46 43 44 44 43 44 14 14 14 13 13 13 13 13 13 13 3 3 3 4 4 4 4 4 4 4 11 11 10 10 10 10 10 10 10 10 10 10 9 9 9 9 9 10 10 10 5 5 5 3 3 2 2 2 2 2 7 7 7 7 7 7 7 7 7 7 Source: The source of this information is the City's adopted budget documents. Note: Information is based on authorized positions approved by Council in the Budget. Page 120 Total 133 132 130 123 119 115 115 117 116 118 (This page intentionally left blank) Page 121 CITY OF ELOY, ARIZONA Operating Indicators by Function/Program Last Ten Fiscal Years Function/Program General Government Registered Voters Votes cast last primary election 2006 2007 2008 2009 2010 3,047 531 * * 3,135 369 * * 3,314 638 Police Arrests Citations Traffic Stops Officer Reports Photo Enforcement - Notices Printed Calls for Service 1,568 4,033 4,386 2,703 * 17,021 1,428 3,005 4,557 2,985 * 15,828 1,273 2,992 4,554 4,110 * 16,118 937 702 2,504 3,905 864 16,707 Highways & Streets Street resurfacing (miles) Cold Mix for Potholes (tons) Street sweeping (miles) * * 40 * * 40 3 212 42 Water New Residential Connections Line Breaks Average Daily Consumption 76 * 1.31 34 * 1.31 Wastewater Average Daily Sewage Treatment (thousands of gallons) Line cleaning (feet) Line Plugs * * * Parks and Recreation Park Areas Parkland Acreage Playgrounds Afterschool Program Participants Aquatic Center Admissions 7 15 5 333 4,536 Page 122 Fiscal Year 2011 2012 2013 2014 2015 * * 3,322 891 * * 3,810 * 3,735 1,872 1,048 1,007 2,189 3,717 1,172 14,112 972 1,535 1,902 3,435 2,383 13,076 248 371 618 1,031 1,525 14,524 1,703 936 2,820 3,401 1,451 13,334 1,880 1,698 4,490 3,021 1,358 18,801 1,557 960 3,582 2,463 72 18,150 3 271 42 4 168 42 3 197 46 1 145 46 1 96 46 6 192 46 23 240 49 8 179 1 1 252 1 0 204 1 3 177 1 0 69 1 0 87 1 0 27 1 0 35 1 * * * * * * 550 * 52 490 * 54 490 90,000 58 490 150,000 22 600 100,000 43 450 100,000 27 490 75,000 21 9 15 6 355 5,223 9 15 6 378 2,530 9 15 6 382 2,120 9 15 6 272 2,357 9 15 6 228 2,075 9 15 6 216 2,268 9 15 6 205 2,935 10 16.29 6 240 4,451 10 16.29 6 300 3,316 Airport Hangers T-Hangers 5 12 5 12 5 12 5 12 5 12 5 12 5 12 5 12 5 12 5 12 Economic Development Building Permits-Commercial Building Permits-Residential Housing Rehabilitations Code Enforcement Cases Planning Cases 23 310 11 * 110 23 113 3 * 97 38 44 4 * 75 22 35 6 1,104 58 20 78 7 1,267 50 14 48 12 2,087 24 12 37 1 1,601 25 15 96 4 1,729 32 19 99 4 4,063 32 13 74 6 2,429 31 16,046 11,830 684 8,200 401 16,386 16,381 718 9,000 307 17,809 13,433 864 9,318 628 16,362 14,559 920 11,636 790 18,924 16,544 817 16,544 1,821 19,086 32,281 858 17,490 2,204 20,857 35,398 975 17,481 2,274 23,900 35,867 991 23,107 3,629 26,540 28,187 940 22,267 5,618 23,961 28,075 937 18,996 7,807 Culture - Library Items in Collections Total Items Circulated Reference Transactions Computer Uses (Hrs.) Inter-Library Loan Sources: This information is obtained from the records of various City Departments Note: Voter registration is taken every two years. * Not available Page 123 CITY OF ELOY, ARIZONA Capital Asset Statistics by Function/Program Last Ten Fiscal Years Function/Program Public Safety Stations Patrol Units Highways and Streets Streets (miles) Streetlights Street poles Water Water mains (miles) Fire hydrants Sewer Sanitary Sewer (miles) Maximum daily treatment capacity (thousands of gallons) Recreation and Aquatics Parks Acreage Number of Parks Swimming Pools Tennis Courts Ball Fields 2007 2008 2009 2012 2013 2014 2015 1 12 1 12 1 12 1 12 1 12 1 12 1 12 1 12 1 15 1 11 * 591 570 * 605 582 85 616 593 90 598 575 90 598 575 91 598 575 93 598 598 93 598 598 93 598 598 93 598 598 120 315 120 315 120 321 120 321 123 321 123 326 123 326 123 327 123 327 123 327 44 44 45 45 47 47 47 47 47 47 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 15 7 1 1 3 15 9 1 1 3 15 9 1 1 3 15 9 1 1 3 15 9 1 1 3 15 9 1 1 3 15 9 1 1 3 15 9 1 1 3 16 9 1 1 3 16 9 1 1 3 Sources: This information is obtained from the records of various City Departments Page 124 Fiscal Year 2010 2011 2006