City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 This page left blank intentionally. City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTRODUCTORY SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 Mayor Jerry Weiers Councilmembers Ian Hugh - Vice Mayor, Cactus District Bart Turner - Barrel District Lauren Tolmachoff - Cholla District Jamie Aldama - Ocotillo District Gary D. Sherwood - Sahuaro District Samuel U. Chavira - Yucca District Management Staff Dick Bowers - Acting City Manager Tom Duensing, Interim Assistant City Manager Prepared by Finance Vicki Rios, Interim Finance and Technology Director i This page left blank intentionally. ii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 TABLE OF CONTENTS Page I. INTRODUCTORY SECTION Title Page ......................................................................................................................................... i Table of Contents ...........................................................................................................................iii Letter of Transmittal ....................................................................................................................... 1 GFOA Certificate of Achievement.................................................................................................. 5 Glendale, Arizona and Neighboring Communities ......................................................................... 6 Glendale City Officials ................................................................................................................... 7 Glendale Council District Boundaries ............................................................................................. 8 Organization Chart .......................................................................................................................... 9 II. FINANCIAL SECTION Independent Auditors’ Report .............................................................................................................. 11 A. MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) ............................................. 15 B. BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position .............................................................................................................. 29 Statement of Activities .................................................................................................................. 30 Fund Financial Statements: Balance Sheet – Governmental Funds........................................................................................... 32 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................................................................... 33 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds.................................................................................................................. 34 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of 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 ........ 37 Statement of Cash Flows – Proprietary Funds .............................................................................. 38 Notes to the Financial Statements ..................................................................................................... 40 C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of Pension Liability ....................................................................................................... 97 iii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 TABLE OF CONTENTS Schedule of Pension Contributions ............................................................................................. 100 Schedule of Funding Progress ..................................................................................................... 102 Notes to Pension Liability and Contributions ............................................................................. 103 Budgetary Comparison Schedule – General Fund ...................................................................... 104 Notes to Required Supplementary Information ........................................................................... 106 D. COMBINING STATEMENTS Budgetary Comparison Schedule – Municipal Property Corporation Debt Service Fund .......... 107 Non-Major Governmental Funds Combining Balance Sheet........................................................................................................ 110 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances................ 114 Budgetary Comparison Schedules Transportation Fund ............................................................................................................. 117 Community Development Block Grants Fund ..................................................................... 118 Highway Users Gas Tax Fund ............................................................................................. 119 Police and Fire Sales Tax Fund ............................................................................................ 120 Federal Stimulus Fund ......................................................................................................... 121 Other Special Revenue Fund ................................................................................................ 122 Highway User Debt Service Fund........................................................................................ 124 Western Loop 101 Public Facilities Corporation Debt Service Fund .................................. 125 Transportation Debt Service Fund ....................................................................................... 126 Excise Tax Revenue Debt Service Fund .............................................................................. 127 General Obligation Debt Service Fund ................................................................................ 128 Cemetery Perpetual Care Fund ............................................................................................ 129 Development Impact Fees Fund........................................................................................... 130 Streets Construction Fund .................................................................................................... 131 Fire and Police Construction Fund ....................................................................................... 132 Parks Bond Construction Fund ............................................................................................ 133 Other Construction Fund ...................................................................................................... 134 Non-Major Proprietary Funds – Business-Type Activities Combining Statement of Net Position ..................................................................................... 136 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 137 Combining Statement of Cash Flows ...................................................................................... 138 Budgetary Comparison Schedules Water and Sewer Fund (a Major Fund) ................................................................................ 140 Landfill Fund ....................................................................................................................... 142 iv City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 TABLE OF CONTENTS Sanitation Fund .................................................................................................................... 143 Housing Fund ....................................................................................................................... 144 Internal Service Funds Combining Statement of Net Position ..................................................................................... 145 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 146 Combining Statement of Cash Flows ...................................................................................... 147 Budgetary Comparison Schedules Risk Management Fund ....................................................................................................... 148 Workers’ Compensation Fund ............................................................................................. 149 Employee Benefits Fund ...................................................................................................... 150 E. SUPPLEMENTARY INFORMATION Federal Financial Data Schedule .......................................................................................... 151 III. STATISTICAL SECTION Schedule Page Net Position by Component ............................................................................................... 1 ............. 158 Changes in Net Position ..................................................................................................... 2 ............. 160 Fund Balances – Governmental Funds ............................................................................... 3 ............. 163 Changes in Fund Balances – Governmental Funds ............................................................ 4 ............. 164 Assessed and Estimated Actual Value of Taxable Property ............................................... 5 ............. 166 Direct and Overlapping Governments Property Tax Rates ................................................ 6 ............. 167 Principal Property Taxpayers ............................................................................................. 7 ............. 168 Property Tax Levies and Collections ................................................................................. 8 ............. 169 City Transaction Privilege Taxes (Sales Tax) by Category ................................................ 9 ............. 171 Ratio of Outstanding Debt by Type.................................................................................. 10 ............. 172 Ratios of Net General Bonded Debt Outstanding............................................................. 11 ............. 174 Net Direct and Overlapping Governmental Activities Debt............................................. 12 ............. 175 Legal Debt Margin Information ....................................................................................... 13 ............. 177 Pledged-Revenue Coverage ............................................................................................. 14 ............. 178 Demographic and Economical Statistics .......................................................................... 15 ............. 180 Principal Employers ......................................................................................................... 16 ............. 181 Full-Time Equivalent City Government Employees by Function/Program ..................... 17 ............. 182 Operating Indicators by Function/Program ...................................................................... 18 ............. 183 Capital Asset Statistics by Function/Program .................................................................. 19 ............. 184 Miscellaneous Water and Sewer Rate Statistics ............................................................... 20 ............. 185 Miscellaneous Water and Sewer Statistics ....................................................................... 21 ............. 186 v This page left blank intentionally. vi November 18, 2015 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Glendale, Arizona: The Finance Division of the Finance and Technology Department is pleased to submit the City of Glendale, Arizona’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2015. The City publishes the CAFR annually after the close of each fiscal year. The CAFR includes a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP). The financial statements are audited by a firm of licensed certified public accountants in accordance with generally accepted auditing standards (GAAS). City Management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, Management has established a comprehensive internal control framework that is designed to both protect the government’s assets from loss, theft, or misuse; and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. 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. To the best of our knowledge and belief, this financial report is complete and reliable in all material respects and is designed to fairly represent the financial position of the operations of the various funds of the City. This letter of transmittal is best reviewed in conjunction with the Management’s Discussion and Analysis (MD&A) beginning on page 15. The MD&A provides a narrative introduction, overview, and analysis of the basic financial statements of the City. Independent Audit The City’s financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit is to provide 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 disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” 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 audited government’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 the City’s separately issued Single Audit reporting package. Budgetary Controls The annual budget serves as the foundation for the City’s financial planning and control. All agencies of the City are required to submit requests for appropriation to the City Manager on or before the last week in December each year. Management uses these requests to develop a budget to propose to City Council for review and adoption. The Council is required to hold public hearings on the proposed budget and adopt the final budget by the first Monday in August. The legal level of budgetary control is the total budget of $642 million as adopted in FY14-15. Department heads may request transfers of appropriations within the same 1 fund for his/her department. However, transfers of appropriations between funds require approval of the City Council and can only occur in the last quarter of the fiscal year. Budget-to-actual comparisons are provided in this report for each individual fund for which an appropriated annual budget has been adopted. Arizona state law and Glendale City financial policies require that each annual city budget be a balanced budget. A balanced budget means total expenditures cannot exceed the budgeted period’s total financial resources available. The adopted FY14-15 budget complies with the balanced budget requirement in all City funds. Additionally, the State of Arizona sets a limit on the expenditures of local jurisdictions. Compliance with these expenditure limitations is required. The City submits an audited expenditure limitation report as defined by the Uniform Expenditure Reporting System (A.R.S. Section 41-1279.07) along with audited financial statements to the State Auditor General within the required timeframe. City of Glendale Profile The City of Glendale, Arizona is the fifth largest city in the state with a population of approximately 234,000 people. Located in the northwestern part of the metropolitan Phoenix area and occupying approximately 59 square miles of land, the City is home to the Arizona Cardinals and the Arizona Coyotes. The City is also the owner of Camelback Ranch, the spring training facility for the Los Angeles Dodgers and the Chicago White Sox. The City was incorporated in 1910 and has operated under the council-manager form of government since its incorporation. Policy-making and legislative authority are vested in the City Council which consists of the Mayor and six other members. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, Clerk, Attorney, Municipal Judge and City Auditor (Internal). The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council members serve four-year terms, with three Council members elected every two years. The Mayor is elected to serve a four-year term. The City provides a full range of services including: police and fire protection; water, sewer, and sanitation services; the construction and maintenance of highways, streets, public facilities, and other infrastructure; and recreational activities and cultural events. Certain housing services are provided by the City’s public housing authority, which functions, in essence, as a department of the City and therefore has been included as an integral part of the City’s financial statements. The City also is financially accountable for two legally separate entities - the Municipal Property Corporation and Western Loop 101 Public Facilities Corporation, which are reported within the City’s financial statements. Economic Conditions and Strategies Before reviewing the presented financial statements, it is important to consider the local and global economic factors that have impacted the City’s financial position. Primary Revenue Sources The City relies on local and state shared sales tax as well as state shared income tax as primary revenue sources for the City’s operating budget. In June 2012, the City Council approved a sales tax rate increase of .7% effective August 1, 2012. Local sales tax revenues increased 11.5% this fiscal year when compared to the last fiscal year. The growth can be attributed to the improving economy, economic development activities, and major events held at the City such as the Super Bowl and Pro Bowl. In addition, the city’s state shared sales tax revenues increased 4.9% and state shared income tax revenues increased 10.8%. Workforce and Unemployment Glendale’s unemployment rate for the month of June 2015 was 5.4% which is lower than the statewide unemployment rate of 6.3%. Year over year 2,845 more people joined the labor force and 3,828 more people were employed in Glendale. Glendale’s workforce is concentrated in the following nonfarm 2 sectors: education and health services (25.4%); trade, transportation, and utilities (20.5%); government (15.8%); professional & business services (11.9%); and construction (8.7%); Glendale’s nonfarm employment grew 2.7% over last year with construction, professional and business services, educational and health services leading the growth. The manufacturing sector saw a decline of 1.3% in nonfarm employment. The Arizona Department of Administration projects that in 2016, Arizona nonfarm employment will grow by 2.4%; Glendale is expected to grow faster than the State at 2.6%. Economic Development Business attraction, business retention & expansion, redevelopment, business assistance, and major events comprise the five pillars of Glendale’s economic development program. Business attraction is focused on five targeted industries: aerospace & defense, manufacturing, signature retail & entertainment, medical technology, and advanced business services. In fiscal year 2015, the City successfully hosted the 2015 Pro Bowl and Super Bowl XLIX which was reported by the Arizona State University WP Carey School of Business as having a $720 million economic impact for Arizona. Major attraction projects in representative target industries include Palo Verde Oncology, Progressive Financial, Whiting Systems Inc., The Container Store, Dave & Buster’s Westgate, and Honor Health. The City also collaborated with WESTMARC on the development of a new workforce measurement tool for the West Valley that demonstrates where workers live based on their occupation. This tool, which is expected to go live in the third quarter of fiscal year 2016, will increase the marketability of Glendale to prospective clients by demonstrating that the City has the workforce to support industries in the community. Financial Strategy Through sound financial planning and positive economic conditions, the City’s General Fund balance is positive and has increased significantly in fiscal year 2015. The key financial measures that were taken to improve the City’s financial position are as follows: The City refinanced $361 million in bonds which resulted in $48 million savings in net present value debt service costs. The debt restructuring provides savings to the General Fund and allows the city to begin replenishing reserves that were significantly depleted over the recession years. During the fiscal year, the City also paid the remaining balance of a lease purchase agreement relating to the Public Safety Training Center which saved the city approximately $703 thousand in interest costs. In April 2015, the City Council adopted a resolution to reclassify the inter-fund advances between the general fund and water and sewer, landfill and sanitation to inter-fund transfers. This removed the longterm liability from the general fund balance sheet. In June 2015, as part of the annual budget process, the City Council adopted a financial policy to establish a minimum unrestricted (the total of the committed, assigned, and unassigned) fund balance for the General Fund totaling 25% of projected annual ongoing revenues. The policy includes provisions for replenishing the fund balance over the next five fiscal years if it falls below the 25% minimum. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2014. This was the twenty-seventh consecutive year the City has received this prestigious award, and the twenty-ninth year overall. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR 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. 3 In addition, the City also received the GFOA’s Distinguished Budget Presentation Award for its fiscal year beginning July 1, 2014. This was the twenty-eighth consecutive year that the City has received the highest form of recognition in governmental budgeting. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Division. I would like to express appreciation to all members of the division who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor, Council, and City Manager for their unfailing support in maintaining the highest standards of professionalism in the management of the City’s finances. Respectfully submitted, Vicki L. Rios, CPA Interim Director of Finance and Technology 4 5 Glendale, Arizona & Neighboring Communities To Flagstaff Cave Creek e fre re Ca 17 Scottsdale 60 El Mirage Peoria Sun City Surprise 303 Luke AFB Phoenix Glendale 51 Fountain Hills Paradise Valley 101 101 10 Goodyear 85 202 Sky Harbor Airport Mesa 89 60 Tempe Chandler 10 To Tucson 6 Gilbert Glendale City Officials Jerry Weiers Mayor Ian Hugh Vice Mayor/ Councilmember Cactus District Jamie Aldama Councilmember Ocotillo District Bart Turner Councilmember Barrel District Gary D. Sherwood Lauren Tolmachoff Councilmember Cholla District Samuel U. Chavira Councilmember Sahuaro District Councilmember Yucca District 7 Dick Bowers Acting City Manager Glendale Council District Boundaries Pinnacle Peak Rd. Deer Valley Rd. Cholla Beardsley Rd. Union Hills Dr. Bell Rd. Saquaro Greenway Rd. Thunderbird Rd. Cactus Rd. Peoria Ave. Olive Ave. Barrell Cactus Yucca Yucca Northern Ave. Glendale Ave. Ocotillo Bethany Home Rd. 43rd Ave. 51st Ave. 59th Ave. 67th Ave. 75th Ave. 83rd Ave. 91st Ave. 99th Ave. 107th Ave. 115th Ave. El Mirage Rd. Dysart Rd. Litchfield Rd. Bullard Ave. Reems Rd. Sarival Ave. Cotton Ln. e. Av 8 nd ra G Citrus Rd. Camelback Rd. Police Department Debora Black Police Chief Public Works Department Jack Friedline Director 9 Development Services Department Sam McAllen Director Fire Department Chris DeChant Interim Chief Boards & Commissions Water Services Department Craig Johnson Director Human Resources Department Jim Brown Director Communications Department Vacant Presiding City Judge Elizabeth Finn Community Services Department Erik Strunk Director City Auditor Candace MacLeod Finance and Technology Department Vicki Rios Interim Director City Clerk Pam Hanna Interim Assistant City Manager Tom Duensing Acting City Manager Dick Bowers Assistant City Manager Jennifer Campbell City Attorney Michael D. Bailey Mayor & Council CITIZENS OF GLENDALE Office of Economic Development Brian Friedman Director Office of Intergovernmental Programs Brent Stoddard Director This page left blank intentionally. 10 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ FINANCIAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of City of Council City of Glendale, Arizona Glendale, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Glendale, 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. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’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 City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. An independent member of Nexia International 11 The Honorable Mayor and Members of City of Council City of Glendale, Arizona Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Glendale, 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. Emphasis of a Matter During the fiscal year ended June 30, 2015, the City adopted Governmental Accounting Standards Board Statement (GASBS) No. 68, Accounting and Financial Reporting for Pensions and GASBS No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68. As a result of the implementation of GASBS No. 68 and No. 71, the City reported a restatement for the change in accounting principle (see Note XVII). Our auditors’ opinion was not modified with respect to the restatement. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 15 – 28, the required supplementary information for the City’s pension plans and other postemployment benefits on pages 97 – 102 and the budgetary comparison schedule for the general fund on pages 104 – 105 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Glendale, Arizona’s basic financial statements. The combining and individual nonmajor fund financial statements, supplementary information and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the supplementary information 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 information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 12 The Honorable Mayor and Members of City of Council City of Glendale, Arizona The introductory and statistical sections 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 it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2015, on our consideration of the City of Glendale, 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 result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Glendale, Arizona’s internal control over financial reporting and compliance. a CliftonLarsonAllen LLP Phoenix, Arizona November 18, 2015 13 This page left blank intentionally. 14 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ MANAGEMENT’S DISCUSSION & ANALYSIS (Required Supplementary Information) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Management’s Discussion and Analysis The following discussion and analysis is provided to readers of the City’s financial statements as a narrative overview of the financial activities of the City for the fiscal year ended June 30, 2015. This discussion and analysis is designed to assist the reader in focusing on significant financial highlights; provide an overview of the City’s financial activity; identify changes in the City’s financial position; identify material deviations from the financial plan (the approved annual budget); and identify individual fund issues or concerns. The Management’s Discussion and Analysis (MD&A) has a different focus and purpose than the letter of transmittal presented on pages 1-4. It is designed to be read in conjunction with the transmittal letter, the financial statements beginning on page 29, and the accompanying notes to the financial statements. Significant Financial Highlights The financial statements illustrate the following significant financial highlights for FY 2014-15:  The City’s total net position increased $10,362 or 1.4%. The governmental net position increased by $44,861 or 13.5%, and the business-type net position decreased by $34,499 or 8.6%. The increase in net position in the governmental activities is attributed to the reclassification of the inter-fund advances from water and sewer, landfill, and sanitation to inter-fund transfers. The decrease in the business-type net position is also attributed to the reclassification of the inter-fund advance to an inter-fund transfer from water and sewer, landfill, and sanitation to the general fund.  General revenues from governmental activities increased $21,377 or 7.6%. The primary reason for this increase was an increase in sales tax revenue from the major events that were held at Westgate such as the Super Bowl XLIX and Pro Bowl. The city also continued its efforts to attract and retain major retailers in the community such as the expansion of the Tanger Outlet stores at Westgate.  Governmental activities program specific revenues in the form of charges for services, grants, and contributions increased $2,756 or 3.9%. This increase can be primarily attributed to the additional revenues received under the arena management agreement.  The total cost of all City programs decreased by $11,122 or 2.7%. The decrease in expenses is attributed to a decrease in general government and street maintenance expenses in the governmental activities and a decrease in water and sewer expenses for the business-type activities.  The General Fund, a major governmental fund, collected $218,890 in revenues which is an increase of $36,568 or 20.1% from the prior year. This increase was primarily due to an increase in sales taxes and special assessments revenue of $29,622 from the major events at Westgate and economic development efforts by the City. The total expenditures of the General Fund were $187,571, which is an increase of $45,454 or 32%. A significant portion of this increase is related to the consolidation of the police and fire sales tax funds into the general fund which resulted in an increase of $25,137 in public safety expenses for the general fund.  The General Fund balance increased $50,608 or 2539%. This increase was primarily due to the reclassification of the inter-fund advance to an inter-fund transfer from water & sewer, landfill and sanitation to the general fund. The consolidation of the police and fire special revenue fund into the general fund also resulted in an increase of $11,100 in the general fund balance.  The City paid the remaining balance of $10,304 on a lease purchase agreement related to the Regional Public Safety Training Center which will result in a decrease of approximately $703 in future interest costs. 15 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Overview of the Financial Statements This report consists of a series of financial statements that are categorized as Government-Wide Financial Statements or Fund Financial Statements. Government-Wide Financial Statements, which include the Statement of Net Position and the Statement of Activities, are designed to provide the reader with information about the overall activities of the City and the long-term view of the City’s finances. The Fund Financial Statements illustrates how City services were financed in the short-term as well as more detailed information about the City’s most significant funds. Also included in this report are the notes to the financial statements which are provided to help enhance understanding of the content within the financial statements. Government-Wide Financial Statements The Government-Wide Financial Statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The accrual basis of accounting is used for government-wide financial statements. The Statement of Net Position presented on page 29, provides information on all of the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources with the difference reported as net position. Net position is categorized as net investment in capital assets, restricted by an outside party, and unrestricted. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities found on page 30, presents information that illustrates how the City’s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). Both of the Government-Wide Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, community services, community environment, street maintenance, and interest on long-term debt. The business-type activities of the City include water and sewer services, landfill, sanitation, and housing. Fund Financial Statements The Fund Financial Statements provide more detailed information about the major funds within the City. 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements use the modified accrual basis of accounting and 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 may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund 16 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 19 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the 2 major funds. Data from the other 17 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules. Proprietary Funds The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer, landfill, sanitation, and housing services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its risk management, workers’ compensation and employee benefit activities. Because these services predominantly benefit governmental rather than businesstype functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information for the water and sewer fund, while data from the other three enterprise funds is combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds is provided in the form of combining statements and schedules. Conversely, all three internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Additional Required Supplementary Information Following the basic financial statements is Required Supplementary Information (RSI) that further explains and supports the financial information in the financial statements. RSI presents the budgetary comparison schedules for the general fund, as well as other required supplementary information related to the City’s pensions and other post-employment benefits. Other The Combining Statements and Individual Fund Statements and Schedules section presents combining statements for non-major governmental funds, non-major enterprise funds, and non-major internal service funds, along with budget to actual comparisons on individual funds. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a City’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $744,542 as of June 30, 2015. By far the largest portion of the City’s net position reflects its investment in capital assets (e.g., land, building, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. 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 its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 17 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) The City’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. At the end of the current fiscal year, the City is able to report positive balances in the three categories of net position with the exception of unrestricted net position for the governmental activities which increased by $28,360 over prior year. The City is addressing the negative unrestricted net position for the governmental activities through planned spending reductions, decrease debt service payments as a result of the bond refunding in fiscal year 2015, and the reclassification of the inter-fund advance to an inter-fund transfer. The chart below is a comparison of the City’s net position for fiscal years 2015 and 2014: Condensed Statement of Net Position As of June 30, 2015, and 2014 (in thousands) Governmental Activities 2014 2015 restated Current and other assets Capital assets, net Total asse ts $ Deferred Outflows of Resources Current liabilities Noncurrent liabilities Total liabilitie s Deferred Inflows of Resources Net position: Net investment in capital assets Restricted Unrestricted Total ne t position $ 301,454 1,142,283 1,443,737 250,073 1,169,316 1,419,389 $ 190,402 516,534 706,936 $ 223,733 527,551 751,284 72,423 31,277 14,054 5,305 86,477 36,582 131,428 986,012 1,117,440 134,221 984,428 1,118,649 40,117 306,892 347,009 39,143 315,283 354,426 171,545 1,292,904 1,464,449 173,364 1,299,711 1,473,075 21,842 - 6,317 - 28,159 - 253,134 24,090 90,440 $ 367,664 256,164 22,300 123,699 $ 402,163 710,031 192,804 (158,293) 744,542 456,897 168,714 (248,733) 376,878 $ T otal Primary Government 2014 2015 restated Business-T ype Activities 2014 2015 restated $ 448,083 161,027 (277,093) 332,017 18 $ $ 491,856 1,658,817 2,150,673 $ $ 473,806 1,696,867 2,170,673 704,247 183,327 (153,394) 734,180 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) The following presents a summary of the changes in net position compared to the prior year: Changes in Net Position As of June 30, 2015, and 2014 (in thousands) Governmental Activities 2014 2015 restated Re ve nue s: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions T otal program revenues $ 37,251 25,665 11,403 74,319 $ 35,647 25,168 10,748 71,563 $ 106,507 8,855 2,562 117,924 $ 108,051 9,357 2,423 119,831 - - General revenues: Property taxes Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Gain on disposal of capital assets Loss on joint venture Miscellaneous T otal revenues 23,881 147,175 20,695 23,577 131,983 19,734 27,446 8,664 1,070 (688) 520 303,082 25,271 8,086 726 78 687 281,705 643 127 (3,329) 86 115,451 Expense s: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Water and sewer Landfill Sanitation Housing Total e xpe nse s Exce ss be fore transfe rs 60,490 127,870 21,482 31,311 4,980 19,180 32,106 297,419 5,663 73,637 116,070 20,524 30,796 5,895 25,207 34,808 306,937 (25,232) 74,807 7,727 15,059 13,159 110,752 4,699 39,198 (64) 44,861 332,017 $ 376,878 (25,296) 357,313 332,017 Transfe rs in (out) Incre ase (de cre ase ) in ne t position Ne t position be ginning - re state d Ne t position e nding $ T otal Primary Government 2014 2015 restated Business-T ype Activities 2014 2015 restated 143,758 34,520 13,965 192,243 $ 23,577 131,983 19,734 463 167 67 120,528 27,446 8,664 1,713 (561) (3,329) 606 418,533 25,271 8,086 1,189 245 754 402,233 77,243 7,554 14,471 13,088 112,356 8,172 60,490 127,870 21,482 31,311 4,980 19,180 32,106 74,807 7,727 15,059 13,159 408,171 10,362 73,637 116,070 20,524 30,796 5,895 25,207 34,808 77,243 7,554 14,471 13,088 419,293 (17,060) 64 - (34,499) 8,236 402,163 393,927 367,664 $ 402,163 10,362 734,180 744,542 $ - $ Changes in Net Position The net position of the governmental activities increased by $44,861 while business-type activities’ net position decreased by $34,499. The most notable difference is the reclassification of the inter-fund advance to an interfund transfer from water and sewer, landfill and sanitation to the general fund. 19 143,698 34,525 13,171 191,394 23,881 147,175 20,695 (39,198) $ $ (17,060) 751,240 734,180 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Revenues and Expenditures The chart below shows the performance of the revenues in the governmental activities versus expenses: Expenses and Program Revenues - Governmental Activities expenses program revenues $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $General government Public safety Public works Community services Community environment Street maintenance Interest on longterm debt The City’s total revenue from governmental activities for the fiscal year ended June 30, 2015, was $303,082. The cost of programs and services for governmental activities was $297,419. The decrease in the interest expense on long term debt of $2,702 is due to the savings from refunding of the transportation excise tax revenue bonds, general obligation bonds, and Municipal Property Corporation bonds. 20 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) The chart below shows the performance of the revenues and expenses in the business-type activities: Expenses and Program Revenues - Business-Type Activities expenses program revenues $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $Water and sewer Landfill Sanitation Housing The City’s revenue from business-type activities for the fiscal year ended June 30, 2015, was $115,451. The cost of programs and services was $110,752. 21 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) City Revenue Categories Revenue Sources Fiscal Year 2014-15 Urban revenue sharing (state shared income tax) 6.5% Auto in-lieu taxes 2.1% Miscellaneous 0.4% Charges for services 34.1% State shared sales tax 4.9% Grants and contributions 11.5% Sales taxes 34.8% Property taxes 5.7% The pie chart above shows the different types of revenue the City receives and the proportion of each. The majority (68.9%) of the total revenue the City receives comes from charges for services and local sales tax. The second most significant source is grants and contributions. 22 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) City Expense Categories Functional Expenses Fiscal Year 2014-15 Sanitation 3.7% Housing 3.2% Landfill 1.9% General government 14.8% Water and sewer 18.3% Public safety 31.3% Interest on long-term debt 7.9% Street maintenance 4.7% Community environment 1.2% Community services 7.7% Public works 5.3% The majority of the City’s expenses (49.6%) are incurred in the Public Safety and Water and Sewer categories. Public Safety expenses include those related to police and fire protection services provided to the community. Public Safety expenses are funded by the general fund. Water and Sewer expenses are paid by the enterprise fund which is funded primarily through user paid fees for services. 23 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) 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. Governmental Funds As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $154,630, an increase of $48,256 or 45.4% in comparison with the prior year. The City implemented Governmental Accounting Standards Board Statement (GASB) 54 during the 2012 fiscal year which impacted the presentation of fund balance components by more accurately classifying the fund balances into five categories: non-spendable, restricted, committed, assigned and unassigned; Note I. K. in the summary of significant accounting policies addresses this in greater detail. In fiscal year 2015 and 2014, $28,409 and a negative $4,835, respectively, of the total fund balance constituted unassigned fund balance. Revenues for governmental functions overall totaled $297,013 in fiscal year 2015, an increase of 7.6% from the previous years’ total of $276,148. Expenditures for governmental functions totaled $292,478 in fiscal year 2015, an increase of 9.2% from the previous year total of $267,896. The General Fund is the main operating fund of the City. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $28,409 while total fund balance was $48,615. The General Fund has $216 of its fund balance as non-spendable; $10,313 as restricted; $1,114 as committed; and $8,563 assigned. Per the City’s adopted financial policies, 10% of the general fund operating revenue which totals $19,650 has been earmarked as the Budget Stabilization Reserve and $8,759 has been earmarked as the Operating Reserve. Consistent with the requirements of GASB Statement No. 54, formal Council action was not taken prior to June 30, 2015 to commit these funds; therefore, the funds are reported as unassigned. The major factors which increased the General Fund balance from the prior year include:    Consolidation of the police and fire special revenue funds into the general fund. Increases in sales tax activity from major events such as the Super Bowl and Pro Bowl. Reclassification of an inter-fund advance to an inter-fund transfer from water and sewer, landfill, and sanitation to the general fund. Overall, the General Fund’s performance resulted in revenues over expenditures of $31,320 in fiscal year 2015. In the prior year, revenues exceeded expenditures by $40,206. The Municipal Property Corporation (MPC) debt service fund was established to account for the debt service payments on the bonds that were issued to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center, and convention center. The fund had a balance of $7,161 at the end of the fiscal year. In March 2015, senior excise tax revenue bonds were issued to refund MPC bond series 2002B, 2003B, 2006A, and series 2012D. Proprietary Funds Net position of the enterprise funds decreased $34,725 or 8.6%. The enterprise funds’ total net position was $24,090 restricted, $92,922 unrestricted, and $253,134 invested in capital assets. This decrease in net position is primarily due to the reclassification of an inter-fund advance to the general fund as an inter-fund transfer. The water and sewer fund accounts for operations, maintenance and construction projects of city-owned water and sewer systems. The fund saw a decrease in net position of $11,382 for the fiscal year ended June 30, 2015. The decrease in net position is due to the reclassification of the inter-fund advance to an inter-fund transfer from water and sewer to the general fund. 24 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) The internal service funds account for risk management, workers’ compensation, and employee benefits provided to other departments. The funds saw an increase in fund balance of $1,276 for the fiscal year ended June 30, 2015. Internal service funds were 100% unrestricted. The policy of the City is to fund the worker’s compensation and risk management funds at a 55% confidence level based on the most recent actuarial valuations. General Fund Budgetary Highlights  The City’s budgeted revenues exceeded expectations and were $6,793 higher than the final budgeted amounts.  General Fund expenditures were less than the final budget by $15,646 or 7.0%. The most significant reduction was in public safety, public works and community services expenses. Expenses for public safety were $3,611 lower than the budgeted amount while expenses for public works and community services were $1,630 and $1,444 lower than budgeted amounts. In addition, budgeted equipment purchases did not occur during the fiscal year resulting in general fund capital outlay expenditures that were $3,938 or 40.1% less than the final budget.  General Fund budgetary fund balance increased by $1,627 or 3.8% as a result of increase in revenues. The most significant increase was in sales tax revenue which was $2,716 higher than the budgeted amount. The increase is attributed to the major events that were held at the City such as the Super Bowl and Pro Bowl. Capital Asset and Debt Administration Capital Assets The City’s investment in capital assets (net of accumulated depreciation) as of June 30, 2015, for its governmental-type activities was $1,142,283 and for the business-type activities was $516,534. The investment in governmental and business-type capital assets consisted of land, buildings, machinery and equipment, and infrastructure for streets, parks, airport and street lighting, water and wastewater treatment plants. Major capital asset projects capitalized during the current fiscal year included the following:         DOE UV Lamp & Well 43 Projects $4,101 Airport Apron Rehabilitation and Lighting Improvements $2,759 Multi-use Pathway $2,091 HURF Pavement Management $2,074 Grand Ave Infrastructure Improvements $1,553 CAD/RMS Project $1,366 51st Avenue HES Projects $1,143 Bus Stop and Shelters $1,023 25 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) The following table is a summary of capital assets reflected in the June 30, 2015, financial statements as compared to last year’s financial statements. Capital Assets at Year End (Net of depreciation) (in thousands) Governmental Activities 2015 2014 Construction in progress $ 19,208 $ 30,972 Land 90,237 90,338 Water storage rights Artwork 2,378 2,378 Buildings 271,426 281,629 Improvements other than buildings 147,706 146,341 Infrastructure-streets 460,829 464,492 Infrastructure-parks 52,204 56,692 Infrastructure-airport 5,440 5,931 Infrastructure-flood/storm drains 68,626 69,618 Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment 6,349 7,008 Computer equipment 1,054 690 System Purchase Software 2,993 2,383 Automotive equipment 13,833 10,844 T otal $ 1,142,283 $ 1,169,316 Business-T ype Activities 2015 2014 $ 14,289 $ 12,371 26,299 26,299 7,580 7,759 7,213 7,600 44,750 47,584 73,023 73,880 69,932 71,814 155,624 160,254 91,930 95,263 14,265 14,998 2,661 2,764 1,483 1,528 192 193 1,023 1,163 6,270 4,081 $ 516,534 $ 527,551 T otal Primary Government 2015 2014 $ 33,497 $ 43,343 116,536 116,637 7,580 7,759 2,378 2,378 278,639 289,229 192,456 193,925 460,829 464,492 52,204 56,692 5,440 5,931 68,626 69,618 73,023 73,880 69,932 71,814 155,624 160,254 91,930 95,263 14,265 14,998 2,661 2,764 7,832 8,536 1,246 883 1,023 1,163 2,993 2,383 20,103 14,925 $ 1,658,817 $ 1,696,867 The construction commitments at June 30, 2015 were $22,662. Additional information on capital assets can be found in Note V of the financial statements. 26 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Long-Term Debt At the end of the current fiscal year, the City had total debt outstanding of $881,492 compared to $962,586 last year, an 8.4% net decrease. General obligation T ransportation revenue bond Highway users revenue bonds Excise tax revenue bonds Municipal Property revenue bonds Capital lease obligation Water and sewer revenue bonds/obligations T otal $ Governmental Activities 2015 2014 126,305 $ 147,810 80,995 88,015 1,895 3,700 114,130 326,375 57 $ 649,757 $ Business-T ype Activities 2015 2014 $ $ - - 459,585 10,361 - - 709,471 231,735 $ 231,735 253,115 $ 253,115 $ T otal Primary Government 2015 2014 126,305 $ 147,810 80,995 88,015 1,895 3,700 114,130 326,375 57 $ 231,735 881,492 459,585 10,361 $ 253,115 962,586 The City received a “AA” underlying rating from Standard & Poor’s and an “A3” underlying rating from Moody’s for general obligation debt. The senior excise tax bonds are rated “AA+” by Standard and Poor’s and an “A3” by Moody’s. The subordinate lien water and sewer revenue bonds are rated “A1” by Moody’s and “AA” by Standard & Poor’s. Transportation bonds were assigned an underlying rating of “AA” by Standard & Poor’s and “A3” by Moody’s. Street and highway user revenue bonds are rated "AA" by Standard & Poor's and "A3" by Moody's. The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes, libraries, economic development, historic preservation, and cultural facilities may not exceed 6% of the total limited property value of the taxable property in that city. Cities may also issue general obligation bonds up to 20% of the total limited property value for supplying water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s current unused 6% and 20% debt limitation on June 30, 2015, was $68,042 and $108,057, respectively. Additional information on long-term debt can be found in Notes VIII and X of the financial statements. Next Year’s Budget and Economic Factors The adopted fiscal year 2015-16 budget is $632,000, a decrease of 1.6% from 2014-15. The planned spending reduction is mainly attributable to a decrease in debt service payments as the result of a recent bond refinancing and a reduction in capital project carryover funding. As the jobless claims continue to decline and the overall economy continues to improve, budgeted revenues are anticipated to increase slightly over the prior year. Major sources continue to be sales tax, state shared revenues and property taxes. Total revenues available to the city in fiscal year 2015-16 from all sources are estimated at $511,200. In the fiscal year 2015-16 budget, the general fund sub-funds, totaling 23 were eliminated and absorbed by the general fund or reclassified into internal service funds. The city of Glendale continues to be a mecca for national sporting events. The city is proud to host the National College Football Playoffs in January 2016 and one-time costs associated with the event are also included in the budget. For fiscal year 2015, the City’s annual average unemployment rate is 5.4%; this represents an improvement from last calendar year’s average of 6.5%. 27 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Request for information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance and Technology, 5850 West Glendale Avenue, Suite 302, Glendale, Arizona 85301. The remainder of this page left blank intentionally. 28 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ BASIC FINANCIAL STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. City of Glendale, Arizona Statement of Net Position June 30, 2015 (amounts expressed in thousands) Governmental Activities ASSETS Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Property taxes Accounts Note Accrued interest Intergovernmental receivable Internal balances Inventories and prepaid items Restricted deposits Restricted cash and investments Capital assets: Non-depreciable Depreciable (net) Equity in joint venture Total assets $ 163,509 $ 795 19,512 51,308 471 14,690 2,482 382 48,305 LIABILITIES Vouchers payable Accounts payable Contract payable Retainage payable Matured bonds payable Accrued interest payable Intergovernmental payable Deposits payable Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Total liabilities 110,134 Total $ 11,847 2 (2,482) 1,506 2,911 12,359 273,643 795 31,359 51,308 471 14,692 1,888 2,911 60,664 111,823 1,030,460 1,443,737 40,588 475,946 54,125 706,936 152,411 1,506,406 54,125 2,150,673 50,471 21,952 72,423 3,317 10,737 14,054 53,788 32,689 86,477 16,045 4,793 5,517 197 26,945 14,327 449 2,305 6,348 3,712 64 167 13,170 4,777 292 4,321 5 19,757 4,857 5,517 364 40,115 19,104 741 6,626 6,353 54,502 986,012 1,117,440 13,609 306,892 347,009 68,111 1,292,904 1,464,449 21,842 6,317 28,159 456,897 253,134 710,031 20,611 67,438 37,000 23,663 5,766 9,561 4,675 (248,733) 376,878 13,170 10,122 798 90,440 367,664 20,611 80,608 37,000 23,663 10,122 5,766 9,561 5,473 (158,293) 744,542 DEFERRED OUTFLOWS OF RESOURCES Debit amounts related to pensions Debit amounts resulting from refunded debt Total deferred outflows of resources DEFERRED INFLOW OF RESOURCES NET POSITION Net investment in capital assets Restricted for: Capital projects Debt service Transportation Highway and streets Revenue bond retirement, replacement, and extension Perpetual care - nonexpendable Police and Fire Other purposes Unrestricted Total net position Primary Government Business-Type Activities $ The notes to the financial statements are an integral part of this statement. 29 $ $ City of Glendale, Arizona Statement of Activities For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Charges for Services Expenses Functions/Programs Primary government: Governmental activities: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Total governmental activities Business-type activities: Water and sewer Landfill Sanitation Housing Total business-type activities Total primary government $ $ 60,490 127,870 21,482 31,311 4,980 19,180 32,106 297,419 $ 74,807 7,727 15,059 13,159 110,752 408,171 $ 18,498 6,084 631 11,704 309 25 37,251 78,541 9,757 14,944 3,265 106,507 143,758 Program Revenues Operating Grants and Contributions $ $ 710 3,941 30 2,116 4,827 14,041 25,665 266 8,589 8,855 34,520 General revenues: Taxes: Property taxes levied for: General purposes Debt service Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted (Loss)/Gain on disposal of capital assets Loss on joint venture Miscellaneous Transfers Total general revenues, special items, and transfers Change in net position Net position - beginning - restated Net position - ending The notes to the financial statements are an integral part of this statement. 30 Capital Grants and Contributions $ $ 3,185 444 4,563 3,211 11,403 2,455 107 2,562 13,965 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-Type Activities Activities Total $ $ (38,097) (117,401) (20,821) (12,928) 156 (1,903) (32,106) (223,100) $ - $ (38,097) (117,401) (20,821) (12,928) 156 (1,903) (32,106) (223,100) (223,100) 6,455 2,030 (115) (1,198) 7,172 7,172 6,455 2,030 (115) (1,198) 7,172 (215,928) 5,250 18,631 147,175 20,695 27,446 8,664 1,070 (688) 520 39,198 267,961 44,861 332,017 376,878 643 127 (3,329) 86 (39,198) (41,671) (34,499) 402,163 367,664 5,250 18,631 147,175 20,695 27,446 8,664 1,713 (561) (3,329) 606 226,290 10,362 734,180 744,542 $ $ 31 City of Glendale, Arizona Balance Sheet Governmental Funds June 30, 2015 (amounts expressed in thousands) Major Funds Municipal Property Corporation General Debt Service ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Note Accrued interest Due from other funds Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets $ 52,322 $ 164 16,802 471 2,536 2,142 216 977 75,630 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable $ Accounts payable Contract Payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances $ 9,349 4,793 5,517 1,141 448 2,300 257 23,805 4,734 $ 51,308 13,045 69,087 $ 8,033 2,585 10,618 $ 95,351 $ 631 2,704 12,548 107 32,708 144,049 $ 4,695 197 53 1 2,536 5 6,091 6,294 24,360 44,232 Total Governmental Funds $ 152,407 $ 795 19,506 51,308 471 2,536 14,690 323 46,730 288,766 $ 14,044 4,793 5,517 197 1,194 449 2,536 2,305 6,348 14,327 26,945 78,655 3,210 51,308 963 55,481 216 10,313 1,114 8,563 28,409 48,615 75,630 7,161 7,161 69,087 5,768 92,809 277 98,854 144,049 5,984 110,283 1,114 8,840 28,409 154,630 288,766 The notes to the financial statements are an integral part of this statement. 32 $ Other Non-Major Governmental Funds $ $ $ City of Glendale, Arizona Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2015 (amounts expressed in thousands) Amounts reported for governmental activities in the statement of net position are different because: Fund balances - total governmental funds balance sheet $ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Less accumulated depreciation 154,630 $ 1,789,321 (647,038) 1,142,283 The reacquisition price of refunding outstanding debt is a deferred outflow of resources in the statement of net position and is amortized over the lesser of the refunded bonds or refunding bonds and represents a reconciling item between the government-wide and fund financial statements. 21,952 Deferred outflow of resouces related to pensions 50,471 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds and shown as an internal balance item. 2,482 Internal service funds are used by management to charge the costs of workers' compensation, risk management, and employee benefits to individual funds. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the statement of net position. Long-term liabilities, including bonds payable are not due and payable in the current period and, therefore, are not reported in the funds. Bonds payable Net pension obligation Capital lease obligations Developer payable obligations Compensated absences Bond discount OPEB obligations Unamortized premium on debt issuance 341 (649,700) (244,467) (57) (3,406) (20,503) 1,402 (56,614) (55,577) (1,028,922) Deferred inflows of resources related to pensions (21,842) Deferred inflows of resources is unavailable revenue that is measurable but not yet available for governmental fund activities is recognized as revenue for governmental-wide activities. Net position of governmental activities 55,483 $ The notes to the financial statements are an integral part of this statement. 33 376,878 City of Glendale, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Major Funds Municipal Property Corporation General Debt Service REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Payment to refunded bonds escrow agent Principal-current bond refunding Interest-current bond refunding Refunding bonds issued Premium on long-term debt issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1 Fund balances, June 30 $ $ 127,297 8,867 57,165 16,600 3,556 1,010 4,395 218,890 $ - Other Non-Major Governmental Funds $ 43,308 1,743 29,947 525 1,085 248 1,267 78,123 Total Governmental Funds $ 170,605 10,610 87,112 525 17,685 3,556 1,258 5,662 297,013 33,417 110,166 8,637 13,546 20 717 3,884 9 905 68 3,977 36 12,833 4,957 7,234 1,002 33,494 114,143 8,673 26,379 4,977 7,951 5,791 10,304 867 6,012 187,570 2,585 19,382 22,881 24,362 12,621 14,937 82,027 37,251 32,870 20,949 292,478 31,320 (22,881) (3,904) 266 50,669 (31,647) 19,288 50,608 (1,993) 48,615 (35,067) (98,195) (910) 164,998 (1,793) 29,033 6,152 1,009 7,161 (96,899) (11,950) (112) 209,255 35,751 2,384 25,027 (168,056) (4,600) (8,504) 107,358 98,854 $ The notes to the financial statements are an integral part of this statement. 34 $ 4,535 $ (131,966) (110,145) (1,022) 209,255 35,751 2,650 240,694 (201,496) 43,721 48,256 106,374 154,630 City of Glendale, Arizona Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Amounts for governmental activities in the statement of net position are different because: Net change in fund balances - total governmental funds $ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation. This is the amount by which capital outlays of $20,949 did not exceed depreciation of $47,318 for the current period. The net effect of various transactions involving capital is to increase net position. Capital contributions Disposals Gain (loss) on sales 48,256 (26,369) $ 2,677 (2,650) (688) (661) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds. The net effect of long-term debt issuance and the related transactions is to increase net assets. Payment to redeem lease Bond premium Bond premium amortized Bond discount amortized Deferred amount on refunding Payment to refunded bonds escrow agent Principal paid Refunding bonds issued Principal paid current refunding 3,886 10,304 (35,751) 2,805 (62) (1,089) 131,966 26,947 (209,255) 110,145 36,010 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. (2,539) Other post employment benefits 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. (2,925) Pension contributions 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. 18,450 Net pension expense 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. (26,944) Internal service funds are used by management to charge the costs of workers' compensation, risk management, and employee benefits to individual funds. 1,050 Expenses on the statement of activities differ from governmental funds because of the portion not accrued on the governmental funds. Change in net position of governmental activities (3,353) $ The notes to the financial statements are an integral part of this statement. 35 44,861 City of Glendale, Arizona Statement of Net Position Proprietary Funds June 30, 2015 (amounts expressed in thousands) ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernmental receivable Inventories and prepaid items Total current assets Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Governmental Activities Internal Service Funds $ $ 94,538 11,413 (1,887) 1,489 105,553 Noncurrent assets: Restricted deposits Restricted cash and investments Capital assets: Capital assets Accumulated depreciation Capital assets, net 15,596 DEFERRED OUTFLOWS OF RESOURCES Debit amounts related to pensions Debit amounts resulting from refunded debt Total deferred outflows of resources LIABILITIES Current liabilities: Vouchers payable Accounts payable Retainage payable Compensated absences Matured bonds payable Intergovernmental payable Deposits Unearned rent Estimated claims payable Current portion of long-term debt: Unamortized premium on debt issuance Revenue bonds/obligations payable Interest payable Total current liabilities Noncurrent liabilities: Compensated absences Unamortized premium on debt issuance Revenue bonds/obligations payable Pension obligations OPEB long-term obligations Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities DEFERRED INFLOWS $ - 36 110,134 11,102 14,136 (2,289) 2 1,506 123,489 6 59 11,167 2,911 12,359 1,575 - 784,632 (292,520) 492,112 56,351 (31,929) 24,422 840,983 (324,449) 516,534 54,125 561,507 667,060 24,422 42,358 54,125 585,929 709,418 1,575 12,742 2,155 10,737 12,892 1,162 1,162 3,317 10,737 14,054 2 2 2,945 74 1,346 13,170 288 4,086 - 767 64 93 598 4 235 5 - 3,712 64 167 1,944 13,170 292 4,321 5 - 2,001 10 10,369 2,250 9,415 4,777 38,351 1,766 2,250 9,415 4,777 40,117 12,380 691 26,982 222,320 18,543 7,898 276,434 314,785 511 9,996 4,893 98 14,960 30,458 32,224 1,202 26,982 222,320 28,539 12,791 98 14,960 306,892 347,009 1 18 19 12,399 4,104 2,213 6,317 4 228,712 24,422 253,134 - 13,170 10,122 798 108,261 361,063 (15,339) 9,083 13,170 10,122 798 92,922 370,146 341 341 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net position of business-type activities The notes to the financial statements are an integral part of this statement. $ 2,723 (402) 2 17 17,936 2,911 12,359 Equity in joint venture Total noncurrent assets Total assets NET POSITION Net investment in capital assets Restricted for: Debt service Revenue bond retirement, replacement and extension Other purposes Unrestricted Total net position $ $ (2,482) 367,664 - $ City of Glendale, Arizona Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Operating revenues: Intergovernmental Metered water sales Sewer service charges Container service Curb service Landfill user fees Self-insurance premium Recycling sales Other fees Total operating revenues Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Governmental Activities Internal Service Funds $ $ Operating expenses: Water Sewer Landfill Housing Closure/post-closure care adjustment Sanitation Administrative and general Insurance claims and premiums Amortization and depreciation Total operating expenses Operating income (loss) $ 18,365 11,849 11,498 22,370 64,082 13,843 Nonoperating revenues (expenses): Impact fees Investment income Interest expense Net loss from joint venture Bond issuance cost Gain on disposal of assets OPEB expense Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in net position Total net position - beginning - restated Total net position - ending 266 43,312 32,033 2,314 77,925 $ 8,962 43,312 32,033 4,216 10,728 7,594 1,771 5,971 114,587 27,114 215 27,329 7,099 12,676 (206) 13,567 2,640 35,776 886 18,365 11,849 7,099 12,676 (206) 13,567 11,498 25,010 99,858 14,729 55 26,043 26,098 1,231 967 433 (9,718) (3,329) (700) 6 (430) (12,771) 210 121 (271) 60 967 643 (9,718) (3,329) (700) 127 (701) (12,711) 45 45 1,072 946 2,018 1,276 2,455 274 (39,472) (34,725) 1,276 2,455 (14,909) (11,382) $ 8,696 4,216 10,728 7,594 1,771 3,657 36,662 372,445 361,063 274 (24,563) (23,343) $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net position of business-type activities The notes to the financial statements are an integral part of this statement. 37 32,426 9,083 $ $ 226 (34,499) (935) 341 City of Glendale, Arizona Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid for insurance and in settlement of claims Cash paid to employees for services Net cash provided (used) by operating activities $ Cash flows from noncapital financing activities: Transfers in Transfers out Advances to/due from other funds Net cash provided (used) by noncapital financing activities 79,362 - $ 107,344 8,691 (9,327) (15,770) (16,002) (34,663) (15,458) 38,336 (8,387) 3,189 (23,845) 41,525 (14,909) 14,850 274 (24,563) 24,633 274 (39,472) 39,483 344 $ 27,326 (26,523) (44) 759 - 285 - 140,503 (139,803) (700) (10,210) (5,753) 967 (12,493) (179) 5 (5,440) - 140,503 (139,803) (700) (10,205) (11,193) 967 (12,493) (179) - (27,668) (5,435) (33,103) - Cash flows from investing activities: Interest received from investments Net cash provided by investing activities 433 433 Net increase (decrease) in cash and cash equivalents during fiscal year 11,042 $ 27,982 8,691 (6,675) (18,893) (59) Cash flows from capital and related financing activities: Proceeds from bonds sold Payment to refunded bonds' escrow agent Bond issuance cost Principal payments on obligations Acquisition of capital assets and rights Impact fees Interest payments on obligations Contributions to Join Venture Net cash (used) by capital and related financing activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 $ Governmental Activities Internal Service Funds 95,855 106,897 The notes to the financial statements are an integral part of this statement. 38 210 210 (1,692) $ 17,288 15,596 $ 643 643 45 45 9,350 804 113,143 122,493 $ 11,873 12,677 Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operations: Amortization and depreciation Net pension expense and contribution Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Inventories and prepaid items Restricted deposits Vouchers and accounts payable Accrued expenses Intergovernmental payable Due to other funds Deposits Unearned rent Compensated absences Claims payable Proceeds from disposal of assets Estimated closure and post-closure costs Net cash provided (used) by operating activities Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net position: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents Noncash investing, capital, and financing activities: Contributions of capital assets Loss on joint venture Amortization of bond premium/discount Amortization of debit amounts resulting from refunded debt $ $ $ $ $ 13,843 $ 886 $ Governmental Activities Internal Service Funds 14,729 22,370 (368) 2,640 (197) 25,010 (565) 940 (759) 103 1,587 (99) (10) 394 335 - (20) 7 4 (4) (8) (11) (1) 4 (1) 62 34 920 7 (755) 103 1,583 (107) (21) (1) 398 (1) 397 34 38,336 94,538 12,359 106,897 2,455 (3,329) 1,702 590 39 $ $ $ $ (206) 3,189 15,596 15,596 - $ $ $ $ (206) 41,525 110,134 12,359 122,493 2,455 (3,329) 1,702 590 $ 1,231 (3) 174 10 (653) - $ $ $ $ 759 11,102 1,575 12,677 - CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Notes to the Financial Statements The Notes to the Basic Financial Statements include a summary of significant accounting policies and other disclosures considered necessary for a clear understanding of the accompanying financial statements. Index Note Page Summary of Significant Accounting Policies ............................................................................. I ............................. 41 Compliance – Excess of Expenditures Over Appropriations/Deficits in Fund Equity ............. II ............................. 52 Deposits and Investments ........................................................................................................ III ............................. 52 Note Receivable....................................................................................................................... IV ............................. 53 Capital Assets ........................................................................................................................... V ............................. 54 Construction Commitments ..................................................................................................... VI ............................. 56 Self-Insurance Funds ..............................................................................................................VII ............................. 56 Leases ................................................................................................................................... VIII ............................. 59 Short-Term Debt ...................................................................................................................... IX ............................. 60 Long-Term Debt ....................................................................................................................... X ............................. 60 Landfill Obligations ................................................................................................................. XI ............................. 71 Inter-fund Transactions...........................................................................................................XII ............................. 72 Encumbrances....................................................................................................................... XIII ............................. 74 Equity in Joint Venture ......................................................................................................... XIV ............................. 74 Jointly Governed Organizations ............................................................................................ XV ............................. 75 Governmental Fund Balance Components and Fund Type Definitions ............................... XVI ............................. 75 Change in Accounting Principle .......................................................................................... XVII ............................. 77 Employee Retirement Systems and Pension Plans ............................................................ XVIII ............................. 77 Other Post-Employment Benefits (OPEB) ........................................................................... XIX ............................. 93 Contingent Liabilities and Commitments .............................................................................. XX ............................. 95 Implementation of New Accounting Principles .................................................................... XXI ............................. 95 Subsequent Events ............................................................................................................... XXII ............................. 96 40 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) I. Summary of significant accounting policies A. Reporting entity The City of Glendale, Arizona (City) was incorporated June 18, 1910, under the provisions of Article 13, Sections 1 through 6 of the Constitution of Arizona and Title 9 of the Arizona Revised Statutes. It is governed by a Mayor elected at large, and six district council members. The City operates under a Council-Manager government. The major operations of the City include providing police, fire and water and sewer services to citizens. As required by GAAP, these financial statements present the government 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 a government’s operations, so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in combined financial statements to emphasize that it is legally separate from the government. The City has no discretely presented component units. Blended component units City of Glendale, Arizona, Municipal Property Corporation (MPC) is a non-profit corporation organized under the laws of the State of Arizona to assist the City in the acquisition and financing of municipal projects and facilities. MPC is governed by a board of directors who are responsible for approving the corporation’s bond sales. Bond sales must also be approved by the City Council. Although it is legally separate from the City, MPC is reported as if it is part of the primary government because its sole purpose is to finance and construct public facilities for the City. The total debt outstanding, including leases, of the MPC is expected to be repaid entirely or almost entirely with the resources of the primary government. MPC does not issue separate audited financial statements. However, it does file a tax return with the Internal Revenue Service. Copies of the tax return are available from the City’s Finance and Technology Department. City of Glendale, Arizona, Western Loop 101 Public Facilities Corporation (PFC) is a non-profit corporation organized under the laws of the State of Arizona to assist the City to finance, construct and equip a spring training baseball facility for two major league teams and all other related infrastructure. The Board of Directors of the PFC, appointed by the City Council, consists of four City employees and one private citizen. The Board of Directors is responsible for authorizing debt (obligations) of the PFC. The City Council also approves the debt of the PFC. The total debt outstanding, including leases, of the PFC is expected to be repaid entirely or almost entirely with the resources of the primary government. Although the PFC is a legally separate entity from the City, the PFC is reported as if it is part of the primary government because its sole purpose is to finance and construct public facilities for the City. The PFC does not issue separate audited financial statements. The PFC does file a tax return with the Internal Revenue Service. Copies of the tax return are available from the City’s Finance and Technology Department. B. Government-wide and fund financial statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. There are several types of transactions that are reported in the financial statements as inter-fund items. Transactions that would be treated as revenue, expenditures or expenses if they involved organizations external to the governmental unit, like the sale of water from the water and sewer fund to various 41 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) functions of the general fund, are accounted for as revenue and expenditures or expenses in the funds involved. Transactions that constitute reimbursement to a fund for expenditures or expenses initially made from that fund, which are properly applicable to another fund, are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is being reimbursed. Governmental Accounting Standards Board (GASB) Statement 34 also requires that administrative service fees charged to other operating funds to support general services used by the other operating funds (like purchasing, accounting and administration) should be treated as reimbursement transactions and the revenue and expenditures/expenses reduced in the allocating fund. Transfers between funds are included in the results of both governmental and proprietary funds (as other sources/uses in governmental funds). Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported in the fund financial statements as “due to/from other funds.” Certain transactions occurring between funds that are combined within the same fund type or displayed in the same financial statement column for presentation in these annual financial statements have been eliminated from the financial statements. These transactions include transfers between funds and interdepartmental service charges. In the government-wide financial statements, only the net inter-fund activity and balances between governmental activities and business-type activities are shown (reported as “internal balances”). The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is 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 and other items not properly 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 major individual enterprise funds are reported as separate columns in the fund financial statements. The internal service funds are eliminated on an entity-wide basis as per GASB Statement 34. C. Form of presentation – fund financial statements The City reports the following major governmental funds: The general fund is the City’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. The municipal property corporation debt service fund (MPC) accounts for the debt service payments for the bonds that were issued to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center and convention center. The City reports the following major proprietary fund: The water and sewer fund accounts for operations, maintenance and construction projects of the Cityowned water and sewer systems. 42 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Additionally, the City reports internal service funds. Internal service funds account for risk management, workers’ compensation and employee benefits provided to other departments. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures/expenses, as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The following funds are presented in the accompanying financial statements: Governmental funds Governmental funds are those through which most governmental functions of the City are financed. The acquisition, use and balances of the City’s expendable financial resources and related liabilities (except those accounted for in proprietary funds) are accounted for through governmental funds. The measurement focus is based upon determination of financial position and changes in financial position rather than upon the determination of net income. The following governmental funds are presented in the accompanying financial statements. General fund: The general fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special revenue funds: Special revenue funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Debt service funds: Debt service funds are used to account for the accumulation of financial resources for the payment of general long-term debt principal, interest, and related costs, except the debt service accounted for in the enterprise funds. Debt service funds also include the debt payable from highway user’s gas tax revenues and unrestricted excise tax revenues as well as debt funded by property taxes levied by the City on property located within the City. Capital projects funds: Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Permanent fund: Permanent fund is used to account for financial resources to be used by the cemetery fund. Proprietary funds Proprietary funds are used to account for the City’s ongoing operations and activities, which are similar to those found in the private sector. The measurement focus is based upon the determination of net income. Enterprise funds: Enterprise funds are used to account for operations, including debt service, 1) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or 2) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, 43 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) or other purposes. The enterprise funds, which the City currently maintains, are the water and sewer, landfill, sanitation, and housing funds. Internal service funds: Internal service funds are used to account for the financing of self-insurance provided by one City department to other City departments on a cost-reimbursement basis. D. Measurement focus and basis of accounting The City-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. 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 provider have been met. 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 except as described below in relation to grants. Revenues are considered to be available when they are collected 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, principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the related debt service fund for payments to be made shortly after fiscal year-end. Revenues susceptible to accrual because of their availability include property tax, sales tax, highway user’s tax, state shared sales tax, vehicle license tax, and interest earned on investments. Licenses and permits, charges for services, fines and forfeitures, and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. In applying the susceptible to accrual concept to intergovernmental revenues, the decision to accrue depends on the terms of the arrangement or agreement. Generally, these resources are reflected as revenue at the time of receipt or earlier if they meet the available criterion. Certain grant revenues are recognized based on expenditures recorded. Resources that have been received before time requirements are met but after all other eligibility requirements have been met are recorded as a deferred inflow. However, resources transmitted before time requirements are met but after eligibility requirements have been met are recorded as deferred outflows. This practice is defined and supported by GASB Statement 63, as it pertains to Financial reporting of deferred outflows of resources, deferred inflows of resources and net position. E. Statement of cash flows The City considers short-term investments (including restricted assets) in the State of Arizona Local Government Investment Pool (LGIP), mutual fund-money market, U.S. Treasury bills and notes with original maturities of three months or less at acquisition date to be cash equivalents. F. Inter-fund transactions Inter-fund transactions, consisting of services performed for other funds or costs billed to other funds are treated as expenditures in the fund receiving the services and as a reimbursement reducing expenditures in the fund performing the services, except for sales of water to other City departments, which are recorded as revenue in the Water Enterprise funds. In addition, operating transfers are made between 44 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) funds to shift resources from a fund legally authorized to receive revenue to a fund authorized to expend the revenue. Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is classified as due to/from other funds (current portion of inter-fund advances) and advances to/from other funds (noncurrent portion of inter-fund advances). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. G. Inventories and prepaid items Inventories of the governmental and enterprise funds consist primarily of expendable supplies held for consumption. These inventories are maintained on a perpetual system verified through cyclical physical counts and are valued using a weighted average cost. Generally, expenditures are recorded at the time inventories are used (i.e., the consumption method) for both GAAP reporting and budgetary purposes. However, the City postage inventory is recorded as expenditure at time of purchase (i.e., the purchase method) for budgetary purposes. At June 30, 2015, the postage portion of the general fund supplies inventory was $9. Certain expenditures are recorded for financial reporting purposes as prepaid items. Special reporting treatment is applied to governmental fund inventories and prepaid items to indicate that they represent amounts that are not in spendable form, even though they are a component of current assets. Such amounts are presented as a component of non-spendable fund balance. H. Restricted assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted on the balance sheet, or statement of net position, because they are maintained in separate bank accounts and their use is limited by applicable debt covenants and the escrow agreement. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources, as they are needed. Restricted assets also include cash held at the Maricopa County Treasurer for the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO funds are limited by state and federal law to qualified expenses related to fighting and preventing drug use and organized crime. I. Capital assets The City has chosen not to apply the modified approach to any networks or subsystems of infrastructure assets. No long-term assets or depreciation are shown in the governmental fund financial statements. Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only to the City) are defined as assets with an initial, individual cost of more than $5 and an estimated useful life greater than three years. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. 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 total interest expense incurred by the enterprise funds 45 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) during the current fiscal year was $9,718. In addition, $91 was included as part of the cost of capital assets under construction in connection with water and sewer projects. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Improvements other than buildings Infrastructure Machinery and equipment Automotive equipment Software Computer equipment Useful Life (Years) 30 10-20 10-100 5-8 6-8 3 3-5 Capital assets transferred between funds are transferred at their carrying value (cost less accumulated depreciation) as of the date of the transfer. J. Water rights The City has entered into a lease agreement with Salt River Pima-Maricopa Indian Community (SRPMIC) for the rights to 1,814 acre-feet of water each year through 2099. These rights, costing $2,693, are being amortized over 40 years on a straight-line basis starting January 1, 2000. Current year amortization was $67. The net book value of water rights as of June 30, 2015, is $1,648. In addition, the City will be responsible for paying for the cost of water delivered each year. The City participates in the Plan Six cost sharing agreement to construct the Waddell Dam on the Agua Fria River and modify the Roosevelt and Stewart Mountain Dams on the Salt River. The parties to this agreement include the United States government, State of Arizona, Central Arizona Water Conservation District, Salt River Project, and the cities of Phoenix, Chandler, Glendale, Mesa, Scottsdale, Tempe and Tucson. The federal government has determined that this agreement does not constitute a joint venture. As of June 30, 2015, the City has capitalized payment of $4,463 for these water rights. Current year amortization was $112. The net book value of these water rights as of June 30, 2015, is $3,905. The City purchased Central Arizona Project water rights as part of the Salt River Pima-Maricopa Indian Community Water Rights Settlement in November 2007. These rights, as of June 30, 2015, costing $2,027, are a permanent right and are considered to have an indefinite useful life. As such, they are not amortized; therefore, cost and net book value are equal to $2,027. K. Governmental fund balance components The City has implemented GASB No. 54 fund balance reporting and governmental fund type definitions. The components of governmental fund balance consist of the following: Non-spendable amounts are the portion of net resources that cannot be spent because of their form such as inventories and prepaid items. Also included is the portion of net resources that cannot be spent because they must be maintained intact pursuant to legal and contractual requirements such as the cemetery permanent fund. Restricted are amounts that are subject to externally enforceable legal restrictions imposed by parties outside the government such as creditors, grantors, contributors, and other governments through laws and regulations. Examples of restricted fund balance are amounts held to pay for bonded construction 46 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) projects, debt service, and excise tax revenues collected for voter approved transportation expenditures. Committed are amounts that are constrained by limitations imposed by the highest level of decision making authority, namely Mayor and Council and require approval by the same level of authority through an ordinance to remove. Amounts must be committed prior to the fiscal year end. An example of committed fund balance is amounts for artwork. Assigned are amounts that are constrained by limitations imposed by management based on the intended use of the funds. The city manager and finance director are given authority to assign funds as needed through the financial policies adopted in the annual Budget Book approved by Mayor and Council. Examples include amounts intended for computer replacement or telephone or equipment management services. Unassigned are amounts for any other purpose. If resources were not assigned, they could not be properly reported in a fund other than the general fund. Therefore, only the general fund can report a positive amount of unassigned fund balance. Any governmental fund in a deficit position could report a negative amount of unassigned fund balance. When both restricted and unrestricted resources are available for specific expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed and assigned are considered spent (if available) before unassigned amounts. On the government-wide financial statements, only restrictions imposed by external sources are shown as restricted net position. L. Net position The government-wide and proprietary fund financial statements use a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted. Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category. Restricted Net Position – This category represents net position that has external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments, and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose. M. Property tax The City levies taxes on real and personal property located within its boundaries. Property values are assessed by the Maricopa County Tax Assessor. The tax levy is then approved by the State of Arizona Property Tax Oversight Commission. The County Treasurer bills and collects property taxes and remits them to the City monthly. City property tax revenues are recognized when levied to the extent that they are received within the current period, or soon enough thereafter (within 30 days of year-end), to pay liabilities of the current period. Remaining collectible taxes are accrued and reflected as deferred inflows of resources. 47 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Property Tax Calendar Lien date Levy (assessment) date (third Monday in August) Due dates: First half of assessment Second half of assessment Penalties and interest added (collection dates): First half of assessment Second half of assessment January 1, 2014 August 18, 2014 October 1, 2014 March 1, 2015 November 3, 2014 May 1, 2015 The City currently levies less than the maximum allowed by State Statutes for primary property taxes. The City is permitted to levy an increase of two percent over the previous year’s maximum allowable primary levy plus an increased dollar amount due to a net gain in property not taxed the previous year. The secondary property tax levy is made for the purpose of retiring the principal, interest and servicing fees on bonded indebtedness. The City may levy the amount deemed necessary to meet its bonded debt service requirements. Assessed values are established by the Maricopa County Tax Assessor each year on a uniform basis ratio to full cash value of each property class as required by State Statutes. The distribution of the City’s levy (tax rate per $100 assessed value) to its funds for the year ended June 30, 2015, is as follows: Fund General fund General obligation debt service fund Total Rate 0.49 1.66 $ 2.15 $ N. Compensated absences Vacation time is accumulated up to a maximum of 10 workweeks and compensatory time is earned in lieu of cash payment for overtime. Both vacation and compensatory time can either be taken as time off from work, within certain limitations, or may be payable to employees upon termination or retirement. Employees who have ten or more years of service will receive upon retirement 100% of up to 160 hours of vacation accrued. Any remaining vacation time above 160 hours will be 100% contributed to a mandatory Retiree Health Savings plan for the employee. Employees separating from the City receive 100% of accrued vacation time. Sick leave is accumulated without limit and can be used in the event of an illness of the employee or their immediate family. Accumulated sick leave can be converted to a cash benefit on a biannual basis for employees based on one-third of the average hourly rate the last 36 months. Employees must maintain a minimum sick leave balance on the books. Employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their average hourly wage over the last 36 months. Employees who separate from service and have five or more years of service will receive one-third of their sick leave balance based on their average hourly wage over the last 36 months in a cash payout. Represented Fire and Police MOU employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their average hourly wage over the last 36 months. Represented Fire and Police MOU employees who retire are paid 100% of accrued vacation time. The current portion of the liability for compensated absences recorded in the governmental fund is equal to: 1) vacation and compensatory time taken and paid during the thirty days following the year ended 48 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) June 30, 2015, and 2) sick leave, taken and paid for illness during that period, paid to terminating employees or paid under the optional annual declaration. Long-term liabilities of governmental funds are not shown on the fund financial statements. All of the outstanding vacation, compensatory time, and sick leave are recorded as a liability on the government-wide financial statements, and the proprietary fund financial statements, according to payment policy. O. Deferred outflow and deferred inflow of resources Resources transmitted before time requirements are met, but after all other eligibility requirements have been met, are reported as deferred outflows. Reacquisition costs associated with bond refunding is an example of a deferred outflow of resources. Resources received before time requirements are met, but after all other eligibility requirements are met, are recorded as deferred inflows. Certain grant receipts is an example of deferred inflow of resources. Amounts that are reported as deferred outflows are shown as a separate balance sheet section following the assets. Similarly, amounts shown as deferred inflows are shown in a separate balance sheet section following liabilities. P. Long-term obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are reported as a long-term liability and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond 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. Q. Operating revenues and expenses 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 enterprise funds and the City’s internal service funds are charges to customers for sales and services, or housing operational grants from a federal agency. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. R. 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 49 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. S. Deferred compensation Voluntary Deferred Compensation Plan for Employees of the City of Glendale, State of Arizona; Restated Plan Document (the “Plan document”) was adopted by the Mayor and City Council on November 10, 1998, and amended on January 8, 2002 to incorporate the Federal Economic Growth and Tax Relief Reconciliation Act of 2001. In addition, the Mayor and City Council adopted a defined contribution deferred compensation plan document on April 9, 2002, under the Internal Revenue Code Section 401(a). Also, during the fiscal year 2011, the employees had available to them the option of deferring compensation in a Roth IRA administered by ICMA Retirement Corporation (ICMA RC). On February 12, 2013 the adoption of a new contract was approved by the Mayor and City Council which allowed the plan to be administered solely by the third-party administrator GREAT WEST LIFE & ANNUITY INSURANCE CO (Great West). Through the Plan document, the City offers its employees a deferred compensation plan that permits them to defer a portion of their current salary until future years. Any contributions made to the deferred compensation plan, in compliance with Section 457 and 401(a) of the Internal Revenue Code, are not available to employees until termination of employment, retirement, death or an unforeseen emergency. Contributions to the plan are administered by the thirdparty administrator, Empower Retirement. In compliance with the provisions of the U.S. Internal Revenue Code Sections 457(g) and 401(a), the plan assets are in custodial or trust accounts for the exclusive benefit of the plans’ participants and beneficiaries. The City provides neither administrative services nor investment advice to the plans; therefore, no fiduciary relationship exists between the City and the deferred compensation pension plan. In addition, the plan assets are not included as a fund of the City. Retiree Health Savings (RHS) Plan was originally adopted on July 1, 2008, and amended and restated on February 12, 2013, by Mayor and Council. The purpose of the Plan is to provide certain Employees with an opportunity to receive reimbursement for certain Health Care Expenses as provided in this Plan. It is the intention of the Adopting Employer that the benefits payable under this Plan be eligible for exclusion from the gross income of Participants as provided by Sections 105(b) and 106 of the Code. In addition, it is the intention of the Adopting Employer that the Plan qualify as a Health Reimbursement Arrangement (HRA) under IRS Revenue Ruling 202-41 (June 26, 2002) and IRS Notice 2002-45 (June 26, 2002). The provider for this RHS plan is Educator Benefit Consultants (EBC). The contributions to this Plan are detailed in the Compensated Absences (N) section on this document. T. Elected Officials’ Defined Contribution Retirement System (EODCRS) HB 2608 signed in July of 2013 closed the Elected Officials’ Retirement Plan (EORP) to new members and established the new Elected Officials’ Defined Contribution Retirement System (EODCRS) effective January 1, 2014 (A.R.S. Title 38, Chapter 5, Article 3.1). In addition to this new plan, the EODCRS Disability Program was also established (A.R.S. Title 38, Chapter 5, Article 3.2). EODCRS is a nonERISA 401(a) plan type. If a person is elected, appointed, or hired on or after January 1, 2014, does not have money on account with EORP, does not have money on account with ASRS or does not timely opt out of the EODCRS to return to ASRS, if applicable, the elected official must be automatically enrolled in the EODCRS. This includes any elected official who has already retired from EORP and/or ASRS. The investment options available to EODCRS members will be administered by Nationwide Retirement Solutions (NRS). The elected official will also contribute to and participate in the EODCRS Disability Program administered by PSPRS. As prescribed in ARS § 38‐727, if a person is appointed, elected, or hired on or after January 1, 2014 and does not have money on account with the EORP, but has money on account with the ASRS, that person 50 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) has the option to return to the ASRS. The member has the option to participate in either the EODCRS or the ASRS Plan with each term. That decision is irrevocable during the term in which that election was made. Additionally, the elected official will contribute to and participate in the Long‐Term Disability Program administered by ASRS. To choose the ASRS, the person must fill out a form provided by PSPRS opting out of the EODCRS. This election must be made within 30 days after that person’s term begins and returned to PSPRS. The City was required by statute to contribution 12.20 percent of elected officials participating as an ASRS members’ annual covered payroll to the ASRS Legacy As of January 1, 2014, the employer rate for all employers contributing on behalf of their elected officials, regardless of what plan they are in, will be 23.5%. However, pursuant to ARS § 38‐810, subsection C, and as described above, that rate may be split a number of ways depending on which plan (or path) your elected official will belong to. Employee rates will vary, also dependent upon the path your elected official is on, and all are pre‐tax contributions. The rates for the respective disability programs are separate from the 23.5% employer rate and are contributed on an after‐tax basis. The 23.5% employer rate is set by statute; however the Board of Trustees of PSPRS is required to monitor this rate to inform the Legislature annually of its continued ability to pay the unfunded liability of the EORP legacy costs, so there is the possibility of this rate changing from time‐to‐time. Additionally, the rate for the disability program will also be reviewed and revised annually to meet its actuarially determined costs. For the year ended June 30, 2015 active EODCRS members were required by statue to contribute at the rate of 8.125 percent (8 percent to the DC plan and .125 percent for the disability program) of the members’ annual covered payroll. The City was required by statue to contribute at the rate 6.125 percent (6 percent to the DC plan and .125 percent for the disability program) of the active members’ annual covered payroll. $205 maximum was the annual contribution limit in 2013 from all contribution sources under the 414(h) employer pick up rules. Employee and employer contributions are immediately vested. In addition, the City was required by statute to contribution 17.50 percent of the EODC members’ annual covered payroll to the EORP Legacy. U. Investments The City uses the following methods and assumptions to account for its investments: 1. 2. 3. Aside from investments clearly identified as belonging to a specific fund, any unrealized gain/loss resulting from the valuation is recognized within the general fund as investment revenue. Investments are recorded at fair value, which is based on quoted market prices as of the valuation date. Pooled investment income is allocated to various funds monthly based on the average equity balances maintained during the month. Arizona Revised Statutes require the City to deposit certain crime-related forfeitures with the County Treasurer. The County Treasurer determines the fair value of those pooled investments. The structure of the pool does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the value of the participants’ investments. The County Treasurer is not subject to custodial credit risk. The City’s investment in LGIP represents shares of the pool’s portfolio. The fair value of each share in the LGIP is one dollar. These shares are not identified with specific investments and are not subject to custodial credit risk. Neither the County nor LGIP are registered with the Securities and Exchange Commission as investment companies. The State Board of Deposits provides oversight, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the LGIP. There is no regulatory oversight of the County Treasurer’s operations. The net increase in the fair value of investments during the fiscal year ended June 30, 2015, was $263. 51 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) II. Compliance - Excess of expenditures over appropriations/deficits in fund equity The City ended the fiscal year June 30, 2015, with a deficit fund balance/net position in the following funds: Employee benefits internal service fund Deficit will be funded by an increase in premiums for fiscal year 2016 and next fiscal year. $ Sanitation A rate study is expected to be completed in fiscal year 2016. III. 4,203 894 Deposits and investments The City maintains a cash management pool for its cash and cash equivalents in which each fund and/or account or sub-account of a fund participates on a dollar equivalent basis. Deposits At year-end, the carrying amount of the City’s deposits was $54,312 and the bank balances were $56,301. The difference of $1,989 represents deposits in transit, outstanding checks, and other reconciling items. At year-end, all of the City's deposits were covered by Federal depository insurance and collateral held in the City’s name. City deposits held with fiscal agents at June 30, 2015, were $70,521 and were uncollateralized. Investments State Statutes and the City’s investment policy authorize the City to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, repurchase agreements, commercial paper (A-1/P-1 rated), interest-earning money market accounts, certificates of deposit, and the State of Arizona Local Government Investment Pool (LGIP). Investments may not exceed three years to maturity from the date of purchase. The City’s investment in the LGIP is stated at fair value, which also approximates the value of the investment upon withdrawal. As of June 30, 2015, the City had the following investments: Investment Type Corporate bonds U.S. Agencies U.S. Treasuries Arizona LGIP - State Pool Grand total investments Cash deposits Cash with fiscal agents Total deposits and investments 0-1 $ 18,146 25,112 20,031 33,539 $ 96,828 Investment Maturities (in years) 1-2 2-3 Fair Value $ 26,769 $ 13,027 $ 57,942 20,146 30,578 75,836 15,047 9,990 45,068 33,539 $ 61,962 $ 53,595 $ 212,385 54,312 70,521 $ 337,218 Interest rate risk: As a means of limiting its exposure to interest rate risk the City’s investment policy requires all securities to mature in no more than three years. The City also purchases securities to be laddered with staggered maturity dates. 52 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Credit risk: The City’s investment policy requires commercial paper to have a rating of at least A-1 by Standard and Poor’s, P-1 by Moody’s, or F1 by Fitch. Corporate bonds must have a rating of at least A or better by Standard and Poor’s, A2 by Moody’s, or A by Fitch. As of June 30, 2015, the City’s investments were rated by Moody’s Investor Service and Standard & Poor’s as follows: Investment Type U.S. Agencies U.S. Treasury Arizona LGIP Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate S&P Rating AA+ AA+ NR AAA+ AA+ A+ AA AAAA+ AA AA+ Moody's Rating Aaa Aaa NR Aa3 A2 A1 A1 Aa1 A1 Aaa A1 Aa1 % of Total Investments 35.72% 21.22% 15.79% 7.10% 3.83% 3.57% 2.38% 2.36% 2.36% 2.35% 2.22% 1.10% Weighted Average Maturity (Years) 1.06 1.59 0.00 1.10 1.71 1.10 1.76 2.33 1.48 0.07 1.85 1.82 Concentration of credit risk: The investment policy of the City contains no limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of the total investments are as follows: Issuer T-Note Total FHLB Total Arizona LGIP Total FFCB Total Investment Type U.S. Treasury U.S. Agencies Arizona LGIP U.S. Agencies $ Amount 45,068 35,243 33,539 25,055 Custodial credit risk: To control custodial credit risk, the City’s investment policy requires all securities and collateral to be held by an independent third party custodian in the City’s name. The custodian provides the City with monthly market values along with original safekeeping receipts. IV. Note receivable On October 22, 2008, the Western Loop 101 Public Facilities Corporation (PFC), a blended component of the City, issued $199,750 in third lien excise tax revenue bonds to construct a baseball spring training facility. On October 1, 2009, the City finalized an Intergovernmental Agreement with the Arizona Sports and Tourism Authority (AZSTA) for the Glendale Spring Training Facility Project. The AZSTA agreed to contribute to the City $60,000 for the construction costs plus interest at 4.13% per annum payable semi-annually. A note receivable for the agreed upon contribution amount plus accrued interest on the note in the amount of $20,293 less an allowance for doubtful accounts in the amount of $28,985 has been recorded at June 30, 2015. No payments have been received by the City on the note as of June 30, 2015. At the Glendale City Council workshop session held on August 5, 2014, the AZSTA presentation included projections for the AZSTA to begin making payments to the City in the year 2021. On December 27, 2012, the City of Glendale Municipal Property Corporation (MPC), a blended component unit of the City, issued subordinate excise tax revenue bonds to refund the $199,750 third lien excise tax revenue bonds. The issuance of $183,405 in tax-exempt bonds and $16,850 in taxable bonds achieved debt service savings and lowered the next five fiscal years’ annual rental payments under the Lease Agreement. In fiscal year 2015, the AZSTA receivable was recorded in the MPC debt service fund. 53 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) V. Capital assets A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2015, is as follows: Balances June 30, 2014 Governmental activities Non-depreciable assets: Construction in progress Land Artwork Total non-depreciable assets $ Depreciable assets: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total depreciable assets at historical cost 30,972 90,338 2,378 123,688 Increase $ $ (25,423) (844) (26,267) Balances June 30, 2015 $ 19,208 90,237 2,378 111,823 10,622 16,307 106 392 526 1,170 5,611 34,734 (1,085) (2,157) (86) (106) (2,659) (6,093) 387,023 273,974 736,138 88,964 77,594 14,710 44,354 5,178 5,299 44,264 1,677,498 (105,394) (117,011) (256,424) (34,429) (7,870) (8,779) (37,040) (4,068) (1,746) (30,468) (603,229) (10,203) (9,257) (18,885) (3,285) (1,098) (491) (1,047) (162) (560) (2,330) (47,318) 954 82 106 2,367 3,509 (115,597) (126,268) (275,309) (36,760) (8,968) (9,270) (38,005) (4,124) (2,306) (30,431) (647,038) Total depreciable assets, net 1,045,628 (12,584) (2,584) 1,030,460 Governmental activities capital assets, net $ 1,169,316 Less accumulated depreciation for: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total accumulated depreciation 387,023 263,352 720,916 91,121 77,488 14,710 44,048 4,758 4,129 41,312 1,648,857 13,659 743 14,402 Decrease 54 $ 1,818 $ (28,851) $ 1,142,283 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Balances June 30, 2014 Business-Type activities: Non-depreciable assets: Construction in progress - water and sewer $ Construction in progress - landfill Construction in progress - housing authority Land Total non-depreciable assets 11,642 496 233 26,299 38,670 Depreciable assets: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment System Purchase Automotive equipment Total depreciable assets at historical cost Less accumulated depreciation for: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment System Purchase Automotive equipment Total accumulated depreciation $ 5,786 1,646 99 7,531 Decrease $ (5,412) (26) (175) (5,613) $ 12,016 2,116 157 26,299 40,588 16,696 9,183 70,833 116,486 128,843 249,149 137,860 28,440 5,187 5,288 925 1,163 20,494 790,547 161 129 1,708 1,161 4,215 661 283 3,865 12,183 (109) (2,226) (2,335) 16,857 9,183 70,962 118,194 130,004 253,364 138,521 28,440 5,187 5,462 925 1,163 22,133 800,395 (9,096) (1,424) (23,249) (42,606) (57,029) (88,895) (42,597) (13,442) (2,423) (3,760) (732) (16,413) (301,666) (548) (179) (2,963) (2,565) (3,044) (8,845) (3,995) (728) (103) (318) (1) (140) (1,581) (25,010) 98 2,129 2,227 (9,644) (1,603) (26,212) (45,171) (60,073) (97,740) (46,592) (14,170) (2,526) (3,980) (733) (140) (15,865) (324,449) 488,881 (12,827) (108) 475,946 Total depreciable assets, net Business-Type activities capital assets, net Increase Balances June 30, 2015 $ 527,551 55 $ (5,296) $ (5,721) $ 516,534 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Depreciation was charged to functions/programs as follows: Governmental activities: General Public safety Public works Street maintenance Community services Community environment Total depreciation expense $ $ Business-Type activities: Water and sewer Landfill Sanitation Housing Total depreciation expense $ $ 13,351 4,182 14,115 11,183 4,475 12 47,318 22,370 787 1,400 453 25,010 Included in the water and sewer depreciation amount is $179 amortization of water storage rights. VI. Construction commitments The City has active construction projects as of June 30, 2015. The projects include street construction, park facilities, and the construction of additional water and sewer facilities. At year-end the government’s commitments with contractors are as follows: Project General government Community services Public safety Public works Street maintenance Water and sewer facilities Landfill Housing Total primary government Spent-to-Date $ 5,522 113 2,821 3,253 7,497 12,016 2,115 157 $ 33,494 Construction Commitment $ 606 496 10 45 11,424 7,177 2,904 $ 22,662 VII. Self-insurance funds The City is exposed to various risks of loss. Certain of these risks are accounted for within the internal service fund type. A. Risk management On January 1, 1987, the City established a risk management fund for torts, and loss and destruction of assets. The City’s risk management fund purchases excess or commercial insurance as follows: automobile and general liability, errors and omissions, employment practices liability, employee benefit liability, employee benefits wrongful acts, and products completed operations hazards with limits up to $50,000. The risk management fund was fully self-insured through June 30, 1998, for tort liability 56 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) losses. Effective July 1, 1998, the City purchased excess insurance. Currently the excess insurance liability coverage has a $1,000 self-insured retention. The fund also purchased commercial insurance for airport owners and operators liability with limits up to $20,000 and no deductible, crime coverage with limits up to $10,000 with a $50 deductible, fiduciary liability covering the Deferred Compensation Committee with limits up to $5,000 and no deductible, and public employees blanket bond covering the Risk Management and Workers’ Compensation Trust Fund Board with limits up to $10. Property coverage for damage or destruction of city assets is up to $1,000,000 with varying deductibles from $25 up to $500. The property coverage includes builders risk, automobile physical damage, boiler and machinery, pollution and cyber. Funds receiving insurance coverage pay monthly premiums to the risk management fund based upon a budget model taking into consideration actuarial analysis and projections, prior loss experience, staffing, and operating budget. Premium payments to insurance carriers, loss control, and risk management expenses are made directly from the risk management fund. Insurance coverage has not been significantly reduced in recent years. B. Workers’ compensation On July 1, 1994, the City established a workers’ compensation fund for work-related injuries to employees. The workers’ compensation fund provides coverage up to a maximum of $2,000 for each workers’ compensation claim with an $850 self-insured retention. Funds receiving insurance coverage pay monthly premiums to the workers’ compensation fund based upon a budget model taking into consideration actuarial analysis and projections prior loss experience, staffing level, operating budget and the National Council on Compensation Insurance workers’ compensation manual rates. Premium payments to insurance carriers and loss control and workers’ compensation expenses are made directly from the workers’ compensation fund. There have been no settlements paid in excess of insurance in any of the past three years. C. Employee benefits On July 1, 2000, the City established an employee benefits fund to meet future cost increases for healthrelated insurance. Premiums are collected through contributions from employee paychecks and department budgets. Retirees contribute 100% and COBRA participants contribute 100% of premiums for their insurance benefit coverage. Premiums for the medical, vision, dental, and life insurance plans are determined prior to each renewal period by estimating the costs of claims and administration of the plan based on a variety of factors including: the demographics of the group, previous claims history, plan design changes and any new mandated benefits. These insurance benefits are provided through fully insured and self-insured insurance plans. The City is responsible for the first $200 in medical claims per individual per plan year. Claims exceeding $200 for an individual are paid by the reinsurance plan. Premiums for the self-insured medical plan are set prior to the beginning of each plan year equal to 125% of the expected claims liability. Premium payments to insurance carriers are made directly from the fund. There have been no settlements paid in excess of insurance in any of the past three years nor has insurance coverage been significantly reduced in recent years. 57 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) D. Estimated liability Based on information provided by the actuary, liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported, the effects of specific, incremental claim adjustment expenses, and other allocated claim adjustment expenses. The City’s workers’ compensation self-insurance program liability includes recoveries related to subrogation. Salvage and subrogation are immaterial to both risk management and employee benefits self-insurance programs and are not incorporated into the liability. The risk management trust fund and workers’ compensation self-insurance programs do include a provision for unallocated claim adjustment expenses. The workers’ compensation fund includes payment of Industrial Commission taxes and fees. The City claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and societal factors. The risk management fund and the workers compensation fund are funded to meet a 55% confidence level of the most recent actuarial report. The City reports the estimated liability in net present value dollars using a future investment yield assumption of .51%. These liabilities are reported in the internal service funds at their actuarial determined liability of $10,369 as of June 30, 2015. Changes in the balances of claims liabilities during the past two years are as follows: Risk Management 2015 2014 Workers' Compensation 2015 2014 Unpaid claims, beginning of fiscal year $ 3,167 Current year claims and changes in estimate 599 Claims payments (909) $ 4,261 $ 3,706 $ 3,151 (655) (439) 546 (734) 2,054 (1,499) Balance at fiscal year end $ 3,167 $ 2,857 58 $ 3,518 $ 3,706 Employee Benefits 2015 2014 $ 4,149 $ 21,560 (21,715) $ 3,994 1,995 24,333 (22,179) $ 4,149 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) VIII. Leases A. Capital leases The City’s capital lease activity consists principally of leasing various types of heavy equipment and light equipment such as photocopiers for the Fire Department. Leases vary in terms of 6 to 9 years for photocopiers and for fire trucks. Current year principal expenditures are $10,304 for governmental activities. The future minimum lease obligation and net present value of lease payments at June 30, 2015, are as follows: Governmental Activities $ 54 2 2 1 59 (2) $ 57 Year Ending June 30 2016 2017 2018 2019 Total minimum lease payments Less: Amount representing interest Present value of net minimum lease payments The assets acquired through capital leases are as follows: Governmental Activities $ 186 1,667 197 5,341 7,391 (4,559) $ 2,832 Class of Property Equipment Automotive equipment Building Other Less: Accumulated depreciation Total B. Operating lease expenditures The City leases office space and vehicles under various cancelable operating lease agreements expiring at various dates. Certain leases contain provisions for possible future increased rentals based upon changes in the Consumer Price Index. Combined annual rental payments in fiscal year 2014-15 were $222. C. Operating lease revenue The City also leases various City-owned properties and buildings under cancelable and non-cancelable long-term lease agreements through fiscal year 2015 and beyond. The carrying value of leased assets is $328,543 (cost of $494,442 less accumulated depreciation of $165,899). The leased properties and buildings are included as capital assets in the government-wide financial statements. Certain leases contain provisions for future increased revenues based upon changes in the Consumer Price Index. 59 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Scheduled minimum revenues for non-cancelable leases for succeeding fiscal years ending June 30 are as follows: Total Fiscal Year Revenues 2016 $ 2,676 2017 2,933 2018 2,274 2019 2,262 2020 2,275 2021 and beyond 44,815 Total $ 57,235 IX. Short-term debt The City did not issue short-term debt for the year ended June 30, 2015. X. Long-term debt A. General obligation bonds (GO) The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of the City and are repaid through the City’s levying of property taxes. Retirement of the general obligation bonds in the business-type activities are intended to be paid back by the revenues of the business-type activities. B. Revenue bonds Highway User Revenue Fund (HURF) bonds are used to construct street and highway projects. The $1,895 HURF bonds outstanding are special obligations of the City and are secured by taxes, fees, charges or other monies collected by the state and returned to the City pursuant to Title 28, Chapter 18, Article 2, A.R.S. as amended. A special revenue fund called highway user gas tax fund has been set up by the City to collect HURF revenues from the state and transferred to the debt service fund to pay for HURF principal and interest. The total principal and interest remaining on the bonds to be paid is $1,971. The current year principal and interest amounts of $1,805 and $148, respectively, were funded with transfers of $958 from HURF fund; and $1,000 from transportation fund. The State Legislature has in the past and may in the future alter the type and/or rate of taxes, fees, and charges as well as allocation of such monies. The transportation revenue bonds are special revenue obligations of the City and are used to construct various transportation projects such as roadway widening, intersection improvements, and right-of-way acquisitions. The $80,995 in bonds outstanding is secured by the City’s pledge of a 0.50% transportation excise tax approved by voters on November 6, 2001. The debt service payments are also secured by the same excise tax. The total remaining principal and interest to be paid to a trustee under a trust agreement is $117,947. The current year revenues of $24,690 collected in the transportation special revenue fund paid the current year principal and interest amounts of $3,345 and $3,597, respectively. For transportation revenue bonds, the pledged revenue coverage covenants in the purchase agreements require the transportation excise taxes received must be equal to or at least one and one-half times the total interest and principal payment required in the current fiscal year. 60 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) The Excise Tax Revenue Refunding bonds are special obligations of the City and are not a general obligation of the City. Under a purchase agreement the City makes monthly payments to a trustee. The payments are secured by a senior claim and pledge by the City of all of the City’s unrestricted excise tax revenues which comprise of all excise tax, transaction privilege, franchise and income tax which it collects or is apportioned by the State or political subdivision of the State. The $114,130 in bonds outstanding was issued to refund senior and subordinate excise tax revenue bonds issued by the MPC. The total principal and interest remaining on the bonds to be paid is $175,176. The current year interest amount of $1,793 was funded with a transfer from the MPC debt service fund. The $231,735 in water and sewer revenue bonds/obligations outstanding has been issued for the construction, acquisition, and equipping of water and sewer facilities and related systems and infrastructure. These are special revenue obligations and are pledged and secured solely by the net revenues of the system. The net revenues of the system consist of revenues collected from customers including development impact fees and interest income less such necessary expenses of operation, maintenance, and repair of the system excluding depreciation, amortization and debt service. The total principal and interest remaining to be paid is $322,209. The current year principal and interest on the bonds were $24,088 and net revenues of the system were $37,613. For water and sewer revenue bond senior obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations. For water and sewer revenue bond subordinate obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations and subordinate obligations. C. Municipal Property Corporation (MPC) bonds In 1982, 2002, 2003, 2006 and 2008 the MPC, a non-profit corporation, issued bonds to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively. On October 19, 1982, July 31, 2002, May 1, 2003, and June 1, 2006, the City entered into a lease purchase agreement with MPC, whereby, the City purchased the constructed municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively, from MPC. In addition, on April 1, 2004, the City entered into a lease agreement with the MPC to issue bonds to finance an escrow account to refund certain outstanding City improvement district bonds. In June 2008, the City entered into a lease agreement with the MPC to issue bonds to refund outstanding 2006B bonds. In February 2012, the City entered into a lease agreement with the MPC to issue bonds to partially refund outstanding maturities of the bond series 2003, 2004, and 2006. In December 2012, the City entered into a lease agreement with the MPC to issue bonds to partially refund outstanding maturities of the bond series 2003 and 2004, and to fully refund outstanding maturities of the Western Loop 101 Public Facilities Corporation bond series 2008. In March 2015, senior excise tax revenue bonds were issued to refund MPC bonds series 2002B, 2003B, 2006A, and series 2012D, respectively. An amount equal to the MPC debt service and related miscellaneous fees, is payable to the MPC in monthly installments by the City. Under the provisions of the purchase agreement, the City has pledged for the payment of the purchase price: 1) all net revenues derived from the municipal office complex and arena, and 2) all excise, transaction, privilege and franchise taxes which the City currently collects, may collect or are allocated to the City by any other governmental unit or municipal corporation, except the City’s share of such amounts which by state law, rule or regulation must be expended for other purposes. However, under no circumstances shall such pledge constitute a general obligation of the City nor will the purchase price be payable from the proceeds of ad valorem taxes. The total principal and interest remaining to be paid is 61 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) $ 559,216. Excise tax revenues pledged for repayment of MPC was $151,963. The current year principal and interest paid was $21,967. For senior liens, the pledged revenue coverage covenants in the lease agreements require the unrestricted excise taxes received must be equal to or at least three times the senior excise tax obligation payment required in any current fiscal year. The requirement for second liens is the unrestricted excise taxes received must be equal to at least two times the combined total payment on senior excise tax obligations and second lien excise tax obligations in any current fiscal year. D. Changes in long-term liabilities The following is a summary of changes in long-term liabilities reported in the governmental activities financial statements for the year ended June 30, 2015: June 30, 2014 - restated General obligation (GO) bonds Revenue bonds: Highway user revenue Excise Tax Revenue bonds Transportation bonds M unicipal Property Corporation Total bonds payable $ Other long-term obligations: Capital lease obligations OPEB obligations Compensated absences Claims and judgments Unamortized premium on debt issuance Discount on debt issuance Net pension obligation Developer payable obligations Total other long-term obligations Total $ 147,810 Increases $ 39,490 June 30, 2015 Decreases $ (60,995) $ Amounts Due Within One Year 126,305 $ 18,460 3,700 88,015 459,585 699,110 114,130 55,635 209,255 (1,805) (62,655) (133,210) (258,665) 1,895 114,130 80,995 326,375 649,700 1,895 3,380 2,775 26,510 10,361 53,689 19,152 11,022 2,925 10,930 22,705 (10,304) (8,374) (23,358) 57 56,614 21,708 10,369 52 13,685 10,369 24,349 35,751 (4,523) 55,577 3,886 (1,464) 207,362 3,112 327,583 37,123 294 109,728 62 (46,497) (1,402) 244,485 3,406 390,814 27,992 1,026,693 $ 318,983 $ (305,162) $ 1,040,514 $ 54,502 General, transportation, and police and fire sales tax special revenue funds typically have been used to liquidate compensated absences in prior years, since most employees engaged in governmental activities are paid from those funds. Paychecks include payment for leave taken during the current pay period. Of the $1,040,514 in the total liabilities, $434,945 is related to net position for the City’s net investment in capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are OPEB obligations, compensated absences, and claims and judgments. No governmental funds cash has been used to fund the net other post-employment benefit obligation (OPEB). The net annual OPEB cost for the current fiscal year was 32.3% funded by the employee benefits internal service fund. This fund receives money from employee contributions as well as general and water and sewer fund contributions. 62 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) The following is a summary of changes in long-term liabilities reported in the business-type activities financial statements for the year ended June 30, 2015: June 30, 2014 - restated Water and sewer revenue/obligation bonds Total bonds payable $ Other long-term obligations: Estimated closure and post-closure costs Unamortized premium on debt issuance Net Pension obligations OPEB obligations Compensated absences Housing noncurrent liabilities Total other long-term obligations Total $ Amounts Due Within One Year Additions Reductions June 30, 2015 253,115 253,115 $ 121,245 121,245 $ (142,625) (142,625) $ 231,735 231,735 15,166 - (206) 14,960 - 14,139 32,100 12,089 2,749 93 76,336 19,257 702 1,925 5 21,889 (4,164) (3,561) (1,528) (9,459) 29,232 28,539 12,791 3,146 98 88,766 2,250 1,944 4,194 143,134 $ (152,084) $ 320,501 $ 13,609 329,451 $ $ 9,415 9,415 Of the $320,501 in total liabilities, $274,137 (including matured bonds payable) is included in the calculation of net position for the City’s net investment in capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are estimated landfill closure and post-closure costs, OPEB obligations, compensated absences, and housing noncurrent liabilities. E. Current and advance refunded bonds The City issued refunding bonds to defease certain outstanding bonds, thus achieving debt service savings. The City has placed the proceeds from the refunding issues in an irrevocable escrow account with a trust agent, which will provide amounts sufficient for future payment of principal and interest of the issue refunded. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City’s financial statements. Although defeased, the refunded debt from this issue will not be actually retired until the call dates have come due or until maturity if they are not callable issues. 63 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Issue Refunded Date Refunded Western Loop 101 Public Facilities Corporation Bonds Series 2008C December 27, 2012 Transportation Excise Tax Bonds 2007 February 25, 2015 59,110 Water and Sewer Revenue Bonds 2006 March 3, 2015 61,145 Water and Sewer Revenue Bonds 2007 March 3, 2015 28,970 Water and Sewer Revenue Bonds 2008 March 3, 2015 39,340 Municipal Property Corporation Bonds Series 2006A March 5, 2015 24,145 Municipal Property Corporation Bonds Series 2012D March 5, 2015 8,285 General Obligation Bonds 2006A March 10, 2015 9,735 General Obligation Bonds 2007 March 10, 2015 20,300 The remainder of this page left blank intentionally. 64 Remaining Balance $ 10,645 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) F. Bonds payable Bonds payable at June 30, 2015, are comprised of the following: Classified in governmental activities on the government-wide financial statements: Purpose Interest Rate Issued Fiscal Year Ending June 30 Year Series M atures GO bonds payable from secondary assessed property taxes Various 1.50-5.00 2003 Various 4.00-5.00 2006 Various 4.00-5.00 2007 Various 1.50-5.63 2010 Refunding 4.00-5.00 2011 Refunding 2.00-5.00 2015 Total 2018 2021 2022 2030 2022 2022 Revenue bonds payable from highway user revenue funds Streets 4.00-5.00 2006 Total 2016 Revenue bonds payable from the 0.5% transportation sales tax Transportation excise tax 4.00-5.00 2008 2032 Refunding 2.00-5.00 2015 2032 Total Excise Tax bonds payable from general fund sales tax Refunding 2015A 5.00 2015 Refunding 2015B 3.93-4.03 2015 Total 2031 2033 M unicipal Property Corporation payable from general fund lease payments M PC excise tax 2003B 1.46-5.58 2003 2033 M PC refunding 4.70-4.70 2004 2033 M PC excise tax 2008A 3.00-5.00 2008 2032 M PC excise tax 2008B 5.45-6.16 2008 2033 M PC refunding 2012A 3.00-5.00 2012 2021 M PC refunding 2012B 5.00 2013 2033 M PC refunding 2012C 5.00 2013 2038 M PC refunding 2012D 1.30-3.125 2013 2020 Total Total bonds payable recorded in governmental activities Less current portion Long-term portion of bonds payable recorded in governmental activities 65 Amount of Original Issue Bonds Outstanding June 30, 2015 $ $ 52,525 29,365 61,000 41,650 38,300 39,490 4,335 4,250 12,895 35,155 30,180 39,490 126,305 15,745 1,895 1,895 109,110 55,635 25,655 55,340 80,995 100,430 13,700 100,430 13,700 114,130 105,260 7,250 32,315 52,780 8,665 39,620 183,405 16,850 1,480 7,250 31,980 47,490 8,665 39,620 183,405 6,485 326,375 $ 649,700 (26,510) 623,190 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Classified in business-type activities on the government-wide financial statements: Issued Fiscal Year Ending June 30 Year Series Matures Amount of Original Issue Revenue bonds/obligations payable from water and sewer fund Various 4.25-5.00 2007 2028 Various 3.00-5.00 2008 2028 Various 6.20-6.55 2011 2030 Various refunding 2.00-5.00 2012 2028 Various refunding 2.50-5.00 2015 2028 Total 44,500 65,500 25,685 77,635 121,245 Purpose Interest Rate Bonds Outstanding June 30, 2015 $ Total bonds payable recorded in business-type activities Less current portion Long-term portion of bonds payable recorded in business-type activities $ 4,325 8,860 25,685 71,620 121,245 231,735 231,735 (9,415) 222,320 The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed 6% of the limited assessed valuation of the taxable property in that city. In addition to the 6% limitation for general municipal purpose bonds, cities may issue general obligation bonds up to 20% of the limited assessed valuation for supplying such city with water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s unused bonded debt borrowing capacity as of June 30, 2015, is as follows: 6% Capacity to incur bonded debt Less: Bonded debt applicable to limit Unused bonded debt capacity $ $ 67,877 165 68,042 20% $ $ 226,257 (118,200) 108,057 The various bond indentures contain significant limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, and minimum revenue and bond coverage. The City is in compliance with all such significant limitations and restrictions. 66 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) G. Bonds authorized, issued and unissued Bonds authorized but not fully issued as of June 30, 2015, are shown below: GO bonds Authorized Amount Issued through June 30, 2015 Authorized but Unissued Voter authorized October 20, 1981 Operations center $ $ $ 6,750 Voter authorized March 10, 1987 Library 550 6,200 9,698 8,000 1,698 18,215 50,500 4,494 17,873 13,721 32,627 40,910 16,910 24,000 17,000 15,398 53,700 64,801 1,460 3,175 62,966 15,540 15,398 50,525 1,835 6,935 185 6,750 20,554 16,155 102,638 79,065 502,319 10,522 1,518 11,827 139,480 10,032 14,637 102,638 67,238 362,839 Voter authorized November 2, 1999 (1) Cultural facility Economic development Governmental facilities Landfill development Library Open spaces Public safety Transit (1) (1) (1) Voter authorized May 15, 2007 Flood control Parks and recreation Public safety Streets and parking Total GO bonds $ $ $ Revenue bonds Voter authorized November 2, 1999 (1) Water and sewer Total revenue bonds $ 10,000 10,000 $ - $ 10,000 10,000 Total bonds $ 512,319 $ 139,480 $ 372,839 (1) Certain general obligation bonds or revenue bonds can be issued as general obligation bonds, revenue bonds or a combination thereof. 67 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) H. Other debt (developer, notes, long-term) Classified in the governmental activities in the government-wide financial statements: Developer Payable Obligation - On December 1, 2005, the City entered into a development and ground lease agreement with Cabela’s whereby Cabela’s has the option to purchase the City owned property 90 days after the expiration of the 20-year ground lease (option date). In addition, the City entered into a site improvement management agreement on July 1, 2006, whereby Cabela’s accrues a management compensation amount for their actual costs of operation, maintenance, and repair of site improvements. The management compensation amount accrues annually with interest. At the option date Cabela’s can purchase the property at Fair Market Value and receive a credit against the purchase price for the accrued management compensation amount. The remainder of this page left blank intentionally. 68 $ 3,406 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) I. Future year debt service requirements Fiscal Year Ending HURF Bonds Transportation Bonds $ 18,707 20,876 20,575 22,857 23,861 25,717 25,662 24,269 23,603 23,515 23,453 26,041 25,968 26,628 26,535 26,472 26,404 35,412 22,532 22,533 22,532 22,532 22,532 559,216 Less interest 76 36,952 232,841 61,046 31,096 90,474 1,895 $ 80,995 $ 326,375 $ 114,130 $ 126,305 $ 231,735 69 $ 5,566 5,566 6,681 10,695 10,791 10,864 10,919 12,312 12,980 13,065 13,132 10,538 10,608 9,954 10,047 10,110 10,178 1,170 175,176 G.O. Bonds $ 1,971 1,971 $ 7,143 7,144 7,147 7,145 7,143 6,811 6,811 6,806 6,811 6,810 6,808 6,810 6,808 6,809 6,806 6,810 7,325 117,947 Excise Tax Bonds 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total Principal $ MPC Bonds $ 24,017 19,999 18,230 18,061 18,028 18,000 14,681 3,444 3,407 3,370 3,328 3,283 3,234 3,184 3,135 157,401 Water and Sewer Revenue Bonds/ Obligations $ 20,134 20,126 22,640 25,448 25,080 24,409 24,079 25,290 25,288 25,285 25,289 24,162 20,302 7,410 7,267 322,209 Total $ 77,538 73,711 75,273 84,206 84,903 85,801 82,152 72,121 72,089 72,045 72,010 70,834 66,920 53,985 53,790 43,392 43,907 36,582 22,532 22,533 22,532 22,532 22,532 1,333,920 452,485 $ 881,435 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) The following table discloses the debt service requirements as of June 30, 2015, segregating principal and interest, for the next five years and in five-year increments thereafter. Fiscal Year 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2035 2036-2038 Total J. Principal 35,925 33,560 36,605 46,990 49,790 243,655 235,290 137,720 61,900 $ 881,435 Interest 41,613 40,151 38,668 37,216 35,113 140,553 82,249 31,226 5,696 $ 452,485 $ $ Total 77,538 73,711 75,273 84,206 84,903 384,208 317,539 168,946 67,596 $ 1,333,920 $ New bonds On February 25, 2015, the City issued $55,635 in Transportation excise tax revenue refunding bonds to advance refund the 2021-31 maturities of the Transportation excise tax revenue bonds issued in 2007. The 2015 bonds mature on various dates starting 2015 to 2031 with an interest rate of 2.00-5.00%. The bonds are not a general obligation of the City, but are a special obligation of the City and are payable from and secured by a 0.50% transportation excise tax approved by voters. On March 3, 2015, the City issued $121,245 in Senior Lien Water and Sewer revenue refunding bonds to advance refund the 2016 -28 Water and Sewer Revenue bonds issued in 2006, 2007, and 2008, respectively. The 2015 bonds mature on various dates starting 2018 to 2028 with an interest rate of 2.55.00%. The bonds are not a general obligation of the City, but are a special revenue obligation of the City and are pledged and secured solely by the net revenues of the water and sewer system. On March 5, 2015, the City issued $114,130 in Senior Excise Tax revenue refunding obligations to current refund the MPC bond series 2002 with bonds maturing in 2029-33, current refund the MPC taxable senior bond series 2003B with bonds maturing in 2015-32, advance refund the senior MPC 2006A bonds maturing in 2015-26, and advance refund the MPC subordinate 2012D bonds with maturities in 2015 and 2016. The 2015 bonds mature on various dates starting 2018 to 2033 with various interest rates of 3.979% to 5.00%. The bonds are not a general obligation of the City, but are a limited obligation of the City and are payable from and secured by a senior lien pledge of the city’s Unrestricted Excise Taxes. On March 10, 2015, the City issued $39,490 in General Obligation refunding bonds to current refund the bond series 2004 with bond maturing in 2016-19, advance refund the 2006A bonds maturing in 20182021, and advance refund the 2007 bonds with maturities in 2019-22. The 2015 bonds mature on various dates starting 2016 to 2022 with various interest rates of 2.00-5.00%. The bonds are a direct general obligation of the City and pledged by the full faith and credit of the City. They are repaid through the levying of property taxes by the City. In total, the bonds refunding resulted in a deferred outflow of $16,691 and will be amortized over the life of the new refunding bonds. The City realized a future cash flow savings in the amount of $49,454. 70 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) XI. Landfill obligations The City operates a municipal sanitary landfill under an Aquifer Protection Permit and Solid Waste Facility Plan approval issued by the Arizona Department of Environmental Quality requiring future closure work and post-closure monitoring. The permit meets federal and state regulations. These 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 post-closure costs as an operating expense in each period based on landfill capacity used. The landfill closure and post-closure care liability at June 30, 2015, calculated below, represents the cumulative amount reported to date based on the use of estimated capacity of the landfill. North Cell South Cell 31,127 - 22,429 19,687 88% Capacity (cubic yards) Capacity used to date Percentage of capacity used Total closure and post-closure costs in present dollars: as of June 30, 2015 as of June 30, 2014 $ $ 18,148 18,059 $ $ 17,043 16,959 Closure and post-closure care costs: Amount remaining to be recognized as of June 30, 2015 $ 18,148 $ 2,083 Liability recognized as of June 30, 2015 $ - $ 14,960 These amounts are based on what it would cost to perform all closure and post-closure care in fiscal year 2014-15. The estimated costs are subject to changes due to inflation, deflation, new technology, and applicable laws and regulations. Assets are not restricted to fund the obligations. The estimated remaining life of the landfill is approximately 46 years. According to state and federal laws and regulations, the City must comply with the local government financial test requirements that assure the City can meet the cost of landfill closure, post-closure, and corrective action when needed. The City is in compliance with these requirements. 71 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) XII. Inter-fund transactions Inter-fund balances at June 30, 2015, consisted of the following: A. Due to/due from Due to general fund from: Other non-major governmental funds Community development block grant Other special revenue Total due to general fund $ $ 1,928 608 2,536 The inter-fund balances at June 30, 2015, include short-term loans to cover temporary cash deficits in various funds. This occasionally occurs prior to bond sales or grant reimbursements. All inter-fund balances outstanding at June 30, 2015, are expected to be repaid within one year. B. Advance to/advance from In April 2015, the City Council adopted a resolution to reclassify the remaining balance of $39,276 on the inter-fund advance to an inter-fund transfer from water & sewer, landfill, and sanitation to general fund. The remainder of this page left blank intentionally. 72 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) C. Inter-fund transfers Inter-fund transfers for the year ended June 30, 2015, consisted of the following: Transfers to general fund from: Special revenue funds Transportation fund $ Highway users gas tax Police and fire sales tax Other Special Revenue Funds Capital projects funds Streets construction fund Enterprise funds Water and sewer enterprise fund Non-major proprietary fund Total transfers to general fund Transfers to municipal property corporation debt service from: Debt service funds Excise tax revenue Public facilities corporation General Fund Total transfers to municipal property corporation debt service Transfers to non-major special revenue fund from: General fund Total transfers to non-major special revenue fund 19 15 11,100 4 59 14,909 24,563 50,669 135,058 98 29,842 164,998 1,531 1,531 Transfers to non-major debt service funds from: Municipal property corporation Transportation fund Highway users gas tax Street construction Other construction Total transfers to non-major debt service funds 1,793 8,331 958 849 5,004 16,935 Transfers to non-major capital projects fund from: Transportation fund Highway users gas tax Total transfers to capital projects fund 4,712 1,849 6,561 Transfers to housing, other non-major proprietary fund from: General fund Total transfers to housing, other non-major proprietary fund Grand total all transfers 274 274 $ 240,968 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; 2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and 3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The inter-fund transfers are all classified as transfers and are included in the results of operations of both governmental and proprietary funds. 73 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) XIII. Encumbrances The Arizona Revised Statutes allow cities to encumber unused appropriations for up to sixty days after the end of the fiscal year. However, effective July 1, 1987, the City adopted a policy of not recognizing encumbrances at year-end. All appropriations lapse on the last day of the fiscal year. Any outstanding commitments that the City intends to honor are budgeted in the new fiscal year. At June 30, 2015, the City intended to honor $10,619 of outstanding encumbrances in the new fiscal year. Fund Major: General Transportation Water and sewer Non-Major: Other special revenue Streets capital Other capital Landfill Total XIV. $ $ 12 206 5,867 284 2,752 29 1,469 10,619 Equity in joint venture The City, along with the cities of Phoenix, Mesa, Scottsdale and Tempe participates in the Sub-Regional Operating Group (SROG), a joint venture. SROG constructs, operates and maintains jointly used facilities including the 91st Avenue Waste Water Treatment Plant (Plant) and certain sewage transportation facilities. The City of Phoenix acts as lead agency, and as such, is responsible for the planning, budgeting, construction, operation and maintenance of the Plant. In addition, the City of Phoenix provides all management personnel and financing arrangements and accepts federal grants on behalf of the participants. Each participant pays for its costs of operation and maintenance based on relative sewage flows and strengths and for purchased capacity in the plant and related transportation facilities based on ownership. The latest available audited financial information on the joint venture is as of and for the fiscal year ended June 30, 2014. The City accounts for its approximate 6.8% investment using the equity method in the water and sewer fund. For the year ended June 30, 2014, the City recognized a loss in the joint venture of $3,764. The City has financed its share of construction costs through the issuance of revenue bonds, development fees and grants. The bonds are collateralized by a pledge of water revenues and are reflected in the financial statements of the water and sewer fund. The joint venture itself has not issued any debt. 74 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Summary of audited financial information on the joint venture as of and for the fiscal year ended June 30, 2014, is as follows: Assets Current assets Capital assets, net of accumulated depreciation Total assets Liabilities Net assets $ $ Total revenues Total expenses Decrease in net assets $ $ 46,136 782,409 828,545 28,732 799,813 50,663 (82,237) (31,574) Copies of separate financial statements of the joint venture can be obtained from Arizona Municipal Water Users Association, 4041 North Central Avenue, Phoenix, Arizona 85012. XV. Jointly governed organizations The Regional Public Transit Authority (RPTA) is a voluntary association of local governments, including Glendale, Phoenix, Mesa, Tempe, Scottsdale, and Maricopa County. Its purpose is to ensure that a viable public transportation system is provided as an alternative for regional mobility and to ease the traffic congestion and air pollution caused by over-reliance on the single occupant vehicle. The Board of Directors consists of the mayors of those cities and a member of the County Board of Supervisors. Arizona Municipal Water Users Association (AMWUA) is a non-profit corporation established and funded by cities in Maricopa County for the development of an urban water policy and to represent the cities' interests before the Arizona legislature. In addition, AMWUA contracts with the cities jointly using the 91st Avenue Waste Water Treatment Plant to perform certain accounting, administrative and support services. XVI. Governmental fund balance components and fund type definitions The City has a formally adopted minimum fund balance policy for the general fund. This policy was adopted though the annual budget process. The policy states that the general fund should maintain a minimum unassigned fund balance between 5% and 10% of general fund revenues received less revenues associated with the sporting facilities, certain rental revenues, replacement fund revenues and monies set aside for court, art commission, and employee groups divisions. The City’s general fund, unassigned fund balance at June 30, 2015 is $28,409. Per the City’s adopted financial policies, 10% of the general fund operating revenue which totals $19,650 has been earmarked as the Budget Stabilization Reserve and $8,759 has been earmarked as the Operating Reserve. Consistent with the requirements of GASB Statement No. 54, formal Council action was not taken prior to June 30, 2015 to commit these funds; therefore, the funds are reported as unassigned. 75 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Municipal Property Corporation Debt Service General Nonspe ndable Inventories and prepaid items Cemetery perpetual care T otal Nonspendable Re stricte d Public transit State drug enforcement U.S. drug enforcement Debt service Court security Court time payments Court computer upgrade HOME program Highway user gas tax Police activities Fire activities Development impact fees HURF bond projects Fire and police construction Park bond construction Economic development Open space/trails Cultural and historical projects Government facilities Flood control construction Other T otal restricted Committe d Artwork Other T otal committed Assigne d Equipment replacement General government capital projects Computer replacement T elephone service Equipment management Health center Public safety training facility T ourism promotion initiatives Other T otal assigned Unassigne d fund balance $ $ 216 216 $ Other Non-Major Governmental Funds - $ 107 5,661 5,768 T otal Governmental Funds $ 323 5,661 5,984 110 121 79 7,995 1,166 842 10,313 7,161 7,161 36,496 2,158 238 8,516 134 23,663 14,175 2,159 1,560 143 45 227 262 36 2,404 593 92,809 36,496 2,158 238 15,677 110 121 79 134 23,663 7,995 1,166 14,175 2,159 1,560 143 45 227 262 36 2,404 1,435 110,283 1,005 109 1,114 - - 1,005 109 1,114 4,610 - - 4,610 2,015 444 172 93 104 244 814 67 8,563 28,409 48,615 7,161 277 277 98,854 2,015 444 172 93 104 244 814 344 8,840 28,409 154,630 76 $ $ $ CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Enterprise Fund Type Water and Sewer Fund $ Restricted for debt service Restricted for revenue bond retirement/replacement and extension Two percent of net water revenues must be, by bond ordinance, reserved for the replacement and extension of the City’s water distribution system, or for the retirement of water revenue bonds. The reservation is only required to the extent that the reserve equals two percent of the value of net capital assets of the water and sewer fund. 10,122 798 Restricted for other purposes XVII. 13,170 Total restricted for water and sewer $ 24,090 Total restricted for enterprise fund types $ 24,090 Change in accounting principle Net position as of July 1, 2014, has been restated as follows for 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. Governmental Activities Net position - beginning Adjustment Net position beginning - restated $ $ 539,379 (207,362) 332,017 Business-Type Activities $ $ 434,264 (32,101) 402,163 Total $ $ 973,643 (239,463) 734,180 Business Type Activities: Major Funds Water and Sewer Net position - beginning $ 393,302 Adjustment (20,857) Net position beginning - restated $ 372,445 Other Proprietary Funds $ 43,670 (11,244) $ 32,426 Total $ 436,972 (32,101) $ 404,871 Internal Service Funds $ (913) (22) $ (935) XVIII. Employee retirement systems and pension plans The City contributes to the Arizona State Retirement System (ASRS), the Public Safety Personnel Retirement System (PSPRS) for police officers and fire fighters, and the Elected Officials Retirement Plan (EORP) for City elected officials who are elected, appointed, or hired prior to January 1, 2014. 77 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) At June 30, 2015, the City reported the following aggregate amounts related to pensions for all plans to which it contributes: Statement of Net Position and Statement of Activities Net pension assets Net pension liabilities Deferred outflows of resources Deferred inflows of resources Pension expense Governmental Activities $ 244,485 50,471 21,842 26,944 Business-Type Activities $ 28,539 3,317 6,317 1,302 Total $ 273,024 53,788 28,159 28,246 A. Arizona State Retirement System (ASRS) Plan Description - City employees not covered by the other pension plans described on the following pages participate in the Arizona State Retirement System (ASRS). The ASRS administers a costsharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer 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. ASRS is a component unit of the State of Arizona. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on its Web site at www.azasrs.gov. Benefits Provided - The ASRS provides retirement, health insurance premium supplement, long-term disability, and survivor benefits. State statute establishes benefits 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 Final average salary is based on Benefit percent per year of service 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 Highest 36 consecutive months of last 120 months Highest 60 consecutive months of last 120 months 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a member’s death. For retired members, the survivor benefit is determined by the retirement benefit option chosen. For all other members, the beneficiary is entitled to the member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. 78 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Contributions - In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the year ended June 30, 2015, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.6 percent (11.48 percent for retirement and 0.12 percent for long-term disability) of the members’ annual covered payroll. The City was required by statute to contribute at the actuarially determined rate of 11.6 percent (10.89 percent for retirement, 0.59 percent for health insurance premium benefit, and 0.12 percent for long-term disability) of the active members’ annual covered payroll. In addition, the City was required by statute to contribute at the actuarially determined rate of 9.57 percent (9.51 percent for retirement and 0.06 percent for long-term disability) of annual covered payroll of retired members who worked for the city in positions that would typically be filled by an employee who contributes to the ASRS. Contributions to the pension plan for the year ended June 30, 2015, were $5,996. The City’s contributions for the current and two preceding years for OPEB, all of which were equal to the required contributions, were as follows: Health Benefit Supplement Fund Year Ended June 30, 2015 2014 2013 $ 325 335 379 Long-Term Disability Fund $ 66 134 140 Pension Liability - At June 30, 2015, the City reported a liability of $91,702 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 reported liability at June 30, 2015, decreased by $17,441 from the City’s prior year liability of $109,143 because of changes in the ASRS’ net pension liability and the City’s proportionate share of that liability. The ASRS’ publicly available financial report provides details on the change in the net pension liability. The City’s proportion of the net pension liability was based on the City’s FY 2014 contributions. The City’s proportion measured as of June 30, 2014, was 0.619749 percent, which was a decrease of 0.036775 from its proportion measured as of June 30, 2013. 79 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Pension Expense and Deferred Outflows/Inflows of Resources - For the year ended June 30, 2015, the City recognized pension expense for ASRS of $4,179. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 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 City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 4,660 - $ Deferred Inflows of Resources $ - - 16,036 5,996 10,656 4,267 20,303 $ The $5,996 reported as deferred outflows of resources related to ASRS pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions will be recognized in pension expense as follows: Year Ended June 30, 2016 2017 2018 2019 $ (3,838) (3,838) (3,958) (4,009) Actuarial Assumptions - The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date Actuarial roll forward date Actuarial cost method Amortization method: Plan amendments Investment gain/loss Assumption gain/loss Experience gain/loss Asset valuation Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2013 June 30, 2014 Entry age normal Immediate 5 Years Average future service life Average future service life Fair value 8% 3 - 6.75% 3% Included 1994 GAM Scale BB Actuarial assumptions used in the June 30, 2013 valuation were based on the results of an actuarial study for the 5-year period ended June 30, 2012. 80 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) 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 weighing 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 are summarized in the following table: Asset Class Equity Fixed income Real estate Commodities Total Real Return Arithmetic Basis 7.03% 3.20% 4.75% 4.50% Target Allocation 63% 25% 8% 4% 100% Discount Rate - The discount rate used to measure the ASRS total pension liability was 8 percent, which is less than the long-term expected rate of return of 8.79 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statutes. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the City’s Proportionate Share of the ASRS Net Pension Liability to Changes in the Discount Rate – The following table presents the City’s proportionate share of the net pension liability calculated using the discount rate of 8 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (7 percent) or 1 percentage point higher (9 percent) than the current rate. City's proportionate share of the net pension liability 1% Decrease (7%) Current Discount Rate (8%) 1% Increase (9%) $ $ $ 115,906 91,702 78,570 Pension Plan Fiduciary Net Position - Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. B. Elected Officials’ Retirement Plan (EORP) Plan Description – EORP, a pension trust fund of the State of Arizona, is a cost sharing multipleemployer public employee retirement plan established by Title 38, Chapter 5, Article 3 of the Arizona Revised Statutes, to provide benefits for elected officials who are elected, appointed, or hired prior to January 1, 2014 and judges of certain state, county and local governments. The Board of Trustees (formerly Fund Manager) of the Public Safety Personnel Retirement System (PSPRS) administers the EORP Plan. 81 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Prior to January 1, 2014, the health insurance premium subsidy was considered an agency fund; provided by A.R.S 38-817. The law was amended so all health insurance premium subsidies would be separated from the benefits. The contributions for the health insurance can only be used to pay health insurance benefits. Benefits Provided – The EORP provides retirement, 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: Retirement initial membership date: Before January 1, 2012 On or after January 1, 2012 5 or more years age 65 5 or more years age 65 10 or more years age 62 10 or more years age 62 20 or more years any age Years of service and age required to receive benefit Final average salary is based on Highest 36 consecutive months of last 120 months Highest 60 consecutive months of last 120 months 4% 3% Benefit percent per year of service A retired member or survivor of a retired member, who retired prior to August 1, 2011, may be entitled to a permanent benefit increase in their base benefit contingent upon the balance in the Future Benefit Increase Reserve balance. The maximum amount of the increase is 4% of the benefit being received on the preceding June 30. A retired member or survivor of a retired member, who retired on or after August 1, 2011, may receive a benefit increase from the System if monies are available. However, effective July 1, 2013, and each July 1 thereafter, a benefit increase will be issued as long as the following criteria have been met: Permanent Benefit Increase (PBI) Initial Membership Date Before January 2012 A. Retired member/survivor was receiving benefits on/before July 31 of two (2) previous years. On or After January 1, 2012 A. Age 55 on July 1 and is receiving benefits. B. Under age 55 on July 1 and was receiving an accidental disability and was receiving benefits on/before July 31 of two (2) previous years. B. Retired member/survivor was age 55 on July 1 and receiving benefits on/before July 31 of previous year. C. Survivor under 55 on July 1, is survivor of KIA and receiving benefits on/before July 31 of two (2) previous years. Contributions - Prior to January 1, 2014, the EORPS’ funding policy provided for periodic employer contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, designed to accumulate sufficient assets to pay benefits when due. The normal cost and actuarial accrued liability are determined using the Entry Age Normal method. Unfunded actuarial accrued liabilities and assets in excess of actuarial accrued liabilities are being amortized as a level percent of 82 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) payroll over a closed period 30 year period. Employer contributions including court fees represented 39.62 percent of covered payroll [18.31 percent for normal costs (17.73 percent pension and 0.58 percent health insurance) and 21.31 percent for amortization of the unfunded actuarial accrued liability in aggregate (20.33 percent pension and 0.98 percent health insurance subsidy)]. As of January 1, 2014, the Arizona State Legislature closed the Elected Official’s Retirement Plan and set the employer contribution rate to 25.06 percent of covered payroll (23.50 percent for pension and 1.56 percent for health insurance) with an additional five million dollars appropriated from the Arizona State Budget (Section 133 of Fiscal Year General Appropriation Act). The five million dollars from the State of Arizona is considered a non‐employer contributing entity and is listed separately on the Schedule. Starting in fiscal year 2014 and ending in fiscal year 2043, the Legislature will appropriate five million dollars each year to supplement the Normal Cost an amount to amortize the unfunded accrued liability. The City’s proportionate share of the non-employer contributing entity pension expense as of the measurement date of June 30, 2014 is $213. The City’s contributions to the pension plan for the year ended June 30, 2015, were $54. The City’s contributions for the current and two preceding years for OPEB, all of which were equal to the required contributions, were as follows: Year Ended June 30, 2015 2014 2013 Health Insurance $ 4 4 5 Pension Liability – At June 30, 2015, the City reported a liability of $2,347 for its proportionate share of the EORPS’ net pension liability. The net pension liability was measured as of June 30, 2014. The City’s proportion of the net pension liability was based on the City’s FY 2014 contributions. The City’s proportion measured as of June 30, 2014, was 0.3500380 percent. The City’s reported liability at June 30, 2015, increased by $1,222 from the City’s prior year liability of $1,125 because of changes in the EORPS’ net pension liability and the City’s proportionate share of that liability. The EORPS’ publicly available financial report provides details on the change in the net pension liability. Pension Expense and Deferred Outflows/Inflows of Resources – For the year ended June 30, 2015; the City recognized pension expense for EORP of $696. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 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 City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total 83 Deferred Outflows of Resources $ 645 - Deferred Inflows of Resources $ - - $ 54 699 45 $ 45 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) The $54 reported as deferred outflows of resources related to EORP pensions resulting from City 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 EORP pensions will be recognized in pension expense as follows: Year Ended June 30, 2016 2017 2018 2019 $ 360 262 (11) (11) Actuarial Assumptions – The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date Actuarial cost method Amortization method Asset valuation Investment rate of return Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2014 Entry age normal Level dollar, closed Fair value 5.67% 4.25% 4.00% Included RP-2000 mortality table (unadjusted males and females) The long‐term expected rate of return on pension plan investments was determined using a building‐ block method in which best estimate ranges of expected real rates of return (expected returns, net of pension plan investment expense) are developed for each major class. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Real Target Return Asset Class Allocation Geometric Basis Short term investments 2% 3.25% Absolute return 4% 6.75% Risk parity 4% 6.04% Fixed income 7% 4.75% Real assets 8% 5.96% GTAA 10% 5.73% Private equity 11% 9.50% Real estate 11% 6.50% Credit opportunities 13% 8.00% Non-U.S. equity 14% 8.63% U.S. equity 16% 7.60% Total 100% Discount Rate – A single discount rate of 5.67 percent was used to measure the total pension liability. This single discount rate was based on an expected rate of return on pension plan investments of 7.85 percent and a municipal bond rate of 4.29 percent (20‐year Bond Buyer Index as published by the 84 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Federal Reserve, as of June 26, 2014). The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates set by statute and non‐employer contributions. Based on these assumptions, the pension plan’s fiduciary net position and future contributions were sufficient to finance the benefit payments through the year 2030. As a result, the long‐term expected rate of return on pension plan investments was applied to projected benefit payments through the year 2030, and the municipal bond rate was applied to all benefit payments after that date. Sensitivity of the City’s Proportionate Share of the EORP Net Pension Liability to Changes in the Discount Rate – The following table presents the City’s proportionate share of the net pension liability calculated using the discount rate of 5.67 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (4.67 percent) or 1 percentage point higher (6.67 percent) than the current rate. City's proportionate share of the net pension liability 1% Decrease (4.67%) Current Discount Rate (5.67%) 1% Increase (6.67%) $ $ $ 2,740 2,347 2,015 C. Public Safety Personnel Retirement System (PSPRS) Plan Description – City public safety personnel 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 multiple-employer defined benefit health insurance premium benefit (OPEB) plan (agent plans). 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 issue a publicly available financial report that include their financial statements and required supplementary information. The reports are available on the PSPRS Web site at www.psprs.com. 85 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Benefits Provided - The PSPRS provide retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefits terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Retirement and Disability Years of service and age required to receive benefit Final average salary is based on Benefit percentage Normal Retirement Accidental Disability Retirement Catastrophic Disability Retirement Ordinary Disability Retirement Initial Membership Date Before On or After January 1, 2012 January 1, 2012 20 years any age 25 years and age 52.5 15 years age 62 Highest 36 consecutive months of last 20 years Highest 60 consecutive months of last 20 years 50% less 2.0% for each year of 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% 2.5% per year of credited service, not to exceed 80% 50% or normal retirement, whichever is greater 90% for the first 60 months then reduced to either 62.5% or normal retirement, whichever is greater Normal retirement calculated with actual years of credited service or 20 years of credited service, whichever is greater, multiplied by years of credited service (not to exceed 20 years) divided by 20 Survivor Benefit Retired Members Active Members 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. 86 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Employees Covered by Benefit Terms - At June 30, 2015, the following employees were covered by the agent pension plans’ benefit terms: PSPRS Police PSPRS Firefighters Inactive employees or beneficiaries currently receiving benefits 163 83 Inactive employees entitled to but not yet receiving benefits 43 21 Active employees 385 208 Total 591 312 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. Contribution 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 Premium Benefit PSPRS Police 11.05% PSPRS Firefighters 11.05% 29.20% 1.47% 24.04% 1.17% For the agent plans, the City’s contributions to the pension plan and annual OPEB cost and contributions for the health insurance premium benefit for the year ended June 30, 2015, were: PSPRS Police Contributions Made: Pension Health Insurance Premium Benefit $ 9,693 488 PSPRS Firefighters $ 4,575 223 During fiscal year 2015, the City paid for PSPRS pension and OPEB contributions 100 percent from the General Fund. Pension Liability – At June 30, 2015, the City reported the following net pension liabilities: PSPRS Police PSPRS Firefighters $ Liability 121,280 57,695 The net pension liabilities were 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 87 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) pension liabilities as of June 30, 2014, reflect the following changes of benefit terms and actuarial assumptions. Pension 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% including inflation 3.0% - 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: Target Allocation 2% 4% 4% 7% 8% 10% 11% 11% 13% 14% 16% 100% 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 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% Pension Discount Rates – The following discount rates were used to measure the total pension liabilities: Discount rates PSPRS Police 7.85% PSPRS Firefighters 7.85% 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 88 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the pension 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 – The following tables present changes in the City’s net pension liability for the PSPRS pension plan– Police and Fire: Total Pension Liability (Asset) (a) $ 192,310 PSPRS - Police Balance 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 expenses Other changes Net changes Balances as of June 30, 2015 $ 89 Plan Fiduciary Net Position (b) $ 92,963 Net Pension Liability (Asset) (a) - (b) $ 99,347 5,483 14,973 3,331 - 5,483 14,973 3,331 2,845 19,686 - 8,221 3,432 12,960 2,845 19,686 (8,221) (3,432) (12,960) (8,616) 37,702 230,012 (8,616) (104) (124) 15,769 108,732 104 124 21,933 121,280 $ $ CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Total Pension Liability (Asset) (a) $ 124,713 PSPRS - Firefighters Balance 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 expenses Other changes Net changes Balances as of June 30, 2015 $ Plan Fiduciary Net Position (b) $ 75,960 Net Pension Liability (Asset) (a) - (b) $ 48,753 3,805 9,672 1,658 - 3,805 9,672 1,658 1,452 9,623 - 4,630 2,265 10,457 1,452 9,623 (4,630) (2,265) (10,457) (6,800) 19,410 144,123 (6,800) (84) 10,468 86,428 84 8,942 57,695 $ $ Sensitivity of the City’s Net Pension Liability to Changes in the Discount Rate – The following table presents the City’s net pension liabilities calculated using the discount rates noted above, as well as what the City’s 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: 1% Decrease PSPRS Police Rate Net Pension Liability PSPRS Firefighters Rate Net Pension Liability $ 6.85% 150,553 6.85% 75,462 Current Discount Rate $ 7.85% 121,280 7.85% 57,695 1% Increase $ 8.85% 96,997 8.85% 42,850 Pension Plan Fiduciary Net Position – Detailed information about the pension plans’ fiduciary net position is available in the separately issued PSPRS financial report. Pension Expense – For the year ended June 30, 2015, the City recognized the following pension expense: PSPRS Police PSPRS Firefighters Pension Expense $ 15,871 7,500 90 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) 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 City contributions subsequent to the measurement date Total PSPRS - Firefighters Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 2,349 16,256 Deferred Inflows of Resources $ - - $ 9,693 28,298 Deferred Outflows of Resources $ 1,253 8,307 $ 4,323 $ 4,323 Deferred Inflows of Resources $ - - 3,488 4,575 14,135 3,488 $ The amounts reported as deferred outflows of resources related to pensions resulting from City 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: PSPRS Police Year Ending June 30, 2016 2017 2018 2019 2020 Thereafter $ 2,845 2,845 2,845 2,845 2,902 - PSPRS Firefighters $ 642 642 642 642 1,514 1,990 Agent Plan OPEB Actuarial Assumptions – The health insurance premium benefit contribution requirements for the year ended June 30, 2015, were established by the June 30, 2013 actuarial valuations, and those actuarial valuations were based on the following actuarial methods and 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 plans and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress for the health insurance premium benefit presented as required supplementary information provides multiyear 91 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) trend information that shows whether the actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on (1) the plans as understood by the City and the plans’ members and include the types of benefits in force at the valuation date, and (2) the pattern of sharing benefit costs between the City and the plans’ members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The significant actuarial methods and assumptions used are the same for all PSPRS plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2015 contribution requirements, are as follows: PSPRS - OPEB Contribution Requirements Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Wage Growth June 30, 2013 Entry Age Normal Level percent closed for underfunded actuarial accrued liability, open for excess 23 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value; 20% corridor 7.85% 4.5% - 8.5% 4.50% Agent Plan OPEB Trend Information – The following table presents the annual OPEB cost information for the health insurance premium benefit for the current and 2 preceding years: Year Ended June 30 PSPRS Police 2015 2014 2013 PSPRS Firefighters 2015 2014 2013 Annual OPEB Cost Percentage of Annual Cost Contributed Net OPEB Obligation $ 488 401 427 100.00% 100.00 100.00 $ - $ 223 213 207 100.00% 100.00 100.00 $ - 92 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Agent Plan OPEB Funded Status – The funded status of the health insurance premium benefit plans as of the most recent valuation date, June 30, 2014 is as follows: Actuarial Value of Assets (a) Actuarial Accrued Liability (b) Unfunded Actuarial Accrued Liability (Funding Excess) (b) - (a) Funded Ratio (a) / (b) Annual Covered Payroll (c) Unfunded Actuarial Accrued Liability (Funding Excess) as a Percentage of Covered Payroll (b) - (a) / (c) PSPRS Police 4,369 5,928 $ $ PSPRS Firefighters $ 3,916 3,104 1,559 $ 73.70% 31,816 $ $ 4.90% (812) 126.16% 19,291 0.00% The funded status of the all the PSPRS health insurance premium benefit plans in the June 30, 2014, actuarial valuation was determined using the following actuarial methods and assumptions, applied to all periods included in the measurement: PSPRS - OPEB Funded Status Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Wage Growth XIX. June 30, 2014 Entry Age Normal Level percent closed for underfunded actuarial accrued liability, open for excess 22 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value; 80%/120% market 7.85% 4.0% - 8.0% 4.00% Other Post-Employment Benefits (OPEB) A. Plan description The City of Glendale post-employment healthcare plan is a single-employer defined benefit plan administered by the City of Glendale. The plan provides medical, dental, and vision coverage for eligible retirees and their dependents. Retirees can also continue their basic life insurance benefit. Retirees pay their own insurance premiums. In order for employees to be eligible for this benefit, they need 5 years of service if they were hired prior to July 1, 2005, and 10 years of service if they were hired after July 1, 2005. The Mayor and Council have authority each budget year to establish, eliminate, or amend benefit provisions through the annual budget process. A separate report is not provided as the plan financial information is included in the governmental-wide basis and proprietary funds as part of the City of Glendale reporting entity. B. Funding policy The City pays for and reports retiree health care benefits on a pay-as-you-go basis, which is the practice of paying for these benefits as they become due each year. Contributions to the plan by retirees are established at the beginning of each fiscal year through the annual budget process. The 93 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) City makes no contribution to the retirees’ premiums other than allowing them to participate through the City’s pooled benefits. By providing retirees with access to the City’s healthcare plans based on the same rates it charges to active employees, the City is in effect providing a subsidy to retirees. For the fiscal year ending June 30, 2015, the amount of $3,697 was contributed to the plan by active retirees, in the form of current premiums and the City contributed $1,728 (implied subsidy). The required contribution was 3.72% of covered payroll. C. Annual OPEB cost and net OPEB obligation The City of Glendale’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), and the amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The City had 1,495 active and 306 retiree members for the plan year ending June 30, 2015. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and any changes in the net OPEB obligation as of June 30, 2015. Normal cost Minimum amortization of unfunded actuarial liability (UAL) Annual required contribution $ 2,677 2,315 4,992 ARC adjustment Interest adjustment to net obligation OPEB cost (2,268) 2,631 5,355 Contributions made Net OPEB obligation beginning of year Net OPEB obligation end of year (1,728) 65,778 69,405 $ The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 is as follows: Fiscal Year 2015 2014 2013 Annual OPEB Cost $ 5,355 5,094 16,106 Percentage of Annual OPEB Cost Contributed 32.3% 34.3 12.0 Net OPEB Obligation $ 69,405 65,778 62,432 D. Funding status The City’s funding status for OPEB is as follows (determined by an actuarial study): Actuarial valuation date June 30, 2014 June 30, 2012 July 1, 2009 Actuarial value of assets $ $ $ Actuarial accrued liability 69,463 152,974 106,578 Unfunded Actuarial Liability (UAL) 69,463 152,974 106,578 Funded ratio -% -% -% Annual covered payroll 95,562 105,550 109,704 Ratio of UAL to annual covered payroll 72.7% 144.9% 97.2% 94 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) Multi-year trend information regarding the actuarial value of plan assets increasing or decreasing over time relative to the actuarial accrued liability is available in the Required Supplementary Information on page 102. E. Actuarial methods and assumptions Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and actuarial value of assets, consistent with the long-term perspective of the calculations. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. For June 30, 2014, the last actuarial valuation, the actuarial cost method used is the entry age normal method. A 3.50% pay as you go discount/investment rate was used. No actuarial valuation of assets was done as there were no assets at the valuation date. The amortization method is level percent of payroll amortized over 30 years and the period is open. The actuarial valuations did not include an assumption for inflation rate. The healthcare cost trend rate used in the actuarial assumptions averaged 6.5% for the medical and dental plans in fiscal year 2013-2014. No salary or post-retirement benefit increases were projected. XX. Contingent liabilities and commitments Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the city expects such amounts, if any, to be immaterial. The City is subject to claims and litigation, which arise in the ordinary course of its operations. In the opinion of City management, based on the advice of the City attorney, the resolution of such claims and litigation are believed to either have no material adverse effect on the financial position or the future operations of the City or likelihood of a negative outcome to the City is not determinable. The City, under the memorandum of agreement with the Arizona Sports and Tourism Authority (AZSTA) and B & B Holdings (DBA Arizona Cardinals), irrevocably assigns, transfers, and pledges unrestricted excise taxes collected at the Multipurpose Facility site (Stadium) to AZSTA. In consideration for the pledge of unrestricted excise tax revenues, the AZSTA issued bonds to improve the Stadium infrastructure. The City’s obligation is to make monthly payments to the AZSTA for sales tax payments collected from the site only. The AZSTA bonds do not constitute a legal debt of the City. XXI. Implementation of new accounting principles GASB statement No. 68, Accounting and Financial Reporting for Pensions, addresses accounting and financial reporting for pensions that are provided to the employees of state and local governmental employers. This Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expenses. Note disclosure and required supplementary information requirements about pensions also are addressed. In addition, this Statement details the recognition and disclosure requirements for employers with liabilities (payables) to a defined benefit pension plan and for employers whose employees are provided with defined contribution pensions. 95 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2015 (amounts expressed in thousands) XXII. Subsequent events Effective July 1, 2015, several sub-funds of the General Fund, as presented in the Comprehensive Annual Financial Report and the Annual Budget Book, were reclassified to other fund types as follows: Sub Fund Name General Services – Fleet Telephone Services PC Replacement Utility Bill Donation Arts Commission Court Security Training Facility Revenue Old Fund Type General General General General General General General New Fund Type Internal Service Fund Internal Service Fund Internal Service Fund Special Revenue Fund Special Revenue Fund Special Revenue Fund Special Revenue Fund On July 24, 2015, the City of Glendale, the Arena Manager and Coyotes Hockey team owner signed a first amendment to the professional management services and arena lease agreement. This amendment changed several terms and conditions of the original agreement. The significant changes are as follows: the management fee paid by the city annually was reduced from $15,000 to $6,500; the surcharge and parking revenues received by the city were redefined as exclusive arena manager revenue to be received by the arena manager; the termination was also redefined in its entirety to mean June 30, 2017; and a change of manager clause was added whereby the City has the option to replace the arena manager at any time after June 30, 2016, provided that the City delivers a notice of such election not less than 90 days of the effective date. On October 13, 2015, the City Council adopted a resolution authorizing the City Manager to execute all documents necessary to authorize the purchase of real property located at the southwest corner of Bethany Home Road and 91st Avenue in Glendale, Arizona in the amount of $15,527. The purchase of real property at the southwest corner of Bethany Home Road and 91st Avenue is contingent upon the purchase of the real property at the southwest corner of Maryland Avenue and 91st Avenue, located in Glendale, Arizona, for a purchase price of $6,812. It is anticipated that this transaction, and subsequent eligible improvements, will be funded through the issuance of General Obligation (GO) bonds. As the issuance of the GO bonds, anticipated in early 2016, is subsequent to the close of the transaction, the GO bond proceeds will be used to reimburse the City for the cost of the land purchase. The remainder of this page left blank intentionally. 96 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION (other than MD&A) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. CITY OF GLENDALE, ARIZONA Schedule of Pension Liability June 30, 2015 (amounts expressed in thousands) Arizona State Retirement System: City's Proportion of the Net Pension Liability City's Proportionate Share of the Net Pension Liability City's Covered-Employee Payroll City's Proportionate Share of the Net Pension Liability as a Percentage of its Covered -Employee Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 2015 (2014) 0.619749% $ 91,702 $ 54,523 168.19% 69.49% Reporting Fiscal Year (Measurement Date) 2014 2013 - 2006 (2013) (2012 - 2005) 0.656524% Information $ 109,143 Not Available $ 57,475 189.90% NA Reporting Fiscal Year (Measurement Date) 2015 2014 - 2006 (2014) (2013 - 2005) Elected's Official Plan: City's Proportion of the Net Pension Liability City's Proportionate Share of the Net Pension Liability City's Covered-Employee Payroll City's Proportionate Share of the Net Pension Liability as a Percentage of its Covered -Employee Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 0.350038% $ 2,347 $ 252 931.35% 31.91% The remainder of this page left blank intentionally. 97 Information Not Available CITY OF GLENDALE, ARIZONA Schedule of Pension Liability June 30, 2015 (amounts expressed in thousands) Public Safety Personnel Retirement System - Police: Total Pension Liability: 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 Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position: Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expenses Other Changes Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Reporting Fiscal Year (Measurement Date) 2015 2014 - 2006 (2014) (2013 - 2005) $ 5,483 Information 14,973 Not Available 3,331 2,845 19,686 $ $ $ City's Net Pension Liability (Asset) - Ending (a) - (b) (8,616) 37,702 192,310 230,012 8,221 3,432 12,960 (8,616) (104) (124) 15,769 92,963 108,732 121,280 Plan Fiduciary Net Position as a Percentage of the Total Pension 47.27% Covered-employee Payroll 31,815 City's Net Pension Liability (Asset) as a Percentage of Covered-employee Payroll 381.20% 98 CITY OF GLENDALE, ARIZONA Schedule of Pension Liability June 30, 2015 (amounts expressed in thousands) Public Safety Personnel Retirement System - Fire: Total Pension Liability: 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 Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position: Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expenses Other Changes Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) Reporting Fiscal Year (Measurement Date) 2015 2014 - 2006 (2014) (2013 - 2005) $ 3,805 Information 9,672 Not Available 1,658 1,452 9,623 $ $ $ (6,800) 19,410 124,713 144,123 4,630 2,265 10,457 (6,800) (84) 10,468 75,960 86,428 City's Net Pension Liability (Asset) - Ending (a) - (b) 57,695 Plan Fiduciary Net Position as a Percentage of the Total Pension 59.97% Covered-employee Payroll 19,291 City's Net Pension Liability (Asset) as a Percentage of Covered-employee Payroll 299.08% 99 CITY OF GLENDALE, ARIZONA Schedule of Pension Contributions June 301, 2015 (amounts expressed in thousands) Arizona State Retirement System: Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution Deficiency (Excess) City's Covered-Employee Payroll City's Contributions as a Percentage of CoveredEmployee Payroll $ 2015 5,996 $ 2014 5,978 $ 2013 5,971 $ $ 5,996 54,853 $ $ 5,978 54,523 $ $ 5,971 57,475 10.93% Elected's Official Retirement Plan: Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution Deficiency (Excess) City's Covered-Employee Payroll City's Contributions as a Percentage of CoveredEmployee Payroll 10.96% 10.39% Reporting Fiscal Year 2014 2013 -2006 54 $ 75 Information Not Available 54 75 $ 197 $ 252 2015 $ $ $ 27.41% Public Safety Personnel Retirement System - Police: Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution Deficiency (Excess) City's Covered-Employee Payroll City's Contributions as a Percentage of CoveredEmployee Payroll 2015 $ 9,693 $ $ 9,693 39,992 29.76% 2014 $ 8,221 $ $ 24.24% Public Safety Personnel Retirement System - Fire: Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution Deficiency (Excess) City's Covered-Employee Payroll City's Contributions as a Percentage of CoveredEmployee Payroll 2015 $ 4,575 $ $ 4,575 20,910 21.88% 100 8,221 31,815 Reporting 2013 $ 6,787 $ $ 25.84% 2014 $ 4,630 $ $ 4,630 19,291 24.00% F 6,787 29,041 23.37% Reporting 2013 $ 3,454 $ $ 3,454 18,664 18.51% F 2012 $ 5,997 $ $ 5,997 65,443 Reporting Fiscal Year 2011 2010 $ 5,743 $ 5,685 $ $ 9.16% 5,743 65,143 8.82% Fiscal Year 2012 $ 5,907 $ 2011 5,248 5,907 29,849 $ $ 5,248 28,006 $ $ 19.79% $ 2011 2,546 2,828 18,483 $ $ 2,546 17,195 15.30% 5,685 71,338 7.97% 2009 6,479 $ 2008 6,045 $ 2007 5,269 $ 2006 3,628 $ $ 6,479 81,655 $ $ 6,045 79,680 $ $ 5,269 74,388 $ $ 3,628 68,780 7.93% 2010 - 2006 Information Not Available 18.74% Fiscal Year 2012 $ 2,828 $ $ $ $ $ 2010 - 2006 Information Not Available 14.80% 101 7.59% 7.08% 5.27% CITY OF GLENDALE, ARIZONA Schedule of Funding Progress June 30, 2015 (amounts expressed in thousands) GASB Statement No. 45 Supplementary Information The schedule of funding progress for the Public Safety Personnel Retirement System post-retirement health insurance subsidy is as follows: Valuation Date June 30 Fire 2014 2013 2012 Police 2014 2013 2012 Actuarial Value of Assets Actuarial Accrued Liability (AAL) Unfund AAL (UAAL) Annual Covered Payroll Funded Ratio UAAL as a % of Covered Payroll $ 3,916 - $ 3,104 2,942 2,902 $ (812) 2,942 2,902 126.2 % 0.0 % 0.0 $ 19,291 18,548 18,406 0.00 % 15.86 15.77 $ 4,369 - $ 5,928 5,603 5,437 $ 1,559 5,603 5,437 73.7 % 0.0 % 0.0 $ 31,816 28,336 29,356 4.90 % 19.77 18.52 Other Post-Employment Benefits (OPEB) Valuation Date June 30 7/1/2009 6/30/2012 6/30/2014 Actuarial Value of Assets $ - Actuarial Accrued Liability (AAL) $ 106,578 152,974 69,463 Unfund AAL (UAAL) $ 106,578 152,974 69,463 Funded Ratio 0.0 % 0.0 0.0 Annual Covered Payroll $ 109,704 105,550 95,562 UAAL as a % of Covered Payroll 97.2 % 144.9 72.7 The actuarial accrued liability and OPEB cost are significantly lower than the prior valuation. The large increase in retiree contributions have decreased the City’s cost of providing the benefits to the retirees and have reduced current and expected future retiree participation in the plan. In fiscal year 2014 the retiree contributions increased an average of 58% for medical coverage and 48% for dental. Due to the increase in retiree contributions, the assumption for participation rate was also decreased. 102 CITY OF GLENDALE, ARIZONA Notes to Pension Liability and Contributions June 30, 2015 (amounts expressed in thousands) PSPRS Actuarial Methods and Assumptions: Actuarial Cost Method Entry age normal Amortization Level Level percent closed for unfunded actuarial accrued liability, open for excess Remaining Amortization Period as of the 2013 Actuarial Valuation 23 years for unfunded actuarial accrued liability, 20 years for excess Asset Valuation Method 7-year smoothed market value; 20% corridor Actuarial Assumptions: Investment Rate of Return In the 2013 actuarial valuation, the investment rate of return was decreased from 8.0% to 7.85% Projected Salary Increases In the 2013 actuarial valuation, projected salary increases were from 5.0%9.0% to 4.5%-8.5% Wage Growth In the 2013 actuarial valuation, wage growth was decreased from 5.0% to 4.5% Retirement Age Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006-June 30, 2011 Mortality RP-2000 mortality table (adjusted by 105% for both males and females 103 City of Glendale, Arizona Budgetary Comparison Schedule General Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income (loss) Proceeds from disposal of assets Loan proceeds Miscellaneous Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 30,752 Final $ 102,144 8,459 56,414 35,580 3,298 265 250 26 2,406 208,842 45,290 (53,298) 231,586 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 41,679 Public safety 113,537 Public works 21,768 Community services 15,137 Community environment 20 Street maintenance 880 Contingencies 5,000 Miscellaneous 2,696 Debt service: Principal 1,496 Interest 807 Capital outlay 7,032 Total charges to appropriations 210,052 Budgetary fund balance, June 30, 2015 $ 21,534 104 $ 30,752 Actual Amounts (budgetary basis) $ 42,550 Variance with Final Budget Positive (Negative) $ 11,798 102,144 8,459 56,414 35,580 3,298 265 250 26 2,406 208,842 46,230 (54,453) 231,371 104,860 8,867 57,425 35,007 3,556 595 257 26 5,042 215,635 24,736 (31,647) 251,274 2,716 408 1,011 (573) 258 330 7 2,636 6,793 (21,494) 22,806 19,903 42,243 113,507 21,489 15,252 20 877 2,563 5,427 41,632 109,896 19,859 13,808 20 717 3,885 611 3,611 1,630 1,444 160 2,563 1,542 10,746 807 9,812 222,743 10,538 868 5,874 207,097 208 (61) 3,938 15,646 8,628 $ 44,177 $ 35,549 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 251,274 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (42,550) Indirect cost allocation (9,700) Interest earned on restricted investments not available for appropriation 415 Internal charges for services provided. (9,613) Proceeds from disposal of assets. (257) Interfund loan from water and sewer. (26) Revenue reported on a GAAP basis. (59) Police and fire sales tax revenue. 22,495 Less: Transfers in. (24,736) Add: Transfers out. 31,647 Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 218,890 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Principal retirement. Capital outlay funded by long-term debt. Internal charges for services provided. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. The notes to the financial statements are an integral part of this statement. 105 $ 207,097 (235) 138 (19,430) $ 187,570 CITY OF GLENDALE, ARIZONA Notes to Required Supplementary Information June 30, 2015 (amounts expressed in thousands) I. Basis of accounting The City prepares its annual budget on a basis which differs from the GAAP basis. A budgetary comparison schedule for the general fund is included as required supplementary information to provide a meaningful comparison of actual results to budget on a budget basis. Budgetary comparison schedules for all other funds are presented as other supplemental information after the combining statements. In all cases, the budgetary schedules include a reconciliation of the adjustments required to convert the budgetary revenues and expenditures or changes in net position on a budgetary basis, to revenues and expenditures/expenses or changes in net position on a GAAP basis. In the fund financial statements, the revenues and expenses relating to police and fire sales tax is included in general fund and reflected as a reconciling item in the budgetary comparison schedule for the general fund. II. Budgetary information The City utilizes the following procedures in establishing the budgetary data reflected in the financial statements. 1. 2. 3. 4. 5. 6. III. Prior to the first of June of each year, the City Manager submits to the Mayor and Council a proposed operating budget for the fiscal year commencing the following July 1. The budget includes proposed operating, capital and debt service expenditures and the means of financing them. The projected beginning budgeted fund balances for each fund are based on preliminary estimates of the June 30th ending actual budget basis fund balances rather than the June 30th ending budgeted fund balances. These two amounts will differ because of differences in actual results for the year versus planned results and by unused contingency appropriations. The legal level of budgetary control is the total budget as adopted. This is the level at which expenditures cannot legally exceed the appropriated amount. Prior to July 1, after receiving comments in a public hearing, a tentative budget is adopted by the City Council, which sets an upper-dollar limit for all funds combined, beyond which the City may not increase appropriations. After two weeks of legal advertising, the City Council legally adopts a final budget ordinance, which sets appropriations for each fund. Budget basis expenditures may not exceed appropriations for each fund, except in conjunction with the transfer of contingency funds and/or unused appropriation authority from another fund that is backed by additional revenue or fund balance in the fund receiving the appropriation. Contingency funds are appropriated for several funds as identified in the budget basis schedules and may only be transferred with City Council approval. The City Council may reallocate appropriations through budget amendments, but may not increase total appropriations above the total budget, which was legally adopted for the fiscal year. The City Council may authorize a transfer of unencumbered appropriation balanced within an individual city office, department or agency at any time during the fiscal year. During the last three months of the fiscal year, the City Council may approve transfers among city offices, departments, and agencies as necessary. Interfund transfers (i.e., transfers between funds) must be specifically approved by City Council. Procedures for requesting City Council approval of appropriation transfers and delegation of budget responsibility will be set by the City Manager. Budgetary authorization and spending management controls are employed during the year for all funds. Contingency appropriation The principal purpose of a contingency appropriation is to cover any unforeseen expenditure, which may arise after the budget is adopted. It is impossible to estimate revenues exactly or to determine in a prior year the exact expenditures of each program or activity for the ensuing year. Thus, a contingency is essential for budgetary purposes. Contingency appropriation is re-established each fiscal year based on available fund balance and balancing needs of the budget year. The unused balances of contingency appropriations are reflected in the budget basis financial statements. 106 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ COMBINING STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. City of Glendale, Arizona Budgetary Comparison Schedule Municipal Property Corporation Debt Service Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Add: Transfers in Less: Transfers out Amounts available for appropriation 952 Final $ 31,289 32,241 $ 762 952 $ 31,347 (1,793) 30,506 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Miscellaneous 35 Bond issuance cost Debt service: Principal 8,745 Interest 22,699 Payment to escrow agent Principal - current bond refunding Interest - current bond refunding Total charges to appropriations 31,479 Budgetary fund balance, June 30, 2015 Actual Amounts (budgetary basis) $ 1,009 Variance with Final Budget Positive (Negative) $ 164,998 (1,793) 164,214 57 133,651 133,708 35 - 9 20 885 (9) 15 (885) 8,745 20,879 29,659 2,585 19,382 35,067 98,195 910 157,053 6,160 1,497 (35,067) (98,195) (910) (127,394) 847 $ 7,161 $ 6,314 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 164,214 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (1,009) Less: Transfers in. (164,998) Add: Transfers out. 1,793 Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Other financing uses on bond refunding. Payment to escrow agent. Principal - current bond refunding. Interest - current bond refunding. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 107 $ 157,053 (35,067) (98,195) (910) $ 22,881 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds are used to account for revenues from specific taxes or other earmarked revenue sources, which by law are designated to finance particular functions or activities of government and which, therefore, cannot be diverted to other uses. Transportation Fund This fund accounts for the City’s public transit program and transportation improvement projects. Community Development Block Grants Fund This fund accounts for a series of ongoing entitlements received directly from the U. S. Department of Housing and Urban Development (HUD). This fund also includes the HUD Rental Rehabilitation and HOME programs. Highway User Gas Tax Fund This fund accounts for capital outlay and maintenance of municipal streets and highways, as mandated by the Arizona Revised Statutes. Financing for this fund is provided by state-shared fuel taxes. Police and Fire Sales Tax Fund This fund accounts for police and fire activities funded by a .5 percent sales tax levied directly by voter initiative. Federal Stimulus Fund This fund accounts for the three-year federal stimulus grants that were started in FY 2010 and were allocated to the City of Glendale as part of the American Reinvestment and Recovery Act (ARRA), the federal stimulus package. Other Special Revenue Fund This fund accounts for various activities, including the airport, miscellaneous grants, and other recreation programs. Debt Service Funds Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Highway User Debt Service Fund This fund accumulates monies for payment of all street and highway revenue bonds of the City. Highway user fuel taxes are transferred from other funds to fund this debt. Western Loop 101 Public Facilities Corporation Debt Service Fund This fund accounts for the debt service payments on the bonds issued to finance the spring training baseball facility and the note receivable from AZSTA. Transportation Debt Service Fund This fund accumulates monies for payment of the transportation revenue bonds. Transportation excise taxes are transferred from a special revenue fund to fund this debt. Excise Tax Revenue Debt Service Fund This fund accounts for the debt that was issued to refund the senior and subordinate excise tax revenue bonds issued by the Municipal Property Corporation. General Obligation Debt Service Fund This fund accounts for the resources received from a secondary property tax levy used to repay general obligation debt. 108 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 City’s programs. Cemetery Perpetual Care Fund This fund is used to account for the revenues received by the City from the sale of cemetery lots and other related services. Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Development Impact Fees Fund This fund accounts for fees covered by Chapter 28, Article VI of the Municipal Code and is restricted in use by ARS 9-463.05. The fees are used exclusively to provide the necessary public facilities and services for development. Residential development impact fees may be spent only in the district (residential development district, not political district) in which they are collected. Streets Construction Fund This fund accounts for the construction of streets, sidewalks, streetlights, traffic signals, and street landscaping funded through GO and revenue bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. In addition, this fund accounts for transportation projects funded by transportation excise tax revenue bonds issued on October 27, 2007. Fire and Police Construction Fund This fund accounts for the construction of fire and police department facilities. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. Parks Bond Construction Fund This fund accounts for the construction of parks and recreation improvements. Other Construction Fund This fund accounts for the construction of various City projects. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999, and the Federal Aviation Administration.        Flood control facilities Library Transit projects Economic development Open space/trails Government facilities Cultural facilities 109 1 of 3 City of Glendale, Arizona Combining Balance Sheet Non-Major Governmental Funds June 30, 2015 (amounts expressed in thousands) ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets Special Revenue Funds Highway Police User and Gas Fire Tax Sales Tax Transportation Community Development Block Grants $ 33,712 $ 91 $ 22,642 $ 2,592 1,768 99 38,171 $ 7 6,401 6,499 172 4 1,928 4,168 6,272 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: $ Vouchers payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources Fund balances: Nonspendable Restricted Assigned Total fund balances Total liabilities, deferred inflows of resources $ and fund balances 1,134 22 15 1,171 $ $ - 1,312 $ 23,954 $ - $ $ 283 8 291 - Federal Stimulus $ - $ - $ - Other $ 844 $ 3,067 8 4,141 8,060 $ 2,370 19 1 608 5 1,476 4,479 405 - - - - - 99 36,496 36,595 227 227 23,663 23,663 - - 8 3,296 277 3,581 6,499 $ 23,954 38,171 $ 110 $ - $ - $ 8,060 2 of 3 Highway User $ 39 $ 1,879 1,918 $ $ Permanent Fund Debt Service Funds Western Loop 101 Public Facilities Transportation Corporation 74 1,805 1,879 $ - $ - $ - $ 199 $ 5,104 5,303 $ 1,559 3,545 5,104 Excise Tax Revenue $ 1,801 $ 1,801 $ Cemetery Perpetual Care General Obligation 1,793 1,793 $ 8,386 $ 631 21,584 30,601 $ 2,868 19,010 21,878 $ 5,661 $ 105 5,766 $ - - - - - 453 105 39 39 - 199 199 8 8 8,270 8,270 5,661 5,661 1,918 $ - $ 5,303 $ 1,801 $ 30,601 $ 5,766 (Continued) 111 3 of 3 City of Glendale, Arizona Combining Balance Sheet (continued) Non-Major Governmental Funds June 30, 2015 (amounts expressed in thousands) Capital Project Funds Fire Total Development and Parks Non-Major Impact Streets Police Bond Other Governmental Fees Construction Construction Construction Construction Funds ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets $ 14,299 $ 14,299 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: $ Vouchers payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources 117 7 124 $ 2,978 $ 2,978 $ 619 190 410 1,219 - Fund balances: Nonspendable 14,175 Restricted Assigned 14,175 Total fund balances Total liabilities, deferred outflows of resources $ 14,299 and fund balances $ $ 1,560 $ 1,560 $ - $ 143 $ 143 $ - $ 2,996 $ 2,996 $ 22 22 $ 95,351 $ 631 2,704 12,548 107 32,708 144,049 $ 4,695 197 53 1 2,536 5 6,091 6,294 24,360 44,232 - - - - 963 1,759 1,759 1,560 1,560 143 143 2,974 2,974 5,768 92,809 277 98,854 2,978 112 $ 1,560 $ 143 $ 2,996 $ 144,049 This page left blank intentionally. 113 City of Glendale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2015 (amounts expressed is thousands) REVENUES Taxes and special assessments Licenses and permits Intergovernmental Charges for services Investment income Local Miscellaneous Total revenues Transportation Community Development Block Grants Special Revenue Funds Highway Police User and Gas Fire Tax Sales Tax Federal Stimulus $ $ $ $ EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Debt service: Principal Interest Capital outlay: Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Payment to refunded bond escrow agent Principal-current bond refunding Interest-current bond refunding Refunding bonds issued Premium on long-term debt issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses 24,690 4,053 110 146 28,999 3,591 313 3,904 $ - - $ 3 7,679 975 16 525 895 10,093 3,752 - 7,234 - - 34 - 56 3,977 24 1,942 1,205 - 1,909 12,574 2 1 3 3,758 7,234 - 34 3,852 11,056 16,425 146 6,840 - (34) - 4,955 $ 14,037 37 14,074 Other 10,665 - 692 900 (13,062) (11,470) Net change in fund balances Fund balances, July 1 Fund balances, June 30 1 of 3 31,640 36,595 $ 114 (2,822) (2,822) (11,100) (11,100) 146 4,018 (11,100) 81 227 19,645 $ 23,663 $ 11,100 - (963) - 133 631 (4) 760 (34) $ 34 - (203) $ 3,784 3,581 2 of 3 Highway User $ $ Permanent Fund Debt Service Funds Western Loop 101 Public Facilities Transportation Corporation - $ - $ - Excise Tax Revenue $ Cemetery Perpetual Care General Obligation 8 8 $ 18,618 587 19,205 $ 24 24 1 - 534 - 455 - 1,805 148 1,954 - 3,545 3,597 7,676 1,793 1,793 19,010 7,082 26,547 - (1,954) - (7,676) (1,785) (7,342) 24 (65,055) 55,635 9,958 7,331 7,869 114,130 20,928 1,793 (135,058) 1,793 (31,844) (11,950) (112) 39,490 4,865 5,853 6,302 - (1,040) 24 1,958 1,958 (98) (98) 4 (98) 35 39 $ 98 - 193 $ 6 199 8 $ 8 $ 9,310 8,270 $ 5,637 5,661 (Continued) 115 City of Glendale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued) Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2015 (amounts expressed is thousands) 3 of 3 Capital Projects Funds Fire Total Development and Parks Non-Major Impact Streets Police Bond Other Governmental Fees Construction Construction Construction Construction Funds REVENUES Taxes and special assessments Licenses and permits Intergovernmental Charges for services Investments Local Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Debt service: Principal Interest Capital outlay: Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Payment to refunded bond escrow agent Principal-current bond refunding Interest-current bond refunding Refunding bonds issued Premium on long-term debt issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1 Fund balances, June 30 $ 1,740 56 1,796 $ 3 14 17 $ - $ - $ 3 3 $ 43,308 1,743 29,947 1,085 248 525 1,267 78,123 192 - 12 - 4 - 8 12 - 68 3,977 36 12,833 4,957 7,234 1,002 176 368 8,410 8,422 369 369 7 11 211 231 24,362 12,621 14,937 82,027 1,428 (8,405) (369) (11) (228) (3,904) - 1,559 6,561 (908) 7,212 (5,004) (5,004) (96,899) (11,950) (112) 209,255 35,751 2,384 25,027 (168,056) (4,600) 1,428 (1,193) (5,232) (8,504) 12,747 $ 14,175 $ 2,952 1,759 116 - - (369) $ 1,929 1,560 (11) $ 154 143 $ 8,206 2,974 $ 107,358 98,854 City of Glendale, Arizona Budgetary Comparison Schedule Transportation Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Taxes Intergovernmental Charges for services Investments Proceeds from disposal of assets Miscellaneous revenues Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 29,790 Final $ 23,433 5,489 129 80 2,000 31,131 1,567 (30,319) 32,169 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community services 14,317 Street maintenance Capital outlay 6,191 Total charges to appropriations 20,508 Budgetary fund balance, June 30, 2015 $ 11,661 $ 29,790 Actual Amounts (budgetary basis) $ 31,479 Variance with Final Budget Positive (Negative) $ 1,689 23,433 5,489 129 80 2,000 31,131 1,567 (30,338) 32,150 24,705 3,972 110 146 241 1 29,175 900 (13,062) 48,492 1,272 (1,517) (19) 66 241 (1,999) (1,956) (667) 17,276 16,342 15,768 425 4,314 20,507 10,651 1,458 12,109 5,117 425 2,856 8,398 11,643 $ 36,383 $ 24,740 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 48,492 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (31,479) Proceeds from disposal of assets. (241) Revenue reported on a GAAP basis. 65 Less: Transfers in. (900) Add: Transfers out. 13,062 Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 28,999 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Internal charges for services provided. Capital outlay. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 117 $ 12,109 14 451 $ 12,574 City of Glendale, Arizona Budgetary Comparison Schedule Community Development Block Grants Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final - $ - $ 85 Variance with Final Budget Positive (Negative) $ 85 7,532 567 8,099 8,099 7,532 567 8,099 8,099 3,591 313 3,904 3,989 (3,941) (254) (4,195) (4,110) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community environment 8,095 Principal paid Interest expense Capital Outlay Total charges to appropriations 8,095 8,093 2 1 8,096 3,751 2 1 3 3,757 4,342 (3) 4,339 Budgetary fund balance, June 30, 2015 $ 4 $ 3 $ 232 $ 229 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 3,989 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (85) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balance - governmental funds. $ 3,904 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Differences - budget to GAAP: Community environment. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 118 3,757 1 3,758 City of Glendale, Arizona Budgetary Comparison Schedule Highway Users Gas Tax Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Amounts available for appropriation 18,400 Final $ 18,400 Actual Amounts (budgetary basis) $ 19,723 Variance with Final Budget Positive (Negative) $ 1,323 12,903 12,903 31,303 12,903 12,903 31,303 14,037 37 14,074 33,797 1,134 37 1,171 2,494 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Street maintenance 9,028 Capital outlay 44 Transfers out 19,310 Total charges to appropriations 28,382 9,028 44 19,325 28,397 7,234 2,822 10,056 1,794 44 16,503 18,341 Budgetary fund balance, June 30, 2015 $ 2,921 $ 2,906 $ 23,741 $ 20,835 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 33,797 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (19,723) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 14,074 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Differences - budget to GAAP: Transfers out Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 119 10,056 (2,822) 7,234 City of Glendale, Arizona Budgetary Comparison Schedule Police and Fire Sales Tax Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Taxes Proceeds from disposal of assets Total revenues Less: Transfers out Amounts available for appropriation Budgetary fund balance, June 30, 2015 9,998 Final $ 21,900 21,900 (24,442) 7,456 $ 7,456 9,998 Actual Amounts (budgetary basis) $ 21,900 21,900 (24,442) 7,456 $ 7,456 10,907 Variance with Final Budget Positive (Negative) $ 22,511 8 22,519 (24,442) 8,984 $ 8,984 909 611 8 619 1,528 $ 1,528 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 8,984 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (10,907) Revenue reported on a GAAP basis. (16) Proceeds from disposal of assets. (8) Add: Transfers out. 24,442 Total revenues of the police and fire sales tax fund included in the general fund. $ 22,495 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 120 $ - $ - City of Glendale, Arizona Budgetary Comparison Schedule Federal Stimulus Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ Actual Amounts (budgetary basis) Final - $ - $ 33 Variance with Final Budget Positive (Negative) $ 33 RESOURCES (INFLOWS): Amounts available for appropriation - - 33 33 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community services Total charges to appropriations - - 33 33 (33) (33) Budgetary fund balance, June 30, 2015 - $ $ - $ - $ - Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 33 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (33) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Differences - budget to GAAP: Miscellaneous. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 121 33 1 34 City of Glendale, Arizona Budgetary Comparison Schedule Other Special Revenue Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Licenses and permits Intergovernmental Charges for services Investments Proceeds from equipment disposal Local Miscellaneous Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 1,629 Final $ 17,337 1,038 14,616 32,991 260 34,880 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government Public safety 15,560 Public works 100 Community services 2,325 Community environment 1,508 Capital outlay 15,347 Total charges to appropriations 34,840 Budgetary fund balance, June 30, 2015 $ 40 122 $ 1,629 Actual Amounts (budgetary basis) $ 3,801 Variance with Final Budget Positive (Negative) $ 2,172 17,337 1,038 14,616 32,991 646 (4) 35,262 2 7,418 953 16 133 525 686 9,733 631 (4) 14,161 2 (9,919) (85) 16 133 525 (13,930) (23,258) (15) (21,101) 15,310 100 2,585 1,508 14,896 34,399 58 3,967 25 1,916 1,206 3,852 11,024 (58) 11,343 75 669 302 11,044 23,375 863 $ 3,137 $ 2,274 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 14,161 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (3,801) Intergovernmental. 262 Charges for services. 22 Procceds fro equipment disposal. (133) Miscellaneous. 209 Less: Transfers in. (631) Add: Transfers out. 4 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 10,093 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Differences - budget to GAAP: Change in compensated absences liability. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 123 11,024 32 11,056 City of Glendale, Arizona Budgetary Comparison Schedule Highway User Debt Service Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Add: Transfers in Amounts available for appropriation 25 Final $ 1,958 1,983 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Miscellaneous 5 Debt service: Principal 1,805 Interest 148 Total charges to appropriations 1,958 Budgetary fund balance, June 30, 2015 $ 25 Actual Amounts (budgetary basis) $ 25 $ 35 Variance with Final Budget Positive (Negative) $ 10 1,958 1,983 1,958 1,993 10 5 1 4 1,805 148 1,958 1,805 148 1,954 4 25 $ 39 $ 14 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 1,993 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (35) Less: Transfers in. (1,958) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 124 1,954 1,954 City of Glendale, Arizona Budgetary Comparison Schedule Western Loop 101 Public Facilities Corporation Debt Service Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Add: Transfers out Amounts available for appropriation Budgetary fund balance, June 30, 2015 58 Final $ 58 $ 58 Actual Amounts (budgetary basis) 58 $ (58) $ - 98 Variance with Final Budget Positive (Negative) $ (98) $ - 40 (40) $ - Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the $ budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (98) Add: Transfers out. 98 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ - 125 City of Glendale, Arizona Budgetary Comparison Schedule Transportation Debt Service Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Add: Transfers in Amounts available for appropriation Final 3 $ 7,331 7,334 CHARGES TO APPROPRIATIONS (OUTFLOWS): Miscellaneous 5 Debt service: Principal 3,250 Interest 4,076 Total charges to appropriations 7,331 Budgetary fund balance, June 30, 2015 $ Actual Amounts (budgetary basis) 3 $ 3 $ 6 Variance with Final Budget Positive (Negative) $ 3 7,331 7,334 7,331 7,337 3 5 - 5 3,250 4,076 7,331 3,545 3,593 7,138 3 $ 199 (295) 483 193 $ 196 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 7,337 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (6) Less: Transfers in. (7,331) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the $ budgetary comparison schedule. Bond costs related to refunding. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 126 7,138 538 7,676 City of Glendale, Arizona Budgetary Comparison Schedule Excise Tax Revenue Debt Service Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ Actual Amounts (budgetary basis) Final - $ - $ - Variance with Final Budget Positive (Negative) $ - RESOURCES (INFLOWS): Miscellaneous revenue Total revenues Add: Transfers in Amounts available for appropriation - 1,793 1,793 8 8 1,793 1,801 8 8 8 CHARGES TO APPROPRIATIONS (OUTFLOWS): Debt service: Interest Total charges to appropriations - 1,793 1,793 1,793 1,793 - Budgetary fund balance, June 30, 2015 - $ $ - $ 8 $ 8 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 1,801 Differences - budget to GAAP: Less: Transfers in. (1,793) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 8 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the $ budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 127 1,793 1,793 City of Glendale, Arizona Budgetary Comparison Schedule General Obligation Debt Service Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Taxes Intergovernmental Total inflows Add: Transfers in Amounts available for appropriation 10,003 Final $ 19,065 634 19,699 210 29,912 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Miscellaneous 335 Debt service: Principal 19,010 Interest 6,728 Total charges to appropriations 26,073 Budgetary fund balance, June 30, 2015 $ 3,839 $ 10,003 Actual Amounts (budgetary basis) $ 9,310 19,065 634 19,699 6,063 35,765 18,618 587 19,205 5,853 34,368 335 7 19,010 6,755 26,100 19,010 7,082 26,099 9,665 $ 8,269 Variance with Final Budget Positive (Negative) $ (693) (447) (47) (494) (210) (1,397) 328 (327) 1 $ (1,396) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 34,368 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (9,310) Less transfers in. (5,853) Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 19,205 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Other financing uses on bond refunding. Interest - current bond refunding. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 128 $ 26,099 448 $ 26,547 City of Glendale, Arizona Budgetary Comparison Schedule Cemetery Perpetual Care Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Investments Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final 5,636 $ 5,636 $ 5,637 Variance with Final Budget Positive (Negative) $ 1 20 20 5,656 20 20 5,656 24 24 5,661 4 4 5 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Public works 5,656 Total charges to appropriations 5,656 5,656 5,656 - 5,656 5,656 Budgetary fund balance, June 30, 2015 $ - $ - $ 5,661 $ 5,661 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 5,661 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (5,637) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 24 129 City of Glendale, Arizona Budgetary Comparison Schedule Development Impact Fees Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Licenses and permits Investments Total revenues Less: Transfers out Amounts available for appropriation Final 12,358 $ 1,653 47 1,700 (212) 13,846 $ - 12,358 $ 1,653 47 1,700 (212) 13,846 CHARGES TO APPROPRIATIONS (OUTFLOWS): General administration 190 Public safety 2,457 Community services 9,544 Capital outlay 1,655 Total charges to appropriations 13,846 Budgetary fund balance, June 30, 2015 Actual Amounts (budgetary basis) 190 2,457 9,672 1,527 13,846 $ - $ 12,747 Variance with Final Budget Positive (Negative) $ 389 1,740 56 1,796 14,543 87 9 96 212 697 192 176 368 190 2,457 9,480 1,351 13,478 14,175 $ 14,175 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 14,543 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (12,747) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 1,796 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 130 368 368 City of Glendale, Arizona Budgetary Comparison Schedule Streets Construction Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Investments Proceeds from asset disposal Miscellaneous Long-term debt issued Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation Final 3,027 $ 21 20,000 20,021 39,674 (238) 62,484 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: 628 General administration 973 Community services Street maintenance 60,883 Capital outlay Total charges to appropriations 62,484 Budgetary fund balance, June 30, 2015 $ - $ 3,027 Actual Amounts (budgetary basis) $ 2,952 Variance with Final Budget Positive (Negative) $ (75) 21 20,000 20,021 39,674 (1,101) 61,621 3 1,559 14 1,576 6,561 (908) 10,181 (18) 1,559 14 (20,000) (18,445) (33,113) 193 (51,440) 628 1,008 48,585 50,221 12 8,410 8,422 628 1,008 (12) 40,175 41,799 11,400 $ 1,759 $ (9,641) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 10,181 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (2,952) Less: Transfers In. (6,561) Add: Transfers out. 908 Proceeds from disposal of asset. (1,559) Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances governmental funds. $ 17 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 131 $ 8,422 $ 8,422 City of Glendale, Arizona Budgetary Comparison Schedule Fire and Police Construction Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Investments Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final 2,097 $ 2,097 $ 1,929 1 1 2,098 1 1 2,098 1,929 CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety 1,562 Capital outlay 536 Total charges to appropriations 2,098 1,562 536 2,098 369 369 Budgetary fund balance, June 30, 2015 $ - $ - $ 1,560 Variance with Final Budget Positive (Negative) $ (168) (1) (1) (169) 1,562 167 1,729 $ 1,560 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 1,929 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (1,929) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 132 369 369 City of Glendale, Arizona Budgetary Comparison Schedule Parks Bond Construction Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Less: Transfers out Amounts available for appropriation Final 272 $ (1) 271 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 19 Capital outlay 252 Total charges to appropriations 271 Budgetary fund balance, June 30, 2015 $ Actual Amounts (budgetary basis) - $ 272 $ 154 Variance with Final Budget Positive (Negative) $ 272 154 (118) 19 253 272 4 7 11 15 246 261 - $ 143 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 133 (118) 143 154 (154) - 11 11 City of Glendale, Arizona Budgetary Comparison Schedule Other Construction Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Investments Total revenues Less: Transfers out Amounts available for appropriation Final 8,255 $ 2 2 (41) 8,216 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 4,205 Community services Public Works 2 4,009 Capital outlay Total charges to appropriations 8,216 Budgetary fund balance, June 30, 2015 $ - $ 8,255 Actual Amounts (budgetary basis) $ 8,206 Variance with Final Budget Positive (Negative) $ (49) 2 2 (5,045) 3,212 3 3 (5,004) 3,205 1 1 41 (7) 4,258 2 3,956 8,216 8 12 211 231 (8) 4,258 (10) 3,745 7,985 (5,004) $ 2,974 $ 7,978 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 3,205 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (8,206) Add: Transfers out 5,004 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 3 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. $ Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 134 231 231 NON-MAJOR PROPRIETARY FUNDS – BUSINESS-TYPE ACTIVITIES Proprietary funds are used to account for City operations that are run like a business. These funds are responsible for providing enough operational revenue to cover all expenses. Landfill This fund accounts for the operation of the City owned landfill and recycling operations. Fees charged for the use of the landfill are used to maintain and improve the landfill operations as well as fund future closure costs. Sanitation This fund accounts for the City’s trash collection services including curb, roll-off, bulk, and front-load services to individuals and businesses. Revenues collected are used to keep the City clean. Housing This fund accounts for operations to provide affordable housing to those who cannot afford it in the private market. This is done through administration of Federal Section 8 Housing Choice and Conventional Public Housing programs. 135 City of Glendale, Arizona Combining Statement of Net Position Non-Major Proprietary Funds - Business-Type Activities June 30, 2015 (amounts expressed in thousands) Landfill ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernmental receivable Inventories and prepaid items Total current assets $ Sanitation 12,014 $ 1,353 Housing $ 2,229 Total $ 15,596 658 (4) 12,668 2,065 (398) 3,020 2 17 2,248 2,723 (402) 2 17 17,936 27,434 (12,924) 14,510 14,510 27,178 378 14,796 (9,566) 5,230 5,230 8,250 596 14,121 (9,439) 4,682 4,682 6,930 188 56,351 (31,929) 24,422 24,422 42,358 1,162 554 93 326 81 1,054 213 258 4 113 588 64 14 41 5 124 767 64 93 598 4 235 5 1,766 Noncurrent liabilities: Compensated absences Pension obligations OPEB long-term obligations Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES 203 3,256 1,350 14,960 19,769 20,823 721 133 5,126 2,758 8,017 8,605 1,135 175 1,614 785 98 2,672 2,796 357 511 9,996 4,893 98 14,960 30,458 32,224 2,213 NET POSITION Net investment in capital assets Unrestricted Total net position 14,510 (8,498) 6,012 5,230 (6,124) (894) 4,682 (717) 3,965 24,422 (15,339) 9,083 Noncurrent assets: Capital assets: Capital assets Accumulated depreciation Capital assets, net Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Current liabilities: Vouchers payable Accounts payable Retainage payable Compensated absences Intergovernmental payable Deposits Unearned Rent Total current liabilities $ $ 136 $ $ City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Business-Type Activities Enterprise Funds Landfill Operating revenues: Intergovernmental Container service Curb service Landfill user fees Recycling sales Other fees Total operating revenues $ Operating expenses: Landfill Housing Closure/post-closure care adjustment Sanitation Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Investment income Gain (loss) on disposal of assets OPEB expense Total nonoperating revenue (expenses) Income (loss) before contributions and transfers 7,594 1,771 392 9,757 $ Change in net position $ 4,216 10,728 14,944 Housing $ 8,696 3,265 11,961 Total $ 8,696 4,216 10,728 7,594 1,771 3,657 36,662 7,099 (206) 787 7,680 2,077 13,567 1,400 14,967 (23) 12,676 453 13,129 (1,168) 7,099 12,676 (206) 13,567 2,640 35,776 886 177 87 (67) 197 32 34 (162) (96) 1 (42) (41) 210 121 (271) 60 (119) (1,209) 2,274 Transfers in Transfers out Total net position - beginning - restated Total net position - ending Sanitation 946 (20,614) (3,949) 274 - 274 (24,563) (18,340) (4,068) (935) (23,343) 24,352 6,012 $ 137 3,174 (894) $ 4,900 3,965 $ 32,426 9,083 City of Glendale, Arizona Combining Statement of Cash Flows Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Landfill Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid to employees for services Net cash provided (used) by operating activities $ Cash flows from noncapital financing activities: Transfers in Transfers out Advances to/due from other funds Net cash provided (used) by noncapital financing activities 9,672 - $ $ Total 3,266 8,691 $ 27,982 8,691 (8,040) (1,208) (4,352) 1,444 (11,475) (1,176) (694) (9,327) (15,770) (8,387) 3,189 (20,614) 20,694 (3,949) 3,941 274 (2) 274 (24,563) 24,633 (8) 272 344 (2,849) (2,484) 5 (107) 5 (5,440) (2,849) (2,484) (102) (5,435) Cash flows from investing activities: Interest received from investments Net cash provided by investing activities 177 177 Net increase (decrease) in cash and cash equivalents during fiscal year (153) $ 15,044 - Housing (1,287) (3,087) (2,859) 2,439 80 Cash flows from capital and related financing activities: Increase principal obligations Acquisition of capital assets and rights Net cash used capital and related financing activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 Sanitation 12,167 12,014 138 32 32 1 1 (1,016) $ 2,369 1,353 210 210 (523) $ 2,752 2,229 (1,692) $ 17,288 15,596 Landfill Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operations: Depreciation Net pension expense and contributions Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Inventories and prepaid items Vouchers payable Accounts payable Accrued expenses Intergovernmental payable Due to other funds Deposits Unearned rent Compensated absences Proceeds from disposal of assets Estimated closure and post-closure costs Net cash provided by (used) operating activities Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combining statement of net position: Equity in pooled cash and investments Total cash and cash equivalents $ 2,077 Sanitation $ 787 (64) (86) (71) (8) 2 8 (206) 2,439 $ $ $ 12,014 12,014 139 (23) Housing $ (1,168) Total $ 886 1,400 (101) 453 (32) 2,640 (197) $ 65 41 1 27 34 1,444 $ 1 7 4 26 (12) (1) 2 (1) 27 (694) (20) 7 4 (30) 26 (8) (11) (1) 4 (1) 62 34 (206) 3,189 $ $ 1,353 1,353 $ $ 2,229 2,229 $ $ $ 15,596 15,596 City of Glendale, Arizona Budgetary Comparison Schedule Water and Sewer Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Intergovernmental Charges for services: Metered water sales Sewer service charges Impact fees Other fees Investments Miscellaneous Proceeds from loan Proceeds from equipment disposal Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation Final 75,473 $ $ 75,473 $ 84,752 Variance with Final Budget Positive (Negative) $ - 47,775 33,399 1,115 1,504 209 65 78 10 84,155 (146) 159,482 47,775 33,399 1,115 1,504 209 65 78 10 84,155 (222) 159,406 42,972 32,033 967 1,902 433 494 79 6 79,152 (138) 163,766 (4,803) (1,366) (148) 398 224 429 1 (4) (5,003) 84 4,360 13,190 22,314 14,537 4,200 35,484 11,922 18,267 12,021 5,915 1,268 4,047 2,516 4,200 29,569 13,170 12,283 115,178 13,170 10,918 72,213 1,365 42,965 44,317 140 $ 44,228 266 9,279 - CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 13,229 Water 22,194 Sewer 14,128 Contingencies 4,200 Capital outlay 35,961 Debt service: Principal 13,170 Interest 12,283 Total charges to appropriations 115,165 Budgetary fund balance, June 30, 2015 Actual Amounts (budgetary basis) $ 91,553 266 $ 47,325 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 163,766 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (84,752) Revenues offset directly by bad debt expense on budgetary basis. 340 Proceeds from loan. (79) Internal staff and administrative charges reported as revenue only on budgetary basis. (82) Less: Transfers in. Add: Transfers out. 138 Total revenues as reported on the statement of revenues, expenses, and changes in fund net position, excluding capital contributions. $ 79,331 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditure. Change in compensated absences liability. Amortization and depreciation expense. Loss on Joint Venture. Bond issuance costs. Principal payments on long-term obligations. OPEB expense. Interest expense. Indirect cost allocation. Total expenses as reported in the statement of revenues, expenses, and changes in fund net position. 141 $ 72,213 (5,915) (74) 22,370 3,329 700 (13,170) 430 (1,200) (424) $ 78,259 City of Glendale, Arizona Budgetary Comparison Schedule Landfill Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Charges for services: Landfill user fees Recycling fees Other fees Proceeds from equipment disposal Proceeds from interfund loan Investments Total revenues Less: Transfers out Amounts available for appropriation 11,453 Final $ 7,380 2,000 1,232 5 234 164 11,015 (78) 22,390 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Contingencies 600 Landfill 8,763 Capital outlay 12,177 Debt service: Interest Total charges to appropriations 21,540 Budgetary fund balance, June 30, 2015 $ 850 $ 11,453 Actual Amounts (budgetary basis) $ 12,103 Variance with Final Budget Positive (Negative) $ 650 7,380 2,000 1,232 5 234 164 11,015 (89) 22,379 7,594 1,771 823 12 109 177 10,486 (30) 22,559 600 8,763 11,763 7,571 2,953 600 1,192 8,810 418 21,544 10,524 418 11,020 835 $ 12,035 214 (229) (409) 7 (125) 13 (529) 59 180 $ 11,200 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 22,559 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (12,103) Internal staff and administrative charges reported as revenue only on budgetary basis. (430) Revenues offset directly by bad debt expense on budgetary basis. (1) Proceeds from disposal of capital assets. (12) Gain on disposal of assets. 87 Proceeds from loan. (109) Add: Transfers out. 30 Total revenues as reported in the combining statement of revenues, expenses, and changes in fund $ 10,021 net position. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Bad debt expense. Capital outlay expenditures. Change in compensated absences liability. Change in estimated landfill post-closure liability. Depreciation expense. OPEB expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 142 $ 10,524 1 (2,955) (472) (206) 787 68 $ 7,747 City of Glendale, Arizona Budgetary Comparison Schedule Sanitation Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Charges for services: Container service Curb service Investments Proceeds from equipment disposal Proceeds from interfund loan Total revenues Less: Transfers out Amounts available for appropriation Final 3,568 $ 4,250 10,664 28 32 21 14,995 18,563 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Sanitation 14,033 Capital outlay 3,986 Total charges to appropriations 18,019 Budgetary fund balance, June 30, 2015 $ 544 $ 3,568 Actual Amounts (budgetary basis) $ 4,068 4,250 10,664 28 32 21 14,995 (28) 18,535 4,216 10,685 32 34 21 14,988 (28) 19,028 14,033 3,986 18,019 13,581 2,484 16,065 516 $ 2,963 Variance with Final Budget Positive (Negative) $ 500 (34) 21 4 2 (7) 493 452 1,502 1,954 $ 2,447 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 19,028 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (4,068) Revenues offset directly by bad debt expense on budgetary basis. 43 Proceeds from interfund loan. (21) Add: Transfers out. 28 Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 15,010 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Bad debt expense. Capital outlay. Change in compensated absences liability. Depreciation expense. Pension expense. OPEB expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position 143 $ 16,065 42 (2,484) (290) 1,400 234 162 $ 15,129 City of Glendale, Arizona Budgetary Comparison Schedule Housing Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Investments Total revenues Add: Transfers in Amounts available for appropriation 1,922 Final $ 1,922 Actual Amounts (budgetary basis) $ 2,434 Variance with Final Budget Positive (Negative) $ 512 15,522 15,522 274 17,718 15,522 15,522 274 17,718 8,696 3,265 1 11,962 274 14,670 (6,826) 3,265 1 (3,560) (3,048) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Housing 15,696 188 Capital outlay Total charges to appropriations 15,884 15,696 188 15,884 12,708 12,708 2,988 188 3,176 Budgetary fund balance, June 30, 2015 $ 1,834 $ 1,834 $ 1,962 $ 128 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 14,670 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (2,434) Less: Transfers in. (274) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position, excluding capital grant proceeds. $ 11,962 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Depreciation expense. Pension expense. OPEB expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 144 $ 12,708 453 (32) 42 $ 13,171 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTERNAL SERVICE FUNDS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. City of Glendale, Arizona Combining Statement of Net Position Internal Service Funds June 30, 2015 (amounts expressed in thousands) ASSETS Current assets: Equity in pooled cash and investments Accounts receivable, net Inventories and prepaid items Total current assets Risk Management Workers' Compensation $ $ Noncurrent assets: Restricted deposits 3,634 59 3,693 7,253 7,253 Employee Benefits $ Total 215 6 221 $ 11,102 6 59 11,167 - 150 1,425 1,575 3,693 7,403 1,646 12,742 2 - - 2 LIABILITIES Current liabilities: Vouchers payable Compensated absences Estimated claims payable Total current liabilities 114 10 2,857 2,981 32 3,518 3,550 1,855 3,994 5,849 2,001 10 10,369 12,380 Noncurrent liabilities: Compensated absences Pension obligations Total noncurrent liabilities Total liabilities 1 18 19 3,000 3,550 5,849 1 18 19 12,399 4 - - 4 691 3,853 Total assets Deferred Outflows of Resources Deferred Inflows of Resources NET POSITION Unrestricted Total net position $ 691 $ 145 3,853 (4,203) $ (4,203) 341 $ 341 City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Risk Management Operating revenues: Self-insurance premiums Other fees Total operating revenues $ Operating expenses: Administrative and general Insurance claims and premiums Total operating expenses Workers' Compensation 2,502 137 2,639 $ 1,894 50 1,944 55 2,019 2,074 1,148 1,148 565 796 Nonoperating revenues: Investment income (loss) 13 29 Change in net position 578 825 Operating income (loss) Net position - beginning - restated Net position - ending $ 113 691 $ 146 3,028 3,853 Employee Benefits $ Total 22,718 28 22,746 $ 22,876 22,876 55 26,043 26,098 (130) 1,231 3 45 (127) $ (4,076) (4,203) 27,114 215 27,329 1,276 $ (935) 341 City of Glendale, Arizona Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Cash flows from operating activities: Cash received from customers Cash paid for insurance and in settlement of claims Cash paid to employees for services Risk Management Workers' Compensation $ $ (2,370) (44) Net cash provided by (used for) operating activities Cash flows from investing activities: Interest received from investments Net increase (decrease) in cash during fiscal year Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 Reconciliation of operating income (loss) 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) operations: Change in accounts receivable Change in vouchers payable Change in compensated absences Change in claims payable Net cash provided by (used for) operating activities Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net position: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents 2,638 1,944 Employee Benefits $ (1,460) - Total 22,744 $ (22,693) - 27,326 (26,523) (44) 224 484 51 759 13 29 3 45 237 513 54 804 $ 3,397 3,634 $ 6,890 7,403 $ $ 565 $ 796 $ (41) 11 (311) (124) (188) 1,586 1,640 (130) $ 11,873 12,677 $ 1,231 (3) 339 (1) (154) (3) 174 10 (653) $ 224 $ 484 $ 51 $ 759 $ 3,634 3,634 $ 7,253 150 7,403 $ 215 1,425 1,640 $ 11,102 1,575 12,677 $ 147 $ $ $ City of Glendale, Arizona Budgetary Comparison Schedule Risk Management Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Self-insurance premiums Investments Other Total revenues Amounts available for appropriation 2,405 Final $ 2,405 Actual Amounts (budgetary basis) $ 3,245 Variance with Final Budget Positive (Negative) $ 840 2,500 8 25 2,533 4,938 2,500 8 25 2,533 4,938 2,502 13 137 2,652 5,897 2 5 112 119 959 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration Insurance and claims 4,000 Total charges to appropriations 4,000 46 3,954 4,000 43 2,330 2,373 3 1,624 1,627 Budgetary fund balance, June 30, 2015 $ 938 $ 938 $ 3,524 $ 2,586 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 5,897 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (3,245) Total revenues as reported on the combining statement of revenues, expenses, and changes in fund net position. $ 2,652 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Pension contributions that were reclassified as deferred outflows of resources. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 148 $ 2,373 (311) 12 $ 2,074 City of Glendale, Arizona Budgetary Comparison Schedule Workers' Compensation Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Other Total revenues Amounts available for appropriation 6,585 Final $ 6,585 Actual Amounts (budgetary basis) $ 6,704 Variance with Final Budget Positive (Negative) $ 119 1,894 11 25 1,930 8,515 1,894 11 25 1,930 8,515 1,894 50 29 30 2,003 8,707 50 18 5 73 192 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Insurance and claims 1,608 Total charges to appropriations 1,608 1,608 1,608 1,335 1,335 273 273 Budgetary fund balance, June 30, 2015 $ 6,907 $ 6,907 $ 7,372 $ 465 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 8,707 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (6,704) Miscellaneous (30) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 1,973 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 149 $ 1,335 (187) $ 1,148 City of Glendale, Arizona Budgetary Comparison Schedule Employee Benefits Fund For the Fiscal Year Ended June 30, 2015 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2014 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Total revenues Amounts available for appropriation 748 Final $ 748 Actual Amounts (budgetary basis) $ 75 23,000 91 23,091 23,839 23,000 91 23,091 23,839 22,718 28 3 22,749 22,824 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Insurance and claims 23,291 Total charges to appropriations 23,291 23,291 23,291 23,032 23,032 Budgetary fund balance, June 30, 2015 $ 548 $ 548 $ (208) Variance with Final Budget Positive (Negative) $ (673) (282) (63) 3 (342) (1,015) 259 259 $ (756) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 22,824 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource, but is not a current year revenue for financial reporting purposes. (75) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 22,749 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 150 $ 23,032 (156) $ 22,876 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ SUPPLEMENTARY INFORMATION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. 151 $ 161 162 163 164 165 166 167 168 160 4,600,055 5,615,474 85,141 5,700,615 135,533 10,578,489 537,120 188,414 2,271,173 (9,268,155) 157,481 4,600,055 Non-current assets: Capital assets: Land Buildings Furniture, equipment & machinery - dwellings Furniture, equipment & machinery - administration Leasehold improvements Accumulated depreciation Construction in progress Infrastructure Total capital assets, net of accumulated depreciation Notes, loans, & mortgages receivable - non-current Notes, loans, & mortgages receivable - non-current - past due Grants receivable - non-current Other assets Investment in joint venture Total non-current assets Total assets Deferred outflow of resources Total assets and deferred outflow of resources 18,157 (908) 1,015,419 Current investments: Investments - unrestricted Investments - restricted Investments - restricted for payment of current liability Prepaid expenses and other assets Inventories Allowance for obsolete inventories Inter program - due from Assets held for sale Total current assets 131 132 135 142 143 143.1 144 145 150 171 172 173 174 176 180 190 200 290 2,088 117 2,205 954,310 41,655 995,965 Accounts receivables: Accounts receivable - PHA projects Accounts receivable - HUD other projects Accounts receivable - other government Accounts receivable - miscellaneous Accounts receivable - tenants Allowance for doubtful accounts - tenants Allowance for doubtful accounts - other Notes, loans, & mortgages receivable - curren Fraud recovery Allowance for doubtful accounts - fraud Accrued interest receivable Total receivables, net of allowances for doubtful accounts $ Project Total 121 122 124 125 126 126.1 126.2 127 128 128.1 129 120 111 112 113 114 115 100 Account Description Item No. ASSETS: Current assets: Cash: Cash - unrestricted Cash - restricted - modernization and development Cash - other restricted Cash - tenant security deposits Cash - restricted for payment of current liability Total cash Balance Sheet Line The following is the schedule of Federal Financial Data as required by the United States Department of Housing and Urban Development under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H. City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2015 (rounded to nearest dollar) $ $ 82,216 1,315,751 102,410 1,418,161 149,998 102,908 (170,690) 82,216 1,233,535 - 1,133,395 100,140 1,233,535 Housing Choice Vouchers $ $ - - - - - Disaster Voucher Program $ $ - - - - - Disaster Housing Assistance Grants $ $ Eliminations - - - - - - $ $ (continued) 4,682,271 6,931,225 187,551 7,118,776 135,533 10,728,487 537,120 291,322 2,271,173 (9,438,845) 157,481 4,682,271 18,157 (908) 2,248,954 2,088 117 2,205 2,087,705 100,140 41,655 2,229,500 Total 1 of 6 152 508.4 511.4 512.4 513 600 Deferred inflow of resources 400 EQUITY - NET ASSETS/POSITION: Net investment in capital assets Restricted net position Unrestricted net position Total equity - net assets / position Total liabilities, deferred inflow of resources and equity - net assets/position Noncurrent liabilities: Long-term debt, net of current- capital pjts/mortgage revenu Long-term debt, net of current- operating borrowings Noncurrent liabilities- other Accrued compensated absences - noncurrent Loan Liability - noncurrent FASB 5 liabilities Accrued pension and OPEB liabilities Total noncurrent liabilities Total liabilities 351 352 353 354 355 356 357 350 300 311 312 313 321 322 324 325 331 332 333 341 342 343 344 345 346 347 348 310 Account Description Item No. LIABILITIES AND EQUITY-NET ASSETS/POSITION: LIABILITIES: Current liabilities: Bank Overdraft Accounts payable <= 90 days Accounts payable > 90 days past due Accrued wage/payroll taxes payable Accrued compensated absences - current portion Accrued contingency liability Accrued interest payable Accounts payable - HUD PHA Programs Accounts payable - PHA projects Accounts payable - other government Tenant security deposits Unearned revenues Total Current portion of L/T debt - capital pjts/mortgage revenue Current portion of L/T debt - operating borrowings Other current liabilities Accrued liabilities - other Inter program - due to Loan liability - current Total current liabilities Balance Sheet Line City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2015 (rounded to nearest dollar) $ $ 4,600,055 (279,780) 4,320,275 5,700,615 162,215 56,975 1,089,134 1,146,109 1,218,125 25,149 633 41,655 4,579 72,016 Project Total $ $ 82,216 1,919 (439,561) (355,426) 1,418,161 195,117 98,221 117,375 1,310,041 1,525,637 1,578,470 2,031 13,042 37,760 52,833 Housing Choice Vouchers $ $ - - - - Disaster Voucher Program $ $ - - - - Disaster Housing Assistance Grants $ $ Eliminations - - - - $ $ (continued) 4,682,271 1,919 (719,341) 3,964,849 7,118,776 357,332 98,221 174,350 2,399,175 2,671,746 2,796,595 27,180 13,675 37,760 41,655 4,579 124,849 Total (continued) 2 of 6 153 Other government grants Investment income - unrestricted Mortgage interest income Proceeds from disposition of assets held for sale Cost of sale of assets Fraud recovery Other revenue Gain or loss on sale of capital assets Investment income - restricted Total revenue HUD PHA operating grants Capital grants Management fee Asset management fee Bookkeeping fee Front line service fee Other fees Total fee revenue 70600 70610 70710 70720 70730 70740 70750 70700 70800 71100 71200 71300 71310 71400 71500 71600 72000 70000 REVENUE: Net tenant rental revenue Tenant revenue - other Total tenant revenue Account Description Item No. 70300 70400 70500 Income Statement Line City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2015 (rounded to nearest dollar) $ $ 365 33,916 1,056,632 571,210 107,244 - 330,982 12,915 343,897 Project Total $ $ 841 20,546 2,863,765 10,902,778 8,017,626 - - Housing Choice Vouchers $ $ 2,761 2,761 - - Disaster Voucher Program $ $ - - - Disaster Housing Assistance Grants $ $ Eliminations - - - $ $ (continued) 1,206 20,546 2,900,442 11,962,171 8,588,836 107,244 - 330,982 12,915 343,897 Total (continued) 3 of 6 154 58,761 25,259 3,497 29,428 116,945 254,177 99,439 185,903 111,553 651,072 Water Electricity Gas Fuel Labor Sewer Employee benefit contributions- utilities Other utilities expense Total utilities Ordinary maintenance and operations - labor Ordinary maintenance and operations - materials & other Ordinary maintenance and operations - contract costs Employee benefit contributions - ordinary maintenance Total maintenance 93100 93200 93300 93400 93500 93600 93700 93800 93000 94100 94200 94300 94500 94000 $ 11,066 11,066 Tenant services - salaries Relocation costs Employee benefit contributions - tenant services Tenant services - other Total Tenant services - Asset management fee 214,430 93,462 31,164 75 87 28,007 367,225 92100 92200 92300 92400 92500 $ Project Total 92000 EXPENSES: Administrative salaries Auditing fees Management fee Bookkeeping fee Advertising and marketing Employee benefit contributions - administrative Office expenses Legal expense Travel Allocated overhead Other Total operating - administrative Account Description Item No. 91100 91200 91300 91310 91400 91500 91600 91700 91800 91810 91900 91000 Income Statement Line City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2015 (rounded to nearest dollar) $ $ 2,225 2,225 - - - 562,156 258,911 40,756 1,000 21,037 883,860 Housing Choice Vouchers $ $ - - - - - Disaster Voucher Program $ $ - - - - - Disaster Housing Assistance Grants $ $ Eliminations - - - - - $ $ (continued) 254,177 101,664 185,903 111,553 653,297 58,761 25,259 3,497 29,428 116,945 11,066 11,066 - 776,586 352,373 71,920 1,075 87 49,044 1,251,085 Total (continued) 4 of 6 155 $ 448,911 1,642,150 97300 HAP Portability-in Depreciation expense Fraud losses Capital outlays - governmental funds Debt principal payment - governmental fund Dwelling units rent expense Total expenses Housing assistance payments 97350 97400 97500 97600 97700 97800 90000 - (136,607) Extraordinary maintenance Casualty losses - non-capitalized Excess of operating revenue over operating expenses 97100 97200 97000 1,193,239 - Interest on mortgage (or bonds) payable Interest on notes payable (short and long term) Amortization of bond issue costs Total Interest expense and amortization cost 96710 96720 96730 96700 Total operating expenses - Other general expenses Compensated absences Payments in lieu of taxes Bad debt - tenant rents Bad debt- mortgages Bad debt - other Severance expense Total other general expenses 96200 96210 96300 96400 96500 96600 96800 96000 96900 44,158 2,773 46,931 Property insurance Liability insurance Workmen's compensation All other insurance Total insurance premiums - 96110 96120 96130 96140 96100 $ Project Total Protective services - labor Protective services - other contract costs Protective services - other Employee benefit contributions - protective services Total protective services Account Description Item No. 95100 95200 95300 95500 95000 Income Statement Line City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2015 (rounded to nearest dollar) $ $ 2,701,866 4,061 11,630,537 7,983,316 - 9,961,484 941,294 - 23,922 23,922 29,438 1,849 31,287 - Housing Choice Vouchers $ $ - - - 2,761 - - - - - Disaster Voucher Program $ $ - - - - - - - - - Disaster Housing Assistance Grants $ $ Eliminations - - - - - - - - - $ $ - (continued) 2,701,866 452,972 13,272,687 7,983,316 - 9,827,638 2,134,533 - 23,922 23,922 73,596 4,622 78,218 Total (continued) 5 of 6 156 Prior period adjustments, equity transfers & correction of errors Changes in compensated absence balance Changes in contingent liability balance Changes in unrecognized pension transition liabilit Changes in special term/severance benefits liability Changes in allowance for doubtful accounts - dwelling rent Changes in allowance for doubtful accounts - othe Administrative fee equity Housing assistance payments equity Unit months available Unit months leased Excess cash Land purchases Building purchases Furniture & equipment - dwelling purchases Furniture & equipment - administrative purchases Leasehold improvements purchases Infrastructure purchases CFFP debt service payments Replacement housing factor funds 11040 11050 11060 11070 11080 11090 11100 11170 11180 11190 11210 11270 11610 11620 11630 11640 11650 11660 13510 13901 70,716 5,809 2,316 28,403 - (700,798) 1,728 1,678 827,961 Beginning equity $ 5,332,322 Required annual debt principal payments - (311,249) 274,269 274,269 - 11030 $ $ $ Project Total 11020 MEMO ACCOUNT INFORMATION Excess (deficiency) of total revenues over (under) total expenses Operating transfers from/to primary government Operating transfers from/to component unit Proceeds from notes, loans and bonds Proceeds from property sales Extraordinary items, net gain/loss Special items, net gain/loss Inter project excess cash transfer in Inter project excess cash transfer out Transfers between program and project - in Transfers between program and project - out Total other financing sources (uses) 10030 10040 10050 10060 10070 10080 10091 10092 10093 10094 10100 10000 OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers out Account Description Item No. 10010 10020 Income Statement Line City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2015 (rounded to nearest dollar) $ $ $ $ - (990,702) (357,345) 1,919 12,605 12,602 - 1,363,035 - (727,759) - - Housing Choice Vouchers $ $ $ $ - (12,674) - 9,913 - 2,761 - - Disaster Voucher Program $ $ $ $ - (8,481) - 8,481 - - - - Disaster Housing Assistance Grants $ $ $ $ Eliminations - - - - - - - $ $ $ $ 70,716 5,809 2,316 28,403 - (1,712,655) (357,345) 1,919 14,333 14,280 827,961 6,713,751 - (1,036,247) 274,269 274,269 Total (continued) 6 of 6 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ STATISTICAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2015 This page left blank intentionally. STATISTICAL SECTION This part of the City of Glendale’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health. Contents Pages Financial Trends These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time. 158-165 Revenue Capacity These schedules contain information to help the reader assess the city’s local revenue source, the property tax and sales tax. 166-171 Debt Capacity These schedules present information to help the reader assess the affordability of the city’s current levels of outstanding debt and the city’s ability to issue additional debt in the future. 172-179 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place. 180-181 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the city’s financial report relates to the services the city provides and the activities it performs. 182-187 157 City of Glendale, Arizona Net Position by Component Last Ten Fiscal Years (amounts expressed in thousands) Government 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 Total primary government net position $ 2015 2014, restated 456,897 168,714 (248,733) $ 448,083 161,027 (277,093) $ 2013 2012, restated 438,366 186,106 (59,797) $ 460,639 183,829 (73,375) 376,878 332,017 564,675 571,093 253,134 24,090 90,440 256,164 22,300 123,699 251,765 12,264 161,999 262,554 12,921 139,934 367,664 402,163 426,028 415,409 710,031 192,804 (158,293) 704,247 183,327 (153,394) 690,131 198,370 102,202 723,193 196,750 66,559 744,542 $ 158 734,180 $ 990,703 $ 986,502 Schedule 1 2011 $ 463,961 204,645 (22,532) 2010 $ 457,773 176,400 11,684 2009 $ 471,484 144,422 51,500 2008 $ 499,322 133,695 51,850 2007 $ 446,828 180,303 44,573 2006 $ 398,517 155,163 75,417 646,074 645,857 667,406 684,867 671,704 629,097 271,708 29,988 112,323 271,969 13,988 124,550 286,452 13,249 114,814 297,329 12,836 107,384 249,569 11,881 155,325 233,387 12,437 158,753 414,019 410,507 414,515 417,549 416,775 404,577 735,669 234,633 89,791 729,742 190,388 136,234 757,936 157,671 166,314 796,651 146,531 159,234 696,397 192,184 199,898 631,904 167,600 234,170 $ 1,060,093 $ 1,056,364 $ 1,081,921 $ 1,102,416 $ 1,088,479 $ 1,033,674 159 160 $ 297,419 Total governmental activities expenses 73,637 13,159 Capital grants and contributions Total governmental activities program revenues 71,563 10,748 11,403 74,319 25,168 - - 10,486 1,126 6,369 17,666 419,293 112,356 25,665 25 Operating grants and contributions 309 Community environment Street maintenance 11,704 631 Public works Community services 6,084 18,498 Public safety General government Charges for services: Governmental activities: $ 408,171 Total primary government expenses Program revenues 110,752 Total business-type activities expenses $ 13,088 15,059 Sanitation Housing 14,471 7,727 7,554 74,807 77,243 306,937 34,808 - 25,207 5,895 30,796 20,524 116,070 Water and sewer $ $ 2014 Landfill Business-type activities: 32,106 - 19,180 Interest on long-term debt Other Street maintenance 4,980 31,311 Community services Community environment 21,482 Public works 60,490 127,870 $ 2015 Public safety General government Governmental activities: Expenses City of Glendale, Arizona Changes in Net Position Last Ten Fiscal Years (amounts expressed in thousands) $ $ $ 63,510 7,904 25,156 - - 11,003 1,149 5,778 12,520 385,375 111,105 14,037 16,122 7,486 73,460 274,270 42,413 - 20,000 5,655 33,831 19,230 115,694 37,447 2013 $ $ $ 69,290 5,274 27,636 - - 17,910 512 5,624 12,334 392,133 116,783 14,827 15,437 7,602 78,917 275,350 41,913 - 20,045 6,828 39,478 18,435 112,689 35,962 2012 $ $ $ 42,530 139,833 70,552 27,137 72,774 3,755 29,596 2 - - 7,447 5,824 14,232 402,286 118,637 14,180 14,093 8,454 81,910 283,649 42,286 - 23,058 6,316 44,524 16,627 108,308 11,918 $ $ $ 2010 11,733 495 5,094 24,822 405,659 116,225 14,687 14,814 7,280 79,444 289,434 41,967 - 21,721 7,061 41,136 20,099 111,217 46,233 2011 $ $ $ 62,625 2,600 24,146 36 3,045 15,661 588 4,670 11,879 386,711 108,348 11,840 14,039 8,045 74,424 278,363 38,982 - 23,978 3,539 48,143 15,040 109,136 39,545 2009 $ $ $ 88,960 14,491 33,191 - - 22,859 543 5,744 12,132 389,007 107,719 9,862 15,209 8,067 74,581 281,288 28,475 - 26,175 5,164 52,185 16,006 113,285 39,998 2008 $ $ $ 99,251 26,247 36,566 48 - 22,285 531 1,964 11,610 338,200 94,351 8,951 13,847 8,264 63,289 243,849 23,551 - 24,906 4,698 45,481 14,816 92,405 37,992 2007 $ $ $ 71,148 6,406 31,973 - 31 20,121 516 1,375 10,726 295,904 86,280 9,466 13,257 7,950 55,607 209,624 16,883 3,020 22,720 4,125 40,275 13,995 75,277 33,329 2006 Schedule 2 161 $ 23,881 $ 10,362 $ Total primary government 44,861 (34,499) $ Business-type activities Governmental activities Changes in net position 226,290 Total primary government $ $ $ 64 (17,060) 8,236 (25,296) 210,839 761 (39,198) (41,671) Transfers Total business-type activities 67 - 86 (3,329) 167 463 210,078 $ $ $ 4,201 10,619 (6,418) 206,974 2,632 641 70 - 43 1,878 204,342 - (641) - - 353 716 7,586 23,159 18,558 132,872 21,372 (202,773) 367 - 127 $ $ 7,987 (210,760) 182,602 119,092 831 9,376 4,137 14,791 7,994 81,963 2013 687 78 726 8,086 25,271 19,734 267,961 643 Miscellaneous 23,577 131,983 (64) Gain (loss) on disposal of capital assets Loss on joint venture $ (227,899) 7,475 (235,374) 191,394 39,198 Investment earnings, unrestricted Business-type activities: Total governmental activities Special item Transfers - 520 Miscellaneous Capital contributions (688) Gain (loss) on disposal of capital assets 8,664 27,446 20,695 147,175 1,070 $ $ Investment earnings, unrestricted Auto in-lieu taxes (state shared income tax) Unrestricted urban revenue sharing Unrestricted state shared sales tax Sales taxes Property taxes Taxes: Governmental activities: General revenues and other changes in net position (215,928) 7,172 Business-type activities Total primary government net expense (223,100) Governmental activities Net (expense)/revenue 192,243 Total primary government program revenues 2,423 119,831 2,562 117,924 Capital grants and contributions Total business-type activities program revenues 9,357 3,504 8,855 3,265 Operating grants and contributions Housing 14,836 14,944 Sanitation 8,646 81,065 2014 9,757 78,541 2015 Landfill Water and sewer Charges for services: Business-type activities: $ $ $ $ $ (63,863) 4,173 (68,036) 139,489 1,465 307 72 - (40) 1,126 138,024 (25,000) (307) - 489 56 975 7,277 19,135 17,716 97,451 20,232 (203,352) 2,708 (206,060) 188,781 119,491 705 9,423 4,886 14,562 7,185 82,730 2012 $ $ $ $ $ 3,729 3,512 217 150,956 1,138 317 70 - 137 614 149,818 (25,000) (317) - 3,936 (677) 1,482 7,917 23,590 18,438 93,260 27,189 (147,227) 2,374 (149,601) 258,432 118,599 1,155 9,342 4,829 14,733 8,027 80,513 2011 $ $ $ $ $ (25,557) (4,008) (21,549) 190,426 1,100 370 83 - 187 460 189,326 - (370) - 5,406 330 286 8,130 31,292 17,786 92,717 33,749 (215,983) (5,108) (210,875) 186,303 113,529 690 9,331 4,870 15,048 6,987 76,603 2010 $ $ $ $ $ $ (20,495) (3,034) (17,461) 201,269 2,992 551 90 - 282 2,069 198,277 - (551) - 2,872 (52) 1,668 8,808 36,267 19,321 97,054 32,890 $ $ $ $ 13,937 774 13,163 210,278 $ $ 54,805 12,198 42,607 193,193 364 5,988 140 - 103 5,381 187,205 - (364) - 301 202 5,557 10,044 27,518 23,037 97,825 23,085 (138,388) 509 $ $ $ 6,210 (144,598) 199,812 100,561 5,125 8,254 662 14,653 9,742 62,125 2007 4,787 108 - 126 4,044 205,491 - (509) - 302 879 4,742 9,730 34,109 22,237 105,175 28,826 (196,341) (4,013) (221,764) (192,328) (6,026) 192,666 103,706 4,346 8,348 816 14,684 9,196 66,316 2008 (215,738) 164,947 102,322 1,207 8,701 2,042 15,258 7,304 67,810 2009 $ $ $ $ $ 46,348 10,104 36,244 178,430 3,710 (700) 100 - 844 3,466 174,720 - 700 - 272 348 4,395 10,444 22,909 23,298 90,968 21,386 (132,082) 6,394 (138,476) 163,822 92,674 5,403 8,020 569 14,167 8,362 56,153 2006 This page left blank intentionally. 162 163 $ $ $ $ $ $ $ $ 5,768 99,970 277 106,015 - 216 10,313 1,114 8,563 28,409 48,615 - $ $ $ $ $ $ $ $ - 5,801 102,241 123 202 108,367 - 600 688 1,554 (4,835) (1,993) 2014(1) $ $ $ $ $ $ $ $ - 5,774 103,772 115 144 109,805 - 650 311 1,676 (14,438) (11,801) 2013(1) $ $ $ $ $ $ $ $ - 5,829 117,964 129 82 124,004 - 197 368 2,351 (29,565) (26,649) 2012(1) $ $ $ $ $ $ $ $ - 5,822 129,635 11,464 199 147,120 - 463 5,403 1,965 9,253 (5,414) 11,670 2011(1) Note: (1) Changes made per GASB 54 requirement fund balance reporting, effective June 30, 2011. All other governmental funds Nonspendable Restricted Committed Assigned Total all other governmental funds All other governmental funds Reserved Unreserved, report in: Special revenue funds Capital projects funds Total all other governmental funds General fund Nonspendable Restricted Committed Assigned Unassigned Total general fund General fund Reserved Unreserved Total general fund 2015(1) City of Glendale, Arizona Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) $ $ $ $ $ $ $ $ $ $ $ 50,478 41,046 167,579 - $ $ $ $ $ 76,055 - 9,383 29,463 38,846 2010 - 57,555 27,474 168,995 83,966 - 10,450 42,180 52,630 2009 $ $ $ $ $ $ $ $ - 76,493 18,436 153,075 58,146 - 9,271 57,117 66,388 2008 $ $ $ $ $ $ $ $ - 34,369 68,932 148,330 45,029 - 10,500 50,880 61,380 2007 $ $ $ $ $ $ $ $ - 30,584 64,106 137,600 42,910 - 10,287 62,166 72,453 2006 Schedule 3 164 Total expenditures Excess of revenues over (under) expenditures General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Capital outlay Debt service: Principal Interest Expenditures Total revenues Taxes and special assessments Licenses and permits Intergovernmental Local revenues Charges for services Fines and forfeitures Investment income (loss) Miscellaneous Revenues $ 267,896 8,252 292,478 4,535 30,043 35,628 37,251 32,870 276,148 159,328 11,522 81,364 18 14,781 3,735 900 4,500 29,666 108,397 7,463 25,536 5,826 8,352 2,323 14,662 $ 2014 33,494 114,143 8,673 26,379 4,977 7,951 5,791 20,949 297,013 170,605 10,610 87,112 525 17,685 3,556 1,258 5,662 2015 City of Glendale, Arizona Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) $ (852) 257,435 26,441 43,038 16,065 103,610 7,859 27,966 5,554 8,305 4,617 13,980 256,583 149,705 10,373 76,520 36 11,896 3,469 762 3,822 2013 $ (23,215) (33,947) 31,640 42,593 19,668 95,270 8,859 33,887 6,853 9,038 1,577 22,093 248,263 120,974 9,367 79,760 10,461 3,806 1,841 22,054 271,478 $ 2011 263,713 24,947 42,515 18,147 100,368 7,709 33,597 6,703 8,311 1,782 19,634 229,766 118,218 10,798 73,009 11,487 3,374 1,180 11,700 2012 $ (60,262) 322,800 29,451 42,913 23,085 96,161 11,569 37,518 6,160 10,388 2,026 63,529 262,538 126,291 9,734 90,047 13,640 4,052 774 18,000 2010 $ (196,139) 455,499 29,670 39,571 26,048 103,624 11,072 42,294 3,478 11,901 1,666 186,175 259,360 130,119 10,503 91,642 9,881 4,064 3,805 9,346 2009 $ (120,924) 407,409 32,151 32,294 25,364 100,384 11,743 44,767 4,972 13,045 1,629 141,060 286,485 133,746 17,385 101,821 14,125 4,507 9,986 4,915 2008 $ (136,022) 411,817 28,096 20,630 24,524 86,753 12,155 39,150 4,657 13,372 3,059 179,421 275,795 121,122 17,839 107,699 10,086 3,932 10,905 4,212 2007 $ (89,795) 329,767 20,328 17,222 21,868 72,745 12,252 35,604 3,978 11,609 2,918 131,243 239,972 112,576 16,039 86,994 8,838 3,564 7,825 4,136 2006 Schedule 4 165 25.82% 25.93% $ 28.54% 649 1,501 (256,054) 52,136 (53,267) - (1,557) 239,875 19,779 589 - 2013 $ 27.64% (59,100) (25,153) (9,320) 32,977 (33,919) (25,000) 8,665 898 546 - 2012 $ 29.77% (34,138) (10,923) (41,251) 38,728 (39,045) (25,000) 11,503 38,300 (11,355) 3,369 331 - 2011 $ 27.91% (15,200) 45,062 36,306 (33,430) - 41,650 10 482 44 2010 $ 25.71% 2,162 198,301 21,914 (22,465) - (3,136) 199,750 1,894 344 - 2009 $ 24.20% 9,753 130,677 (83,521) 51,626 (52,135) - 109,986 93,815 2,192 8,714 - 2008 $ 20.97% (343) 135,679 24,945 (25,309) - 133,327 1,198 850 668 2007 $ 18.91% 8,369 98,164 (9,582) 20,014 (19,314) - 93,033 9,065 1,782 3,166 - 2006 Note: The debt service percentage of noncapital expenditures does not include other financing sources/uses. The percentage equals the total principal and interest expenditures divided by the total expenditures less capital outlay. Debt service as a percentage of noncapital expenditures 48,256 Net change in fund balances 8,370 118 43,721 $ 48,704 (48,768) - (131,966) (110,145) (1,022) 240,694 (201,496) - $ 174 8 2014 209,255 35,751 2,650 - 2015 Refunding lease issued Discount on long-term debt Long-term debt issued Refunding bonds issued Payment to redeem lease Premium on long-term debt issued Proceeds from equipment disposal Capital lease proceeds Payment to redeem/refunded bonds escrow agent Current bond refunding principal Current bond refunding interest Transfers in Transfers out Special item Total other financing sources (uses) Other financing sources (uses) 166 1,593,536 1,189,718 1,130,460 654,550 330,057 304,041 316,206 379,087 2010-11 2011-12 2012-13 2013-14 2014-15 $ 40,191 41,750 45,507 49,391 59,049 60,888 56,528 51,889 47,129 46,475 Personal (3) $ 55,687 53,581 53,158 53,746 56,217 62,176 61,347 60,680 58,111 58,101 Utilities Rails and Wires $ 518,191 477,258 485,894 473,388 609,782 576,051 485,193 285,374 230,940 192,607 Less: Tax Exempt Property $ 1,408,099 1,148,108 1,047,273 1,149,524 1,753,570 2,130,907 2,193,675 1,827,019 1,370,989 1,269,568 Net Assessed Value (1) 2.15 2.29 1.90 1.59 1.59 1.59 1.59 1.62 1.72 1.72 Total Direct Tax Rate $ 12,452,875 12,489,163 11,471,039 12,040,482 17,333,074 20,635,557 21,034,639 16,733,846 12,107,926 11,296,734 Estimated Actual Value(1) 15.469 13.014 13.366 13.479 13.635 13.118 12.736 12.624 13.230 12.943 Assessed Value as a Percentage of Actual Value(2) Schedule 5 Source: Maricopa County Assessor's Office and Maricopa County's Department of Finance Notes: (1) Assessed values are established each year by the County. The tax rate is $100 per assessed value (reference note I. L). (2) The assessed value as a percentage of actual value does not include tax exempt property. (3) The Assessor's Office no longer breaks down the secured and unsecured personal property as of 2013. All prior years secured and unsecured have been combined. 1,451,325 1,213,829 1,844,506 739,388 1,821,057 739,936 2008-09 2009-10 1,406,513 1,033,129 989,418 593,311 $ 2007-08 368,181 Improvements 463,560 $ Real Estate 2006-07 2005-06 Fiscal Year Major Components City of Glendale, Arizona Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) 167 0.31 0.29 0.27 0.24 0.22 0.22 0.22 0.22 0.50 0.49 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 1.66 1.79 1.68 1.37 1.37 1.37 1.35 1.35 1.43 1.41 2.15 2.29 1.90 1.59 1.59 1.59 1.59 1.62 1.72 1.72 City of Glendale 23.58 25.06 22.93 20.69 16.35 15.18 15.85 17.74 19.84 20.96 Glendale Elementary and High School Districts 19.64 19.82 18.08 15.54 14.13 13.81 14.09 15.33 17.26 18.45 Peoria Unified School Districts Overlapping Rates* * Overlapping rates are those of local and county governments that apply to property owners within the City of Glendale. Not all overlapping rates apply to all City of Glendale property owners (e.g., the rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district). Source: Maricopa County 2014 Tax Rates Note: The City rounds the rates to two digits from the four presented by the county. Basic Rate Fiscal Year General Obligation Debt Service City of Glendale, Arizona Direct and Overlapping Governments Property Tax Rates Last Ten Fiscal Years Per $100 Assessed Valuation 18.85 18.91 17.75 16.47 14.18 12.74 13.03 13.97 15.34 16.98 Deer Valley Unified School Districts Schedule 6 168 Rank 1 2 3 4 5 6 7 8 9 10 $ $ 87,526 Assessed Valuation 17,801 12,883 11,861 9,030 8,685 6,493 5,733 5,365 4,852 4,823 6.21 % Percentage of Total City Taxable Assessed Value 1.26 % 0.91 0.84 0.64 0.62 0.46 0.41 0.38 0.35 0.34 Tax Year 2015 $ 76,261 9,293 7,596 5,965 4,704 4,000 3,786 15,872 1 3 4 6 7 9 10 4,235 6,119 8 5 Rank 2 Schedule 7 6.65 % 0.81 0.66 0.52 0.41 0.35 0.33 1.39 0.37 0.53 Percentage of Total City Taxable Assessed Value 1.28 % Tax Year 2005 Assessed Valuation $ 14,691 Note: The Salt River Project Agriculture Improvement and Power District assessed valuation is not reflected in the total assessed valuation of the City of Glendale. The Project is subject to "voluntary contribution" in lieu of ad valorem taxation. Source: Maricopa County Treasurer's Office Total principal taxpayers Taxpayer Arizona Public Service Company New Westgate LLC VHS of Arrowhead, Inc. Wal-Mart Stores, Inc. Arrowhead Towne Center LLC Centurylink (Qwest Corporation) American Furniture Warehouse JQH-Glendale Az Development LLC Thunderbird School of Global Management Stadium Development LLC New River Associates Honeywell, Inc. Southwest Gas Corporation Toys DC South LLC 51 Bell Limited Partnership Corning Gilbert, Inc. City of Glendale, Arizona Principal Property Taxpayers Current Year and Ten Years Ago June 30, 2015 (amounts expressed in thousands) 169 $ 2005-06 20,787 21,841 23,943 24,429 2011-12 2012-13 2013-14 2014-15 (1) Total levy includes only secured property. (2) Includes collections and resolutions. Source: Maricopa County Treasurer's Office 27,534 2010-11 33,927 2008-09 33,617 28,728 2007-08 2009-10 23,423 2006-07 21,566 Total Tax Levy(1) Fiscal Year City of Glendale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) $ 23,729 23,490 21,268 20,090 26,469 32,260 32,411 27,823 22,721 20,980 Amount 97.13 98.11 97.38 96.65 96.13 95.96 95.53 96.85 97.00 97.28 % Percent of Levy Collected within the Fiscal Year of Levy $ - 159 (5) 74 65 536 1,001 549 407 493 in Subsequent Years(2) Collections $ 23,729 23,649 21,263 20,194 26,534 32,796 33,412 28,372 23,128 21,473 Amount 97.13 98.77 97.35 97.15 96.37 97.56 98.48 98.76 98.74 99.57 % Percent of Levy Total Collections to Date Schedule 8 This page left blank intentionally. 170 171 $ Total 8.4 % 7.0 % (18.8) 11.3 (0.6) (5.9) 11.4 168.9 15.1 145,126 79,062 6,457 16,146 8,678 4,773 17,651 5,673 6,686 $ $ $ $ 27.3 % 35.1 % (8.7) 22.8 25.6 7.7 19.3 (25.6) 81.3 122,962 67,133 4,721 14,182 8,028 5,540 14,284 2,154 6,920 2013 $ $ (1.3) % 3.3 % (23.3) (2.6) (0.9) (15.6) 6.9 55.7 (31.5) 96,630 49,686 5,170 11,550 6,393 5,144 11,975 2,896 3,816 2012 $ $ 0.1 % (2.0) % 51.0 (7.0) (6.0) (1.0) 4.0 (50.0) 39.0 97,862 48,089 6,742 11,854 6,449 6,093 11,207 1,860 5,568 2011 $ $ (0.1) % 1.6 % (30.1) 10.6 5.9 (8.4) (0.7) 1.0 0.4 97,805 49,127 4,458 12,729 6,829 6,156 10,791 3,697 4,018 2010 97,937 $ (6.9) % (11.1) % (33.1) (4.7) 20.3 8.9 (1.2) 20.6 11.9 48,353 6,378 11,511 6,449 6,722 10,863 3,659 4,002 $ 2009 $ $ 7.5 % 7.3 % (9.0) 22.1 13.4 4.4 17.8 (7.7) 3.5 105,175 54,416 9,540 12,082 5,359 6,174 10,995 3,034 3,575 2008 $ $ 7.5 % 4.1 % 7.8 11.2 13.3 11.6 14.4 70.0 (14.5) 97,825 50,733 10,483 9,895 4,724 5,914 9,335 3,288 3,453 2007 $ $ Note: The 2012 and prior years tax rate for City activities is 2.2% except for telecommunications which is 5.4%, restaurant bars 3.2%, hotel/motel 5.6%, and retail sales food for home consumption 1.8%. The 2013 and later years tax rate for City activities is 2.9% except for telecommunications which is 6.1%, restaurant/bars 3.9%, hotel/motel 7.9%, retail sales food for home consumption 2.5%, and retail sale of individual items over $5,000 2.2% The amounts represent sales tax dollars collected for the fiscal year presented. 8.9 % 10.1 % 68.4 2.3 8.8 (8.4) 10.9 (2.0) (16.1) 133,938 73,924 7,948 14,502 8,732 5,072 15,842 2,110 5,808 2014 Source: City of Glendale Tax and License Division Total % Growth by year Retail sales Contracting Rentals Utilities Telecom/cable TV Restaurant/bar Amusement Other $ Retail sales Contracting Rentals Utilities Telecom/cable TV Restaurant/bar Amusement Other 2015 City of Glendale, Arizona City Transaction Privilege Taxes (Sales Tax) by Category Last Ten Fiscal Years (amounts expressed in thousands) 17.9 % 16.4 % 26.1 8.1 111.9 2.3 16.1 85.4 (2.1) 90,968 48,743 9,729 8,897 4,168 5,300 8,163 1,934 4,034 2006 Schedule 9 172 175,155 2005-06 224,234 212,524 197,738 225,595 194,270 179,010 163,130 151,206 133,168 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 $ General Obligation Bonds Fiscal Year (1) (4) (5) (4) (5) (4) (4) (4) Ratio of Outstanding Debt by Type Last Ten Fiscal Years (amounts expressed in thousands) City of Glendale, Arizona $ - - - - - - - - - 39 Special Assessment Bonds $ 1,912 3,736 8,055 12,250 16,290 23,910 27,480 30,895 34,065 35,940 Street and Highway Revenue Bonds (4) (5) (4) (5) (4) (4) (4) $ 477,747 477,736 468,875 474,840 481,705 487,305 493,880 298,050 293,530 223,988 Excise Tax Revenue Bonds (4) (5) (4) (5) Government Activities $ 91,047 89,317 91,140 97,035 99,815 102,490 105,035 109,110 - - Transportation Bonds (4) (5) (4) (5) $ 57 10,361 11,094 11,667 11,833 7,493 9,076 10,838 12,492 12,875 Capital Leases $ - - - - - 6,288 7,637 9,045 6,279 15,689 Notes Payable Schedule 10 173 12,375 2005-06 10,805 9,995 9,160 8,300 6,485 5,515 - 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 (4) (4) $ - - - - - - 132 331 520 700 Landfill G.O. Bonds $ 260,967 267,254 273,080 282,625 289,175 273,140 282,345 288,950 229,130 190,020 (4) (5) (4) (5) $ - - - 708 11,901 14,278 12,425 10,240 10,862 12,285 Notes Payable $ - - - - 151 592 1,080 1,688 2,349 2,613 Capital Leases $ 964,898 999,610 1,020,889 1,064,620 1,113,440 1,150,251 1,146,823 982,476 825,056 681,679 Total Primary Government (5) (5) (1) (1) (1) (1) (1) (1) (1) (1) $ 4,141 4,327 4,471 4,694 4,901 4,601 4,587 3,946 3,354 2,794 % Total Debt per Capita(3) 10.18 11.52 12.21 13.27 14.12 13.56 13.11 11.32 9.86 9.08 Percentage of Personal Income (2) (1) Does not include other long-term obligations such as compensated absences, unamortized premiums, claims/judgments, arbitrage, post-closure costs, etc. (2) Calculate by dividing Glendale population with Maricopa County population and multiplying by total personal income to arrive at Glendale personal income (data from Schedule 15). Then divide total primary government amount by Glendale personal income to arrive at percentage of personal income. (3) Numbers not expressed in thousands. (4) Amounts outstanding less July 1. (5) Includes unamortized premiums of debt issuance and discount on debt issuance. 11,595 2006-07 $ Water Sewer G.O. Bonds Fiscal Year Business Activities Water Sewer Revenue Bonds City of Glendale, Arizona Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (amounts expressed in thousands) Less: Amounts Available in Debt Service Funds(2) General Obligation Bonds Fiscal Year 188,230 (1) 2006-07 236,349 (1) 2007-08 223,660 2008-09 2005-06 $ Schedule 11 $ 22,507 Total $ Percentage of Net Assessed Value of Property Per Capita(3) 165,723 13.05 % $ 679.19 24,600 211,749 15.45 859.44 (1) 30,145 193,515 10.59 778.01 207,865 (1) 37,418 170,447 7.77 682.30 2009-10 234,755 (1) 41,934 192,821 9.05 770.75 2010-11 201,680 (1) 21,250 180,430 10.29 794.09 2011-12 185,495 (1) (4) 16,765 168,730 14.68 744.22 2012-13 168,645 (1) (4) 12,641 156,004 14.90 681.22 2013-14 147,810 (4) 9,310 138,500 12.06 599.28 2014-15 126,305 (4) (5) 8,270 118,035 10.43 507.29 Source: Maricopa County - Abstract by tax authority and class ADOA Office of Employment and Population Statistics - Population estimates for July 1, 2014 Note: (1) Includes general obligation water and sewer bonds. (2) Includes the current general obligation bond liability plus the general obligation debt service fund balance at June 30. (3) Per capita is in actual dollars. (4) Includes the July 1 payment. (5) Based on limited assessed value beginning in FY 2015 instead of secondary full cash value. 174 City of Glendale, Arizona Net Direct and Overlapping Governmental Activities Debt June 30, 2015 (amounts expressed in thousands) Schedule 12 Net Debt Outstanding Jurisdiction Peoria Unified School District No. 11 $ 226,970 Percentage Applicable to Glendale 22.5308 % Amount Applicable to Glendale (2) $ 51,138 Glendale Elementary School District No. 40 19,390 99.0637 19,208 Deer Valley Unified School District No. 97 180,160 19.6202 35,348 Alhambra Elementary School District No. 68 - 17.5081 - Glendale Union High School District No. 205 102,965 21.3865 22,021 Maricopa County Community College District 593,820 3.4138 20,272 Phoenix Union High School District No. 210 282,795 1.1245 3,180 Pendergast Elementary School District No. 92 30,220 25.0702 7,576 Tolleson Union High School District No. 214 35,800 7.4898 2,681 Washington Elementary School District No. 6 67,600 3.0869 2,087 160,327 0.0722 116 Agua Fria Union High School District No. 216 51,855 0.0776 40 Litchfield Elementary School District No. 79 42,475 0.1153 49 Cartwright Elementary School District No. 83 25,250 Maricopa County Dysart Unified School District No. 89 - - Total Overlapping Debt 1,819,627 163,716 (1) 688,313 688,313 City of Glendale Debt Total $ 2,507,940 Source: Maricopa County - Abstract by tax authority and class, Abstract by tax area code and Annual Report of Bonded Indebtedness. (1) The City of Glendale debt includes total General Obligation (GO) and revenue bonds debt outstanding, capital leases, premiums and discounts. (2) Calculation based on Net Debt Outstanding multiplied by Percentage Applicable to Glendale, which is determined by dividing the tax area code net secondary assessed value by the tax authority net secondary assessed value. 175 $ 852,029 This page left blank intentionally. 176 177 63.00% 41.09% $ 215,247 150,157 $ 365,404 2008 39.55% $ 66,263 43,358 $ 109,621 2008 31.53% $ 300,409 138,326 $ 438,735 2009 24.40% $ 99,500 32,121 $ 131,621 2009 13.69% $ 90,815 14,399 $ 105,214 2011(1) $ $ 16.61% 57,516 11,455 68,971 2012(1) $ $ 11.63% 55,527 7,309 62,836 2013(1) $ $ 38.44% $ 262,370 163,811 $ 426,181 2010 47.34% $ 184,683 166,031 $ 350,714 2011(1) $ $ 69.29% 70,599 159,306 229,905 2012(1) $ $ 70.99% 60,760 148,695 209,455 2013(1) $ $ Assessed value Debt limit (20% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin 22.69% $ 98,844 29,010 $ 127,854 2010 Schedule 13 59.26% 93,537 136,085 229,622 2014(1) 3.51% 66,471 2,415 68,886 2014(1) -0.24% 68,042 (165) 67,877 $ $ 52.24% 108,057 118,200 226,257 2015(1) (2) $ 1,131,284 226,257 126,305 (8,105) 118,200 $ 108,057 $ $ 2015(1) (2) $ 1,131,284 67,877 (165) (165) $ 68,042 Legal Debt Margin Calculation for Fiscal Year 2015 Assessed value Debt limit (6% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin (1) Debt applicable to limit: General obligation bonds net of July 1 payment made prior to June 30. (2) Based on limited assessed value beginning in FY 2015 instead of secondary full cash value. 44.58% $ 140,730 Legal debt margin Total net debt applicable to the limit as a percentage of debt limit 172,751 113,184 $ 101,447 $ 274,198 2007 47.41% $ 253,914 2006 68.97% $ 43,261 38,998 52,539 $ 23,635 $ 82,259 2007 $ 76,174 2006 Debt limit Total net debt applicable to limit 20% Type Bonds Total net debt applicable to the limit as a percentage of debt limit Legal debt margin Debt limit Total net debt applicable to limit 6% Type Bonds City of Glendale, Arizona Legal Debt Margin Information Last Ten Fiscal Years (amounts expressed in thousands) 178 66,646 69,490 69,300 76,987 81,127 83,496 83,454 81,733 79,325 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 59,426 $ 41,712 42,544 39,203 41,555 41,550 43,628 40,175 44,247 40,825 35,916 Year $ Expenses(2) Charges(1) Fiscal 2005-06 Less: Operating Utility Service City of Glendale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (amounts expressed in thousands) $ 37,613 39,189 44,251 41,941 39,577 33,359 29,125 25,243 25,821 23,510 Revenue $ 13,170 10,210 9,755 9,545 11,107 10,347 9,876 7,252 6,303 6,813 Principal (6) (3) (3) (3) (3) (3) (3) $ 10,918 12,706 13,152 13,306 13,598 13,082 13,539 11,918 9,280 7,143 Interest Water and Sewer Revenue Bonds Net Available Debt Service (3) (3) (3) (3) (3) (3) (3) 1.56 1.71 1.93 1.84 1.60 1.42 1.24 1.32 1.66 1.68 Coverage Schedule 14 179 23,672 20,875 19,488 19,486 20,665 21,691 23,112 24,690 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 $ - - 3,545 3,125 3,005 2,890 2,780 2,675 2,545 4,075 Principal $ - - 3,597 4,201 4,321 4,437 4,548 4,655 4,782 3,255 Interest Debt Service $ 3.46 3.15 2.96 2.82 2.66 2.66 2.85 3.23 - - Coverage $ 151,963 141,674 131,931 100,081 102,962 109,536 118,277 127,373 123,602 114,066 Revenue Excise Tax (7) (7) (7) $ 2,585 6,500 2,790 2,590 6,585 5,600 6,575 7,399 2,715 2,785 Principal (6) (6) $ 21,175 22,951 30,713 27,279 27,612 27,812 24,074 17,617 10,343 8,871 Interest Debt Service Excise Tax Revenue Bonds (5) (8) Source: City of Glendale Finance Department Notes: (1) Operating revenues and nonoperating revenues excluding non-cash contributions, gains and losses. (2) Excluding depreciation. (3) Principal and interest amounts include debt service on the note payable to the Water Infrastructure Financing Authority of Arizona for the 00-01 loan and the 09-10 loan for fiscal years through 2010-11. (4) FY 2008 is the first year the City of Glendale has issued transportation bonds. (5) Excise tax revenue bonds include the Municipal Property Corporation and the Western Loop 101 Public Facilities Corporation (through FY 2012-13). (6) Excluding reductions to principal by refunded bonds - 2011-12 Water & Sewer Revenue Bond $74,050 and Excise Tax Revenue Bonds $8,945; and 2012-13 Excise Tax Revenue Bonds $243,250. (7) Excise tax revenue amounts include state shared revenues. (8) Includes interest expense from refunding the Western Loop 101 Public Facilities Bonds in December 2012. - - 2006-07 $ Tax Year 2005-06 Transportation Sales Fiscal Transportation Bonds (4) 6.40 4.81 3.94 3.35 3.01 3.28 3.86 5.09 9.47 9.79 Coverage City of Glendale, Arizona Demographic and Economical Statistics Last Ten Fiscal Years (amounts expressed in thousands) Schedule 15 Fiscal Year City of Glendale Population(2) Maricopa County Population(6) 2005-06 244 3,793 2006-07 246 3,907 2007-08 249 2008-09 Personal Income $ Per Capita Personal Income(1)(4) (1) 134,339,487 $ Unemployment Rate 35,418 3.9 139,665,253 35,747 3.1 3,988 145,880,680 36,580 3.6 250 4,116 146,898,132 35,690 8.4 2009-10 250 4,023 140,351,646 34,886 9.1 2010-11 227 3,817 147,724,392 (3) 38,701 9.2 2011-12 229 (5) 3,885 (3) 156,763,179 (3) 40,351 8.6 (5) 2012-13 231 (5) 3,934 (3) 160,497,824 (3) 40,798 7.6 (5) 2013-14 233 (5) 3,945 (3) 160,497,824 (3) 40,684 6.6 (5) 2014-15 233 (5) 3,945 (3) 160,497,824 (3) 40,684 5.6 (5) Note: (1) Personal Income and Per Capita Income figures are for Maricopa County. City of Glendale is one of several Valley cities that comprise Maricopa County, including Phoenix, Mesa and Scottsdale. (2) Estimate provided by City of Glendale Planning Department. (3) The previous fiscal year Maricopa County CAFR provides the most current number. (4) Calculation based on personal income divided by Maricopa County population. (5) Estimate provided by Arizona Department of Administration, Office of Employment and Population Statistics website for the prior fiscal year. (6) Maricopa County population extracted from Maricopa County CAFR statistical section. 180 % City of Glendale, Arizona Principal Employers Current Year and Ten Years Ago Schedule 16 2015 Employer Luke Air Force Base Banner Thunderbird Health System Arrowhead Towne Center Walmart Glendale Union High School District Glendale Community College City of Glendale Deer Valley Unified School District Glendale Elementary School District AAA Honeywell, Inc. Schuck and Sons Total Employees 5,100 3,000 2,650 2,175 1,974 1,948 1,610 1,594 1,400 1,067 Rank 1 2 3 4 5 6 7 8 9 10 2005 Percentage of Total City Employment 4.44 % 2.61 2.30 1.89 1.72 1.69 1.40 1.39 1.22 0.93 22,518 19.59 % Source: City of Glendale Economic Development Department Department of Economic Security, Research Administration City of Glendale Human Resources Department 181 Employees 7,907 2,036 2,500 Rank 1 4 3 Percentage of Total City Employment 7.64 % 1.97 2.42 1,862 1,220 2,021 1,432 1,684 6 9 5 8 7 1.80 1.18 1.95 1.38 1.63 2,762 1,150 2 10 2.67 1.11 24,574 23.75 % 182 24.00 56.00 11.00 22.00 69.00 66.00 517.00 259.00 57.00 58.00 31.00 180.00 19.00 56.00 185.00 1,610.00 2015 31.00 49.00 10.00 21.00 69.00 63.00 534.00 253.00 48.00 59.00 32.00 173.00 17.00 57.00 176.00 1,592.00 2014 34.00 54.00 13.00 21.00 67.00 73.00 505.00 260.00 56.00 75.00 32.00 165.00 18.00 60.00 172.00 1,605.00 2013 Sources: City Budget Division for 2006-08 City of Glendale Human Resources Department for 2009-15 General government Management services Finance Planning Building Legal Other Police Fire Homeland security Community service Parks and recreation Library Public works Engineering Transportation Utilities Total Function/Program 36.00 57.00 14.00 24.00 66.00 77.00 534.00 269.00 60.00 92.00 48.00 179.00 19.00 65.00 185.00 1,725.00 45.00 59.00 15.00 26.00 70.00 90.00 544.00 270.00 72.00 123.00 56.00 203.00 26.00 69.00 167.00 1,835.00 43.00 61.00 24.00 32.00 73.00 96.00 554.00 276.00 72.00 122.00 57.00 225.00 27.00 63.00 170.00 1,895.00 38.00 69.00 33.00 43.00 70.00 104.00 567.00 278.00 6.00 69.00 85.00 65.00 256.00 39.00 67.00 171.00 1,960.00 Full-Time Equivalent Employees as of June 30 2012 2011 2010 2009 City of Glendale, Arizona Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 35.00 86.75 28.50 53.75 78.00 108.50 557.50 263.50 7.00 93.75 99.25 87.76 281.00 45.00 89.25 186.00 2,100.51 2008 35.00 86.75 28.50 51.75 78.00 105.50 543.50 251.50 7.00 87.25 98.75 88.76 271.00 45.00 88.25 165.00 2,031.51 2007 34.00 86.75 26.50 55.75 67.00 101.00 506.50 237.50 84.25 89.75 87.76 266.00 46.00 81.25 146.00 1,916.01 2006 Schedule 17 183 (2) (3) 408,516 78,271 77,318 4,799 5,449 528,835 70,679 74,217 85,798 415,695 6,383 76,390 46,833 40,272 56,357 6,065 60,450 13,667 3,478 30,082 127,333 8,588 34,995 2013 90,577 446,010 5,304 80,416 48,187 39,722 55,987 5,970 60,109 14,064 3,495 29,321 127,829 7,083 33,938 2012 92,134 529,113 5,619 80,291 49,784 40,451 55,609 5,998 59,732 13,569 3,573 27,751 129,161 9,902 27,304 89,808 523,512 5,194 69,834 52,634 41,797 55,439 6,405 59,579 14,284 3,847 26,591 129,868 11,015 29,765 Fiscal Year 2011 2010 91,841 540,352 5,289 91,998 53,493 44,600 56,709 6,570 59,079 15,375 3,900 24,419 137,586 11,990 32,599 2009 88,638 546,136 6,931 137,762 58,865 48,267 54,936 6,661 59,807 14,943 4,216 25,851 146,489 12,902 32,918 2008 84,132 557,342 6,310 152,194 60,914 51,425 54,662 7,227 60,700 16,231 4,322 25,819 154,176 12,119 35,169 2007 Note: Water and sewer statistics are contained in Schedule 20 and 21. (1) Fire department figures are on a calendar year, January 1, 2006, through November 3, 2006. (2) Departures/arrivals are based on calendar year prior to 2005-2006. 2009 figures are through October 30, 2009. Year 2010 and forward are based on fiscal year. (3) Includes all formats: books, magazines, CD's, DVD's and electronic/downloadable collection. Source: Various city departments and FAA ATADS report Volumes in collection Transit Dial-A-Ride passengers Departures/arrivals General government Building permits Library 45,942 41,879 56,791 6,244 59,960 6,117 48,993 45,693 60,932 13,768 3,461 30,262 146,538 18,939 31,481 2014 61,117 12,057 3,467 Fire calls Water Number of billed accounts Water produced (millions gallons) Sewer Number of billed accounts Treated influent (millions gallons) Refuse collection Residential curb service (tons per year) Commercial container service (tons per year) Airport 32,250 174,535 17,871 31,873 Police Calls for service Bookings Criminal offense reports Fire EMS calls 2015 Function/Program City of Glendale, Arizona Operating Indicators by Function/Program Last Ten Fiscal Years 89,055 596,266 7,888 143,798 63,521 49,517 56,737 7,410 60,004 16,075 5,886 22,284 148,633 8,640 34,271 2006 (1) (1) Schedule 18 184 Source: Various city departments Note: Landfill capacity in thousands Police Stations Patrol vehicles Fire stations General government City square miles Water Treatment capacity (millions gallons per day) Storage capacity (millions gallons) Miles of water mains Sewer Treatment capacity (millions gallons per day) Miles of sewer lines Landfill Landfill capacity - south cell Landfill capacity used - south cell Other public works Streets (miles) Parks and recreation Number of parks/retention basins/facilities Acres of parks Transit Dial-A-Ride minibuses Function/Program City of Glendale, Arizona Capital Asset Statistics by Function/Program Last Ten Fiscal Years 3 176 9 59 104.1 67 994 29.2 707 21,493 19,220 718 100 2,189 20 59 104.1 67 994 29.2 707 22,429 19,687 718 100 2,189 22 2014 3 178 9 2015 21 100 2,189 718 21,218 18,849 29.2 707 104.1 67 994 59 3 139 9 2013 21 100 2,189 717 22,065 19,257 29.2 700 104.1 67 994 59 3 154 9 2012 21 100 2,189 802 21,912 18,444 29.2 690 104.1 67 994 59 3 174 9 22 100 2,189 736 21,666 18,529 29.2 680 94.1 67 994 59 3 157 9 Fiscal Year 2011 2010 23 99 2,199 736 21,666 18,126 29.2 670 94.1 67 850 59 3 159 9 2009 22 99 2,125 736 22,594 17,776 29.2 659 81.6 62 800 58 3 158 9 2008 22 95 2,125 736 22,594 17,358 29.2 659 81.6 62 750 57 3 157 9 2007 25 92 2,058 733 22,594 16,790 29.2 659 81.6 62 750 57 3 156 9 2006 Schedule 19 City of Glendale, Arizona Miscellaneous Water and Sewer Rate Statistics June 30, 2015 Schedule 20 WATER RATES PER METER SIZE Commercial and Residential Monthly Base Charge Outside Inside City City Meter Size (inch) 5/8 3/4 1 1 1/2 2 3 4 6 8 10 12 $ $ 9.70 12.30 17.40 35.30 62.90 106.00 189.00 376.00 557.00 896.00 1,326.00 12.61 15.99 22.62 45.89 81.77 137.80 245.70 488.80 724.10 1,164.80 1,723.80 Residential Commercial 3/4 inch Meter Size Meter Size and Greater (1) Gallons per Month All Year Inside Outside City City All Year Inside Outside City City 0 - 6,000 7,000 - 15,000 16,000 - 30,000 over 31,000 $ 2.14 2.68 3.76 5.27 $ 2.28 2.28 2.28 2.28 $ 2.79 3.49 4.89 6.85 $ 2.97 2.97 2.97 2.97 Summer Excess Rate Inside Outside City City $ 2.85 2.85 2.85 2.85 SEWER SERVICE RATES Type of Service Inside City Single Family Dwelling Unit Office Building Apartment - Average 5 units Apartment - Average 35 units Retail/Wholesale $ 31.56 48.25 86.05 562.68 69.53 (1) Per 1,000 gallons SOURCE: City of Glendale Finance as of May 2015 185 Outside City $ 57.94 N/A 93.82 161.51 N/A $ 3.72 3.72 3.72 3.72 City of Glendale, Arizona Miscellaneous Water and Sewer Statistics June 30, 2015 HISTORICAL AVERAGE NUMBER OF WATER ACCOUNTS (1) Fiscal Year Ending June 30 2006 2007 2008 2009 (3) 2010 (3) 2011 (3) 2012 (4) 2013 (3) 2014 (3)(5) 2015 (3) Residential 55,354 55,395 54,396 53,523 53,522 53,663 53,858 54,056 53,914 54,126 Multi-Family (2) 1,672 1,674 1,673 1,680 1,799 1,800 Commercial 4,650 5,305 5,411 5,556 4,247 4,264 4,281 4,296 4,264 4,379 Sprinkler (2) 1,647 1,655 1,666 1,669 1,819 1,862 Total 60,004 60,700 59,807 59,079 61,088 61,256 61,478 61,701 61,796 62,167 (1) Total meters in the system being read monthly. Slightly lower figure for active accounts due to vacant properties. (2) In 2010, the schedule was revised to separate into their own categories Sprinkler from Residential and MutiFamily from Commercial. (3) As of October following the fiscal year ended. (4) As of August 2012. (5) Reclassified 269 residential connections to multifamily or sprinkler. SOURCE: City of Glendale Water Services Department WATER DELIVERIES Acre Feet Calendar Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Residential (1) 33,567 34,660 34,594 32,278 31,457 27,537 27,409 27,695 26,921 26,946 Commercial 9,580 10,951 11,281 10,764 10,122 10,482 11,143 11,278 10,634 10,587 (1) Residential includes both single and multi-family housing. (2) Starting in 2005, Other represents unbilled water and system loses. SOURCE: Annual Report of Arizona Department of Water Resources. 186 Other (2) 5,636 3,730 3,937 2,818 5,606 4,455 9,558 3,683 3,050 2,467 Total 48,783 49,341 49,812 45,860 47,185 42,474 48,110 42,656 40,605 40,000 Schedule 21 SEWERAGE ACCOUNTS BILLED AND SEWAGE TREATED Fiscal Year Ending June 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 No. of Sewer (1) Accounts Billed 55,995 56,737 54,662 54,936 56,709 56,868 57,087 57,300 57,385 57,588 91st Ave WWTP (2) (MGD) Actual 8.2 8.2 7.8 6.8 6.8 8.3 7.9 7.3 8.4 6.9 Arrowhead (MGD) 3.0 2.9 2.9 2.8 2.8 2.3 2.3 2.5 2.7 2.7 West (MGD) 8.5 9.2 9.1 8.6 8.4 5.4 4.4 5.8 6.0 7.2 Total Treated 19.7 20.3 19.8 18.2 18.0 16.0 14.6 15.6 17.1 16.8 (1) The number of billed accounts is less than the number of connections due to vacant properties. (2) The 91st Avenue Wastewater Treatment Plant is a regional plant servicing five cities. Previously listed as "Multi-City Plant" (SROG). SOURCE: City of Glendale Water Services Department 187 City of Glendale Finance Division 5850 West Glendale Avenue, Suite 302 Glendale, Arizona 85301 (623) 930-2480