CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2011 Jay Tibshraeny, Mayor Trinity Donovan, Vice-Mayor Rick Heumann, Councilmember Matt Orlando, Councilmember Kevin Hartke, Councilmember Jack Sellers, Councilmember Jeff Weninger, Councilmember Executive Staff Rich Dlugas, City Manager Patrick McDermott, Assistant City Manager Jeff Clark, Assistant City Manager Prepared by Management Services Department Dennis Strachota, Director Dawn Lang, Assistant Director for Finance Penny Burczyk, Accounting Manager Derrick Beracy, Sr. Financial Reporting Analyst CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2011 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ............................................................................................................................................... 1 Organizational Chart .............................................................................................................................................. 7 Certificate of Achievement .................................................................................................................................... 8 FINANCIAL SECTION Independent Auditors' Report .............................................................................................................................. 9 Management’s Discussion and Analysis (MD&A) .......................................................................................... 13 Basic Financial Statements: Government-wide Financial Statements Statement of Net Assets .......................................................................................................................... 24 Statement of Activities ............................................................................................................................ 26 Fund Financial Statements Balance Sheet – Governmental Funds ................................................................................................... 28 Reconciliation of the Balance Sheet Governmental Funds to the Statement of Net Assets .................................................................. 29 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds ........................................................................................................................ 30 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities ...................................................................................................................... 31 Statement of Net Assets - Proprietary Funds ....................................................................................... 32 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds.............................................................................................................................. 34 Statement of Cash Flows - Proprietary Funds ..................................................................................... 36 Statement of Fiduciary Net Assets - Fiduciary Funds ........................................................................ 38 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds ................................................... 39 Notes to Financial Statements ................................................................................................................... 41 Required Supplementary Information: Budgetary Comparison Schedule for the General Fund........................................................................ 76 Note to Required Supplementary Information ....................................................................................... 77 Arizona Public Safety Personnel Retirement System Schedules of Funding Progress ..................... 78 Post-employment Benefits Other than Pensions Schedule of Funding Progress............................... 78 Other Financial Statements: Budgetary Comparison Schedules for Other Major Fund Streets Capital Projects Fund .................................................................................................................. 80 General Obligation Bonds Debt Service Fund ..................................................................................... 81 i CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2011 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Non-Major Governmental Funds Combining Balance Sheet – All Non-Major Governmental Funds By Fund Type ........................................................................................................................................ 82 Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds - By Fund Type .................................................................... 83 Combining Balance Sheet ....................................................................................................................... 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....................... 90 Budgetary Comparison Schedules: Highway User ......................................................................................................................................... 93 Local Transportation Assistance .......................................................................................................... 94 Grants Special Revenue ......................................................................................................................... 95 Community Development .................................................................................................................... 96 Police Confiscated Property .................................................................................................................. 97 Parks and Recreation ............................................................................................................................. 98 Library ...................................................................................................................................................... 99 General Government ........................................................................................................................... 100 Public Buildings .................................................................................................................................... 101 Grants Capital Projects ........................................................................................................................ 102 Community Services ............................................................................................................................ 103 Public Safety Buildings and Improvements ..................................................................................... 104 Vehicle and Capital Equipment ......................................................................................................... 105 Special Assessments ........................................................................................................................... 106 Computer Purchases ............................................................................................................................ 107 Municipal Arts ...................................................................................................................................... 108 Non-Major Proprietary Funds: Combining Statement of Net Assets ................................................................................................... 112 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets .................................................................................................................................. 114 Combining Statement of Cash Flows .................................................................................................. 116 Fiduciary Funds: Statement of Changes in Assets and Liabilities - Agency Fund .................................................... 118 ii CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2011 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Other Supplemental Information: HUD Programs: Combining Statement of Net Assets - All HUD Programs ............................................................ 122 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - All HUD Programs .................................................................................. 124 STATISTICAL SECTION Financial Trends Schedule 1 Net Assets by Component ................................................................................................ 128 Schedule 2a Changes in Net Assets ..................................................................................................... 130 Schedule 2b Changes in Net Assets..................................................................................................... 132 Schedule 2c Changes in Net Assets ..................................................................................................... 134 Schedule 3 Fund Balances of Governmental Funds .......................................................................... 136 Schedule 4 Governmental Funds Revenues ....................................................................................... 138 Schedule 5 Governmental Funds Expenditures and Debt Service Ratio ....................................... 140 Schedule 6 Other Financial Sources and Uses and Net Changes in Fund Balance, Governmental Funds .......................................................................................................................... 142 Revenue Capacity Schedule 7 Taxable Revenue by Category .......................................................................................... 144 Schedule 8 Direct and Overlapping Sales and Use Tax Rates ......................................................... 146 Schedule 9 Principal Sales and Use Taxpayers .................................................................................. 147 Debt Capacity Schedule 10 Ratios of Outstanding Debt by Type ............................................................................. 148 Schedule 11 Direct and Overlapping Governmental Activities Debt ............................................. 149 Schedule 12 Legal Debt Margin Information ..................................................................................... 150 Schedule 13a Pledged-Revenue Coverage ......................................................................................... 152 Schedule 13b Pledged-Revenue Coverage ......................................................................................... 153 Schedule 13c Pledged-Revenue Coverage .......................................................................................... 154 Demographic and Economic Information Schedule 14 Demographic and Economic Statistics .......................................................................... 155 Schedule 15 Principal Employers ........................................................................................................ 156 Operating Information Schedule 16 Employees by Function ................................................................................................... 158 Schedule 17 Operating Indicators by Function/Program ................................................................ 160 Schedule 18 Capital Asset Statistics by Function/Program............................................................. 162 iii The City boasts a strong labor market serving the high technology field’s demand for skilled workers. Resident population has a median age of 32.5 years and a median household income of $71,710. In addition, approximately 68 percent of the population has a college degree or some college education. This highly educated workforce explains in part why the City has the highest average employee wages in the Phoenix metropolitan area, 120% of the statewide average. Over 75 percent of the City’s manufacturing employees are in high technology fields; the national average is 15 percent. The City’s unemployment averaged 6.1 percent for fiscal year 20010/11 compared with 8.8% for Maricopa County and 9.3% for the State of Arizona. The City’s sales tax revenues, which comprise nearly 50 percent of its general fund, increased by 6.7 percent for 2010/11 from the current year budget as the City begins to recover from the effects of the recession that was felt nationally and globally. Anticipating continued fallout from the economic recession and from the corresponding declining revenues, the City reduced its spending by $12 million in its General Fund budget for 2010/11 through a combination of spending cuts and reserves specifically set aside for bridging the budget gap over three fiscal years. The City lead other Phoenix metropolitan communities in recovering from the recession through a combination of sound financial practices and notable economic development successes. 2010/2011 Accomplishments Under the guidance and leadership of the Mayor and Council, along with the expertise and dedication of City management and staff, a number of accomplishments were achieved this last fiscal year. Listed below are just a few of those accomplishments.  Obtained AAA General Obligation Bond credit ratings with stable outlooks from all three rating agencies;  Chandler was selected for the fourth consecutive time as one of 100 Best Communities for Young People;  Completed construction of Chandler’s new City Hall;  Assisted with the relocation, expansion and new construction of key industries in the City, including Intel’s retooling of FABs 12 and 32, eBay/PayPal, International Rectifier, B/E Aerospace, Chandler Regional Medical Center, Education Management Corporation and Digital Realty Trust;  Developed and implemented a new Wellness Initiative for City employees;  Initiated Voluntary Demolition Program to facilitate the elimination of blighted properties;  Reopened Chandler Center for the Arts after major renovations;  Completed installation of new energy management and card access systems in City facilities;  Environmental Education Center was certified as bird habitat from the Desert Rivers Audubon Society and wildlife habitat from the National Wildlife Federation;  Implemented E-billing option for utility customers;  Conserved over 16 million gallons of water from the Water Conservation Residential Audit program;  Chandler Police Forensic Services section became the first city crime lab in Arizona to receive international accreditation; and  Completed construction of Price Road repaving and Chandler/Dobson intersection with American Recovery and Reinvestment Act grants. Strategic Goals The City of Chandler’s continued goal is to provide the highest quality services to the community in the most cost-effective manner. The Council’s strategy to achieve these results is through goals to improve Chandler in a coordinated manner and to make fiscally responsible decisions that will ultimately 2 strengthen the City. The City continued with the Council’s strategic goals by focusing on the following organizational priorities.  Downtown Downtown Chandler and the Historic Square have served as the focal point of community life since Chandler’s inception. Emerging today as a location for independent business and retail, the downtown also serves as the City’s cultural center providing the community with a sense of identity and uniqueness.  Economic Development The ability of the City to maintain and enhance the quality of life of its residents depends upon a successful economic development program. High paid quality jobs attract potential residents, and diversifying the employment and tax base provides revenue to support the amenities enjoyed by the community.  Neighborhoods As Chandler has grown rapidly from a community of 30,000 in 1980 to 235,000 today, neighborhoods have become increasingly important to help define the community’s quality of life and provide a sense of identity and place. The maintenance and long term care of our neighborhoods will become increasingly important as the community continues to age.  Sustainability In order to assure that Chandler’s quality of life is enjoyed by future generations, it is imperative that the City acts as an effective steward of our financial and environmental resources. This effort is even more critical as city resources are becoming increasingly limited, and as best practices throughout the country have provided ample evidence of the many benefits of doing business in a more sustainable fashion. The City Council is committed to the stewardship of the City’s resources through improved business practices and the conservation of our financial and environmental assets.  Transportation An effective multimodal transportation system is critical to the long-term vitality of the Chandler community. The City must maintain a viable transportation network that includes an efficient arterial street and transit system that is connected regionally, as well as a network that is bicycle and pedestrian friendly. FINANCIAL INFORMATION Internal Control Structure Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by management and various other City staff, as needed. 3 Single Audit As a part of the City’s single audit, described earlier, tests were made of the City’s internal control structure and of its compliance with applicable laws and regulations, including those related to federal financial assistance programs. Budgetary Controls The City maintains budgetary controls as an integral part of its overall system of internal controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the general fund, special revenue funds, capital projects funds, enterprise funds and internal service funds are included in the annual appropriated budget. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the total budget, as adopted (FY 2010/2011, $671,006,655). The City additionally exercises management control and oversight of the budget at the department level within each fund and maintains an encumbrance accounting system as another method of maintaining budgetary control. Encumbered amounts do not lapse at fiscal year-end and subsequent year expenditures against those encumbrances are charged against an encumbrance reserve established at the end of the preceding year. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Cash Management Policies and Practices The cash management program of the City provides for the continuous investment of all idle funds. Also, the City utilizes a pooled cash and investment concept for all funds. Each fund type’s portion of the pool is displayed in the financial statements as Equity in Pooled Cash and Investments. External investment management firms at the direction of City staff invested cash temporarily idle during the fiscal year. In addition, the City may invest in direct obligations of the United States of America or any agency thereof, or any obligation guaranteed by the United States of America or any of its agencies. It is the City’s investment policy to minimize credit and market risks while maintaining a competitive yield on its portfolio. Accordingly, all cash deposits were either insured by the Federal Depository Insurance Corporation (FDIC) or collateralized. Risk Management The City maintains and has substantially funded a self-insurance program for its liability, property, worker’s compensation and group insurance coverage needs. Administration of employee health care benefits is governed by the City’s Heath Care Benefits Trust Fund Board. Public liability, property claims and worker’s compensation are administered by the City’s Risk Management division in the Management Services Department. Liabilities for these claims, as reported in the financial statements, are based on independently prepared actuarial reports and historical analyses performed by the City. Excess commercial coverage is purchased for claims above the City’s self-insurance retention and this coverage is obtained via a competitive bidding process. At June 30, 2011, the City’s reserve for self-insurance claims amounted to $45.8 million. 4 5 6 7 8 CERTIFIED PUBLIC ACCOUNTANTS Hein f 25 versary th A nni 1986-2011 INDEPENDENT AUDITORS’ REPORT Honorable Mayor and Members of the City Council City of Chandler, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the City of Chandler, Arizona (the “City”) as of and for the year ended June 30, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 discretely presented component units and remaining fund information of the City of Chandler, Arizona, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 10, the City implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, for the year ended June 30, 2011, which represents a change in accounting principle. In accordance with Government Auditing Standards, we have also issued our report dated January 27, 2012, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 9 10120 N. Oracle Road, Tucson, Arizona 85704 Tel: (520) 742-2611 Fax: (520) 742-2718 Co. HEINFELD, MEECH & CO., P.C. & , Meech eld Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 13 through 22, the Budgetary Comparison Schedule for the General Fund on pages 76 and 77, and the Schedules of Funding Progress on page 78, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements as a whole. The accompanying supplementary information such as the Introductory Section, the Other Financial Statements of the Financial Section, Other Supplemental Information, and the Statistical Section are presented for additional analysis and are not a required part of the financial statements. The Other Financial Statements of the Financial Section and the Other Supplemental Information are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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. The Introductory Section and the Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. HEINFELD, MEECH & CO., P.C. Certified Public Accountants January 27, 2012 10 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 11 12 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 As management of the City of Chandler (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2011. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal beginning on page one and the accompanying notes to the financial statements. FINANCIAL HIGHLIGHTS The financial statements, which follow the Management’s Discussion and Analysis, provide these significant, key financial highlights for 2011 as follows:       The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $1.287 billion (net assets). Of this amount, $428.5 million (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors. However, $75.8 million is invested in a joint venture with the Town of Gilbert. There was a decrease in the City’s total net assets by $5.5 million from the prior year due primarily to the drawdown of cash for construction of projects which were financed from prior years’ bond sales. At June 30, 2011, the City’s governmental funds reported combined ending fund balances of $255.8 million, a decrease of $30.4 million in comparison with the prior year. Approximately 58% of the total amount, $148.4 million, is available for spending at the City’s discretion (committed, assigned or unassigned). At June 30, 2011, total fund balance for the General Fund was $162.3 million which represents a decrease of $36.1 million from the prior year. General revenues from governmental activities accounted for $191.5 million or 74.34% of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $66.1 million or 25.66% of total governmental activity revenues. The City had $105.0 million of program revenues and $1.7 million in general revenues and transfers related to business-type activities. At June 30, 2011, the City’s proprietary funds reported combined total net assets of $450.1 million, and total unrestricted net assets of $168.2 million. A total of $123.4 million of the unrestricted net assets are in the Water Fund. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. 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 statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Net assets are categorized as capital assets less related debt, restricted by an outside third party, and unrestricted. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets 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). 13 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 In the government-wide financial statements the City’s activities are presented in the following categories:    Governmental activities – Most of the City’s basic services are included here, such as general government, public safety, community services, community development, and public works. Sales taxes, state shared revenues, and charges for services finance most of these activities. Business type activities – The services provided by the City included here are water, wastewater, solid waste, airport services, and housing services. The services are financed through user fees and charges. Component units – The discretely presented component units are the Chandler Industrial Development Authority and the Chandler Cultural Foundation. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary 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 focus on near-term inflows 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 the City’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 decision. Both the governmental fund 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 21 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 General Fund, Streets Capital Projects Fund, and General Obligation Bonds Debt Service Fund which are considered to be major funds. Data from the other 18 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 in the supplemental section of this report. The City adopts an annual appropriated budget for the General, Special Revenue, General Obligation and Highway User Revenue Debt Service, Capital Projects and Proprietary Funds. Budgetary comparison statements have been provided in the basic financial statements for the General, Streets Capital Projects, and General Obligation Bonds Debt Service Funds to demonstrate compliance with the budget. Budgetary comparison schedules for other Non-major Special Revenue and Non-major Capital Projects Funds are also included in the financial section. 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, wastewater, solid waste, airport, 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 an internal service fund to account for its self-insurance funds. Because self-insurance funds are funded predominantly by governmental functions rather than business-type functions, it has 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. 14 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 The proprietary fund financial statements provide separate information for the water and wastewater, which are considered to be major funds of the City. Data from the other three enterprise funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds are provided in the form of combining statements and schedules in the financial section of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the basic financial statements in this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget process. The City adopts an annual budget for all governmental and enterprise funds. A budgetary comparison schedule has been provided for the General Fund as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $1.287 billion as of June 30, 2011. A significant portion of the City’s net assets (63.4% percent) reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, improvements other than buildings, vehicles, machinery and equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its 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. An additional portion of the City’s net assets (3.3% percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (33.3% percent) includes $75.8 million which is invested in a joint venture with the Town of Gilbert that may not be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the City as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. There was an increase of $5.1 million in unrestricted net assets reported in connection with the City’s business type activities compared to a decrease of $16.3 million for the year ended June 30, 2010. It should be noted that the City implemented organizational changes during fiscal year ended June 30, 2011 in an effort to consolidate operations. Community development and public works were merged into one department and titled “transportation and development”. These changes are reflected in the 2010 expenditures below in order to provide adequate comparative data. 15 CIT TY OF CH HANDLER R, ARIZON NA Man nagement’s Discussion n and Analy ysis (MD&A A) Yearr Ended Jun ne 30, 2011 The ffollowing tab ble presents a condensed statement s of the City’s nett assets for th he fiscal yearrs ended Junee 30, 2011 and d 2010.. Gov vernmental Activities 2011 Curreent assets Capittal assets, net Non-ccurrent assets T Total assets $ 355,620,3669 845,523,2119 4,202,1442 1,205,345,7330 Business-typ pe Activities 2010 $ 20011 383,6399,670 820,1633,912 4,0211,042 1,207,8244,624 $ T Total (Primaary Govt.) 2010 122,,726,233 559,,683,500 78,,730,971 761,,140,704 $ 2011 98,986,038 5591,162,165 81,807,829 7771,956,032 $ 478,346,602 1,405,206,719 82,933,113 1,966,486,434 2010 $ 482,625,708 1,411,326,077 85,828,871 1,979,780,656 Curreent liabilities Non-ccurrent liabilities T Total liabilities 48,229,3224 320,636,6003 368,865,9227 54,2888,921 323,4599,370 377,7488,291 30,,102,524 280,,937,221 311,,039,745 26,602,357 2283,311,071 3309,913,428 78,331,848 601,573,824 679,905,672 80,891,278 606,770,441 687,661,719 Net aassets: Inveested in capital assets, a net of relaated debt Resttricted Unrrestricted T Total net assets 534,292,4888 41,906,1229 260,307,2888 836,505,9005 537,5766,346 94,4400,806 198,0599,181 830,0766,333 281,,936,017 168,,164,942 450,,100,959 2298,938,820 1163,103,784 4462,042,604 816,228,505 41,906,129 428,472,230 $ 1,286,606,864 836,515,166 94,440,806 361,162,965 1,292,118,937 $ $ $ $ Total asssets $ Governmen ntal Actvities Business-ty ype Actvities Total liabilitties Total net asssets $0 $500 $1 1,000 Millio ons 16 $1,500 $2,0000 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 Changes in net assets. The City’s total revenues for the fiscal year ended June 30, 2011 were $364.1 million. The total cost of all programs and services was $369.7 million. The following table presents a summary of the changes in net assets for the fiscal years ended June 30, 2011 and 2010. Governmental Activities 2011 2010 Business-type Activities 2011 2010 Total (Primary Govt.) 2011 2010 Revenues: Program revenues Charges for services Operating grants and contributions Capital grants and contributions General revenues Property taxes Sales taxes Franchise fees Highway user taxes Other taxes State shared revenues Investment income Miscellaneous Total revenues $ 44,171,220 5,890,147 16,041,213 $ 37,609,321 5,510,710 8,159,960 $ 90,049,474 6,297,200 8,659,772 $ 84,911,736 6,367,024 8,484,239 $ 134,220,694 12,187,347 24,700,985 $ 122,521,057 11,877,734 16,644,199 36,158,574 86,523,295 2,819,521 13,287,878 88,561 47,732,614 1,841,244 3,071,588 257,625,855 40,617,269 83,019,726 3,174,390 13,116,481 13,965,973 54,492,427 3,487,145 850,191 264,003,593 533,313 946,507 106,486,266 756,641 1,422,790 101,942,430 36,158,574 86,523,295 2,819,521 13,287,878 88,561 47,732,614 2,374,557 4,018,095 364,112,121 40,617,269 83,019,726 3,174,390 13,116,481 13,965,973 54,492,427 4,243,786 2,272,981 365,946,023 67,808,567 90,738,477 50,909,361 28,919,560 12,767,934 251,143,899 57,980,882 93,496,932 63,612,491 29,423,203 13,541,708 258,055,216 57,452,876 37,896,180 13,443,102 2,107,354 7,580,783 118,480,295 62,556,496 38,227,999 14,605,448 1,797,991 7,654,449 124,842,383 67,808,567 90,738,477 50,909,361 28,919,560 12,767,934 57,452,876 37,896,180 13,443,102 2,107,354 7,580,783 369,624,194 57,980,882 93,496,932 63,612,491 29,423,203 13,541,708 62,556,496 38,227,999 14,605,448 1,797,991 7,654,449 382,897,599 6,481,956 5,948,377 (11,994,029) (22,899,953) Expenses: General government Public safety Tansportation & development Community services Interest and fiscal charges Water Wastewater Solid waste Airport Housing authority Total expenses Increase (decrease) before transfers Transfers in (out) Increase (decrease) in net assets Beginning net assets as restated Ending net assets (244,702) 6,237,254 873,357 6,821,734 244,702 (11,749,327) (873,357) (23,773,310) (5,512,073) (5,512,073) (16,951,576) (16,951,576) 830,268,651 823,254,596 461,850,286 485,815,914 1,292,118,937 1,309,070,510 $ 836,505,905 $ 830,076,330 $ 450,100,959 $ 462,042,604 $ 1,286,606,864 $ 1,292,118,934 17 CIT TY OF CH HANDLER R, ARIZON NA Man nagement’s Discussion n and Analy ysis (MD&A A) Yearr Ended Jun ne 30, 2011 Rev venue So ources - F Fiscal Yeaar 2011 Other taxees 0.02% Highwa ay user taxees 3.65% % Statee shared reveenues 13.11% nvestment In income 0.65% Misscellaneous 1.10% Franch hise fees 0.7 77% Charg ges for serviices 37.355% Operating grants aand contribu utions 3.35% Sales ta axes 23.76% % Caapital grantss and ccontribution ns 6.29% Property y taxes 9.93% % Function nal Expe enses - Fiscal Yearr 2011 d waste Solid 3.6 64% Airp port 0.57 7% Housing g Authority y 2.05% Wastewater W r 10.25% G General goveernment 188.34% Water W 15.54% Publicc safety 24.555% Interest expensee ng-term deb bt on lon 3.45% Com mmunity serrvices 7.82% Transportation & ment developm 13.78% % al net assets ttotaled $6.2 m million for thee year ended June 30, 2011 1 Goveernmental Acctivities. Thee increase in governmenta comp pared with an n increase of $6.8 $ million in n the prior yeear. This increease was prim marily due to o the increase in charges for serviices of $6.6 million m (17.4%)) and capital grants and contributions of $7.9 millio on (96.6%). S Sales tax revenue increased d by $33.5 million (4 4.2%) from th he prior year. However, state shared r evenues decrreased by $6.8 million (122.4%) from the priorr year. This reduction iss a result of the State of Arizona’s d decreased distribution of urban revenu ue sharing to o muniicipal entitiess. Finally, as a result of the economic downturn, d unrrestricted inv vestment earn nings continueed to decrease by $11.6 million or 47.2% over th he prior year. 18 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 Business-type Activities. The decrease in business-type net assets totaled $11.7 million for the year ended June 30, 2011 compared with a decrease of $23.8 million in the prior year. This is due primarily to the increased revenue of $5.1 million or 6.1% in charges for services resulting from a rate increase and a reduction of expenses of $6.9 million of 5.1%. Also, as a result of the low interest environment, unrestricted investment earnings continued to decrease by 29.5% over the prior year. As evident in the previous graph, the largest financing source for the City is charges for services at 37.4% associated with the user fees and charges for services. Sales taxes also comprise a significant portion of the City’s revenues at 23.8% of the total revenues with state shared revenues accounting for an additional 13.1% of the City’s total revenues. The City as a whole uses the largest amount of resources for public safety at 24.5% of the total functional expenses of the City. The next largest users of resources are general government functions and water services at 18.3% and 15.5%, respectively, with transportation & development accounting for 13.8% of the City’s total expenses. 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. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. Fund balances are reported on a hierarchy of five classifications based on spending constraints in order to provide better consistency and clarification. These classifications include Nonspendable, Restricted, Committed, Assigned and Unassigned. The spendable balances are the Restricted, Committed, Assigned and Unassigned fund balances. Additional information on Fund Balances and their classifications can be found in Note 10 of the financial statements. The financial performance of the City as a whole is reflected in its governmental funds. As the City completed the year, its governmental funds reported a combined fund balance of $255.8 million, a decrease of $30.4 million in comparison with the prior year. Approximately $148.3 million (58%) of this amount is combined assigned and unassigned balances, all which may be spent at the City’s discretion. The total compared to the prior years’ unreserved balance of $162.5 million represents a decrease of $14.2 million. The remainder of the fund balance comprising of non-spendable and restricted balances amounts to $107.5 million (42% of the total fund balance). The non-spendable balance consists of inventories and pre-paid amounts which are legally or contractually required to be maintained intact. The restricted balance is constrained for specific purposed imposed by external parties or enabling legislation. The total compared to the prior years restricted balance of $123.5 million, represents a decrease of $16 million. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, assigned and unassigned fund balance of the General Fund was $160.6 million, while total fund balance reached $162.3 million. As a measure of the General Fund’s liquidity, it may be useful to compare both assigned and unassigned fund balance and total fund balance to total fund expenditures. Assigned and unassigned fund balance represents 99.3% of total General Fund expenditures, which is well above the City’s 12% reserve financial policy. The City’s General Fund balance decreased by $36.1 million during the current fiscal year. A key factor in this decrease was the completion of City Hall, which was financed mostly from General Fund resources. The Street Fund accounts for the acquisition, construction and improvements of the City’s streets’ projects. At the end of the current fiscal year total fund balance was $33.4 million. The fund balance of the City’s Street Fund decreased by $15.7 million during the current fiscal year. A key factor in this decrease was the expenditure of prior years’ bond proceeds to complete major streets projects. Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net assets for the Proprietary Funds and the Internal Service Funds at the end of 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 the fiscal year amounted to $450.1 million and $45.8 million, respectively. Net assets after investments in capital assets and net of related debt are 37.4% unrestricted. Unrestricted net assets of the Water Fund at the end of the year amounted to $123.4 million, and those for the Wastewater Fund amounted to $32.6 million. The total decline in net assets for both funds was $10 million and $1.47 million, respectively. These decreases were a result of unfunded depreciation expense. BUDGETARY HIGHLIGHTS Heading into a third consecutive year of worldwide economic decline, the City of Chandler held strong to its commitment to consistently engage in fiscally responsible practices in its 2010-11 Budget. The City Council adopted a balanced budget for 2010-11, further adjusting budgeted and capital expenditures to meet anticipated lower levels of revenues. As many revenue sources continued to see decreases in 2010-11, the City Council reduced spending and used a budget stabilization reserve established in the prior year to bridge budgetary gaps until the City emerged from the recession. A key to the City’s success in managing its budgetary resources is the distinction it makes between ongoing and one-time revenues and spending, and its emphasis on conservative budgeting. The City’s 2010-11 budget only included ongoing pay increases for certain Public Safety union groups. Other ongoing costs, such as maintenance, utilities, and supplies were managed very closely to ensure they could be met with ongoing revenues. The City continued its practice of budgeting no more than 95% of projected general fund revenues for ongoing spending in recognition that certain revenues will level off or even grow as the City reaches residential build-out. Moreover, the City continued its revenue fluctuation fund and budget stabilization reserves, which provide protection against temporary or unanticipated reductions in revenue, and are in addition to its ongoing 12% general fund contingency. It was a combination of continued adherence to long-standing financial policies, maintenance of healthy reserves, further reductions in operating and capital budgets, and the return of local economic growth that made it possible for the City to weather the lingering effects of the recession. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. As of June 30, 2011, the City had invested $816.2 million in capital assets net of related debt, including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. Total depreciation expense for the year was $76.9 million. Major capital asset events during the current fiscal year included the following:  Completed construction of City Hall at a cost of $65.8 million.  Continued acquisition of the land for the Police Driver Training Facility at a cost of $2.1 million.  Installation of a new digital public safety radio system at a cost of $5.2 million.  Completed design for the Fire station relocation and training center expansion at a cost of $1.0 million. The following table presents capital asset balances net of accumulated depreciation for the fiscal years, ended June 30, 2011 and 2010. 20 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 Governmental Business-type Total Activities Activities (Primary Govt.) 2011 2010 2011 2010 2011 2010 $ 81,151,314 $ 81,151,314 $ 41,256,107 $ 41,256,107 $ 122,407,421 $ 122,407,421 Land improvements Infrastructure 362,709,243 375,725,796 570,340 - 685,527 - 570,340 362,709,243 685,527 375,725,796 System improvements Buildings and improvements 256,568,398 199,837,823 467,969,166 8,983,014 505,119,327 9,349,426 467,969,166 265,551,412 505,119,327 209,187,249 Machinery and equipment Construction in progress Total 26,216,855 118,877,409 23,977,172 139,471,807 1,602,438 39,302,434 2,014,705 32,737,073 27,819,293 158,179,843 25,991,877 172,208,880 $ 845,523,219 $ 820,163,912 $ 559,683,499 $ 591,162,165 $ 1,405,206,718 $ 1,411,326,077 Land Additional information on the City’s capital assets can be found in Note 4 of the financial statements. Long-term Debt. At the end of the current fiscal year, the City of Chandler had total bonded debt outstanding of $603.3 million in long-term debt outstanding with $32.6 million due within one year. The following table presents a summary of the City’s outstanding long-term obligations for the fiscal years ended June 30, 2011 and 2010. General Obligation Bonds Revenue Bonds Excise Tax Revenue Obligations Special Assessment Bonds Total Bonds Payable Arbitrage Payable Governmental Business-type Total Activities Activities (Primary Govt.) 2011 2010 2011 2010 2011 2010 $ 279,968,000 $ 282,888,000 $ 179,747,000 $ 185,032,000 $ 459,715,000 $ 467,920,000 28,620,000 31,800,000 60,280,000 67,580,000 88,900,000 99,380,000 48,540,000 34,040,000 48,540,000 34,040,000 6,190,000 7,315,000 $ 603,345,000 $ 608,655,000 - - 6,190,000 7,315,000 $ 314,778,000 $ 322,003,000 $ 288,567,000 $ 286,652,000 63,398 111,099 37,844 29,898 101,242 140,997 Deferred Bond Premiums 5,841,889 5,482,398 5,039,191 5,027,052 10,881,080 10,509,450 Claims Payable 1,966,172 1,811,045 Landfill Closure/Post Closure Compensated Absences Post Employment Benefits Total Long Term Liabilities - - 1,966,172 1,811,045 4,340,000 - 4,340,000 - 4,340,000 4,340,000 10,490,286 10,131,319 1,049,645 991,531 11,539,931 11,122,850 5,572,720 3,863,996 396,372 269,574 5,969,092 4,133,570 $ 338,712,465 $ 343,402,857 $ 299,430,052 $ 297,310,055 $ 638,142,517 $ 640,712,912 The City of Chandler’s total debt decreased by $2.6 million during the current fiscal year. The key factor in the decrease were lower principal payments due during the fiscal year. During the current fiscal year the City of Chandler issued general obligation bonds to finance several general governmental capital projects as well as a general obligation refunding bond to refinance previously outstanding general obligation revenue bonds to take advantage of favorable interest rates. State statutes currently limit the amount of general obligation debt a city may issue to 20 percent of its total assessed valuation for water, sewer, artificial lighting, open space, parks, public safety and emergency services, streets, transportation, and recreational facilities. The current debt limitation for the City is $493.7 million. The City has $446.3 million of outstanding general obligation debt for these purposes. 21 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2011 State statutes also currently limit the amount of general obligation debt a city may issue to 6 percent of its total assessed valuation for all other purposes. The current debt limitation for the City is $148.1 million. The City has $13.3 million of outstanding general obligation debt for this purpose. As of year-end, the City’s current bond ratings on general obligation bonds were Aaa from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch Ratings. Ratings for the street and highway users were Aa2 from Moody’s, AA from Standard & Poor’s, and AA from Fitch. Water and wastewater revenue bonds were Aa1 from Moody’s Investor Services, AA from Standard & Poor’s, and AA+ from Fitch. Excise Tax bonds were Aa1 from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch. Additional information on the City’s long-term debt can be found in Note 6 of the financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET While many revenue sources have been impacted by the sagging economy, the most significant drivers remain local and state-shared sales tax, state shared income tax, and property tax. In developing the budget for fiscal year 2011-12 the Chandler City Council recognized that the lingering recession had affected not only the City revenues but those of the taxpayer as well. Knowing that some expense areas were going to increase because of contractual, health care, and retirement cost increases, City management made a significant effort to find savings so that expenses, overall, did not change significantly. The City’s overall budget was virtually unchanged from $671 million for 2010-11 to $676 million in 2011-12. Because secondary assessed values decreased for the second year in a row, and future reductions were anticipated, the City Council increased the secondary property tax rate from $0.8522 in 2010-11 to $0.9422 in 2011-12 and reduced capital spending by $14 million. The primary rate remained at $0.3292 so the total property tax rate increase by 7.6%. Despite the increase, most homeowners saw a decrease in the amount of property taxes paid because assessed values on most homes decreased 15% - 20%. Prospects for sustained economic growth looked promising at year end with more than a year of year over year growth in local sales tax revenues and the City’s emergence as the leader in the Phoenix metropolitan region in the return of commercial and industrial development, led by the start of Intel’s multi-billion dollar computer chip manufacturing plant expansion. CONTACTING THE CITY’S FINANCE OFFICE This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional information, contact the Management Services Department, City of Chandler, P.O. Box 4008, MS 609, Chandler, AZ 85244-4008. 22 BASIC FINANCIAL STATEMENTS 23 City of Chandler Statement of Net Assets June 30, 2011 Component Units Chandler Industrial Chandler Development Cultural Foundation Authority Governmental Activities Business-Type Activities $ 337,996,366 1,035,518 4,608 1,506,442 494,794 5,526,046 888,459 6,218,625 405,214 1,544,297 355,620,369 $ 109,405,629 13,111,997 368,236 (494,794) 16,454 233,107 85,604 122,726,233 4,202,142 - 363,450 2,586,198 75,781,323 363,450 6,788,340 75,781,323 - 1,364,449 6,000 - 200,028,723 645,494,496 845,523,219 849,725,361 1,205,345,730 80,558,541 479,124,959 559,683,500 638,414,471 761,140,704 280,587,264 1,124,619,455 1,405,206,719 1,488,139,832 1,966,486,434 457,152 77,776 77,776 1,448,225 2,028,356 8,554,290 4,200,082 9,571,428 6,374,818 2,814,961 473,317 2,130,300 5,574,051 11,369,251 4,673,399 11,701,728 11,948,869 - 22,792 - Total ASSETS Current assets: Equity in pooled cash and investments Cash and investments Accounts receivable Interest receivable Prepaid items Property taxes receivable Internal balances Due from other governments Inventories Special assessments receivable Notes receivable - current Other receivables Total current assets Noncurrent assets: Cash and investments - restricted Notes receivable - long term Other assets Investment in joint venture Capital assets: Non-depreciable Depreciable, net Total capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Accrued interest 24 $ 447,401,995 14,147,515 372,844 1,506,442 5,542,500 1,121,566 6,218,625 405,214 1,629,901 478,346,602 $ 457,152 457,152 $ 499,947 5,883 67,141 7,160 580,131 Unearned revenue Arbitrage liability - current Compensated absences payable - current Bonds payable - current Deferred bond premium - current Landfill closure and postclosure liability - current Claims and judgements payable - current Total current liabilities Noncurrent liabilities: Compensated absences payable - long term Bonds payable - long term Deferred bond premium - long term OPEB liability - long term Arbitrage liability - long term Landfill closure and postclosure liability - long term Claims and judgements payable - long term Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Capital improvements Debt service Legal restrictions Total restricted Unrestricted Total net assets 8,943 31,006 602,012 15,105,000 637,843 3,117,800 48,203,222 617,064 15,236 60,236 17,470,000 552,409 394,950 30,102,524 626,007 46,242 662,248 32,575,000 1,190,252 394,950 3,117,800 78,305,746 - 122,930 145,722 9,888,273 299,673,000 5,204,046 5,572,720 32,392 266,172 320,636,603 368,839,825 989,409 271,097,000 4,486,782 396,372 22,608 3,945,050 280,937,221 311,039,745 10,877,682 570,770,000 9,690,828 5,969,092 55,000 3,945,050 266,172 601,573,824 679,879,570 - 145,722 534,292,488 281,936,017 816,228,505 - 77,776 22,044,171 19,017,204 844,754 41,906,129 260,307,288 $ 836,505,905 168,164,942 $ 450,100,959 22,044,171 19,017,204 844,754 41,906,129 428,472,230 $ 1,286,606,864 457,152 457,152 1,364,449 1,364,449 440,409 1,882,634 See accompanying Notes to Basic Financial Statements. 25 $ $ City of Chandler Statement of Activities and Changes in Net Assets For the year ended June 30, 2011 Program Revenues Functions/Programs Expenses Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ $ Total Primary government: Governmental activities: General government $ 67,808,567 $ 22,548,679 2,074,869 - $ 24,623,548 Public safety 90,738,477 5,658,628 1,392,717 - 7,051,345 Transportation and development 50,909,361 11,884,554 1,991,830 14,260,619 28,137,003 Community services 28,919,560 4,079,359 430,731 1,780,594 6,290,684 Interest on long-term debt 12,767,934 - - - - 251,143,899 44,171,220 5,890,147 16,041,213 66,102,580 Water 57,452,876 43,708,974 - 3,500,393 47,209,367 Wastewater 37,896,180 31,610,009 - 4,586,058 36,196,067 Solid waste Total governmental activities Business-type activities: 13,443,102 13,277,403 - 60,990 13,338,393 Airport 2,107,354 995,307 - 500,463 1,495,770 Chandler housing authority 7,580,783 457,781 6,297,200 11,868 6,766,849 118,480,295 90,049,474 6,297,200 8,659,772 105,006,446 $ 369,624,194 $ 134,220,694 $ $ 171,109,026 $ $ $ Total business-type activities Total primary government 12,187,347 $ 24,700,985 - $ - Component units Chandler Industrial Development Authority Chandler Cultural Foundation Total component units 79,269 1,342,301 $ 1,421,570 65,789 1,013,323 $ 1,079,112 135,867 $ 135,867 $ General revenues and transfers: Taxes: Property taxes, levied for general purposes Sales taxes Franchise fees Highway user taxes Other taxes Total taxes State shared revenues (unrestricted) Investment income Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets - beginning of year Net assets - end of year See accompanying Notes to Basic Financial Statements. 26 $ - 65,789 1,149,190 $ 1,214,979 Net (Expense) Revenue and Changes in Net Assets Primary Government Component Units Chandler Industrial Governmental Business-Type Activities Activities $ (43,185,019) - $ (43,185,019) Cultural Authority Foundation $ - $ - (83,687,132) - (83,687,132) - - (22,772,358) - (22,772,358) - - (22,628,876) - (22,628,876) - - (12,767,934) - (12,767,934) - - (185,041,319) - (185,041,319) - - - (10,243,509) (10,243,509) - - - (1,700,113) (1,700,113) - - - (104,709) (104,709) - - - (611,584) (611,584) - - - (813,934) (813,934) - - - (13,473,849) (13,473,849) - - (185,041,319) (13,473,849) (198,515,168) - - - - - (13,480) - - - - - (193,111) - - - (13,480) (193,111) 36,158,574 - 36,158,574 - - 86,523,295 - 86,523,295 - - 2,819,521 - 2,819,521 - - 13,287,878 - 13,287,878 - - 88,561 - 88,561 - - 138,877,829 - 138,877,829 - - 47,732,614 - 47,732,614 - - 1,841,244 533,313 2,374,557 1,093 14,428 3,071,588 946,507 4,018,095 - - 244,702 - - - 1,724,522 193,003,095 1,093 14,428 (12,387) (178,683) (244,702) 191,278,573 6,237,254 $ $ Total Chandler Development (11,749,327) 830,268,651 461,850,286 836,505,905 $ 450,100,959 (5,512,073) 1,292,118,937 $ 1,286,606,864 469,539 $ 457,152 27 2,061,317 $ 1,882,634 City of Chandler Balance Sheet Governmental Funds June 30, 2011 Major Funds General Obligation Other Streets Bonds Governmental General Capital Projects Debt Service Funds 139,635,124 $ Total ASSETS Equity in pooled cash and investments $ Accounts receivable 42,050,866 $ 35,513,210 993,855 - - - 993,855 4,608 - - - 4,608 399,782 - 1,106,660 - 1,506,442 - - - 6,218,625 6,218,625 Prepaid items Property taxes receivable Special assessments receivable Notes receivable Advances to other funds Due from other funds Due from other governments Inventories Other receivables Total assets $ $ 71,191,544 $ 288,390,744 - - - 405,214 405,214 28,323,345 - - - 28,323,345 596,710 - - 494,794 1,091,504 2,292,277 - - 3,233,769 5,526,046 888,459 - - - 888,459 1,539,247 - - 5,050 1,544,297 $ 36,619,870 $ 81,548,996 $ 334,893,139 $ $ 4,200,437 $ 8,253,470 174,673,407 $ 42,050,866 3,320,362 $ 732,671 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ Accrued payroll 4,005,321 Trust liabilities and deposits - - 155,924 4,161,245 4,663,989 - - 4,907,439 9,571,428 Accrued interest - - 5,697,155 677,663 6,374,818 Due to other funds Advances from other funds - - - 596,710 596,710 - 7,870,000 - 20,453,345 28,323,345 Arbitrage liability - 2,433 - 28,573 31,006 Bonds payable (matured) - - 11,820,000 2,875,000 14,695,000 339,423 - 781,177 5,980,330 7,100,930 12,329,095 8,605,104 18,298,332 39,875,421 79,107,952 Deferred revenue Total liabilities Fund Balances: Nonspendable 893,067 - - - 893,067 Restricted 844,754 33,445,762 18,321,538 53,988,772 106,600,826 Committed - - - - - Assigned 61,733,537 - - - 61,733,537 Unassigned 98,872,954 - - 86,557,757 162,344,312 33,445,762 18,321,538 (12,315,197) 41,673,575 42,050,866 $ 36,619,870 Total fund balances Total liabilities and fund balances $ 174,673,407 $ See accompanying Notes to Basic Financial Statements. 28 $ 81,548,996 255,785,187 $ 334,893,139 City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets June 30, 2011 Total Fund Balances - Total Governmental Funds $ 255,785,187 Amounts reported for governmental activities in the Statement of Net Assets were reported differently because: Capital assets used in governmental activities are not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Non-depreciable 200,028,723 Depreciable buildings, property, equipment and infrastructure, net 645,494,496 Total capital assets 845,523,219 Certain revenues are not available to pay for current period expenditures and, therefore, are deferred in the funds. 7,100,930 The internal service fund is used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service fund is included in governmental activities in the Government-Wide Statement of Net Assets. 45,837,929 Long-term liabilities are not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds amounts of $2,042,956 which are included above, the long-term liabilities were adjusted as follows: Bonds payable (300,083,000) Bonds premium (5,841,889) Bond issuance costs 4,202,142 OPEB liability (5,550,967) Arbitrage liability (32,392) Compensated absences (10,435,254) Total long-term liabilities (317,741,360) Net Assets of Governmental Activities $ See accompanying Notes to Basic Financial Statements. 29 836,505,905 City of Chandler Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2011 Major Funds General General Obligation Other Streets Bonds Governmental Capital Projects Debt Service Funds Total REVENUES: Property taxes $ Sales taxes Franchise fees 9,666,908 - $ 26,634,801 $ - $ 36,301,709 - - - 2,819,521 - - - 2,819,521 - - - 13,287,878 13,287,878 - 88,561 - - 88,561 47,732,614 - - - 47,732,614 Highway user taxes Regional transportation tax State shared $ 86,523,295 86,523,295 Grants and entitlements - - - 14,759,620 14,759,620 System development fees - 2,443,928 - 4,295,992 6,739,920 Special assessments - - - 673,064 673,064 Licenses and permits 3,208,944 - - - 3,208,944 Charges for services 17,984,168 - - 18,000 18,002,168 Fines and forfeitures 3,556,705 - - 1,140,612 4,697,317 Rentals 387,952 - - - 387,952 Contributions 100,000 - - - 100,000 Interest revenue 915,006 283,600 - 436,652 1,635,258 Miscellaneous 4,080,151 92,602 - 420,351 4,593,104 176,975,264 2,908,691 26,634,801 35,032,169 241,550,925 General government 39,012,608 - - 4,624,176 43,636,784 Public safety 81,886,950 - - 2,120,802 84,007,752 Transportation and development 15,121,206 - - 7,005,027 22,126,233 Community services 22,331,843 - - 504,474 22,836,317 3,373,225 19,674,943 - 44,251,773 67,299,941 Principal - - 11,820,000 3,270,000 15,090,000 Bond issuance costs - - 165,433 113,079 278,512 Interest and fiscal charges - - 11,470,107 1,431,509 12,901,616 161,725,832 19,674,943 23,455,540 63,320,840 268,177,155 15,249,432 (16,766,252) 3,179,261 (28,288,671) (26,626,230) Total revenues EXPENDITURES: Current: Capital improvements Debt service: Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Bond premium - - 912,345 135,079 1,047,424 Face amount of bonds issued - - 10,360,000 9,925,000 20,285,000 41,609 - - 67,320 - - Proceeds from disposal of capital assets Payment to escrow agent Transfers in - 1,042,186 Total other financing sources (uses) NET CHANGE IN FUND BALANCE 108,929 - 14,686,771 - (51,411,746) Transfers out (10,816,839) - (10,816,839) 25,876,689 41,605,646 (4,628,693) (56,040,439) (51,370,137) 1,042,186 15,142,277 31,375,395 (3,810,279) (36,120,705) (15,724,066) 18,321,538 3,086,724 (30,436,509) FUND BALANCES: Beginning of year End of year 198,465,017 $ 162,344,312 49,169,828 $ 33,445,762 See accompanying Notes to Basic Financial Statements. 30 $ 18,321,538 38,586,851 $ 41,673,575 286,221,696 $ 255,785,187 City of Chandler Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2011 Net Change in Fund Balances - Total Governmental Funds $ (30,436,509) Governmental activities in the Statement of Activities were reported differently because: Governmental funds report capital outlay as expenditures. However, in the GovernmentWide Statement of Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded and transfered in the current period. 57,290,896 Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities and Changes in Net Assets, but they do not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in governmental funds. (36,951,947) Some items reported in the governmental funds are sources and uses of current financial resources and therefore are not reported as revenues or expenses in Statement of Activities. These items include: Bond proceeds $ (20,285,000) Principal payments on debt 15,090,000 Payment to escrow agent 10,816,839 Bond premium (1,047,424) Other postemployment benefits obligation (1,702,420) Loss on disposal of capital assets (190,788) 2,681,207 Bond issuance costs are recognized as debt service expenditures in the governmental funds, however these costs are capitalized on the Statement of Assets and amortized in the Statement of Activities. 278,512 Accrued interest payable related to long-term debt is recognized as an expense in the Statement of Activities, however is not recognized in the governmental funds because it is not payable from current financial resources. 133,682 Arbitrage liability expenses 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. (9,662) Compensated absence expenses 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. (356,519) Certain revenues in the governmental funds that provide current financial resources are not included in the Statement of Activities because they were recognized in a prior period. However, other revenues that are deferred in the governmental funds because they do not provide current financial resources due to unavailability are recognized in the Statement of Activities. (515,789) Capital assets contributed by developers to the City are not recorded in the governmental funds as they do not provide current financial resources but are recognized in the Statement of Activities as program revenues. 5,211,146 The internal service fund is used by management to charge the costs of certain activities, such as insurance, to individual funds. The net loss of the internal service fund is reported with governmental activities. 8,912,237 Change in Net Assets of Governmental Activities $ See accompanying Notes to Basic Financial Statements. 31 6,237,254 City of Chandler Statement of Net Assets Proprietary Funds June 30, 2011 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments $ 53,373,880 $ 40,744,378 $ 15,287,371 $ 109,405,629 $ 49,605,622 Accounts receivable 6,944,018 4,035,135 2,132,844 13,111,997 41,663 Advances to other funds 3,900,000 - - 3,900,000 - - 16,454 16,454 - Due from other governments - - 37,115 233,107 - Prepaid items - - 368,236 368,236 - Other receivables - - 85,604 85,604 - 64,413,890 44,779,513 17,927,624 127,121,027 49,647,285 1,341,396 1,243,440 1,362 2,586,198 - - - 363,450 363,450 - 75,781,323 - - 75,781,323 - Inventories Total current assets 195,992 Noncurrent assets: Other assets Notes receivable - long term Investment in joint venture Capital assets: Non-depreciable 26,938,610 25,938,050 27,681,881 80,558,541 - Depreciable, net 229,223,505 221,182,595 28,718,859 479,124,959 - 256,162,115 247,120,645 56,400,740 559,683,500 - Total capital assets Total noncurrent assets 333,284,834 248,364,085 56,765,552 638,414,471 - Total assets 397,698,724 293,143,598 74,693,176 765,535,498 49,647,285 Accounts payable 442,910 1,524,343 847,708 2,814,961 300,820 Accrued payroll 261,667 100,998 110,652 473,317 38,837 Trust liabilities and deposits 1,202,709 684,090 243,501 2,130,300 - Accrued interest 3,278,653 2,292,604 2,794 5,574,051 - 494,794 - - 494,794 - LIABILITIES Current liabilities: Due to other funds 32 277,271 162,000 177,793 617,064 8,943 34,518 14,478 11,240 60,236 3,158 11,217,219 6,232,781 20,000 17,470,000 - 330,470 221,743 196 552,409 - 5,232 10,000 4 15,236 - Landfill closure and postclosure liability - current - - 394,950 394,950 - Claims and judgements payable - current - - - - 3,117,800 17,545,443 11,243,037 1,808,838 30,597,318 3,469,558 Unearned revenue Compensated absences payable - current Bonds payable - current Deferred bond premium - current Arbitrage liability - current Total current liabilities Noncurrent liabilities: Compensated absences payable - long term 237,806 184,615 989,409 51,873 3,900,000 - 3,900,000 - 153,031,495 117,904,505 161,000 271,097,000 - 2,478,370 2,005,278 3,134 4,486,782 - 216,424 132,273 47,675 396,372 21,753 - 566,988 Advances from other funds - Bonds payable - long term Deferred bond premium - long term OPEB liability - long term 7,304 15,300 4 22,608 Landfill closure and postclosure liability - long term - - 3,945,050 3,945,050 - Claims and judgements payable - long term - - - - 266,172 Total noncurrent liabilities 156,300,581 124,195,162 4,341,478 284,837,221 339,798 Total liabilities 173,846,024 135,438,199 6,150,316 315,434,539 3,809,356 Invested in capital assets, net of related debt 100,455,848 125,131,375 56,348,794 281,936,017 - Unrestricted 123,396,852 32,574,024 12,194,066 168,164,942 45,837,929 Arbitrage liability - long term NET ASSETS Total net assets $ 223,852,700 $ 157,705,399 See accompanying Notes to Basic Financial Statements. 33 $ 68,542,860 $ 450,100,959 $ 45,837,929 City of Chandler Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds For the year ended June 30, 2011 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees $ 43,708,974 $ 31,610,009 $ 14,272,710 $ 89,591,693 $ - Grants and entitlements - - 6,297,200 6,297,200 Rentals - - 457,781 457,781 - Self insurance premiums - - - - 9,948,171 13,157 2,025 409,654 424,836 852,762 43,722,131 31,612,034 21,437,345 96,771,510 10,800,933 General and administrative 3,977,300 2,572,800 1,516,800 8,066,900 - Personal services 8,272,653 3,604,618 3,411,382 15,288,653 1,091,723 1,893,234 Miscellaneous Total operating revenues - OPERATING EXPENSES: Contractual services Commodities 4,485,417 4,988,233 9,381,242 18,854,892 10,098,904 4,593,780 2,021,239 16,713,923 1,388,037 - - - 11,921,441 Claims expense Housing assistance payments Depreciation and amortization expense Total operating expenses OPERATING INCOME (LOSS) - - 4,819,261 4,819,261 - 20,611,058 17,424,102 1,961,264 39,996,424 - 47,445,332 33,183,533 23,111,188 103,740,053 16,294,435 (3,723,201) (1,571,499) (1,673,843) (6,968,543) (5,493,502) NONOPERATING REVENUES (EXPENSES): Interest revenue 235,318 Interest and fiscal charges (6,557,307) Accretion of bond premium Amortization of bond issuance costs Gain (loss) on disposal of capital assets Equity interest in joint venture 109,173 188,822 (4,585,208) 316,384 205,091 (154,752) (120,439) (7,000) (7,000) - (3,288,485) 533,313 215,648 (5,588) (11,148,103) - 196 (80) (14,383) 521,671 (275,271) (28,383) - - (3,288,485) - 89,318 (13,685,258) 215,648 - Total nonoperating revenues (expenses) (9,455,842) (4,318,734) (13,179,043) (5,890,233) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (1,584,525) (20,653,801) (5,277,854) CAPITAL CONTRIBUTIONS AND TRANSFERS: Capital contributions 3,500,393 Transfers in 4,586,058 - Transfers out - (356,942) Total capital contributions and transfers Change in net assets (166,312) 3,143,451 4,419,746 (10,035,592) (1,470,487) 573,321 8,659,772 - 840,505 840,505 14,606,731 (72,549) (595,803) 1,341,277 (243,248) (416,640) 8,904,474 14,190,091 (11,749,327) 8,912,237 NET ASSETS: Beginning of year End of year 233,888,292 $ 223,852,700 68,786,108 159,175,886 $ See accompanying Notes to Basic Financial Statements. 34 157,705,399 $ 68,542,860 461,850,286 $ 450,100,959 36,925,692 $ 45,837,929 35 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2011 Other Proprietary Funds Major Funds Water Wastewater CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash received from grantors Cash payments to suppliers Cash payments to employees for services Net cash provided (used) by operating activities $ CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets Proceeds from debt issuance Investment in Joint Venture 43,346,077 (19,495,344) (8,143,877) 15,706,856 $ 31,066,948 (11,994,833) (3,611,298) 15,460,817 $ Total 14,513,625 6,314,065 (17,415,201) (3,365,070) 47,419 $ 88,926,650 6,314,065 (48,905,378) (15,120,245) 31,215,092 Governmental Activities: Internal Service Fund $ 10,768,213 (13,604,514) (1,070,772) (3,907,073) (356,942) (356,942) (166,312) (166,312) 840,505 (72,549) 767,956 (3,385,726) (4,122,999) (817,199) 7,050,000 7,950,000 - - - (237,089) - (237,089) 840,505 (595,803) 244,702 14,606,731 (416,640) 14,190,091 (8,325,924) - 15,000,000 - Principal paid on bond maturities (9,699,756) (3,365,244) (20,000) (13,085,000) - Interest paid on bonds (6,663,634) (4,484,673) (5,968) (11,154,275) - Cash received from other funds 494,794 Cash payments to other funds Cash received from system development fees Net cash provided (used) by capital and related financing activities (273,009) 3,391,396 (9,323,024) CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year (429,543) 4,474,837 22,378 235,318 235,318 6,262,208 $ 47,111,672 53,373,880 36 - 188,822 188,822 15,505,705 $ 25,238,673 40,744,378 $ 494,794 (61,836) 573,321 (331,682) (764,388) 8,439,554 (9,632,328) 109,173 109,173 592,866 533,313 533,313 22,360,779 14,694,505 15,287,371 $ 87,044,850 109,405,629 - 215,648 215,648 10,498,666 $ 39,106,956 49,605,622 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 operating activities: Depreciation Changes in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in prepaid items (Increase) decrease in other assets Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits Increase (decrease) in claims payable Increase (decrease) in unearned revenue Increase (decrease) in other liabilities Total adjustments Net cash provided (used) by operating activities NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Contributions of capital assets from developers Loss on disposal of assets Accretion of bond premiums Amortization of bond issuance costs $ $ $ (3,723,201) $ (1,571,499) $ (1,673,843) $ (6,968,543) 20,611,058 17,424,102 1,961,264 39,996,424 (520,404) 10,367 73,601 22,772 (1,017,691) 61,864 96,799 24,779 66,912 19,430,057 15,706,856 (538,540) (28,391) 159,980 (48,754) 3,535 18,310 42,074 17,032,316 15,460,817 (278,069) (27,476) 9,462 (321) 19,544 17,574 1,472 17,812 1,721,262 47,419 (1,337,013) (17,109) 73,601 3,843 (858,032) 32,654 117,908 44,561 126,798 38,183,635 31,215,092 108,997 7,000 316,384 154,752 See accompanying Notes to Basic Financial Statements. 37 $ $ 111,221 7,000 205,091 120,439 $ $ 14,383 196 80 $ $ (5,493,502) - $ (41,663) 1,849 23,422 14,647 1,572,927 8,943 6,304 1,586,429 (3,907,073) - City of Chandler Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2011 Volunteer Fireman's Pension and Relief Trust Fund Agency Funds ASSETS Equity in pooled cash and investments $ Other receivables 30,679 $ 7 Total assets 16,500 - $ 30,686 $ $ 400 $ 16,500 LIABILITIES Accounts payable Due to others - Total liabilities $ 400 NET ASSETS Assets held in trust for pension benefits 30,286 Total net assets $ See accompanying Notes to Basic Financial Statements. 38 30,286 1,000 15,500 $ 16,500 City of Chandler Statement of Changes in Fiduciary Net Assets Fiduciary Funds - Trust Funds For the year ended June 30, 2011 Volunteer Fireman's Pension and Relief Trust Fund ADDITIONS: Interest revenue $ Miscellaneous 36 87 Total additions 123 DEDUCTIONS: Benefits paid to plan members and suppliers 4,800 Change in net assets (4,677) NET ASSETS: Beginning of year 34,963 End of year $ See accompanying Notes to Basic Financial Statements. 39 30,286 40 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 The City of Chandler (City) was incorporated on February 17, 1920. On May 25, 1964, voters ratified a city charter providing for a Council-Manager form of government. The government of the City is operated by authority of its charter, as limited by the state legislature. A seven-member council including a separately elected mayor governs the City. The following notes to the financial statements are an integral part of the City’s financial statements. NOTE 1 - Summary of Significant Accounting Policies The accounting policies and procedures of the City conform to accounting principles generally accepted in the United States of America (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Reporting Entity As required by GAAP, these financial statements present the City and its component units, i.e., entities for which the City is considered to be financially accountable and/or exercise significant influence over operations. Blended component units, although legally separate entities, are in substance part of the City’s operations, and therefore data from these units are combined with data of the City. The City’s discretely presented component units, on the other hand, are reported in a separate column in the basic financial statements, to emphasize that they are legally separate from the City. The component units discussed below are included in the City’s reporting entity because of the significance of their operational and/or financial relationships with the City. Each component unit has a June 30 year-end. 1. Blended Component Unit The City of Chandler Municipal Property Corporation (Corporation) is a nonprofit corporation which exists solely for the purpose of constructing or otherwise acquiring or equipping buildings, structures or improvements on land owned by the City for the benefit, common good and general welfare of the City and its citizens. The Chandler City Council appoints the five members of the Board, who are responsible for approving the Corporation’s bond sales. Additionally, all bond sales must be submitted to and approved by the City Council. All financial activities are reported within the enterprise funds of the City. Unaudited financial statements for the Corporation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 2. Discretely Presented Component Units The component unit column in the basic financial statements includes the financial data of the Chandler Industrial Development Authority (Authority). The Authority is responsible for the issuance of tax-exempt bonds for qualified projects approved by the Authority and the City Council. The Authority has a seven-member board of directors appointed by the City Council. The City is able to impose its will on the Authority inasmuch as the City Council must vote to ratify the actions of the Authority with regard to the issuance of bonds. The accounting records of the Authority are maintained by the City and are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. The Chandler Cultural Foundation (Foundation) oversees the operations of the Chandler Center for the Arts for the selection and scheduling of performances, other facility use and general policy setting activities. The City is able to significantly influence its operations. Specifically, the Foundation’s budget is annually reviewed and approved by the City Council and the Foundation’s nine-member Board is appointed by the City Council. Financial statements for the Foundation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 41 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 1 - Summary of Significant Accounting Policies, continued B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) present financial information about the City as a whole. The reported information includes all of the nonfiduciary activities of the City and its component units. For the most part, the effect of interfund activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, state shared revenues, investment income, and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation Government-wide Financial Statements - The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Agency fund financial statements have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements, the exception is any interfund activity between governmental and business-type activities, such as transfers. Interfund services provided and used are not eliminated. Fund Financial Statements - Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service resources are provided during the current year for payment of long-term debt principal and interest due early in the following year (not to exceed one month) and, therefore, the expenditures and related liabilities have been recognized. Compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise fees, licenses and permits, charges for services, special assessments and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenues are not susceptible to accrual because generally they are not measurable until received in cash. 42 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 1 - Summary of Significant Accounting Policies, continued Delinquent property taxes have been recorded as deferred revenue. Grants and similar awards received before the eligibility requirements are met are also recorded as deferred revenue. Receivables that will not be collected within the available period have also been reported as deferred revenue on the governmental fund financial statements. The City reports the following major governmental funds: General Fund – This fund accounts for all financial resources of the City, except those required to be accounted for in other funds. Streets Fund – This fund is used to account for the acquisition, construction and improvements of City streets’ projects. General Obligation Bonds – This fund accumulates monies for the payment of principal and interest requirements of the City’s tax supported General Obligation Bonds. Revenues for repayment are generated from secondary property taxes. The City reports the following major enterprise funds: Water Services Fund – This fund is used to account for the provision of water services to the residents of the City and certain county residents within the City’s boundaries. All activities necessary to provide such service are accounted for in this fund. Wastewater Services Fund – This fund is used to account for the provision of wastewater services to the residents of the City and certain county residents within the City’s municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Additionally, the City reports the following fund types: Internal Service Fund - Internal Service Funds are established to account for financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost reimbursement basis. The Internal Service Fund consists of a Self Insurance Fund that administers the City’s self-insured property, liability, health and workers’ compensation insurance program. Fiduciary Funds – Fiduciary funds account for assets held by the City on behalf of the Volunteer Firefighter’s Relief and Pension Trust Fund and agency funds, which account for resources held by the City in a custodial capacity for marriage licenses and peddler bonds. The Volunteer Firefighter’s Relief and Pension Trust Fund is a single-employer defined benefit pension plan established to provide pension benefits for volunteer firemen of the City. All applicable pronouncements of the Financial Accounting Standards Board (FASB) issued on or before November 30, 1989, as well as the FASB Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins are followed in both the government-wide business-type and enterprise fund financial statements, unless these pronouncements conflict with or contradict GASB pronouncements. Under this requirement, the City is given the option whether or not to apply all FASB Statements and Interpretations issued after November 30, 1989, except for those that conflict with or contradict GASB pronouncements. Accordingly, the City has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. 43 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 1 - Summary of Significant Accounting Policies, continued Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s internal service fund are interfund transfers from the general fund and water fund for property and liability insurance and charges to user departments for premiums related to worker’s compensation and short term disability self-insurance. The principal operating revenues of the City’s enterprise funds are user fees and charges to customers for water, wastewater, solid waste, and airport services. Operating expenses for these funds include the cost of sales and services, administrative expenses, depreciation, claims and premiums. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources, as they are needed. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by fund type. D. Budgeting and Budgetary Control The City Council formally adopts an annual operating budget for the General, Special Revenue, Capital Projects, Enterprise and Internal Service Funds. Formal budgetary integration is not employed for the Debt Service Funds because effective budgetary control is alternately achieved through bond indenture provisions. The level of control at which expenditures may not exceed budget is by department, except for bond and grants-inaid funds, which are exempted by Arizona Revised Statutes. Upon written request by the City Manager, the City Council has the authority to transfer part or all of any unencumbered appropriation balance from one department to another per City Charter requirement. The City Manager and Department heads have the authority to transfer appropriations between divisions and expenditure categories within departments. Appropriations totaling $4,747,763 were transferred from the contingency reserves within the General, Proprietary, Internal Service, and Capital Projects funds. All appropriations expire at the end of the fiscal year except for encumbered and capital improvements carry forward appropriations. Encumbrance accounting, under which purchase orders, contracts and other commitments for the future expenditure of funds are recorded in order to reserve that portion of the related fund balance, is employed in the governmental fund types. Encumbrances outstanding and capital improvement carry forward appropriations at year-end are reported as reservations of fund balances. The budgets are adopted on a basis differing from GAAP in that for budgetary purposes: (1) current year encumbrances are treated as expenditures; (2) bond proceeds for proprietary funds are considered revenue; (3) capital outlays for enterprise funds are treated as expenditures; (4) debt service principal payments are treated as expenditures for enterprise funds; (5) accrued compensated absences are not recognized as expenditures; (6) depreciation and amortization are not recognized as expenditures; (7) estimated landfill closure and post closure costs are not recognized as expenditures until incurred; and (8) sales tax collected by merchants but not yet required to be remitted at the end of the fiscal year is not recorded as revenue. 44 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 1 - Summary of Significant Accounting Policies, continued On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. Through a Home Rule option, any city can adopt its own alternative expenditure limitation if a majority of the qualified electors vote in favor of the issue at a regular election. On November 2, 2010, the City of Chandler voters approved to continue under Home Rule for the next four years. E. Pooled Cash and Investments City Charter, Ordinance and Trust Agreements authorize the City to invest in obligations of the U.S. Treasury, its agencies, and instrumentalities, certificates of deposit in eligible depositories, repurchase agreements, state bonds, U.S. Commercial Paper and bonds, and the State of Arizona’s Local Government Investment Pool (LGIP). The City of Chandler Municipal Property Corporation is additionally authorized to invest in bankers acceptances, U.S. Corporate obligations rated Aa3 and AA-, or better, full faith and credit general obligations or special revenue bonds of any state or political subdivision rated AAA and Aaa, Refcorp interest strips and money market funds. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Cash resources of the City are combined to form a pool of cash and investments. Excluded from this pool are the cash and investments of the Chandler Industrial Development Authority and the Chandler Cultural Foundation. Interest earned on the pooled cash and investments is distributed each month on the basis of average monthly equity in the pool. F. Restricted Assets Certain proceeds of the City’s enterprise funds revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the Statement of Net Assets because their use is limited by applicable bond covenants. G. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess of 90 days comprise the trade accounts receivable allowance for uncollectibles. H. Inventories Inventories are stated at average cost using the first-in/first-out (FIFO) method. Inventories are recorded as expenses/expenditures when consumed in the government-wide financial statements and governmental and proprietary fund financial statements, respectively. I. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 45 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 1 - Summary of Significant Accounting Policies, continued J. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The City defines general government infrastructure capital assets included in capital improvement projects completed at year’s end in excess of $100,000. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are completed. Estimated useful lives for capital assets were determined based on the City’s historical experience and the various industry standards. Capital assets of the City are depreciated using the straight-line method over the following estimated useful lives: Years 20-40 20 12-50 25 4-7 5-15 Assets Buildings Building improvements Infrastructure System improvements Vehicles Machinery and equipment K. Compensated Absences Vacation leave vests with the employee as it is earned. All employees may carry forward only the amount of vacation benefits equal to the maximum allowable earned credits for the preceding calendar year. Upon termination or retirement, an employee will be compensated for accumulated vacation leave dependent on accumulated time and the individual's vacation benefits associated with their rank within the City. Payment will be based on the individual's rate of pay at termination or retirement. Upon death, the same benefits shall be paid to the employee's beneficiary. The amount, including related benefits, for accumulated vacation leave is reported on the governmentwide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignations or retirements. Generally, resources from the general fund are used to pay for compensated absences. Sick leave benefits provided for ordinary sick pay are not vested with the employee. Upon retirement, an employee will be compensated for 50 percent of accumulated sick leave. Payment will be based on the monthly compensation paid to the employee at the time of retirement and paid into a Retirement Health Savings Plan. Upon death, the same benefits shall be paid to the employee's beneficiary. L. Long-Term Obligations In the government-wide financial statements and proprietary fund statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental or business-type activities and proprietary fund statement of net assets. Bond related charges and credits, such as premiums, discounts and issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. 46 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 1 - Summary of Significant Accounting Policies, continued In the fund financial statements, governmental funds 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. The debt service funds are specifically established to account for and service the long-term obligations for the governmental funds and special assessment debt. Each enterprise fund individually accounts for and services the applicable bonds and lease purchase obligations, which benefit these funds. Long-term obligations are recognized as a liability of a governmental fund when due, or when resources have been accumulated for payment early in the following year. For other long-term obligations, only that portion is expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. M. Fund Equity In the fund financial statements, governmental funds report fund balances as Nonspendable, Restricted, Committed, Assigned and Unassigned. Nonspendable, Restricted and Committed classification represent “reserved” fund balances whereas Assigned & Unassigned classifications represent “unreserved” fund balances. (See Note 10). N. Capital Contributions - Enterprise Funds Capital contributions as shown in the enterprise funds represent Federal and State grants received, subdividers’ costs of installing water mains, water service connections installed at the customers’ expense, and transfers of equipment from governmental funds. Capital contributions are shown as an inflow of resources in both the government-wide and fund financial statements. O. Post-Employment Health Care and Life Insurance Benefits In addition to providing pension benefits, the City allows for continuance of certain health care and life insurance benefits for retired employees. Substantially all of the City's employees may become eligible for those benefits if they are eligible to receive a retirement pension when leaving employment with the City. The cost of retiree health care and life insurance premiums is borne both by the retiree and the specific retirement plan under which they participated. There is no direct cost paid by the City. P. Statements of Cash Flows The City considers all highly liquid investments (including restricted assets) with an original maturity of three months or less to be cash equivalents. In the statements of cash flows, cash receipts and payments are classified according to whether they stem from operating, noncapital financing, capital and related financing, or investing activities. Q. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. 47 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 1 - Summary of Significant Accounting Policies, concluded R. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - Cash and Investments The City maintains a cash and investment pool that is available for use by all funds, except for the Chandler Industrial Development Authority, the Chandler Cultural Foundation, and the Chandler Health Care Benefits Trust. Each fund’s portion of this pool is displayed on the financial statements as Equity in Pooled Cash and Investments. Pooled cash and investments are stated at fair value with accrued interest shown separately. Restricted cash and investments are amounts held separately by trustees and amounts segregated due to their source and future intent. In addition, the Industrial Development Authority, the Chandler Cultural Foundation, and the Chandler Health Care Benefits Trust separately hold investments. Deposits At year-end, the carrying amount of the City deposits was $3,530,611, and the bank balance was $3,585,378. The entire bank balance was covered by the FDIC’s Transaction Account Guarantee Program. In addition, at year ended June 30, 2011, the City had $14,958,866 of restricted cash held by fiscal agent consisting of unspent bond proceeds from the 2011 Excise Tax Revenue Bond issuance. The cash held by fiscal agent is in money market funds invested primarily in short-term U.S. Treasury securities. Investments At June 30, 2011, the City had the following investments and maturities: Investment Maturities (in Years) Investment Type U.S. Treasuries U.S. Agencies: Federal Home Loan Bank Federal Home Loan Mortgage Corp. Federal National Mortgage Assn U.S. Agency Discount Notes: Federal National Mortgage Assn Gov't Guaranteed-Corporate: Citibank JP Morgan Chase Commercial Paper: BNP Paribas Finance The Coca-Cola Company Credit Agricole Rabobank Toyota Motor Credit Corp Money Market - Certificates of Deposit Money Market - U.S. Treasuries & Agencies Total Fair Value $ 143,618,106 $ Less than 1 47,963,412 33,144,863 73,800,274 75,474,038 20,655,626 6,746,172 19,309,617 3,294,538 3,294,538 5,036,343 5,095,944 5,036,343 5,095,944 3,998,684 4,997,365 3,998,020 5,498,904 5,497,838 5,487,826 59,987,850 $ 428,930,593 3,998,684 4,997,365 3,998,020 5,498,904 5,497,838 5,487,826 59,987,850 $ 197,568,139 48 $ 1-5 95,654,694 12,489,237 67,054,102 56,164,421 Concentration of Credit Risk % 33.48 7.73 17.21 17.60 0.77 $ 231,362,454 1.17 1.19 0.93 1.17 0.93 1.28 1.28 1.28 13.99 100.00 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 2 - Cash and Investments, concluded Interest Rate Risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the maturities of its investment portfolio to five years. Credit Risk. The City’s investment policy allows for investments in obligations guaranteed by the full faith and credit of the United States of America, government sponsored enterprises, government bonds with minimum credit ratings of Aa or AA, commercial paper with a minimum short term rating of P1 or A1, negotiable certificates of deposit, corporate bonds carrying a minimum credit rating of A, and the Local Government Investment Pool. The City’s investment in U.S. Agencies, Government Guaranteed Corporate Bonds, Government Guaranteed Commercial Paper and Money Market Funds were rated no lower than AAA, AAA, A-1, and AAA by Standard & Poor’s respectively as of June 30, 2011. Concentration of Credit Risk. The City’s investment policy does not allow for an investment in any one issuer that is in excess of five percent of the City’s total investments. Securities issues by the United States of America or its agencies are exempt from this provision. More than 5% of the City’s investments are in the U.S. Agencies, and U.S. Treasuries and Agencies money market funds. See percentages in above table. NOTE 3 - Property Taxes The City’s property tax is levied and collected by the Maricopa County Treasurer. Property taxes are levied on or before the third Monday in August based upon the previous January 1 full cash value of property as determined by the Maricopa County Assessor. Under Arizona Revised Statutes (A.R.S.), two assessed valuations are used. One is for primary taxes (used to fund operating expenditures) and the other is for secondary taxes (used to meet general obligation debt service requirements). Taxes are due in two equal installments on October 1 and March 1 following the levy date and are delinquent on the first day of November and May, respectively. Delinquent amounts bear interest at the rate of 16 percent. The City also levies various personal property taxes during the year, which are due the second Monday of the month following receipt of the tax notice, and become delinquent 30 days thereafter. Pursuant to A.R.S. a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. The State Constitution and State law specify a property tax levy limitation system. The system consists of two levies, a limited levy known as the primary property tax levy and an unlimited levy referred to as the secondary levy, which may only be used to retire bonded indebtedness. There is also a control on the assessed value of property for primary tax purposes. The base year for the new tax system is fiscal year 1979-80. From this base year, two assessed values evolve. The primary assessed values are allowed to increase by no more than 10 percent a year. The dollar amount of the secondary property tax levy is "unlimited" and the actual full cash value of property is used in determining the tax rate. The primary tax levy is limited to an increase of 2 percent over the previous year's maximum allowable primary levy, plus an increased dollar amount because of a net gain in property not taxed the previous year. Also, the primary property tax from all taxing jurisdictions for homeowners may not exceed 1 percent of the market value of their homes. If the combined primary property tax (for the City, County, School District, etc.) exceeds 1 percent of the market value of the homes, the school districts will reduce their rate until the homeowners' aggregate rate is equal to or less than the allowable 1 percent. The State will then subsidize the school districts for the reduced revenue. This 1 percent limitation applies to primary property taxes only and does not affect the secondary property tax levy. In fiscal year 2010-11, current property tax collections were $33,130,930 or 91.5% percent of the tax levy, and were recognized as revenue when received. At fiscal year end, the delinquent property tax expected to be collected within 60 days is recognized as revenue and recorded as a receivable. Property taxes levied in August 2011 are not available for fiscal year 2010-11; accordingly, such taxes will not be recognized as revenue until fiscal year 2011-2012. 49 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 4 – Capital Assets A summary of changes in capital assets for governmental activities is as follows: Balance July 1,2010 Government Activitites Capital assets, not being depreciated: Land Construction in progress Deletions and Transfers Out 55,494,177 (76,088,575) Total capital assets not being depreciated 220,623,121 55,494,177 (76,088,575) 200,028,723 Capital assets, being depreciated: Infrastructure Building and improvements Machinery and equipment 534,115,683 259,428,082 53,648,010 6,341,125 69,758,149 6,997,166 (430,801) 540,456,808 329,186,231 60,214,375 847,191,775 83,096,440 (430,801) 929,857,414 (158,389,887) (59,590,259) (29,670,838) (19,357,678) (13,027,574) (4,566,695) 240,013 (177,747,565) (72,617,833) (33,997,520) (247,650,984) (36,951,947) 240,013 (284,362,918) Total capital assets, being depreciated, net 599,540,791 46,144,493 (190,788) 645,494,496 Governmental activities capital assets, net $ 820,163,912 $ 101,638,670 $ (76,279,363) Total accumulated depreciation $ Balance June 30, 2011 81,151,314 139,471,807 Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Building and improvements Machinery and equipment $ Additions and Transfers In Construction in progress in the governmental activities capital assets is comprised of the following: Expended to June 30, 2011 $ 15,227,058 27,954,749 75,695,602 $ 118,877,409 Streets Parks and recreation Buildings and related improvements Total 50 Remaining Commitments $ 4,359,503 1,372,488 8,804,627 $ 14,536,618 $ $ 81,151,314 118,877,409 845,523,219 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 4 – Capital Assets, continued A summary of changes in capital assets for business-type activities is as follows: Business-Type Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: System improvements Building and improvements Vehicles, machinery and equipment Land improvements Total capital assets being depreciated Less accumulated depreciation for: System improvements Buildings and improvements Vehicles, machinery and equipment Land improvements Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net Balance July 1, 2010 $ 41,256,107 32,737,073 73,993,180 Additions and Transfers In $ 7,922,114 7,922,114 Deletions and Transfers Out Balance June 30, 2011 $ (1,356,753) (1,356,753) $ 41,256,107 39,302,434 80,558,541 881,579,645 20,358,369 15,094,122 2,117,236 919,149,372 1,616,266 262,247 104,075 1,982,588 (74,778) (74,778) 883,195,911 20,620,616 15,123,419 2,117,236 921,057,182 (376,460,318) (11,008,943) (13,079,417) (1,431,709) (401,980,387) 517,168,985 (38,766,427) (628,659) (486,151) (115,187) (39,996,424) (38,013,836) 44,587 44,587 (30,191) (415,226,745) (11,637,602) (13,520,981) (1,546,896) (441,932,224) 479,124,958 $ 591,162,165 $ (30,091,722) $ (1,386,944) Construction in progress in the business-type activities is comprised of the following: Expended to June 30, 2011 Remaining Commitments Sewer system improvements $ 19,073,967 $ Water system improvements 20,111,776 Airport improvements 4,495,293 116,691 Total $ 39,302,434 51 2,491,012 65,092 $ 7,051,397 $ 559,683,499 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 4 – Capital Assets, concluded Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Public safety Community services Transportation and development Total depreciation expense - governmental activities Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority Total depreciation expense - business-type activities $ 3,453,789 5,393,083 7,803,122 20,301,953 $ 36,951,947 $ 20,611,058 17,424,102 608,334 777,983 574,947 $ 39,996,424 NOTE 5 - Operating Leases The City leases approximately 73,000 square feet of office and library space under non-cancelable operating leases expiring through December 2010. Total costs for such leases were $506,230 for the year ended June 30, 2011. There are no future minimum lease payments at this time. Year Ending June 30 2011 Total $ $ 506,230 506,230 NOTE 6 - Long-Term Liabilities A. General Obligation Bonds 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. Bonds issued for business-type activities are reported in the proprietary funds as they are to be repaid from proprietary revenues. In addition, general obligation bonds have been issued to refund other general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds are generally issued as 10 to 15 year serial bonds, except for refunding issues, with varying amounts of principal maturing each year. The City has pledged future ad valorem tax revenues to repay a total of $459,715,000 in outstanding general obligation bonds. Proceeds of the bonds were used for general governmental purposes. The bonds are payable solely from ad valorem taxes and are payable through July 1, 2028. Annual principal and interest payments on the bonds are expected to require 108% of total 2010-11 ad valorem taxes. Principal and interest payments which exceed current collections were funded by excess collections from prior years. The total principal and interest remaining to be paid on the bonds is $638,648,871. Principal and interest paid for the current year and total ad valorem property taxes were $39,257,669 and $36,369,964, respectively. 52 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, continued General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2011 were as follows: Outstanding Governmental Activities General Obligation Bonds: June 30, 2011 $6,650,000 Capital Improvement Bonds, Series 1996, due in annual installments of $225,000 to $250,000 through 7/1/13; interest at 6.5 percent. 725,000 $8,205,000 Capital Improvement Bonds, Series 1996B, due in annual installments of $450,000 to $550,000 through 7/1/13; interest at 7.2 percent to 7.25 percent. 1,475,000 $6,950,000 Capital Improvement Bonds, Series 1999, due in an annual installment of $600,000 at 7/1/11; interest at 4.35 percent. 600,000 $8,040,000 Capital Improvement Bonds, Series 2001, due in an annual installment of $535,000 at 7/1/11; interest at 4.3 percent. 535,000 $23,000,000 Capital Improvement Bonds, Series 2002, due in annual installments of $750,000 to $1,125,000 through 7/1/12; interest at 4.25 percent to 4.375 percent. 1,875,000 $21,375,000 Capital Improvement Bonds, Series 2003, due in annual installments of $500,000 to $2,775,000 through 7/1/17; interest at 3 percent to 4 percent. 11,875,000 $16,265,000 Refunding Bonds, Series 2003, due in annual installments of $880,000 to $2,775,000 through 7/1/16; interest at 3 percent to 5 percent. 8,205,000 $24,800,000 Capital Improvement Bonds, Series 2005, due in annual installments of $2,000,000 to $2,900,000 through 7/1/15; interest at 4 percent. 11,650,000 $30,905,000 Capital Improvement Bonds, Series 2006, due in annual installments of $2,000,000 to $6,675,000 through 7/1/17; interest at 4 percent to 4.5 percent. 22,725,000 $111,045,000 Capital Improvement Bonds, Series 2007, due in annual installments of $1,000,000 to $6,6000,000 through 7/1/26; interest at 3 percent to 5 percent. 57,100,000 $22,960,000 Refunding Bonds, Series 2007, due in annual installments of $845,000 to $4,240,000 through 7/1/20; interest at 4 percent to 5 percent. 22,905,000 $252,000,000 Capital Improvement Bonds, Series 2009, due in annual installments of $750,000 to $17,000,000 through 7/1/28; interest at 2.25 percent to 5 percent. 120,013,000 $9,925,000 Capital Improvement Bonds, Series 2011A, due in annual installments of $500,000 to $3,300,000 through 7/1/20; interest at 3 percent to 4 percent. 9,925,000 $10,360,000 Refunding Bonds, Series 2011B, due in annual installment of $795,000 to $3,305,000 through 7/1/18; interest at 2 percent to 4 percent. 10,360,000 Total Governmental Activities General Obligation Bonds 53 $ 279,968,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, continued Business-Type Activities General Obligation Bonds: Outstanding June 30, 2011 $17,225,000 Refunding Bonds, Series 2001, due in an annual installment of $ $1,040,000 at 7/1/11; interest at 4.75 percent. 1,040,000 $16,265,000 Refunding Bonds, Series 2003, due in annual installments of $2,225,000 to $2,580,000 through 7/1/15; interest at 4 7,190,000 percent to 5 percent. $111,045,000 Capital Improvement Bonds, Series 2007, due in annual installments of $1,800,000 to $3,900,000 through 7/1/26; 41,550,000 interest at 3 percent to 5 percent. $252,000,000 Capital Improvement Bonds, Series 2009, due in annual installments of $4,820,000 to $11,086,000 through 7/1/28; interest 129,967,000 at 2.25 percent to 5 percent. Total Business-Type Activities General Obligation Bonds $ 179,747,000 B. Street and Highway Revenue Bonds Street and highway revenue bonds are issued specifically for the purpose of constructing street and highway projects. These bonds are payable solely from the revenues derived by the City from highway user taxes, including motor vehicle fuel taxes and all other taxes, fees and charges relating to registration, operation or use of vehicles on public highways or streets or to fuels or any other energy source used for the vehicles collected by the State and returned to the City. The City has pledged future highway user revenues to repay a total of $28,620,000 in outstanding street and highway user revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s streets and highways. The bonds are payable solely from state shared gasoline tax revenues and are payable through July 1, 2019. Annual principal and interest payments on the bonds are expected to require less than 30% of total 2010-11 street and highway user revenues. The total principal and interest remaining to be paid on the bonds is $33,076,338. Principal and interest paid for the current year and street and highway user revenue taxes were $4,051,008 and $13,287,878, respectively. 54 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, continued Street and highway revenue bonds outstanding as reported in governmental activities at June 30, 2011 were as follows: Outstanding June 30, 2011 Governmental Activities Revenue Bonds: $2,500,000 Street & Highway User Bonds, Series 1993, due in an annual installment of $800,000 at 7/1/11; interest at 6 percent. $ 800,000 $5,750,000 Street & Highway User Bonds, Series 1994, due in an annual 1,100,000 installment of $1,100,000 at 7/1/11; interest at 8 percent. $1,250,000 Street & Highway User Bonds, Series 1996B, due in annual 125,000 installments of $25,000 through 7/1/15; interest at 5.5 percent to 7.5 percent. $5,280,000 Street & Highway User Refunding Bonds, Series 1997, due in an 50,000 annual installment of $50,000 at 7/1/11; interest at 5.9 percent. $10,540,000 Street & Highway User Refunding Bonds, Series 2002, due in annual installments of $840,000 to $880,000 through 7/1/13; 1,720,000 interest at 3.875 percent to 4.25 percent. $5,000,000 Street & Highway User Bonds, Series 2003, due in annual installments of $1,000,000 to $1,500,000 starting 7/1/16 through 7/1/19; 5,000,000 interest at 3.5 percent to 5 percent. $10,920,000 Street & Highway User Refunding Bonds, Series 2004, due in annual installments of $200,000 to $3,360,000 through 7/1/18; 9,375,000 interest at 3.5 percent to 5 percent. $10,450,000 Street & Highway User Refunding Bonds, Series 2010, due in annual installments of $105,000 to $2,965,000 through 7/1/19; 10,450,000 interest at 2 percent to 3.5 percent. Total Governmental Activities Revenue Bonds $ 28,620,000 C. Water and Sewer Revenue Bonds Water and sewer revenue bonds are issued as authorized by the voters to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the bonds. These bonds are secured by a pledge of revenues from these systems, and do not constitute a general obligation of the City backed by the general taxing authority. The City has pledged future water and wastewater system revenues, net of operating expenses, to repay a total of $60,280,000 in outstanding water and wastewater system revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater systems. The bonds are payable solely from net water and wastewater system revenues and are payable through July 1, 2020. Annual principal and interest payments on the bonds are expected to require less than 32% of net 2010-11 water and wastewater system revenue. 55 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, continued The total principal and interest remaining to be paid on the bonds is $72,298,700. Principal and interest paid for the current year and net water and wastewater system revenues were $10,432,478 and $32,709,288, respectively. Water and sewer revenue bonds outstanding as reported in business-type activities at June 30, 2011 were as follows: Business-Type Activities Revenue Bonds: $5,150,000 Water & Sewer Bonds, Series 1994, due in an annual installment of $2,150,000 at 7/1/14; interest at 8 percent. $16,890,000 Water & Sewer Bonds, Series 1996, due in annual installments of $250,000 to $400,000 through 7/1/13; interest at 7.25 percent. $7,770,000 Water & Sewer Refunding Bonds, Series 1997, due in annual installments of $100,000 through 7/1/13; interest at 6.25 percent to 6.5 percent. $5,985,000 Water & Sewer Bonds, Series 1999, due in an annual installment of $410,000 at 7/1/11; interest at 4.4 percent. $12,500,000 Water & Sewer Bonds, Series 2001, due in annual installments of $700,000 to $1,045,000 through 7/1/18; interest at 4.25 percent to 4.5 percent. $26,145,000 Water & Sewer Refunding Bonds, Series 2001, due in an annual installment of $1,595,000 at 7/1/11; interest at 4.75 percent. $10,970,000 Water & Sewer Refunding Bonds, Series 2002, due in annual installments of $1,540,000 to $3,755,000 through 7/1/13; interest at 4.25 percent to 5 percent. $17,830,000 Water & Sewer Refunding Bonds, Series 2003, due in annual installments of $30,000 to $7,515,000 through 7/1/16; interest at 3 percent to 5 percent. $10,000,000 Water & Sewer Bonds, Series 2003, due in annual installments of $1,625,000 to $4,200,000 through 7/1/13; interest at 3 percent to 4 percent. $10,000,000 Water & Sewer Bonds, Series 2005, due in annual installments of $100,000 to $2,500,000 starting 7/1/12 through 7/1/20; interest at 4 percent to 5 percent. $15,485,000 Water & Sewer Refunding Bonds, Series 2005, due in annual installments of $485,000 to $5,725,000 through 7/1/17; interest at 3.50 percent to 5 percent. Total Business-Type Activities Revenue Bonds Outstanding June 30, 2011 $2,150,000 900,000 300,000 410,000 3,270,000 1,595,000 6,905,000 11,675,000 8,325,000 10,000,000 14,750,000 $ 60,280,000 D. Excise Tax Revenue Obligations Excise tax revenue obligations are issued to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the obligations. The City has collateralized the obligations by the pledge of all unrestricted excise taxes (transaction, franchise fees, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. 56 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, continued The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for or any other amounts remain unpaid or unprovided for thereunder, it will not further encumber the excise taxes on a basis equal to the pledge thereunder unless the excise taxes received by the City in the immediately preceding fiscal year shall have amounted to at least three times the highest combined debt service for the current or any succeeding fiscal year for all outstanding parity obligations, including the additional parity obligations proposed be secured by a pledge of the same excise taxes. The City shall have the right to incur additional parity obligations payable from and secured by the excise taxes on parity with the obligations. Annual principal and interest payments on the obligations are expected to require less than 2% of net 2010-11 excise tax revenue. The total principal and interest to be paid on the obligations is $65,633,127. Principal and interest paid for the current year and excise tax revenues were $2,218,063 and $136,164,353, respectively. Business-Type Actvities Excise Tax Revenue Obligations: $34,040,000 Water & Sewer Excise Tax Obligations, Series 2009, due in annual installments of $1,100,000 to $5,455,000 through 7/1/28; interest at 2.25 percent to 4.375 percent. $15,000,000 Water & Sewer Excise Tax Obligations, Series 2011, due in annual installments of $645,000 to $1,210,000 through 7/1/28; interest at 3 percent to 5 percent. Total Business-Type Activities Excise Tax Revenue Obligations Outstanding June 30, 2011 $ 33,540,000 15,000,000 $ 48,540,000 E. Special Assessment Bonds with Governmental Commitment As trustee for improvement districts, the City is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2011, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, are adequate for the scheduled maturities of the bonds payable and related interest. Special assessment bonds are collateralized by properties within the districts. In the event of default by the property owner, the City may enforce an auction sale to satisfy the debt service requirements of the bonds. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment bonds payable with governmental commitment outstanding as reported in governmental activities at June 30, 2011 were as follows: Outstanding Governmental Activities Special Assessment Bonds: June 30, 2011 $7,370,000 Spectrum Improvement District Bonds, due in annual installments of $410,000 to $635,000 through 1/1/23; interest at 4 percent. Total Special Assessment Bonds with Governmental Commitment 57 $ 6,190,000 $ 6,190,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, continued Changes in Long-Term Liabilities Balance July 1, 2010 Governmental Activities: Compensated absences Bonds payable: General obligation bonds Revenue bonds Special assessment bonds Total bonds payable $ Arbitrage liability Claims payable Post employment benefits Deferred bond premiums Totals Arbitrage liability Post employment benefits Deferred bond premiums Landfill closure/post closure Totals $ $ Balance June 30, 2011 (5,818,372) 10,490,286 Due Within One Year $ 602,012 20,285,000 20,285,000 (23,205,000) (3,180,000) (1,125,000) (27,510,000) 279,968,000 28,620,000 6,190,000 314,778,000 11,820,000 2,875,000 410,000 15,105,000 111,099 1,811,045 3,863,996 5,482,398 14,844 5,186,127 1,708,724 1,047,424 (62,545) (3,613,200) (687,933) 63,398 3,383,972 5,572,720 5,841,889 31,006 3,117,800 637,843 34,419,458 $ (37,692,050) $ 340,130,265 Reductions Balance June 30, 2011 $ Balance July 1, 2010 $ 6,177,339 Reductions 282,888,000 31,800,000 7,315,000 322,003,000 $ 343,402,857 Business-Type Activities: Compensated absences Bonds payable: General obligation bonds Revenue bonds Excise tax revenue obligations Total bonds payable 10,131,319 Additions 991,531 Additions $ 618,414 $ (560,300) $ 1,049,645 $ 19,493,661 Due Within One Year $ 60,236 185,032,000 67,580,000 34,040,000 286,652,000 15,000,000 15,000,000 (5,285,000) (7,300,000) (500,000) (13,085,000) 179,747,000 60,280,000 48,540,000 288,567,000 8,760,000 7,610,000 1,100,000 17,470,000 29,898 269,574 5,027,052 4,340,000 17,950 126,798 533,809 - (10,004) (521,670) - 37,844 396,372 5,039,191 4,340,000 15,236 552,409 394,950 16,296,971 $ (14,176,974) $ 299,430,052 $ 297,310,055 $ 58 $ 18,492,831 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, continued Statutory Debt Limitation In the absence of more restrictive bond authorization ballot limitations, the City is subject to state limitations on the amount of net bonded debt (exclusive of revenue bonds, excise tax revenue obligations and improvement district bonds), it may have outstanding. The statutory debt limitation is 20 percent of the secondary assessed valuation for purposes of water, wastewater, artificial light, acquisition and development of land for open space preserves, recreation facilities, public safety and emergency services, streets and transportation, and 6 percent of the secondary assessed valuation for all other purposes (e.g., library, museum, center for the arts). At June 30, 2011, the 6 percent debt limitation was $148,117,597, providing a debt margin of $134,756,597 and the 20 percent debt limitation was $493,725,323, providing a debt margin of $47,371,323. Bond Covenants Pursuant to certain bond indenture agreements, the City is obligated to various limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, minimum amounts to be maintained in various sinking funds and minimum revenue bond coverages. The City is in compliance with all such significant limitations and restrictions in the opinion of City’s management. Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for all bonds payable as of June 30, 2011: Years Ended June 30 General Obligation Principal 2012 $ 11,820,000 2013 11,860,000 2014 14,135,000 2015 14,035,000 2016 15,520,000 2017-2021 82,244,000 2022-2026 80,000,000 2027-2029 50,354,000 Total $ 279,968,000 GOVERNMENTAL ACTIVITIES Highway Highway Users Users Improvement Improvement General Revenue Revenue Districts Obligation Districts Principal Interest Principal Interest Interest $ 11,408,603 11,088,475 10,551,675 9,978,456 9,395,087 36,931,125 19,103,188 3,139,594 $ 2,875,000 3,700,000 3,830,000 3,975,000 4,105,000 10,135,000 - $ 1,022,350 885,225 767,725 637,000 479,238 664,800 - $ $ 111,596,203 $ 28,620,000 $ 4,456,338 $ 6,190,000 59 410,000 430,000 445,000 465,000 480,000 2,715,000 1,245,000 - $ Total 247,600 231,200 214,000 196,200 177,600 583,400 75,200 - $ 27,783,553 28,194,900 29,943,400 29,286,656 30,156,925 133,273,325 100,423,388 53,493,594 $ 1,725,200 $ 432,555,741 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 6 - Long-Term Liabilities, concluded BUSINESS-TYPE ACTIVITIES Years Ended June 30 2012 General Obligation Principal $ General Obligation Interest Revenue Principal Revenue Interest Excise Tax Principal Excise Tax Interest Total 8,760,000 $ 7,013,962 $ 7,610,000 $ 2,669,226 $ 1,100,000 $ 1,447,908 $ 28,601,096 2013 9,420,000 6,640,063 7,930,000 2,350,558 1,745,000 1,606,913 29,692,534 2014 10,595,000 6,247,863 8,260,000 1,999,818 1,815,000 1,561,763 30,479,444 2015 10,900,000 5,862,113 4,485,000 1,671,026 6,180,000 1,466,419 30,564,558 2016 10,910,000 5,507,075 6,760,000 1,359,306 4,270,000 1,338,950 30,145,331 2017-2021 48,976,000 22,337,656 25,235,000 1,968,766 10,855,000 5,600,756 114,973,178 2022-2026 49,025,000 11,706,531 - - 13,075,000 3,423,800 77,230,331 2027-2029 31,161,000 2,022,406 - - 9,500,000 646,618 43,330,024 $ 179,747,000 $ 67,337,669 $ 60,280,000 $ 12,018,700 $ 48,540,000 $ 17,093,127 $ 385,016,496 Total Compensated Absences The City’s policy relating to compensated absences is described in Note 1. As shown in the table below, the long-term portion of this debt, amounting to $10,490,286 for governmental activities and $1,049,644 for business-type activities at June 30, 2011 is expected to be paid in future years from future resources. Compensated absences for governmental activities have been liquidated primarily by the General Fund. Balance Balance Due Within July 1, 2010 Incurred Satisfied June 30, 2011 One Year $ 10,131,319 $ 6,177,339 $ 5,818,372 $ 10,490,286 $ 602,009 $ $ 618,414 $ 560,300 $ 1,049,645 $ Governmental Activities Compensated Absences Business-Type Activities Compensated Absences 991,531 60,236 NOTE 7 - Defeased Debt Current Year Defeasance On May 11, 2011, the City issued $10,360,000 in General Obligation Refunding Bonds with an average interest rate of 1.65 percent. This issuance was used to advance refund $3,000,000 of Series 1999 General Obligation Bonds with an average interest rate of 4.44 percent; $1,810,000 of Series 2001 General Obligation Bonds with an average interest rate of 4.47 percent; and $5,550,000 of Series 2002 General Obligation Bonds with an average interest rate of 4.37 percent. The refunding portion of net proceeds of $10,816,839 (after payment of $166,396 in underwriting fees, insurance, and other issuance costs and receipt of $623,235 in original issue premium) was used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 1999, 2001, and 2002 bonds. Only a portion of the future debt service payments for the 1999, 2001, and 2002 bonds were defeased. As a result, this part of the debt service payments for the bonds is considered to be defeased and the liability for that portion of the bonds has been removed from the government-wide and statement of net assets. 60 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 7 - Defeased Debt, concluded The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $456,839. This difference, reported in the accompanying financial statements as a component of other assets, is being charged to operations through the year 2018 using the straight-line amortization method. The City completed the advance refunding to decrease its total debt service payments over the next 8 years by $518,063 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $501,216. Prior Year Defeasance In prior years, the City defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City’s financial statements. Bonds that have been advance refunded (defeased) as of June 30, 2011 are as follows: Refunded Debt Outstanding Amount General Obligation Bonds, Series 1996B 2,910,000 General Obligation Bonds, Series 2002 12,525,000 Total Refunded Bonds Outstanding $ 15,435,000 NOTE 8 – Landfill Closure and Postclosure Costs State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. In addition to operating expenses related to landfill activities through its closure date (October 1, 2005), an expense provision and related liability has been recognized based on the future closure and postclosure care costs to be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. As of June 30, 2011, the City estimates total costs related to landfill closure and postclosure care is $15,388,438 and has recognized that entire amount since the landfill no longer accepts waste. To date, $11,048,438 has been paid. The remaining balance of $4,340,000 consists of a current liability of $394,950 and $3,945,050 recorded as a non-current liability on the City’s financial statements. The estimated total current cost of the landfill closure and postclosure, $15,388,438, is based on the amount that would be paid if all equipment, facilities, and services required to care, monitor, and maintain the landfill were acquired as of June 30, 2011. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City is required by state and federal regulations to comply with local government financial test requirements that assure the City can meet the costs of landfill closure, postclosure care and, if necessary, corrective action when needed. It is anticipated that future inflation costs will be financed in part from earnings on investments. The remaining portion of anticipated future inflation costs and any additional costs that might arise from changes in postclosure requirements, e.g., due to changes in technology or more rigorous environmental regulations, may need to be covered by additional charges to future taxpayers. 61 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 9 - Capital Contributions Capital contributions in the Water, Wastewater, Solid Waste, Airport, and Housing Authority funds amounted to the following: System Water Development Developer Government Fees Contributions Contributions 3,265,313 $ $ $ 235,080 Total - $ 3,500,393 Wastewater 4,324,536 261,522 - 4,586,058 Solid Waste 60,990 - - 60,990 Airport - - 500,463 500,463 Housing Authority - - 11,868 11,868 512,331 $ 8,659,772 Total $ 7,650,839 $ 496,602 $ NOTE 10 – Fund Equity During the year ended June 30, 2011, the City implemented the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54 establishes standards for financial reporting, including note disclosure requirements for fund balance classifications of the governmental funds (General Fund, Special Revenue Funds, Capital Project Funds, Debt Service Funds, and Permanent Funds), and clarifies existing governmental fund type definitions. In the fund financial statements, fund balances are reported in five classifications that comprise a hierarchy based on spending constraints placed on the purposes for which resources can be used for better consistency and clarification. The classifications of fund balance are explained below: Nonspendable fund balance includes amounts that cannot be spent because either, 1) it is not in a spendable form, such as inventory or prepaid items or 2) it is legally or contractually required to be maintained intact. Restricted fund balance includes amounts constrained to specific purposes by their providers which are either imposed 1) by external parties (grantors, bondholders and higher levels of Government), 2) by law through constitutional provisions or 3) by enabling legislation legally enforceable by external parties. Committed fund balance is self-imposed limitations to be used only for a specific purpose pursuant to constraints by formal action of the highest level of decision making authority, namely Mayor and Council. Mayor and Council approval is required to commit resources and amounts cannot be used for any other purpose unless Mayor and Council take the same formal action to remove or change the commitment. Assigned fund balance includes amounts intended to be used for a specific purpose. For General Fund, the assigned fund balance must be for a specific purpose and for all other governmental funds the assigned fund balance represents the residual balance of the fund. Intent can be expressed by Mayor and Council or by an official to which the Mayor and Council delegates the authority. Unlike committed fund balances, assigned fund balances can be changed without formal action. Unassigned fund balance includes amounts available for any purpose; these amounts are reported only in the General Fund. In addition, other governmental funds that result in a negative fund balance are presented in this classification. 62 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 10 – Fund Equity, continued Generally, the City would first apply restricted resources, than committed, assigned and unassigned resources when an expense is incurred for purposes for which more than are classification of fund balance are available. As of June 30, 2011 the constraints placed on fund balance for the major governmental funds and all other governmental funds are presented in the following table: Other NonStreets Major Capital Governmental Grand Total Projects General Non-spendable Inventories Prepaid items Total Non-spendable Restricted for Court Enhancement Judicial Enhancement Transportation and Development Debt Service Reserve Community Development Community Services Other Capital projects Total Restricted $ 888,459 4,608 $ - $ - $ 888,459 4,608 893,067 - - 893,067 706,695 138,059 - 33,445,762 - 17,447,607 19,017,204 427,793 13,373,535 22,044,171 706,695 138,059 50,893,369 19,017,204 427,793 13,373,535 22,044,171 844,754 33,445,762 72,310,310 106,600,826 - - - - - - - - 232,634 886,794 39,092,109 21,522,000 - - 232,634 - 61,733,537 - - 232,634 98,872,954 - - (12,315,197) - 86,557,757 - 98,872,954 - (12,315,197) 148,058,660 $ 162,344,312 $ 33,445,762 Committed to Total Committed Assigned to Domestic Violence Prevention Self-Insurance Purposes Capital Improvements Projects Economic Development Projects Total Assigned Unassigned Total Unassigned Total fund balances 63 $ 59,995,113 $ 255,785,187 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 10 – Fund Equity, concluded The City’s General Fund Reserve Policy requires an amount equal to 12% of adopted General Fund operating revenues, excluding transfers in. Unassigned includes this reserve in the amount of $19,552,074. NOTE 11 - Retirement and Pension Plans All full-time employees of the City, the Mayor and City Council are covered by one of three pension plans. All fulltime City employees, except public safety personnel, participate in the Arizona State Retirement System, a multipleemployer cost-sharing pension plan. Public safety personnel participate in the Public Safety Personnel Retirement System, which is an agent multiple-employer plan. The Mayor and City Council participate in the Elected Officials’ Retirement Plan, a multiple-employer cost sharing pension plan. All three pension plans are administered by the State of Arizona. Arizona State Retirement System A. Plan Description All full-time City employees (except public safety personnel) participate in the Arizona State Retirement System (the System), a multiple-employer cost sharing defined benefit pension, health insurance premium, and long-term disability plan. The System was established by the State of Arizona to provide pension benefits for employees of the state and employees of participating political subdivisions and school districts. The System is administered in accordance with Title 38, Chapter 5, of Arizona Revised Statutes. The System provides for retirement, disability, health insurance premium benefits, and death and survivor benefits. The System issues a publicly available financial report that includes financial statements and required supplementary information for the System. That report may be obtained by writing to Arizona State Retirement System, P.O. Box 33910, Phoenix, AZ 85067-3910, or by calling 1-800621-3778. B. Funding Policy Arizona Revised Statutes provide statutory authority for determining the employees' and employers' contribution amounts as a percentage of covered payroll. Employers are required to contribute at the same rate as employees. Although Arizona Revised Statutes prescribe the basis of making the actuarial calculation, the Arizona Legislature is able to legislate a contribution rate other than the actuarially determined rate. The actuarially determined contribution rate for the year ended June 30, 2011 was 9.85 percent (9.6 percent retirement and 0.25 percent long-term disability) for active members and the City was required to contribute 9.85 percent (9.01 percent for retirement, 0.59 percent for health insurance premium, and 0.25 percent for long-term disability) of the members’ annual covered payroll. The City’s contributions to the System for the years ended June 30, 2011, 2010 and 2009, were $6,307,634.16, $6,480,656 and $6,627,159 respectively, equal to the required contributions for each year. Arizona Public Safety Personnel Retirement System (Full-time Police and Fire Employees) A. Plan Description All full-time sworn police officers and fire fighters are eligible to participate in the Public Safety Personnel Retirement System (PSPRS) in separate agent multiple-employer defined benefit retirement and health insurance premium plans. PSPRS was established by Title 38, chapter 5, Article 4 of the Arizona Revised Statutes to provide pension benefits for public safety employees of certain state and local governments. The PSPRS is jointly administered by the fund manager and participating local boards. The fund manager is a five-member board appointed by the Governor and the State Legislature. The fund manager is responsible for establishing contribution rates in accordance with an Actuarial study. 64 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 11 - Retirement and Pension Plans, continued The PSPRS provides retirement benefits, as well as death and disability and health insurance premium benefits. The PSPRS of the State of Arizona issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Public Safety Personnel Retirement System, 3010 East Camelback Road, Ste 200, Phoenix, AZ 85016 or by calling (602) 255-5575. B. Funding Policy The System is funded through a member contribution of 7.65 percent of gross payroll, an employer contribution set by an actuarial valuation expressed as a percent of gross payroll, and a distribution of the net earnings of the Fund. The City’s current aggregate contribution rate for police is 17.57 percent of annual covered payroll of which 1.09 percent was the health insurance premium portion. The current aggregate contribution rate for firefighters is 15.65 percent of annual covered payroll of which 0.98 percent was the health insurance premium portion. C. Annual Pension Cost For fiscal year ended June 30, 2011, the City’s annual pension cost of $4,486,814 for police and $2,363,871 for firefighters for PSPRS was equal to the City’s required and actual contributions. The required contributions were determined as part of the June 30, 2009, actuarial valuations using the projected unit credit actuarial cost method. The contribution requirements for the year ended June 30, 2011 were established by the June 30, 2009 actuarial valuations. Those valuations were based on the following. For police, the actuarial assumptions include (a) a rate of return on the investment of present and future assets of 8.5 percent per year compounded annually, attributable to inflation and other across-the-board increases, (b) projected salary increases of 5.5 percent compounded annually attributable to inflation and other across-the-board increases, and (c) additional projected salary increases of 0 percent to 3 percent per year attributable to seniority/merit. For firefighters, the actuarial assumptions include (a) a rate of return on the investment of present and future assets of 8.5 percent per year compounded annually, attributable to inflation and other across-the-board increases, (b) projected salary increases of 5.5 percent compounded annually attributable to inflation and other across-the-board increases, and (c) additional projected salary increases of 0 percent to 3 percent per year attributable to seniority/merit. The actuarial value of PSPRS assets was determined using techniques that smooth the market value of assets over a seven-year period. PSPRS’s unfunded accrued liability is being amortized as a level percent of projected payroll over a closed period of 30 years. If the actuarial value of assets exceeded the actuarial accrued liability, the excess was amortized over an open period of 20 years. The remaining amortization period at July 1, 2010, was 26 years for unfunded actuarial accrued liability and 20 years for excess contributions. 65 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 11 –Retirement and Pension Plans, continued Arizona Public Safety Personnel Retirement System - Police Three-Year Trend Information Percent Annual of APC Pension Contributed Cost (APC) Fiscal Year Ended Net Pension Obligation 2009 (Pension) $ 4,941,860 100% - 2009 (Health) $ 100% - 2010 (Pension) $ 4,596,415 100% - 2010 (Health) $ 100% - 2011 (Pension) $ 4,437,908 100% - 2011 (Health) $ 100% - 28,330 22,633 48,906 Arizona Public Safety Personnel Retirement System - Firefighters Three-Year Trend Information Fiscal Year Ended Annual Pension Cost (APC) Percent of APC Contributed Net Pension Obligation 2009 (Pension) $ 2,609,678 100% - 2009 (Health) $ 100% - 2010 (Pension) $ 2,508,750 100% - 2010 (Health) $ 100% - 2011 (Pension) $ 2,340,705 100% - 2011 (Health) $ 100% - 11,533 10,834 23,166 D. Funded Status and Funding Progress As of June 30, 2010, the most recent actuarial calculation date, the firefighters plan was 82 percent funded and police was 74 percent funded. The actuarial accrued liability for benefits was $66.9 million and $110 million, and the actuarial value of assets was $54.6 million and $81 million, resulting in an unfunded actuarial accrued liability (UAAL) of $12.3 million and $28.9 million respectively. The covered payrolls (annual payrolls of active employees covered by the plans) were $15.3 million and $26 million, and the ratio of the UAAL to the covered payroll was 80 percent and 111 percent. The schedule of funding progress, presented as Required Supplementary Information following the Notes to the Financial Statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Elected Officials’ Retirement Plan (Mayor and City Council) A. Plan Description The City’s Mayor and Council participate in the Elected Officials’ Retirement Plan (EORP), a multiple-employer cost sharing defined benefit pension and health insurance premium plan. The EORP was established and is administered by the State of Arizona to provide pension benefits for state and county elected officials, judges, and certain Cityelected officials. The fund manager of the PSPRS is also the administrator for the EORP. EORP provides retirement benefits, as well as death and disability benefits. The Elected Officials’ Retirement Plan issues a publicly available financial report that includes financial statements and required supplementary information for EORP. The report may be obtained by writing to Elected Officials’ Retirement Plan, 3010 East Camelback Road, Ste 200, Phoenix, AZ 85016 or by calling (602) 255-5575. 66 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 11 –Retirement and Pension Plans, concluded B. Funding Policy Covered employees are required by state statute to contribute an amount equal to 7 percent of gross salary. Incorporated city or town employers are required to contribute an amount sufficient to meet both the normal cost of a level-cost method attributable to the EORP, plus the amount required to amortize the unfunded accrued liability for the employer. Such amount is to be determined each year by actuarial valuation and paid as a level percent of compensation. The contribution requirements for plan members are established and may be amended by the Fund Manager, a five-member board. The City’s rate for fiscal year ended June 2011 was 29.79 percent of the members’ annual covered payroll, of which 1.80 percent was the health insurance premium portion. The city’s contributions to EORP for the years ended June 30, 2011, 2010, and 2009, were $47,863, $40,950, and $37,757 respectively, equal to the required contributions for each year. Volunteer Firemen's Pension And Relief Fund A. Plan Description The Volunteer Firemen’s Pension Plan (VFPP) is a single-employer defined benefit pension plan administered by the City. The last actuarial valuation of the Volunteer Firemen's Pension and Relief Fund was made as of November 19, 2004, at which time the actuarial liability was fully funded. As of June 30, 2011, there was one retiree and/or beneficiary of a retiree receiving retirement benefits under the plan. There were no terminated employees entitled to benefits and not yet receiving them. Additionally there are no non-vested active employees and no partially vested employees covered by the plan. The VFPP issues a publicly available financial report that may be obtained from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. B. Funding Policy There were no contributions to the Volunteer Firemen's Pension and Relief Fund by the City in fiscal year 2010/11. Pursuant to the November 19, 2004, actuarial valuation, the present value of all benefits payable in future years was $57,222 based upon a 6 percent rate of return and the pension obligation was deemed to be fully funded. NOTE 12 – Post-employment Benefits Other Than Pensions The cost of post-employment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. A. Plan Description The City provides post-employment medical care (OPEB) for retired employees through a single employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents though the City’s group health insurance plans, which covers active and retired members. The benefits, benefit levels and contribution rates are determined annually by the City’s Human Resources Department and approved by the City Council. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. 67 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 12 – Post-employment Benefits Other Than Pensions, continued The City also provides a Retirement Health Savings Plan (RHSP) for active employees that may be used upon separation from City employment. The City funds $15 per pay period during the term of employment. The plan provides medical expense reimbursements eligible under Internal Revenue Code Section 213, other than direct longterm care expenses. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. B. Benefits Provided The City provides post-employment medical care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s medical plan during their active status. Upon retirement, the City deposits a one-time payment of $800 per year of City service in the retiree’s account. The retiree must have a minimum of five years of City service to receive this contribution. C. Funding Policy The plan premium rates are determined annually by the City’s Human Resources Department, in collaboration with an outside consulting firm, and approved by the City Council. The retiree’s contribution is 100% of the actuarially determined blended premium rate. The 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. This implied subsidy exists because, on average, retiree healthcare costs are higher than active employee healthcare costs. By not contributing anything toward this plan in advance, the City employs a pay-as-you-go method through paying the higher rate for active employees each year. As of June 30, 2011, retirees contributed $818,079 and the City contributed $1,459,219 (implied subsidy). D. Annual OPEB Costs and Net OPEB Obligation The City’s annual other post-employment benefit (OPEB) cost for each plan is calculated based on the annual required contribution (ARC) of the employer, an 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 to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for the current year and related information for each plan are as follows at June 30, 2011: Annual Required Contribution (ARC) ARC Adjustment $ 3,291,374 (203,312) Interest Adjustment to Net OPEB Obligation Annual OPEB Cost 206,679 $ 3,294,741 Contributions Made (1,459,219) Increase in Net OPEB Obligation Net OPEB Obligation - Beginning of year Net OPEB Obligation - End of year 68 $ 1,835,522 4,133,570 $ 5,969,092 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 12 – Post-employment Benefits Other Than Pensions, concluded The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2011 were as follows: Percentage of Fiscal Year Annual Employer OPEB Cost Net OPEB Ended June, 30 OPEB Cost Contributions Contributed Obligation 2011 $ 3,294,741 $ 2010 2009 1,459,219 44.29% $ 5,969,092 3,293,137 1,325,055 40.24% 4,133,570 2,136,825 1,188,119 55.60% 2,165,488 E. Funded Status and Funding Progress The funded status of the plan as of the most recent actuarial valuation is as follows: Actuarial Accrued Liability $ 26,120,095 Actuarial Value of Plan Assets - Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio $ 26,120,095 0.0% Covered Payroll 98,508,058 UAAL as a percentage of covered payroll 26.5% 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. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. The actuarial methods and significant assumptions used to determine the ARC for the current year are as follows: 1. 2. 3. The actuarial cost method used is the projected unit credit method. As of the valuation date, July 1, 2009, there are no assets, hence no need for an actuarial value of assets. The amortization method is level percent of payroll. The amortization period is 30 years. The period is open. In the June 30, 2009 actuarial valuation, the projected unit credit actuarial cost method was used along with a discount rate of 5.0%. In addition, the actuarial assumptions included: an annual medical healthcare cost trend rate of 10% initially, reduced by decrements to an ultimate rate of 6.0% after 8 years; an annual dental healthcare cost trend rate of 5% initially, reduced to 3% after 9 years; and an annual projected salary increase of 2%. 69 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 13 - Commitments and Contingencies The City is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the City’s financial position. NOTE 14 - Risk Management The City is exposed to various risks of loss related to litigation, claims and torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters (for which the City carries commercial insurance). The City established a Self-Insurance Fund (an Internal Service Fund) to account for and finance its uninsured risks of loss. In fiscal year 2010/2011, the Self-Insurance Fund provided coverage for up to a maximum of $2,000,000 per occurrence for liability claims and $50,000 for each property damage claim. The City purchases commercial insurance for claims in excess of coverage provided by the Self-Insurance Fund and for all other risks of loss. During fiscal year 2010/2011, there were no significant reductions in the amounts of excess coverage purchased, nor has the City experienced any settlements in excess of insurance coverage over the past three fiscal years. Premiums are paid into the Internal Service Fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. As with any risk retention program, the City is contingently liable with respect to claims beyond those actuarially projected. Interfund premiums are used to reduce the amount of claim expenditures reported in the Internal Service Fund. In the opinion of City management, based on the advice of the City Attorney, the outcome of such litigation and claims will not have materially adverse effect on the City’s financial position. The claims liability of $1,966,172 reported as claims payable in the Self-Insurance Fund at June 30, 2011, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that liabilities be reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $2,000,000 for general liability and $500,000 for worker’s compensation. Liabilities include an amount for claims that have been incurred but not reported (IBNR). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Changes in the Fund’s claims liability amount in fiscal years 2010 and 2011 were: Years Ended June 30, Beginning of Fiscal Year Liability Current Year Claims and Changes in Estimates Claim Payments Balance at Fiscal Year End 2010 $ 3,624,854 $ 1,571,159 (3,384,968) $ 1,811,045 2011 $ 1,811,045 $ 3,768,327 (3,613,200) $ 1,966,172 70 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 15 – Interfund Transfers, concluded The interfund transfers in and out at June 30, 2011 are as follows: Fund Transfer Detail Transfers In General Capital projects-streets $ - Transfers Out $ 1,042,186 Non-major governmental - 35,172,703 Non-major enterprise - 590,126 Internal service Total general fund - 14,606,731 51,411,746 Streets General Total streets fund Non-major governmental General Non-major governmental 1,042,186 1,042,186 - 35,172,703 - 4,378,314 4,378,314 Enterprise-water 356,942 Enterprise-wastewater 166,312 Non-major enterprise 72,549 250,379 416,640 40,563,460 4,628,693 Internal service Total non-major governmental funds - Water Non-major governmental Total water fund - 356,942 356,942 Wastewater Non-major governmental Total wastewater fund - 166,312 166,312 Non-major enterprise General 590,126 - Non-major governmental Total non-major enterprise funds 250,379 840,505 72,549 72,549 Internal service General 14,606,731 Non-major governmental Total internal service fund 14,606,731 Total $ 57,052,882 416,640 416,640 $ 57,052,882 Interfund transfers are made from various funds and cost centers to fund costs including dental and health insurance, computer replacement and debt service. 71 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 16 – Interfund Receivables and Payables A. Interfund Advances To/Advances From Advances To General Advances From Total Capital Projects-Community Services $ Capital Projects-Public Safety Buildings & Improvements 429,287 15,654,706 Capital Projects-Streets 7,870,000 Capital Projects-Public Buildings 4,369,352 Total General Fund 28,323,345 Enterprise Water Enterprise-Wastewater 3,900,000 Total $ 32,223,345 Interfund advances are made from the general fund to capital projects funds to cover expenditures in impact fee funds until impact fees are received. None will be repaid within one year. The interfund advance was made from the water enterprise fund to the wastewater system development fees fund of the wastewater enterprise to cover expenditures until system development fees are collected. Amounts to be repaid within one year total $650,000. B. Interfund Due To/Due From Due from other funds General Due to other funds Total Special Revenue-Grants $ 357,024 Special Revenue-Community Development Capital Projects-Grants Non-major governmental 193,600 46,086 Total general fund 596,710 Water 494,794 Total 72 $ 1,091,504 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2011 NOTE 17 – Joint Venture The City and the Town of Gilbert entered into an Intergovernmental Agreement (Agreement) for the design, construction and operation of a Joint Water Treatment Plant. Under the Agreement, the real property, plant infrastructure and raw water pipelines will be jointly owned with each party entitled to 50% of the plant capacity, and each party paying 50% of the construction costs. The Town of Gilbert acts as the Lead Agent, overseeing construction activities, which were substantially complete at June 30, 2011, and operating the plant. The City’s investment in the joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. Total Investment as of June 30, 2011, was: City of Chandler's Share $75,781,323 Town of Gilbert's Share 76,257,644 $152,038,967 NOTE 18 –Deficit in Fund Balances The grants special revenue fund and the police confiscated property fund had deficit balances of $238,222 and $40,635 respectively. The deficits will be covered by future revenues. The public buildings capital projects fund and the public safety buildings and improvements fund had deficit fund balances of $3,917,685 and $8,118,655 respectively. The funds were financed by advances of interfund loans and will be paid back by future impact fee revenues. 73 74 REQUIRED SUPPLEMENTARY INFORMATION 75 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Property taxes $ Sales taxes 9,561,000 $ 9,561,000 $ 9,666,908 $ 105,908 81,105,500 81,105,500 86,523,295 3,207,000 3,207,000 2,819,521 (387,479) 47,253,000 47,253,000 47,732,614 479,614 Licenses and permits 2,711,400 2,711,400 3,208,945 497,545 Charges for services 9,251,031 9,251,031 17,984,170 8,733,139 Fines and forfeitures 4,324,600 4,324,600 3,546,173 (778,427) Rentals 418,006 418,006 387,952 (30,054) Contributions 100,000 100,000 100,000 - Interest revenue 3,139,000 3,139,000 915,006 (2,223,994) Miscellaneous 2,204,181 2,204,181 4,080,151 1,875,970 163,274,718 163,274,718 176,964,735 13,690,017 22,100,779 24,546,388 22,368,806 2,177,582 713,363 750,981 661,927 89,054 Communications and public affairs 2,064,033 2,431,079 1,955,120 475,959 Law 3,131,590 3,204,260 3,158,761 45,499 City magistrate 3,902,212 3,977,302 3,699,772 277,530 47,819,326 39,749,093 10,546,211 29,202,882 816,160 830,508 724,850 105,658 Fire 27,273,998 27,470,123 26,627,982 842,141 Police 56,723,763 58,006,073 56,753,675 1,252,398 Transportation and development 17,396,020 19,084,940 17,755,546 1,329,394 Community services 22,615,194 24,049,272 23,232,727 816,545 204,556,438 204,100,019 167,485,377 36,614,642 (41,281,720) (40,825,301) 9,479,358 50,304,659 Franchise fees State shared Total revenues 5,417,795 EXPENDITURES: General government City manager City clerk Management services Mayor and council Public safety Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) Change in fund balance Fund balances, July 1, 2010 Fund balances, June 30, 2011 $ 25,000 25,000 11,066,900 11,066,900 (79,854,791) (79,948,348) (51,411,746) 28,536,602 (68,762,891) (68,856,448) (51,370,137) 17,486,311 (110,044,611) (109,681,749) (41,890,779) 67,790,970 198,465,017 198,465,017 198,465,017 88,420,406 See accompanying notes to this schedule. 76 $ 88,783,268 41,609 16,609 - $ 156,574,238 (11,066,900) $ 67,790,970 CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2011 NOTE 1 – Budgetary Basis of Accounting The adopted budget of the City is prepared on a basis consistent with accounting principles generally accepted in the United States of America with the following exception: reserved encumbrances at year end are recognized as expenditures. Consequently, the following adjustment is necessary to present the change in fund balance on a budgetary basis in order to provide a meaningful comparison. Change in Fund Balances Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds $ (36,120,705) Reserved encumbrances at June 30, 2011 recognized as budgetary expenditures in fiscal year ended June 30, 2011 Budgetary Comparison Schedule for the General Fund (5,770,074) $ (41,890,779) 77 CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2011 Arizona Public Safety Personnel Retirement System - Police Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 30-Jun 2008 2009 2010 (2) Projected Unit Credit Actuarial Accrued Liability (AAL) $ 66,242,859 74,018,711 81,082,048 $ 95,361,375 102,681,147 109,952,888 (3) Percent Funded (1)/(2) (4) Unfunded AAL (2) - (1) (5) Annual Covered Payroll (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 69.5% 72.1% 73.7% $ 29,118,516 28,662,436 28,870,840 $ 25,093,684 26,862,925 26,008,462 116.0% 106.7% 111.0% Arizona Public Safety Personnel Retirement System - Firefighters Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 30-Jun 2008 2009 2010 (2) Projected Unit Credit Actuarial Accrued Liability (AAL) $ 45,433,395 51,154,097 54,633,092 $ 58,745,529 62,888,943 66,930,524 (3) Percent Funded (1)/(2) (4) Unfunded AAL (2) - (1) (5) Annual Covered Payroll (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 77.3% 81.3% 81.6% $ 13,312,134 11,734,846 12,297,432 $ 14,906,063 15,408,927 15,328,067 89.3% 76.2% 80.2% (5) Annual Covered Payroll (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) Post-employment Benefits Other than Pensions Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 01-Jul 2007 2009 2011 (2) Projected Unit Credit Actuarial Accrued Liability (AAL) $ - $ 17,961,768 26,120,095 33,009,726 (3) Percent Funded (1)/(2) 0.0% 0.0% 0.0% 78 (4) Unfunded AAL (2) - (1) 17,961,768 26,120,095 33,009,726 87,610,241 98,508,058 93,253,195 20.5% 26.5% 35.4% OTHER FINANCIAL STATEMENTS 79 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Streets Capital Projects For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ System development fees Regional transportation tax Miscellaneous Total revenues 1,082,000 $ 1,082,000 $ 283,600 $ (798,400) 900,000 900,000 2,443,928 14,623,596 14,623,596 88,561 - - 92,602 16,605,596 16,605,596 2,908,691 2,084,048 13,207,237 - 13,207,237 1,543,928 (14,535,035) 92,602 (13,696,905) EXPENDITURES: General government Transportation and development 47,596,135 - - - Capital improvements 3,401,800 39,874,746 28,434,013 11,440,733 Total expenditures 53,081,983 53,081,983 28,434,013 24,647,970 (36,476,387) (36,476,387) (25,525,322) 10,951,065 16,674,596 16,674,596 1,042,185 (15,632,411) (14,674,596) (14,674,596) 2,000,000 2,000,000 1,042,185 (34,476,387) (34,476,387) (24,483,137) 49,169,828 49,169,828 49,169,828 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Change in fund balances Fund balances (deficits), July 1, 2010 Fund balances (deficits), June 30, 2011 $ 14,693,441 80 $ 14,693,441 - $ 24,686,691 14,674,596 (957,815) 9,993,250 $ 9,993,250 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Obligation Bonds Debt Service For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Property taxes $ Interest revenue 26,815,000 $ 26,815,000 $ 26,634,801 $ (180,199) 240,000 240,000 - (240,000) 27,055,000 27,055,000 26,634,801 (420,199) General government 17,326,958 17,326,958 - Principal 12,128,000 12,128,000 11,820,000 - - 165,433 11,545,904 11,545,904 11,470,107 75,797 41,000,862 41,000,862 23,455,540 17,545,322 (13,945,862) (13,945,862) 3,179,261 17,125,123 13,945,862 13,945,862 14,686,771 740,909 13,945,862 13,945,862 14,686,771 740,909 - - 17,866,032 17,866,032 49,169,828 49,169,828 49,169,828 - Total revenues EXPENDITURES: Bond issuance costs Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures 17,326,958 308,000 (165,433) Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances Fund balances (deficits), July 1, 2010 Fund balances (deficits), June 30, 2011 $ 49,169,828 81 $ 49,169,828 $ 67,035,860 $ 17,866,032 City of Chandler Combining Balance Sheet All Non-Major Governmental Funds - By Fund Type June 30, 2011 Total Non-Major Special Debt Capital Governmental Revenue Service Projects Funds 3,838,040 $ 46,287,741 $ 71,191,544 - 6,218,625 - 6,218,625 Notes 405,214 - - 405,214 Other 5,050 - - 5,050 ASSETS Equity in pooled cash and investments Receivables (net of allowance for uncollectible): $ 21,065,763 Special assessments Due from other funds - - 494,794 494,794 2,758,352 - 475,417 3,233,769 $ 24,234,379 $ 10,056,665 $ 47,257,952 $ 81,548,996 $ 696,673 $ 8,006 $ 3,495,758 $ Due from other governments Total assets $ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll Trust liabilities and deposits 4,200,437 147,161 - 8,763 155,924 4,907,439 - - 4,907,439 Accrued interest - 677,663 - 677,663 550,624 - 46,086 596,710 Advances from other funds - - 20,453,345 20,453,345 Arbitrage liability - - 28,573 28,573 Bonds payable - 2,875,000 - 2,875,000 Deferred revenue 180,000 5,800,330 - 5,980,330 Total liabilities 6,481,897 9,360,999 24,032,525 39,875,421 - - - - 18,031,339 695,666 35,261,767 53,988,772 Committed - - - - Assigned - - - - (278,857) - (12,036,340) (12,315,197) Due to other funds Fund Balances: Nonspendable Restricted Unassigned Total liabilities and fund balances $ 17,752,482 695,666 23,225,427 41,673,575 24,234,379 $ 10,056,665 $ 47,257,952 $ 81,548,996 82 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds - By Fund Type For the year ended June 30, 2011 Total Non-Major Special Debt Capital Governmental Revenue Service Projects Funds REVENUES: $ Highway user taxes Grants and entitlements 13,287,878 $ 4,992,484 - $ - $ 13,287,878 - 9,767,136 14,759,620 System development fees - - 4,295,992 4,295,992 Special assessments - 673,064 - 673,064 Charges for services - - 18,000 18,000 Fines and forfeitures 1,140,612 - - 1,140,612 Interest income 125,670 - 310,982 436,652 Miscellaneous 296,850 - 123,501 420,351 19,843,494 673,064 14,515,611 35,032,169 General government 2,732,485 - 1,891,691 4,624,176 Public safety 2,120,802 - - 2,120,802 Transportation and development 7,005,027 - - 7,005,027 Total revenues EXPENDITURES: Current: Community services 269,087 - 235,387 504,474 Capital improvements 3,585,021 - 40,666,752 44,251,773 Principal - 3,270,000 - 3,270,000 Bond issuance costs - - 113,079 113,079 Interest and fiscal charges - 1,431,509 - 1,431,509 15,712,422 4,701,509 42,906,909 63,320,840 4,131,072 (4,028,445) (28,391,298) (28,288,671) Bond premium - - 135,079 135,079 Face amount of bonds issued - - 9,925,000 9,925,000 Proceeds from disposal of capital assets - - 67,320 67,320 21,825,680 25,876,689 Debt service: Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out Total other financing sources (uses) - 4,051,009 (4,593,380) - (4,593,380) 4,051,009 31,917,766 31,375,395 (462,308) 22,564 3,526,468 3,086,724 673,102 19,698,959 38,586,851 (35,313) (4,628,693) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES FUND BALANCES: Beginning of year 18,214,790 $ End of year 83 17,752,482 $ 695,666 $ 23,225,427 $ 41,673,575 84 City of Chandler Non-Major Governmental Funds NON-MAJOR SPECIAL REVENUE FUNDS A Special Revenue Fund is used to finance particular activities and is created out of receipts of specific taxes or other earmarked revenues. Such funds are authorized by statutory or charter provisions to pay for certain activities with some special form of continuing revenues. Highway User Used to account for the receipt and expenditure of the City’s allocation of State highway user taxes. State law restricts the use of these monies to maintenance, construction and reconstruction of streets, and repayment of transportation-related debt. Local Transportation Assistance Used to account for the receipt and expenditure of the City’s allocation of State lottery monies. State law restricts the use of these monies to street and highway projects in the public right-of-way and to mass transportation purposes. Grants Used to account for the receipt and expenditure of miscellaneous federal and state grants awarded to the City for various, specific operational purposes. Community Development Used to account for monies received from the U.S. Department of Housing and Urban Development and Maricopa County for affordable housing activities including housing rehabilitation and redevelopment activities. Police Confiscated Property Used to account for monies confiscated by the police department and monies received from the sale of confiscated property. Parks and Recreation Use to account for donations for park improvements and programs restricted pursuant to donor covenants. Library Used to account for donations for library improvements and programs restricted pursuant to donor covenants. NON-MAJOR DEBT SERVICE FUNDS Highway User Revenue Bonds Accumulates monies for the payment of principal and interest requirements of the City's Highway User Revenue Bonds. Revenues for repayment are generated from gas tax generated within the State of Arizona. Special Assessment Bonds Accumulates monies for the payment of principal and interest on Special Assessment Bonds that were issued to finance costs of improvements applicable to benefiting properties within certain improvement districts. 85 City of Chandler Non-Major Governmental Funds, Continued CAPITAL PROJECTS FUNDS General Government Used to account for the acquisition, construction, reconstruction, improvement and renovation of general government projects. Public Buildings Used to account for bond proceeds used for the acquisition, construction, reconstruction, improvement and renovation of City buildings. Grants Used to account for the receipt and expenditure of miscellaneous federal and state grants awarded to the City for various, specific capital purposes. Community Services Used to account for the acquisition of land and equipment, development, construction and improvement of community parks and projects. Public Safety Buildings and Improvements Used to account for public safety, e.g., police and fire department, building construction, renovation and improvements and equipment purchases Vehicle and Capital Equipment Replacement Used to account for the purchase and/or replacement of general equipment-type assets, e.g., vehicles, furniture, office equipment. Special Assessments Used to account for expenditures related to special assessment districts within the City. Computer Purchases Used to account for the purchase and/or replacement of computer equipment. Municipal Arts Used to account for amounts earmarked for the acquisition of art for public spaces. 86 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2011 Special Revenue Local Police Highway Transportation User Assistance Community Confiscated Grants Development Parks and Property Recreation Library - $ 4,302,687 $ 268,574 $ 45,190 - - ASSETS Equity in pooled cash and investments $ 13,803,868 $ 2,645,444 $ - $ Receivables (net of allowance for uncollectible): Special assessments receivable - - - - - Notes receivable - current - - - 405,214 - - - Other receivables - - - - - 4,000 1,050 Due from other funds - - - - - - - 1,206,409 - 415,668 510,032 626,243 - - $ 15,010,277 $ 2,645,444 $ 415,668 $ 915,246 $ 4,928,930 $ 272,574 $ 46,240 $ $ 554 $ 100,024 $ 266,908 $ $ $ 103,374 - 16,842 26,945 - - - - - - - 4,907,439 - - Due from other governments Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll Trust liabilities and deposits 263,190 62,126 1,897 1,974 Accrued interest - - - - - - - Due to other funds - - 357,024 193,600 - - - Advances from other funds - - - - - - - Arbitrage liability - current Bonds payable - current Deferred revenue - - 180,000 - - - - Total liabilities 366,564 554 653,890 487,453 4,969,565 1,897 1,974 14,643,713 - 2,644,890 - (238,222) 427,793 - (40,635) 270,677 - 44,266 - 14,643,713 2,644,890 (238,222) 427,793 (40,635) 270,677 44,266 Total liabilities and fund balances $ 15,010,277 $ 2,645,444 $ 272,574 $ 46,240 Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances (deficits) $ 415,668 $ 915,246 $ 4,928,930 (Continued) 87 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2011 Debt Service Capital Projects Special Highway User Assessment General Public Revenue Bonds Bonds Government Buildings Grants ASSETS Equity in pooled cash and investments $ 3,428,863 $ 409,177 $ 656,246 $ 456,333 $ - Receivables (net of allowance for uncollectible): Special assessments - 6,218,625 - - - Notes - - - - - Other - - - - - - - - - 494,794 - - - - 475,417 Due from other funds Due from other governments Total assets $ 3,428,863 $ 6,627,802 $ 656,246 $ 456,333 $ 970,211 $ - $ 8,006 $ 653,988 $ 4,655 $ 760,966 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll - - 2,258 - 4,155 Trust liabilities and deposits - - - - - 553,863 123,800 - - - Due to other funds - - - - 46,086 Advances from other funds - - - 4,369,352 - Arbitrage liability - current Bonds payable - current Deferred revenue 2,875,000 - 5,800,330 - 11 - - Total liabilities 3,428,863 5,932,136 656,246 4,374,018 811,207 - 695,666 - - (3,917,685) 159,004 - - 695,666 - (3,917,685) 159,004 Accrued interest Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances (deficits) Total liabilities and fund balances $ 3,428,863 $ 6,627,802 88 $ 656,246 $ 456,333 $ 970,211 Capital Projects Public Safety Community Services Improvements $ 13,322,783 Vehicle and Total Other Buildings and Capital Equipment $ 8,977,650 Special Computer Municipal Governmental Assessments Purchases Arts Funds 14,963,050 $ 4,751,728 $ 2,733,763 Replacement $ $ 426,188 $ 71,191,544 - - - - - - 6,218,625 - - - - - - 405,214 - - - - - - 5,050 - - - - - - 494,794 - - - - - - 3,233,769 $ 4,751,728 $ 2,733,763 $ 426,188 $ 81,548,996 $ $ $ 732 $ 4,200,437 $ 13,322,783 $ 8,977,650 $ 14,963,050 $ $ 1,440,436 $ 244,168 232,961 37 157,815 - - - 2,350 - - 155,924 - - - - - - 4,907,439 - - - - - - 677,663 - - - - - - 596,710 429,287 15,654,706 - - - - 20,453,345 27,399 - 1,163 - - - - - 28,573 2,875,000 5,980,330 689,647 17,096,305 244,168 2,387 157,815 732 39,875,421 12,633,136 - (8,118,655) 14,718,882 - 4,749,341 - 2,575,948 - 425,456 - 53,988,772 (12,315,197) 12,633,136 (8,118,655) 14,718,882 4,749,341 2,575,948 425,456 41,673,575 14,963,050 $ 4,751,728 $ 2,733,763 $ 13,322,783 $ 8,977,650 $ $ 426,188 $ 81,548,996 (Concluded) 89 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2011 Special Revenue Local Police Highway Transportation User Assistance Grants Community Confiscated Parks and Development Property Recreation Library $ $ REVENUES: Highway user taxes $ 13,287,878 $ - $ - $ - $ - - - Grants and entitlements - 196,785 2,803,869 1,991,830 - - - System development fees - - - - - - - Special assessments - - - - - - - Charges for services - - - - - - - Fines and forfeitures - - - - 1,140,612 - - 102,934 16,682 3,662 175 - 1,862 355 2,194 183,937 8,418 - - 69,143 33,158 13,393,006 397,404 2,815,949 1,992,005 1,140,612 71,005 33,513 General government - - 1,033,293 1,699,192 - - - Public safety - - 1,182,983 - 937,819 - - Interest revenue Miscellaneous Total revenues EXPENDITURES: Current: Transportation and development 6,689,840 315,187 - - - - - Community services - - 180,049 - - 68,298 20,740 Capital improvements 2,646,714 91,817 394,212 224,064 228,214 - - - - - - - - - 9,336,554 407,004 2,790,537 1,923,256 1,166,033 68,298 20,740 25,412 68,749 2,707 12,773 Debt service: Principal Bond issuance costs Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES 4,056,452 OTHER FINANCING SOURCES (USES): Bond Premium Face amount of bonds issued (9,600) (25,421) - - - - - - - Proceeds from disposal of capital assets - - - - - - - Transfers in - - - - - - - Transfers out Total other financing sources (uses) (4,337,624) (5,377) - (250,379) - - - (4,337,624) (5,377) - (250,379) - - - (281,172) (14,977) 25,412 (181,630) 2,707 12,773 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (25,421) FUND BALANCES (DEFICITS): Beginning of year End of year 14,924,885 $ 14,643,713 $ 2,659,867 (263,634) 2,644,890 $ (238,222) 90 609,423 $ 427,793 (15,214) $ (40,635) $ 267,970 31,493 270,677 $ 44,266 Debt Service Capital Projects Special Highway User Assessment General Public Revenue Bonds Bonds Government Buildings $ - $ $ - $ - $ Services - $ - - - - - 9,767,136 - - - - 291,779 - 3,200,040 - 673,064 - - - - - - - - - - - - - - - - - - - - - 100,913 - - 104,149 - 1,724 - - 673,064 104,149 291,779 9,768,860 3,300,953 - - 1,490,547 - 22,838 - - - - - - - - - - - - - - - - - - - - - 13,394,586 3,199,069 8,743,270 7,244,190 2,875,000 1,176,009 395,000 255,500 - - - 79,867 - 4,051,009 650,500 14,885,133 3,199,069 8,766,108 7,324,057 (4,051,009) 22,564 (14,780,984) (2,907,290) 1,002,752 (4,023,104) - - - - - 95,406 7,010,000 - 4,051,009 - 14,780,984 - - - - - - - - - 4,051,009 - 14,780,984 - - 7,105,406 - 22,564 - 1,002,752 3,082,302 $ - Community Grants - 673,102 $ 695,666 (2,907,290) $ - (1,010,395) $ (843,748) (3,917,685) $ 159,004 9,550,834 $ 12,633,136 (Continued) 91 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2011 Capital Projects Public Safety Vehicle and Total Other Buildings and Capital Equipment Improvements Replacement Special Computer Municipal Governmental Assessments Purchases Arts Funds REVENUES: Highway user taxes $ Grants and entitlements - $ - System development fees - $ - - $ - - $ - - $ 13,287,878 - 14,759,620 804,173 - - - - 4,295,992 Special assessments - - - - - 673,064 Charges for services - - - - 18,000 18,000 Fines and forfeitures - - - - - 1,140,612 56,653 101,827 31,665 18,089 1,835 436,652 - 11,676 5,952 - - 420,351 860,826 113,503 37,617 18,089 19,835 35,032,169 General government - - 97,148 281,158 - 4,624,176 Public safety - - - - - 2,120,802 Transportation and development - - - - - 7,005,027 Community services - - - - 235,387 504,474 Capital improvements 5,744,489 539,228 - 1,783,560 18,360 44,251,773 33,212 - - - - - 3,270,000 113,079 1,431,509 5,777,701 539,228 97,148 2,064,718 253,747 63,320,840 (4,916,875) (425,725) (59,531) (2,046,629) (233,912) (28,288,671) Interest income Miscellaneous Total revenues EXPENDITURES: Current: Debt service: Principal Bond issuance costs Interest and fiscal charges Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Bond premium Face amount of bonds issued 39,673 2,915,000 - - - 135,079 9,925,000 - Proceeds from disposal of capital assets - 67,320 - - - 67,320 Transfers in - 4,510,153 - 2,534,543 - 25,876,689 - - - (4,628,693) - 2,534,543 - 31,375,395 Transfers out - Total other financing sources (uses) (35,313) 2,954,673 4,542,160 (1,962,202) 4,116,435 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (59,531) 487,914 (233,912) 3,086,724 FUND BALANCES (DEFICITS): Beginning of year End of year (6,156,453) $ (8,118,655) 10,602,447 $ 14,718,882 4,808,872 $ 4,749,341 2,088,034 $ 2,575,948 659,368 $ 425,456 38,586,851 $ 41,673,575 (Concluded) 92 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Highway User Special Revenue For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Highway user taxes $ 13,000,000 $ 13,000,000 5,157 5,157 - (5,157) 243,000 243,000 102,934 (140,066) - - 2,194 2,194 13,248,157 13,248,157 13,393,006 144,849 General government 3,963,321 4,800,229 - 4,800,229 Transportation and development 9,923,062 7,918,291 7,185,297 732,994 Capital improvements 3,773,150 4,941,013 3,971,517 969,496 17,659,533 17,659,533 11,156,814 6,502,719 (4,411,376) (4,411,376) 2,236,192 6,647,568 (4,336,664) (4,336,664) (4,337,624) (960) (4,336,664) (4,336,664) (4,337,624) (960) Change in fund balances (8,748,040) (8,748,040) (2,101,432) Fund balances, July 1, 2010 14,924,885 14,924,885 14,924,885 6,176,845 $ 6,176,845 Charges for services Interest revenue Miscellaneous Total revenues $ 13,287,878 $ 287,878 EXPENDITURES: Current: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Fund balances, June 30, 2011 $ 93 $ 12,823,453 6,646,608 $ 6,646,608 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Local Transportation Assistance Special Revenue For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ - $ - $ 196,785 $ 196,785 Interest revenue 44,000 44,000 16,682 (27,318) Miscellaneous 57,000 57,000 183,937 126,937 101,000 101,000 397,404 296,404 780,400 625,524 - 625,524 1,236,266 1,152,615 316,571 836,044 339,132 577,659 130,402 447,257 2,355,798 2,355,798 446,973 1,908,825 (2,254,798) (2,254,798) (49,569) 2,205,229 (5,377) (5,377) (5,377) - (5,377) (5,377) (5,377) - (2,260,175) (2,260,175) (54,946) 2,205,229 2,659,867 2,659,867 Total revenues EXPENDITURES: Current: General government Transportation and development Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2010 Fund balances, June 30, 2011 $ 399,692 94 $ 399,692 2,659,867 $ 2,604,921 $ 2,205,229 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Special Revenue For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 35,164,235 $ 35,164,235 $ 2,803,866 $ (32,360,369) Interest revenue - - 3,662 Miscellaneous - - 8,418 35,164,235 35,164,235 2,815,946 (32,348,289) General government 5,119,550 6,033,029 1,426,320 4,606,709 Public safety 2,500,000 2,797,622 1,224,390 1,573,232 14,411,474 - - - 1,105,602 1,130,622 189,421 941,201 14,612,107 28,270,155 3,179,010 25,091,145 37,748,733 38,231,428 6,019,141 32,212,287 Change in fund balances (2,584,498) (3,067,193) (3,203,195) (136,002) Fund balances (deficits), July 1, 2010 (1,107,382) (1,107,382) (1,107,382) - Total revenues 3,662 8,418 EXPENDITURES: Current: Transportation and development Community services Capital improvements Total expenditures Fund balances (deficits), June 30, 2011 $ (3,691,880) 95 $ (4,174,575) $ (4,310,577) $ (136,002) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Development Special Revenue For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 4,500,000 Interest revenue Total revenues $ 4,500,000 $ 1,991,831 $ (2,508,169) - - 175 4,500,000 4,500,000 1,992,006 (2,507,994) 5,210,100 5,642,163 2,595,081 3,047,082 380,000 597,917 418,707 179,210 5,590,100 6,240,080 3,013,788 3,226,292 (1,090,100) (1,740,080) (1,021,782) - - (250,379) (250,379) - - (250,379) (250,379) (1,090,100) (1,740,080) (1,272,161) 175 EXPENDITURES: Current: General government Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures 718,298 Other financing sources (uses): Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2010 Fund balances (deficits), June 30, 2011 609,423 $ (480,677) 96 609,423 $ (1,130,657) 467,919 609,423 $ (662,738) $ 467,919 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Police Confiscated Property Special Revenue For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Fines and forfeitures $ Total revenues 3,000,000 $ 3,000,000 $ 1,140,612 $ (1,859,388) 3,000,000 3,000,000 1,140,612 (1,859,388) 67,000 - - - 2,020,000 2,222,484 977,982 1,244,502 980,000 1,009,878 353,741 656,137 3,067,000 3,232,362 1,331,723 1,900,639 EXPENDITURES: Current: General government Public safety Capital improvements Total expenditures Change in fund balances (67,000) (232,362) (191,111) 41,251 Fund balances, July 1, 2010 (15,214) (15,214) (15,214) - Fund balances, June 30, 2011 $ (82,214) 97 $ (247,576) $ (206,325) $ 41,251 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Parks and Recreation Special Revenue For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ Miscellaneous 4,000 $ 4,000 $ 1,862 $ (2,138) 52,750 52,750 69,143 16,393 56,750 56,750 71,005 14,255 General government 8,800 8,262 - 8,262 Community services 159,931 160,469 68,301 92,168 168,731 168,731 68,301 100,430 (111,981) (111,981) 2,704 114,685 267,970 267,970 267,970 - Total revenues EXPENDITURES: Current: Total expenditures Change in fund balances Fund balances, July 1, 2010 Fund balances, June 30, 2011 $ 155,989 98 $ 155,989 $ 270,674 $ 114,685 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Special Revenue For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ Miscellaneous Total revenues 1,000 $ 1,000 $ 355 $ (645) 55,000 55,000 33,158 (21,842) 56,000 56,000 33,513 (22,487) 1,000 1,000 - 1,000 EXPENDITURES: Current: General government Community services Total expenditures 55,000 55,000 20,740 34,260 56,000 56,000 20,740 35,260 - - 12,773 12,773 31,493 31,493 31,493 - Change in fund balances Fund balances, July 1, 2010 Fund balances, June 30, 2011 $ 31,493 99 $ 31,493 $ 44,266 $ 12,773 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Government Capital Projects For the year ended June 30, 2011 Total Budgeted Amounts Original Final Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Miscellaneous $ - Total revenues $ - - $ - 104,149 $ 104,149 104,149 104,149 EXPENDITURES: Current: General government Public safety Transportation and development Community services $ Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures 26,308,471 3,000,000 1,089,297 1,580,289 $ 14,052,505 66,000 - $ 3,382,389 22,045 - $ 10,670,116 43,955 - 5,941,940 23,959,839 19,630,804 4,329,035 37,919,997 38,078,344 23,035,238 15,043,106 (37,919,997) (38,078,344) (22,931,089) (14,938,957) 37,919,997 37,919,997 14,780,984 (23,139,013) 37,919,997 37,919,997 14,780,984 (23,139,013) Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances - (158,347) (8,150,105) (38,077,970) Fund balances, July 1, 2010 - - - - Fund balances (deficit), June 30, 2011 $ - 100 $ (158,347) $ (8,150,105) $ (38,077,970) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Buildings Capital Projects For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 141,107 $ 141,107 $ 291,779 $ 150,672 97,000 97,000 - 238,107 238,107 291,779 53,672 7,669,221 1,336,219 - 1,336,219 (97,000) EXPENDITURES: Current: General government Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures - 6,333,002 3,209,627 3,123,375 7,669,221 7,669,221 3,209,627 4,459,594 (7,431,114) (7,431,114) (2,917,848) 4,513,266 Other financing sources (uses): Transfers in 5,009,779 5,009,779 - (5,009,779) 5,009,779 5,009,779 - (5,009,779) Change in fund balances (2,421,335) (2,421,335) (2,917,848) (496,513) Fund balances (deficits), July 1, 2010 (1,010,395) (1,010,395) (1,010,395) - Total other financing sources (uses) Fund balances (deficits), June 30, 2011 $ (3,431,730) 101 $ (3,431,730) $ (3,928,243) $ (496,513) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants Capital Projects For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ - $ - $ 9,767,136 $ 9,767,136 Interest revenue - - - Miscellaneous - - 1,724 1,724 - - 9,768,860 9,768,860 General government - - 22,838 (22,838) Public safety - - - - Transportation and development - - - - Community services - - - - Capital improvements - - 8,743,270 (8,743,270) - - 8,766,108 (8,766,108) - - 1,002,752 1,002,752 (1,107,382) (1,107,382) Total revenues - EXPENDITURES: Current: Total expenditures Change in fund balances Fund balances (deficits), July 1, 2010 Fund balances (deficits), June 30, 2011 $ (1,107,382) 102 $ (1,107,382) (1,107,382) $ (104,630) $ 1,002,752 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Services Capital Projects For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 2,287,400 $ 2,287,400 $ 3,200,040 $ 912,640 194,500 194,500 100,913 2,481,900 2,481,900 3,300,953 819,053 20,355,827 2,017,807 6,076,348 - 6,076,348 550,000 16,802,355 8,206,726 8,595,629 22,923,634 22,878,703 8,206,726 14,671,977 (20,441,734) (20,396,803) (4,905,773) 15,491,030 (93,587) EXPENDITURES: Current: Community services General government Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Bond premium Face amount of bonds issued Transfers in Transfers out Total other financing sources (uses) Change in fund balances Fund balances (deficits), July 1, 2010 Fund balances (deficits), June 30, 2011 $ - - 95,406 11,700,000 11,700,000 7,010,000 (4,690,000) (5,000,000) 95,406 5,000,000 5,000,000 - (8,000,000) (8,000,000) - 8,700,000 8,700,000 7,105,406 (1,594,594) (11,741,734) (11,696,803) 2,199,633 13,896,436 9,550,834 9,550,834 9,550,834 - (2,190,900) 103 $ (2,145,969) $ 11,750,467 8,000,000 $ 13,896,436 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Safety Buildings and Improvements Capital Projects For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 433,400 $ 433,400 $ 804,172 $ 370,772 185,000 185,000 56,653 (128,347) 618,400 618,400 860,825 242,425 541,352 17,517,664 1,958,475 - - 1,958,475 - - 16,100,541 7,939,168 8,161,373 18,059,016 18,059,016 7,939,168 10,119,848 (17,440,616) (17,440,616) (7,078,343) 10,362,273 EXPENDITURES: Current: General government Public safety Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Bond premium - - 39,673 8,545,000 8,545,000 2,915,000 (5,630,000) 8,545,000 8,545,000 2,954,673 (5,590,327) Change in fund balances (8,895,616) (8,895,616) (4,123,670) 4,771,946 Fund balances (deficits), July 1, 2010 (6,156,453) (6,156,453) (6,156,453) - (15,052,069) $ (15,052,069) Proceeds from the issuance of debt Total other financing sources (uses) Fund balances (deficits), June 30, 2011 $ 104 $ (10,280,123) 39,673 $ 4,771,946 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Vehicle and Capital Equipment Capital Projects For the year ended June 30, 2011 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ Miscellaneous 133,000 $ 133,000 $ 101,827 $ (31,173) 10,000 10,000 11,676 1,676 143,000 143,000 113,503 (29,497) General government 1,927,166 1,765,093 - 1,765,093 Capital improvements 2,253,000 2,454,751 847,896 1,606,855 4,180,166 4,219,844 847,896 3,371,948 (4,037,166) (4,076,844) (734,393) 3,342,451 Total revenues EXPENDITURES: Current: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from disposal of capital assets Transfers in Transfers out 40,000 40,000 67,320 27,320 2,920,166 2,920,166 4,510,153 1,589,987 (35,313) Total other financing sources (uses) (35,313) (35,313) - 2,924,853 2,924,853 4,542,160 1,617,307 Change in fund balances (1,112,313) (1,151,991) 3,807,767 4,959,758 Fund balances, July 1, 2010 10,119,978 10,119,978 10,119,978 - 9,007,665 $ 8,967,987 $ 13,927,745 Fund balances, June 30, 2011 $ 105 $ 4,959,758 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Special Assessments Capital Projects For the year ended June 30, 2011 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ 75,000 Miscellaneous Total revenues $ 75,000 $ 31,665 $ (43,335) - - 5,952 5,952 75,000 75,000 37,617 (37,383) 96,372 96,953 97,148 (195) 96,372 96,953 97,148 (195) (21,372) (21,953) (59,531) EXPENDITURES: Current: General government Total expenditures Change in fund balances Fund balances, July 1, 2010 Fund balances, June 30, 2011 4,808,872 $ 4,787,500 106 4,808,872 $ 4,786,919 (37,578) 4,808,872 $ 4,749,341 $ (37,578) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Computer Purchases Capital Projects For the year ended June 30, 2011 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ Total revenues 38,000 $ 38,000 $ 18,090 $ (19,910) 38,000 38,000 18,090 (19,910) General government 2,050,208 1,519,368 289,407 Capital improvements 1,951,090 2,442,252 2,039,037 403,215 4,001,298 3,961,620 2,328,444 1,633,176 (3,963,298) (3,923,620) (2,310,354) (1,653,086) 2,410,641 2,410,641 2,534,543 123,902 2,410,641 2,410,641 2,534,543 123,902 (1,552,657) (1,512,979) 2,088,034 EXPENDITURES: Current: Total expenditures Excess (deficiency) of revenues over expenditures 1,229,961 Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2010 Fund balances, June 30, 2011 $ 535,377 107 $ 224,189 (1,529,184) 2,088,034 2,088,034 - 575,055 $ 2,312,223 $ (1,529,184) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Municipal Arts Capital Projects For the year ended June 30, 2011 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Charges for services $ Interest revenue - $ - $ 18,000 $ 18,000 12,000 12,000 1,835 (10,165) 12,000 12,000 19,835 7,835 General government 130,000 50,000 - 50,000 Community services 225,000 349,931 330,655 19,276 - - 18,360 (18,360) 355,000 399,931 349,015 50,916 (343,000) (387,931) (329,180) 58,751 659,368 659,368 659,368 Total revenues EXPENDITURES: Current: Capital improvements Total expenditures Change in fund balances Fund balances , July 1, 2010 Fund balances , June 30, 2011 $ 316,368 108 $ 271,437 $ 330,188 $ 58,751 109 110 City of Chandler Non-Major Proprietary Funds Solid Waste Used to account for the provision of solid waste (refuse) services to the residential customers of the City. All activities necessary to provide such service are accounted for in this fund. Airport Used to account for the provision of airport services at the City's municipal airport. All activities necessary to provide such service are accounted for in this fund, including but not limited to administration, operation, maintenance, financing, and related debt service, billing, and collection. Chandler Housing Authority Used to account for expenditures of the City's housing assistance programs which consist of housing owned and operated by the City and rent subsidy payments to private sector owners of dwelling units. Financing for this fund is derived from tenants and the United States Department of Housing and Urban Development. 111 City of Chandler Combining Statement of Net Assets Non-Major Proprietary Funds June 30, 2011 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds ASSETS Current assets: Equity in pooled cash and investments $ 11,359,511 $ 134,445 $ 3,793,415 $ 15,287,371 2,011,568 91,185 30,091 2,132,844 Due from other governments - - 16,454 16,454 Inventories - 37,115 - 37,115 Prepaid items - - 368,236 368,236 80,007 5,597 - 85,604 13,451,086 268,342 4,208,196 17,927,624 Other assets - 1,362 - 1,362 Notes receivable - long term - - 363,450 363,450 Non-depreciable 7,088,918 18,995,066 1,597,897 27,681,881 Depreciable, net 9,730,077 11,683,667 7,305,115 28,718,859 16,818,995 30,678,733 8,903,012 56,400,740 16,818,995 30,680,095 9,266,462 56,765,552 30,270,081 30,948,437 13,474,658 74,693,176 782,031 39,099 26,578 847,708 Accrued payroll 45,891 18,365 46,396 110,652 Trust liabilities and deposits 16,129 45,835 181,537 243,501 Accounts receivable Other receivables Total current assets Noncurrent assets: Capital assets: Total capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable 112 Accrued interest - 2,794 - 168,543 9,250 - 2,794 177,793 4,020 2,725 4,495 11,240 - 20,000 - 20,000 Deferred bond premium - current - 196 - 196 Arbitrage liability - current - 4 - 4 394,950 - - 394,950 1,411,564 138,268 259,006 1,808,838 66,022 44,755 73,838 184,615 - 161,000 - 161,000 Unearned revenue Compensated absences payable - current Bonds payable - current Landfill closure and postclosure liability - current Total current liabilities Noncurrent liabilities: Compensated absences payable - long term Bonds payable - long term Deferred bond premium - long term OPEB liability - long term Arbitrage liability - long term Landfill closure and postclosure liability - long term Total noncurrent liabilities Total liabilities - 3,134 - 3,134 34,553 13,122 - 47,675 - 4 - 4 3,945,050 - - 3,945,050 4,045,625 222,015 73,838 4,341,478 5,457,189 360,283 332,844 6,150,316 16,818,995 30,626,787 8,903,012 56,348,794 4,238,802 12,194,066 NET ASSETS Invested in capital assets, net of related debt 7,993,897 Unrestricted Total net assets $ 24,812,892 (38,633) $ 30,588,154 113 $ 13,141,814 $ 68,542,860 City of Chandler Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Non-Major Proprietary Funds For the year ended June 30, 2011 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: Service fees $ 13,277,403 $ 995,307 $ - $ 14,272,710 Grants and entitlements - - 6,297,200 6,297,200 Rentals - - 457,781 457,781 Miscellaneous - 9,302 400,352 409,654 13,277,403 1,004,609 7,155,333 21,437,345 Total operating revenues OPERATING EXPENSES: General and administrative 1,416,800 100,000 - 1,516,800 Personal services 1,437,545 526,110 1,447,727 3,411,382 Contractual services 9,139,526 46,083 195,633 9,381,242 840,897 637,127 543,215 2,021,239 - - 4,819,261 4,819,261 608,334 777,983 574,947 1,961,264 13,443,102 2,087,303 7,580,783 23,111,188 Commodities Housing assistance payments Depreciation and amortization expense Total operating expenses OPERATING INCOME (LOSS) (165,699) (1,082,694) (425,450) (1,673,843) NONOPERATING REVENUES (EXPENSES): Interest revenue 77,554 Interest expense - Accretion of bond premium - 196 - Amortization of bond issuance costs - (80) - (80) Gain (loss) on disposal of capital assets - (14,383) - (14,383) 77,554 (18,824) 30,588 Total nonoperating revenues (expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 1,031 (88,145) 109,173 30,588 (5,588) (5,588) - (1,101,518) 196 89,318 (394,862) (1,584,525) CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions Transfers in Transfers out 60,990 500,463 11,868 573,321 - 305,126 535,379 840,505 (64,913) Total transfers Net income (loss) (7,636) (72,549) - (3,923) 797,953 547,247 (92,068) (303,565) 152,385 1,341,277 (243,248) NET ASSETS Beginning of year 24,904,960 End of year $ 114 24,812,892 30,891,719 $ 30,588,154 68,786,108 12,989,429 $ 13,141,814 $ 68,542,860 115 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2011 Solid Waste CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash received from grantors Cash payments to suppliers Cash payments to employees for services $ 13,048,167 (11,411,640) (1,417,766) Net cash provided (used) by operating activities Airport $ 921,353 (772,489) (508,533) Chandler Housing Authority $ 544,105 6,314,065 (5,231,072) (1,438,771) Total Other Proprietary Funds $ 14,513,625 6,314,065 (17,415,201) (3,365,070) 218,761 (359,669) 188,327 47,419 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out (64,913) 305,126 (7,636) 535,379 - 840,505 (72,549) Net cash provided (used) by noncapital financing activities (64,913) 297,490 535,379 767,956 (262,247) (817,199) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets - (554,952) Principal paid on bond maturities - (20,000) - (20,000) (57,102) 60,990 (5,968) (4,734) 500,463 11,868 (5,968) (61,836) 573,321 3,888 (85,191) (250,379) (331,682) 77,554 1,031 30,588 109,173 77,554 1,031 30,588 109,173 503,915 592,866 280,784 3,289,500 14,694,505 134,445 $ 3,793,415 Interest paid on bonds Cash payments to other funds Capital contributions Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of year End of year 235,290 (146,339) 11,124,221 $ 11,359,511 116 $ $ 15,287,371 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 operating activities: Depreciation and amortization Changes in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in other assets Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits Increase (decrease) in unearned revenue $ Increase (decrease) in other liabilities Total adjustments Net cash provided (used) by operating activities NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Loss on disposal of assets Accretion of bond premiums Amortization of bond issuance costs (165,699) $ (1,082,694) $ (425,450) $ (1,673,843) 608,334 777,983 574,947 1,961,264 (221,075) (14,417) 6,316 (383) (7,778) (92,007) (27,476) 81 38,197 13,228 (580) 9,250 35,013 9,381 (24,101) 18,537 - 13,463 4,349 - 17,812 384,460 723,025 613,777 1,721,262 (278,069) (27,476) 9,462 (321) 19,544 17,574 1,472 $ 218,761 $ (359,669) $ 188,327 $ 47,419 $ - $ 14,383 196 80 $ - $ 14,383 196 80 117 City of Chandler Statement of Changes in Assets and Liabilities - Agency Fund Fiduciary Funds For the year ended June 30, 2011 Balance Balance July 1, 2010 Additions Deletions June 30, 2011 Miscellaneous Deposit Fund Assets: Equity in pooled cash and investments Total assets $ 9,500 $ 8,000 $ (1,000) $ 16,500 $ 9,500 $ 8,000 $ (1,000) $ 16,500 $ 9,500 $ 8,000 $ (1,000) $ 16,500 $ 9,500 $ 8,000 $ (1,000) $ 16,500 Liabilities: Due to others Total liabilities 118 119 120 City of Chandler Financial Data Schedule Housing and Redevelopment For the year ended June 30, 2011 AS SUBMITTED ELECTRONICALLY TO: U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT REAL ESTATE ASSESSMENT CENTER (REAC) The Financial Data Schedule is a required electronic submission to the U.S. Department of Housing and Urban Development by all Housing Authorities receiving HUD funding. Financial data on each of the grant programs is presented in a combining schedule. The Financial Data Schedule presented herein has been submitted electronically to HUD. The activities of the City of Chandler Housing and Redevelopment Division are reported as an enterprise fund in the City's Comprehensive Annual Financial Report. 121 City of Chandler Financial Data Schedule Housing and Redevelopment June 30, 2011 Combining statement of net assets - all HUD programs Low Rent Public Housing AMP 1 14.850a FDS line # AMP 2 14.850a All AMPs 14.850a Account description ASSETS 111 113 114 122 124 125 126 126.1 127 142 161 162 164 166 167 171 Cash - unrestricted Cash - restricted for FSS escrow accounts Cash - security deposits $ Accounts receivable - HUD other projects Accounts receivable - other governments Accounts receivable - miscellaneous Accounts receivable - tenants - dwelling rents Allowance for doubtful accounts - dwelling rents Notes and mortgages receivable - current Prepaid expenses and other assets Land Buildings Furniture, equipment, machinery - admin Accumulated depreciation Construction in progress Notes and mortgages receivable - non-current Total assests $ 758,008 55,653 $ 326,213 56,860 $ 1,084,221 112,513 8,852 12,142 (2,668) - 7,603 10,512 (3,185) - 16,455 22,654 (5,853) - 1,932,844 4,943,244 175,545 (5,152,449) - 1,582,289 8,748,390 60,105 (4,149,533) - 3,515,133 13,691,634 235,650 (9,301,982) - 2,731,171 $ 6,639,254 $ 9,370,425 LIABILITIES 312 321 322 341 342 345 Accounts payable Accrued wage/payroll taxes payable Accrued compensated absences - current Tenant security deposits Deferred revenues Other current liabilities 13,193 12,816 631 55,653 4,178 6,256 8,604 639 56,860 4,067 19,449 21,420 1,270 112,513 8,245 353 354 Noncurrent liabilities - other Accrued compensated absences - noncurrent 10,364 10,492 20,856 96,835 86,918 183,753 1,899,184 735,152 6,241,251 311,085 8,140,435 1,046,237 2,634,336 6,552,336 9,186,672 Total liabilities NET ASSETS 508.1 511.1 512.1 Invested in capital assets, net of related debt Restricted net assets Unrestricted net assets Total net assets Total liabilities and net assets $ 122 2,731,171 $ 6,639,254 $ 9,370,425 Business Activities Central Office 14.850a $ $ $ Other Business 551,632 - $ Housing Choice Vouchers 14.871 Total Business Activities 1,680,043 2,500 $ 2,231,675 2,500 $ Total 235,718 126,788 - $ 3,551,614 126,788 115,013 - - - 13,291 368,236 16,455 13,291 22,654 (5,853) 368,236 32,718 (16,330) - 200,000 520,613 129,670 (108,846) 363,450 200,000 520,613 162,388 (125,176) 363,450 35,470 (30,719) - 3,715,133 14,212,247 433,508 (9,457,877) 363,450 568,020 $ 2,787,430 $ 3,355,450 $ 748,784 $ 13,474,659 324 14,134 2,452 - 374 2,500 - 698 14,134 2,452 2,500 - 6,429 10,842 774 - 26,576 46,396 4,496 115,013 8,245 40,275 - 40,275 58,279 12,708 58,279 73,839 57,185 2,874 60,059 89,032 332,844 16,388 494,447 741,437 2,043,119 757,825 2,537,566 4,751 436,745 218,256 8,903,011 436,745 3,802,059 510,835 2,784,556 3,295,391 659,752 13,141,815 568,020 $ 2,787,430 $ 3,355,450 $ 748,784 123 $ 13,474,659 City of Chandler Financial Data Schedule Housing and Redevelopment June 30, 2011 Statement of revenues, expenses, and changes in fund net assets - all HUD programs Low Rent Public Housing AMP 1 14.850a FDS line # AMP 2 14.850a All AMPs 14.850a Account description REVENUES 70300 70400 70600 70610 70710 70720 70730 71100 713 713.1 71400 71500 72000 Net tenant rental revenue Tenant revenue - other HUD operating grants HUD capital grants Management feesearned Asset management fees earned Bookkeeping fees earned Investment income - unrestricted Proceeds from disposition of assets held for sale Cost of Sale of Assets Fraud recovery Other revenue Investment income - restricted $ Total revenues 178,644 8,045 1,057,734 2,250 6,509 19,138 - $ 243,137 596,088 9,618 838 26,252 - $ 421,781 8,045 1,653,822 11,868 7,347 45,390 - 1,272,320 875,933 2,148,253 128,264 2,650 115,860 14,513 42,761 1,920 15,016 19,560 46,744 15,125 801 29,354 47,327 1,275 36,681 145,774 117,391 98,661 51,348 10,478 11,739 9,048 473 99,535 1,740 99,558 12,472 33,034 1,815 13,551 16,800 125 3,289 7,330 110 3,331 102,541 82,485 81,319 37,010 16,574 2,292 9,458 6,537 227,799 4,390 215,418 26,985 75,795 3,735 28,567 36,360 46,744 15,125 926 32,643 54,657 1,385 40,012 248,315 199,876 179,980 88,358 27,052 14,031 18,506 7,010 962,763 630,906 1,593,669 260,788 273,907 534,695 1,223,551 904,813 2,128,364 EXPENSES 91100 91200 91300 91310 914 91500 91600 91900 92000 92100 92300 92400 93100 93200 93300 93800 94100 94200 94300 94500 96100 96200 96210 96400 Administrative salaries Auditing fees Management fees Bookkeeping fees Compensated Absences Employee benefit contributions - administrative Office expenses Other operating - administrative Asset management fees Tenant services - salaries Employee benefit contributions - Ttenant services Tenant services - other Water Electricity Gas Other utility expenditures Ordinary maintenance and operations -labor Ordinary maintenance and operations - materials Ordinary maintenance and operations - contract costs Ordinary maintenance and operations - ordinary maintenance Insurance Other general expenditures Compensated absences Bad debt - tenant rents Total operating expenditures 97300 97350 97400 Other expenditures: Housing assistance payments HAP portability-in Depreciation Total expenditures EXCESS (DEFICIENCY) OF REVENUES OF EXPENSES BEFORE OTHER FINANCING SOURCES (USES) 48,769 (28,880) 19,889 45,000 (45,000) 26,100 - 45,000 (45,000) 224,278 - 90,000 (90,000) 250,378 - 26,100 224,278 250,378 OTHER FINANCING SOURCES (USES) 10010 10020 10030 11040 Operating transfers in Operating transfers out Operating transfers in from primary government Equity transfers Total other financing sources (uses) CHANGE IN NET ASSETS TOTAL NET ASSETS, BEGINNING OF YERAR NET ASSETS, END OF YEAR $ 74,869 195,398 270,267 2,559,467 6,356,938 8,916,405 2,634,336 $ 6,552,336 $ 9,186,672 OTHER MEMORANDUM AMOUNTS 70600 11190 11210 Maximumannual contributions commitment Unit months available Number of unit months leased 1,956 1,935 124 1,680 1,663 3,636 3,598 Business Activities Central Office 14.850a $ 286,589 36,360 70,485 5,089 - Other Business $ 36,000 12,084 1,025 - $ 36,000 286,589 36,360 70,485 17,173 1,025 - $ 4,643,378 1,949 3,709 342,183 4,119 Eliminations $ Total (286,589) (36,360) (70,485) - $ 457,781 8,045 6,297,200 11,868 26,469 3,709 388,598 4,119 398,523 49,109 447,632 4,995,338 (393,434) 7,197,789 271,995 108,772 6,848 16,453 1,501 5,686 42,727 - 2,147 360 7,511 1,106 426 7,687 31,000 271,995 2,147 360 108,772 14,359 17,559 1,927 7,687 5,686 42,727 31,000 139,820 3,400 69,024 43,140 58,331 5,993 70,565 45,365 22,547 10,453 13,481 - (286,589) (70,485) (36,360) - 639,614 7,790 242,898 9,728 113,491 92,109 37,672 926 32,643 54,657 1,385 40,012 265,874 201,803 187,667 94,044 27,052 24,484 74,714 38,010 453,982 50,237 504,219 482,119 (393,434) 2,186,573 3,674 34,949 38,623 4,493,455 325,806 1,629 - 4,493,455 325,806 574,947 457,656 85,186 542,842 5,303,009 (393,434) 7,580,781 (59,133) (36,077) (95,210) (307,671) - (382,992) 135,000 - - 135,000 - 150,000 - (90,000) 90,000 - 535,378 - 135,000 - 135,000 150,000 - 535,378 39,790 (157,671) - 152,386 817,423 - 12,989,429 75,867 (36,077) 434,968 $ Housing Choice Vouchers 14.871 Total Business Activities 510,835 2,820,633 $ 2,784,556 3,255,601 $ 3,295,391 $ 659,752 $ 4,643,378 5,760 5,762 125 - $ 13,141,815 126 CITY OF CHANDLER, ARIZONA Statistical Section This part of the City of Chandler’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 Page Financial Trends 128 Schedules 1-6 contain information to help the reader understand how the city’s financial performance and well-being have changed over time. Revenue Capacity 144 Schedules 7-9 contain information to help the reader assess the factors affecting the city’s ability to generate its sales and use tax. Debt Capacity 148 Schedules 10-13 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. Demographic and Economic Information 155 Schedules 14-15 offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place and to help make comparisons over time and with other governments. Operating information 158 Schedules 16-18 contain information about the city’s operations and resources to help the reader understand how the city’s financial information relates to the services the city provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 127 CITY OF CHANDLER, ARIZONA NET ASSETS BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 2005 Governmental activities Invested in capital assets, net of related debt $ Restricted Unrestricted Total governmental activities net assets (62,026,075) $ 55,963,968 $ 101,665,063 $ 162,790,025 22,296,791 117,111,402 90,046,996 110,932,310 346,949,775 186,420,301 224,309,216 214,663,854 307,220,491 359,495,671 416,021,275 488,386,189 Business-type activities Invested in capital assets, net of related debt 207,918,704 232,259,546 252,117,283 275,991,278 Restricted 76,248,944 70,198,611 63,985,390 72,538,299 Unrestricted 71,248,431 70,831,613 82,444,533 78,334,422 355,416,079 373,289,770 398,547,206 426,863,999 145,892,629 288,223,514 353,782,346 438,781,303 98,545,735 187,310,013 154,032,386 183,470,609 418,198,206 257,251,914 306,753,749 Total business-type activities net assets Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets $ 662,636,570 $ 732,785,441 (1) The significant increase in this year is due to the addition of the retroactive infrastructure. 128 $ 814,568,481 292,998,276 $ 915,250,188 Schedule 1 Fiscal Year 2006 $ $ 2007 2008 288,893,354 115,343,816 56,979,639 117,712,539 94,440,806 41,906,129 208,727,675 265,645,323 341,971,306 271,690,158 198,059,181 260,307,288 575,777,986 669,882,493 752,947,788 823,254,596 830,076,333 836,505,905 325,992,618 347,306,362 427,130,654 387,401,986 298,938,820 281,936,017 52,511,899 57,835,328 24,319,427 - - - 76,090,729 78,718,941 45,300,009 98,413,928 163,103,784 168,164,942 454,595,246 483,860,631 496,750,090 485,815,914 462,042,604 450,100,959 586,645,963 636,199,716 781,127,497 821,253,885 836,515,166 816,228,505 158,908,865 173,179,144 81,299,066 117,712,539 94,440,806 41,906,129 284,818,404 344,364,264 387,271,315 370,104,086 361,162,965 428,472,230 1,153,743,124 $ 1,249,697,878 $ $ 129 433,851,899 1,309,070,510 $ 2011 260,653,345 (1) $ $ 353,996,843 2010 106,396,966 1,030,373,232 $ 2009 $ 537,576,346 1,292,118,937 $ $ 534,292,488 1,286,606,864 CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 2005 Expenses Governmental activities: General government $ Public safety 32,159,571 $ 50,221,565 Community development Public works Transportation and development Community services Interest and fiscal charges Total governmental activities expenses 30,610,529 $ 54,854,074 32,925,516 $ 59,666,119 38,116,265 56,022,025 6,760,718 7,067,675 7,457,073 6,973,474 20,516,230 161,195,319 21,309,408 17,175,426 - - - - 17,668,011 19,823,356 20,200,390 19,017,024 12,398,031 10,858,078 11,426,919 10,649,133 139,724,126 284,409,031 152,985,425 147,953,347 Business-type activities: Water 33,004,765 35,992,958 40,544,967 41,689,649 Wastewater 21,800,113 22,986,319 24,505,362 25,825,966 Solid waste 8,675,676 14,414,774 9,705,932 9,598,287 Airport 1,305,935 1,420,574 1,458,068 1,582,079 Chandler housing authority Total business-type activities expenses Total primary government expenses $ 6,584,884 7,082,747 8,977,049 7,773,223 71,371,373 81,897,372 85,191,378 86,469,204 211,095,499 $ 366,306,403 $ 238,176,803 $ 234,422,551 (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 130 Schedule 2a Fiscal Year 2006 $ $ 2007 36,669,140 $ 2008 42,317,392 $ 2009 54,459,719 $ 2010 52,293,004 $ 2011 48,920,813 $ 67,808,567 63,840,179 76,200,082 80,860,917 87,609,165 92,421,801 90,738,477 8,706,473 9,154,407 11,692,559 10,429,826 11,715,276 - (1) 31,940,075 32,402,242 39,241,652 47,180,197 56,155,939 - (1) - - - - - 50,909,361 (1) 24,087,695 29,464,039 33,086,565 34,278,998 35,299,676 28,919,560 11,658,090 11,479,112 14,880,604 12,938,524 13,541,708 12,767,934 176,901,652 201,017,274 234,222,016 244,729,714 258,055,213 251,143,899 38,582,431 40,687,283 53,554,653 53,201,379 62,556,496 57,452,876 25,294,189 27,230,862 30,657,939 36,079,767 38,227,999 37,896,180 8,154,317 9,843,824 6,845,979 12,076,998 14,605,448 13,443,102 1,765,772 1,757,279 1,602,268 2,269,691 1,797,991 2,107,354 6,713,829 9,133,427 7,593,242 7,239,185 7,654,449 7,580,783 80,510,538 88,652,675 100,254,081 110,867,020 124,842,383 118,480,295 257,412,190 $ 289,669,949 $ 334,476,097 $ 131 355,596,734 $ 382,897,596 $ 369,624,194 CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 2005 Program Revenues Governmental activities: Charges for services: General government $ 13,215,733 $ 10,972,432 $ 14,339,606 $ 11,770,912 Public safety 2,045,039 2,962,608 2,515,026 2,921,707 Community development 7,980,393 8,407,356 7,833,679 10,119,322 11,087,995 11,764,790 12,879,966 14,037,835 - - - - Public works Transportation and development Community services Operating grants and contributions Capital grants and contributions 1,339,966 1,950,792 1,713,889 1,988,832 1,691,043 3,323,489 1,488,369 1,041,858 32,016,067 29,223,045 22,107,766 13,880,993 69,376,236 68,604,512 62,878,301 55,761,459 Water 32,210,935 34,895,930 36,148,220 36,860,006 Wastewater 18,627,080 19,253,061 19,849,892 20,541,547 Solid waste 8,575,815 9,290,021 9,850,919 9,787,298 Airport 737,950 832,232 896,968 931,547 Community services - housing authority 698,274 684,758 1,744,088 631,494 Total governmental activities program revenues Business-type activities: Charges for services: Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues 5,588,924 6,165,984 6,655,089 6,839,056 32,752,908 29,607,826 34,348,267 35,817,247 99,191,886 100,729,812 109,493,443 111,408,195 $ 168,568,122 $ 169,334,324 $ 172,371,744 $ 167,169,654 $ (70,347,890) $ (70,804,519) $ (90,107,124) $ (92,191,888) $ 27,820,513 (42,527,377) $ 18,742,440 (52,062,079) $ 24,302,065 (65,805,059) $ 24,938,991 (67,252,897) Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense (1) System development fees were reclassed to charges for services under program revenues. (2) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 132 Schedule 2b Fiscal Year 2006 $ 2007 12,359,183 $ 2008 12,793,179.00 $ 2009 12,629,779 $ 2010 14,349,483 $ 2011 16,621,003 $ 22,548,679 3,303,895 4,178,941 4,317,843 4,802,272 7,110,304 8,338,156 10,405,425 5,488,535 3,581,458 3,336,188 - (2) 13,145,192 15,831,165 5,226,726 6,025,846 - (2) - - - - 11,884,554 (2) 24,529,838 (1) - 5,658,628 2,272,309 2,272,826 2,699,469 5,235,864 4,515,980 4,079,359 2,167,327 3,707,115 1,897,300 2,337,910 5,510,710 5,890,147 12,751,519 26,428,112 36,104,151 23,902,360 8,159,960 16,041,213 65,722,227 72,930,790 78,968,242 59,436,073 51,279,991 66,102,580 38,112,680 39,054,531 40,613,727 39,707,910 42,276,145 43,708,974 20,499,458 21,083,587 25,145,258 25,922,530 28,406,808 31,610,009 12,218,720 12,769,423 12,979,695 12,762,120 12,891,628 13,277,403 1,005,728 974,190 773,449 741,556 815,751 995,307 648,766 661,509 1,061,658 595,420 521,404 457,781 6,297,200 6,634,435 6,312,438 6,114,138 6,225,928 6,367,024 23,547,210 28,014,518 19,782,193 9,110,319 8,484,239 8,659,772 102,666,997 108,870,196 106,470,118 95,065,783 99,762,999 105,006,446 $ 168,389,224 $ 181,800,986 $ 185,438,360 $ 154,501,856 $ 151,042,990 $ 171,109,026 $ (111,179,425) $ (128,086,484) $ (155,253,774) $ (185,293,641) $ (206,775,222) $ (185,041,319) $ 22,156,459 (89,022,966) $ 20,217,521 (107,868,963) $ 6,216,037 (149,037,737) $ (15,801,237) (201,094,878) $ (25,079,384) (231,854,606) $ (13,473,849) (198,515,168) 133 CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 2005 Governmental Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes $ Sales taxes Franchise taxes 16,001,578 $ 17,953,164 $ 20,818,622 $ 22,743,537 55,070,562 60,614,779 66,671,049 75,702,332 1,957,618 2,249,190 2,365,749 3,032,260 Highway user taxes - - - - Other taxes - - - - 37,850,975 39,559,356 37,903,674 40,050,636 8,105,353 15,165,191 13,878,663 2,391,875 7,862,804 362,343 State shared revenues System development fees 8,320,712 Investment income (loss) 7,677,017 Miscellaneous Westcor contract payment Transfers Total governmental activities (4,895,290) (1) 162,714 261,069 695,312 - - - - 690,493 (767,922) 621,256 924,227 146,632,728 164,556,802 1,199,710 4,069,440 127,731,669 123,079,699 Business-type activities: Investment income (loss) 4,007,601 Miscellaneous Transfers Total business-type activities: Total primary government (2,624,182) (1) 639,190 (690,493) 3,956,298 $ 131,687,967 $ $ 57,838,779 $ 897,511 767,922 376,917 (621,256) (958,749) 955,371 122,120,950 $ 52,275,180 $ 232,589 (924,227) 3,377,802 147,588,099 $ 56,525,604 $ 167,934,604 Change in Net Assets Governmental activities Business-type activities Total primary government 31,776,811 $ 89,615,590 17,873,691 $ 70,148,871 25,257,436 $ 81,783,040 72,364,914 28,316,793 $ 100,681,707 (1) The negative income this year is the result of the City's share of a loss recognized by the State of Arizona's Local Government Investment Pool. (2) System development fees were reclassed to charges for services under program revenues. 134 Schedule 2c Fiscal Year 2006 $ 2007 25,016,760 $ 2008 26,921,292 $ 34,063,123 $ 2010 38,957,986 $ 2011 40,617,269 $ 36,158,574 82,327,461 95,410,460 97,226,841 85,897,334 83,019,726 2,198,738 3,230,429 3,937,952 3,264,093 3,174,390 2,819,521 - 16,490,129 15,856,863 13,849,284 13,116,481 13,287,878 86,523,295 - 3,481,086 3,786,677 7,921,275 13,965,973 88,561 45,853,506 57,716,644 62,970,459 61,211,289 54,492,427 47,732,614 - (2) - - - - - 12,286,630 17,868,181 20,823,059 10,045,274 3,487,145 1,841,244 3,071,588 10,736 1,822,070 767,221 995,606 850,191 34,500,000 - - - - - 478,441 469,201 534,086 (1,542,346) 873,357 (244,702) 202,672,272 223,409,492 239,966,281 220,599,795 6,424,600 6,876,399 5,906,545 1,043,407 (469,200) 1,792,816 (534,086) 7,450,606 7,165,275 532,354 (478,441) 6,478,513 $ 209,150,785 $ 230,860,098 $ $ 22,796,183 $ 95,323,008 $ 28,634,972 $ 2009 51,431,155 27,668,127 $ 122,991,135 247,131,556 $ 84,712,507 $ 13,381,312 $ 98,093,819 213,596,959 191,278,573 2,536,237 756,641 533,313 788,478 1,542,346 1,422,790 (873,357) 946,507 244,702 4,867,061 1,306,074 225,466,856 $ 35,306,154 $ (10,934,176) $ 135 24,371,978 1,724,522 214,903,033 $ 6,821,737 $ (23,773,310) $ (16,951,573) 193,003,095 6,237,254 (11,749,327) $ (5,512,073) CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2002 General fund Reserved $ Unreserved 2003 27,158,273 $ 2004 34,328,283 $ 2005 50,644,739 $ 56,325,826 149,678,534 135,307,858 126,091,872 124,519,771 Nonspendable - - - - Restricted - - - - Assigned - - - - $ 176,836,807 $ 169,636,141 $ 176,736,611 $ 180,845,597 $ 74,230,663 $ 91,320,181 $ 76,703,585 $ 99,267,829 Unassigned Total general fund All other governmental funds Reserved Unreserved, reported in: Special revenue funds 7,022,854 5,677,614 5,648,789 9,259,261 Capital projects funds - - - - Restricted - - - - - - - - - Total all other governmental funds $ 81,253,517 $ 96,997,795 (1) In FY 2011 the City implemented GASB 54, thus changing how fund balance is categorized. 136 $ 82,352,374 $ 108,527,090 Schedule 3 Fiscal Year 2006 $ 2007 15,211,490 $ 148,606,301 2008 12,349,638 $ 189,087,760 2009 28,237,521 $ 196,093,067 2010 30,482,311 $ 194,457,561 2011 62,149,646 $ 137,041,044 - (1) - (1) - - - - - 893,067 (1) - - - - - 844,754 (1) - - - - - 61,733,537 (1) $ 201,437,398 $ 224,330,588 $ 224,939,872 $ 199,190,690 $ 98,872,954 162,344,312 (1) $ 163,817,791 $ 100,167,158 $ 109,777,210 $ 43,039,742 $ 97,267,450 $ 61,355,662 $ - (1) - (1) $ 8,089,144 14,064,542 17,752,306 18,786,740 18,103,651 253,903 9,158,971 11,608,190 7,868,412 7,379,375 - (1) - - - - - 105,756,072 (1) - - - - - (12,315,197) (1) 108,510,205 $ 133,000,723 $ 72,400,238 $ 137 123,922,602 $ 86,838,688 $ 93,440,875 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS REVENUES LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2002 Taxes - local $ Taxes - intergovernmental Property taxes 2003 72,951,061 $ 2004 82,591,633 $ 2005 91,492,704 $ 102,701,196 48,797,917 49,850,293 50,173,867 51,677,502 - - - - Sales taxes - - - - Franchise fees - - - - Highway user taxes - - - - Other taxes - - - - State shared - - - - Grants and entitlements 7,748,473 3,983,091 4,217,697 14,100,944 System development fees 8,320,712 8,105,353 15,165,191 13,878,663 175,152 513,242 251,608 439,565 Special assessments License and permits Charges for current services Fines and forfeitures Rentals Contributions 5,651,522 6,386,478 7,500,437 7,262,403 12,373,053 12,843,147 13,386,852 15,133,670 2,796,157 3,975,613 3,517,080 4,136,342 17,625 93,630 18,012 19,580 - - 5,980 250 2,170,414 6,987,824 2,204,555 2,667,611 Investment income (loss) 6,885,010 Miscellaneous 1,151,110 Total revenues $ 166,867,792 (4,330,308) (1) 1,538,830 $ 165,551,002 $ 190,104,397 $ 219,005,550 (1) The negative income in this year is the result of the City's share of a loss recognized by the State of Arizona's Local Government Investment Pool. (2) As of fiscal year ended June 30, 2007 the City reclassed the governmental funds revenues local and intergovernmental taxes to Property, Sales, and Other taxes. 138 Schedule 4 Fiscal Year 2006 $ $ 2007 109,141,434 $ 2008 2009 $ 2010 - $ 2011 - (2) $ - 60,107,031 - (2) - - - - $ - - - 26,909,841 (2) 33,844,181 38,677,156 40,259,579 36,301,709 (2) 86,523,295 - 95,410,460 97,226,841 85,897,334 83,019,726 - 3,230,429 3,937,952 3,264,093 3,174,390 2,819,521 - 16,490,129 15,856,863 13,849,284 13,116,481 13,287,878 - 3,481,086 3,786,677 7,921,275 13,965,973 88,561 - 57,716,644 (2) 62,970,459 61,211,289 54,492,427 47,732,614 9,296,423 7,610,807 10,553,680 18,168,904 10,377,502 14,759,620 10,322,313 11,871,969 8,111,597 4,475,029 4,768,306 6,739,920 303,336 309,386 426,428 863,747 663,209 673,064 5,541,215 6,728,309 3,894,368 2,667,720 2,758,392 3,208,944 15,475,362 18,216,653 17,254,859 19,492,740 19,420,434 18,002,168 4,231,306 4,058,090 4,342,621 4,912,159 5,336,294 4,697,317 8,363 89,875 94,575 138,667 101,322 387,952 500 50,000 50,000 50,000 50,000 100,000 10,699,944 15,589,318 18,334,581 8,825,695 3,171,308 1,635,258 1,632,785 1,830,328 1,255,681 1,661,772 1,913,571 4,593,104 226,760,012 $ 269,593,324 $ 281,941,363 $ 139 272,076,864 $ 256,588,914 $ 241,550,925 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2002 General government $ Public safety 2003 28,858,549 $ 2004 29,448,025 $ 2005 31,024,154 $ 41,135,736 49,910,766 53,885,322 58,407,246 57,630,321 6,757,787 7,061,116 7,449,114 7,438,317 20,314,406 19,096,782 23,028,537 38,421,485 - - - - Community services 17,575,610 20,310,994 21,048,659 20,893,626 Capital improvements 32,346,642 33,211,184 36,794,139 33,828,009 Community development Public works Transportation and development Debt service: Principal retirement 3,679,500 6,614,500 8,689,500 8,329,500 Interest and fiscal charges 9,730,214 8,515,445 9,641,321 9,180,338 - 100,000 - 174,917 Bond issuance costs Total expenditures Debt service as a percentage of noncapital expenditures $ 169,173,474 10.1% $ 178,243,368 11.1% $ 196,082,670 12.4% (1) In FY 2011 the City changed its functional categories to eliminate "Community development" and "Public works" and add "Transportation and development." 140 $ 217,032,249 11.1% Schedule 5 Fiscal Year 2006 $ $ 2007 33,729,455 $ 2008 38,124,478 $ 2009 51,261,849 $ 2010 40,503,113 $ 2011 44,663,091 $ 43,636,784 64,090,649 75,800,634 78,306,604 84,493,816 85,390,303 8,740,380 8,989,308 11,593,642 10,509,467 11,614,214 32,555,171 22,987,692 19,306,381 19,283,643 17,664,633 - (1) - - - - - 22,126,233 (1) 22,738,420 25,714,032 28,830,926 29,916,002 30,078,856 22,836,317 49,884,875 75,524,840 104,836,442 124,680,957 106,366,737 67,299,941 17,122,071 12,374,500 16,659,500 15,275,000 17,260,000 15,090,000 10,465,983 10,669,877 14,437,346 13,059,295 13,646,479 12,901,616 135,437 189,840 179,201 961,100 183,969 278,512 239,462,441 15.9% $ 270,375,201 12.1% $ 325,411,891 $ 14.1% 338,682,393 12.5% 141 $ 326,868,282 13.3% 84,007,752 - (1) $ 268,177,155 13.3% CITY OF CHANDLER, ARIZONA OTHER FINANCING SOURCES AND USES AND NET CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2002 2003 2004 2005 Other Financing Sources (Uses) Bond premium $ Face amount of bonds issued Proceeds from sale of capital assets 212,486 $ 1,026,142 $ - $ 852,671 23,000,000 45,850,000 - 35,720,000 159,247 91,245 680,019 264,352 Payment to escrow agent - Westcor contract payment - - - - Transfers in 20,152,263 32,480,447 26,072,155 33,226,080 Transfers out (23,649,139) (37,723,314) (28,318,852) (35,170,013) 19,874,857 21,235,978 (1,566,678) 23,664,668 Total other financing sources and (uses) Net change in fund balances $ 17,569,175 142 (20,488,542) $ 8,543,612 - $ (7,544,951) (11,228,422) $ 25,637,969 Schedule 6 Fiscal Year 2006 $ 2007 515,129 $ 1,975,876 $ 2009 165,431 $ 2010 2,348,878 $ 2011 290,569 $ 1,047,424 30,905,000 88,405,000 7,370,000 120,513,000 10,450,000 20,285,000 205,936 173,742 280,969 219,793 97,609 108,929 - $ 2008 - - 34,500,000 - - - - - 37,204,132 31,525,563 38,442,603 40,593,319 46,309,016 41,605,646 (39,584,767) (34,246,951) (41,108,342) (44,937,903) (39,144,322) (56,040,439) 63,745,430 63,497,938 5,150,661 118,737,087 7,446,272 (3,810,279) (17,956,999) (24,335,292) $ 62,716,055 $ (38,319,867) $ 143 52,131,648 (10,556,600) $ (62,833,096) (10,816,839) $ (30,436,509) CITY OF CHANDLER, ARIZONA TAXABLE REVENUE BY CATEGORY LAST TEN FISCAL YEARS Fiscal Year 2002 2003 2004 2005 Amusements Contracting General Retail Hotel/Motel 1 Miscellaneous Related Revenue Publishing Rentals - Personal Property Rentals - Real Property Restaurant/Bar Telecommunications Use Tax Utilities $ 347,405 11,290,014 19,596,953 1,161,330 1,440,490 586,054 1,760,707 4,530,384 3,921,958 2,869,467 837,932 6,417,518 $ 410,039 11,467,704 22,261,109 1,212,328 2,201,668 669,702 2,008,711 5,207,175 4,482,235 3,124,021 634,029 6,648,449 $ 477,089 13,008,527 25,638,223 1,309,463 1,583,458 711,215 1,994,513 5,454,033 5,015,335 3,006,992 750,291 7,448,823 $ 499,388 14,966,943 28,835,490 1,508,509 3,156,782 754,016 1,807,806 6,074,236 5,618,535 3,336,576 1,132,268 7,929,178 Total Sales and Use Taxes $ 54,760,212 $ 60,327,170 $ 66,397,962 $ 75,619,727 City Direct Sales Tax Rate 2 1.76% 1.73% 1.74% Source: Tax & License Division 1 Includes license application fees, annual license fees, audit assessments, penalties, and interest. 2 The direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. 144 1.70% Schedule 7 Fiscal Year 2006 2007 2008 2009 2010 2011 $ 611,352 16,580,509 38,501,000 1,716,055 1,898,671 699,456 1,743,393 7,141,065 6,994,533 3,603,977 989,767 8,910,538 $ 679,666 15,665,738 41,719,797 1,938,442 2,765,527 723,532 1,935,981 7,883,794 7,655,093 3,709,781 1,044,225 9,688,886 $ 660,985 15,519,590 41,253,934 2,103,714 3,329,891 492,770 2,177,125 8,449,059 7,908,883 3,978,715 950,808 10,401,302 $ 623,159 9,352,480 36,851,140 1,672,893 2,774,033 389,046 2,474,464 8,520,878 7,267,718 4,057,982 930,636 10,982,905 $ 602,027 6,573,348 36,560,075 1,611,912 2,911,821 382,080 2,389,241 8,921,788 7,436,900 3,974,448 869,092 10,786,994 $ 673,666 6,380,957 38,741,270 1,973,790 2,551,354 351,250 2,462,219 9,479,850 7,971,183 3,524,076 1,000,342 11,413,338 $ 89,390,316 $ 95,410,462 $ 97,226,776 $ 85,897,334 $ 83,019,726 $ 86,523,295 1.72% 1.72% 1.72% 1.75% 145 1.75% 1.77% CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING SALES AND USE TAX RATES LAST TEN FISCAL YEARS Schedule 8 Overlapping Rates City Direct Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Tax Rate 1.76% 1.73% 1.74% 1.70% 1.72% 1.72% 1.72% 1.75% 1.75% 1.77% 1 Maricopa County Tax Rate 0.67% 0.68% 0.68% 0.67% 0.68% 0.68% 0.68% 0.67% 0.67% 0.67% 2 State of Arizona Tourism & Sports Authority Tax Rate 3 Tax Rate 4 4.63% 5.10% 5.13% 5.13% 5.14% 5.12% 5.09% 5.02% 5.05% 5.85% 0.00% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% Source: Tax & License Division 1 The City's direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. City tax rates were last increased effective 5/01/1994. 2 The overlapping County tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 0.5% to 0.77%. No rate changes in the past ten fiscal years. 3 The overlapping State tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 6.5% to 6.6%. State tax rate increases during the past ten fiscal years: 0.6% effective 6/01/2002; 1.0% effective 6/01/2010. 4 The Tourism & Sports Authority (TSA) was authorized by Maricopa County voters on November 7, 2000. An additional tax rate of 1.0% is to be levied from March 1, 2001 through February 28, 2031. The only category the overlapping tax rate applies to is the Hotel/Motel category. The overlapping tax rate is calculated using a weighted average of the actual revenues the City collected for this category. 146 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2011 Taxpayer Business Type Taxpayer A Taxpayer B Taxpayer C Taxpayer D Taxpayer E Taxpayer F Taxpayer G Taxpayer H Taxpayer I Taxpayer J Taxpayer K Taxpayer L Taxpayer M Taxpayer N Utility Department Store Grocery Store Department Store Telecommunications Home Improvement Department Store Utility Department Store Vehicle Dealer Grocery Store Vehicle Dealer Vehicle Dealer Telecommunications Sales and Use Tax Payments $ $ 8,553,000 2,632,948 2,200,339 1,579,991 1,317,922 1,242,538 1,183,404 1,060,554 1,041,631 905,145 Fiscal Year 2002 Rank Percentage of Total Sales and Use Tax Payments 1 2 3 4 5 6 7 8 9 10 9.89% 3.04% 2.54% 1.83% 1.52% 1.44% 1.37% 1.23% 1.20% 1.05% 21,717,471 25.10% Rank Percentage of Total Sales and Use Tax Payments 4,552,794 1 8.31% 1,261,164 3 2.30% 1,146,790 836,420 1,099,168 865,982 5 10 7 8 2.09% 1.53% 2.01% 1.58% 1,348,040 1,204,399 1,119,038 852,115 2 4 6 9 2.46% 2.20% 2.04% 1.56% Sales and Use Tax Payments $ $ 14,285,909 26.09% Source: Tax & License Division Notes: The identities of the ten largest revenue payers are prohibited from disclosure per State statute. Alternatively, the business type of the top ten taxpayers for each period has been disclosed along with the appropriate data. 147 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Schedule 10 Governmental Activities - General Obligation Bonds Fiscal Year General Obligation Bonds Estimated Actual Taxable Value of Property 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 87,250,000 106,970,000 102,480,000 120,805,000 140,130,000 197,075,000 187,645,000 294,588,000 282,888,000 279,968,000 8,368,335,959 8,981,174,789 10,999,084,221 12,256,368,621 13,936,132,832 15,180,800,679 26,166,428,389 30,523,597,506 31,011,422,761 22,396,334,191 Percentage of Estimated Actual Taxable Value of Property 1.04% 1.19% 0.93% 0.99% 1.01% 1.30% 0.72% 0.97% 0.91% 1.25% Other Governmental Activities Debt Per Capita 1 Revenue Bonds 434 505 456 510 579 798 749 1,169 1,111 1,177 45,300,000 48,725,000 46,700,000 45,015,000 42,920,000 40,480,000 37,655,000 34,690,000 31,800,000 28,620,000 Special Assessment Bonds 1,647,000 1,547,500 1,443,000 1,333,500 1,219,000 1,099,500 8,345,000 7,820,000 7,315,000 6,190,000 Accrued Interest Capital Appreciation Bonds 27,102,208 29,147,730 30,928,390 32,426,569 33,620,916 34,505,099 35,000,654 - Business-type Activities Fiscal Year General Obligation Bonds Revenue Bonds Certificates of Participation 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 25,770,000 25,395,000 23,705,000 21,270,000 19,415,000 62,410,000 60,395,000 188,612,000 185,032,000 179,747,000 117,540,000 122,735,000 116,140,000 114,800,000 108,870,000 101,095,000 93,000,000 76,415,000 67,580,000 60,280,000 12,510,000 11,035,000 10,210,000 9,335,000 - Excise Tax Revenue Obligations Intergovernmental Loans 34,040,000 34,040,000 48,540,000 Total Primary Government 2 110,755 93,706 75,783 56,942 37,135 16,304 - Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 Population and personal income data can be found in Schedule 14. 2 Includes general bonded debt, other governmental activities debt and business-type activities debt. 148 317,229,963 345,648,936 331,682,173 345,042,011 346,212,051 436,680,903 422,040,654 636,165,000 608,655,000 603,345,000 Percentage of Personal Income 1 6.17% 6.51% 5.71% 5.82% 5.45% 6.81% 5.81% 8.59% 8.67% 9.23% Per Capita 1 1,576 1,631 1,476 1,457 1,431 1,767 1,684 2,524 2,391 2,537 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2011 Schedule 11 Governmental Unit Debt Outstanding Estimated Percentage Applicable Estimated Share of Overlapping Debt Debt repaid with property taxes State of Arizona Maricopa County Maricopa County Community College District EastValley Institute of Technology Chandler Unified School District No. 80 Mesa Unified School District No. 4 Gilbert Unified School District No. 41 Kyrene Elementary School District No. 28 Tempe Union High School District No. 213 None None $ 587,930,000 None 227,080,000 262,845,000 188,720,000 137,785,000 85,410,000 4.05% 5.96 5.96 13.52 75.59 4.98 2.96 29.87 16.21 None None $ Subtotal, overlapping debt 35,052,387 None 171,640,689 13,079,167 5,578,563 41,156,380 13,840,691 280,347,877 City direct debt 314,778,000 Total direct and overlapping debt 100.00 314,778,000 $ 595,125,877 Source: US Bank, N.A. Note: The applicable percentage of overlap for each type of debt was computed on the ratio of secondary assessed valuation as calculated for fiscal year 2010/11 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 149 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2002 2003 2004 2005 6% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 74,634,001 $ 34,020,000 $ 40,614,001 98,302,556 $ 45,475,000 $ 52,827,556 108,344,928 $ 37,575,000 $ 70,769,928 118,749,422 61,660,000 $ 57,089,422 Total net debt applicable to the limit as a percentage of the debt limit 46% 46% 35% 52% 20% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 248,780,004 $ 76,970,000 $ 171,810,004 327,675,186 $ 80,710,000 $ 246,965,186 361,149,760 $ 72,120,000 $ 289,029,760 395,831,408 80,415,000 $ 315,416,408 Total net debt applicable to the limit as a percentage of the debt limit 31% 25% 20% Source: Peacock, Hislop, Staley & Given, Inc. for 1997 - 2001, Piper Jaffray, Inc. for 2002-2011. (1) In November 2006, Arizona Revised Statutes were amended to move public safety and emergency services, streets and transportation from the 6% category to the 20% category. Notes: Under Arizona law, cities may issue general obligation bonds for purposes of water, wastewater, artificial light, open space preserves, parks, public safety and emergency services, streets, transportation, playgrounds and recreational facilities up to an amount not to exceed 20% of secondary assessed valuation. Cities may issue general obligation bonds for any other purpose up to an amount not to exceed 6% of secondary assessed valuation. 150 20% Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2011 Net secondary assessed valuation as of June 30, 2011 $ Debt limit (6% of assessed value) 2,468,626,617 148,117,597 Debt applicable to limit: 6% general obligation bonds 13,361,000 Legal 6% debt margin $ 134,756,597 Debt limit (20% of assessed value) $ 493,725,323 Debt applicable to limit: 20% general obligation bonds 446,354,000 Legal 20% debt margin $ 47,371,323 Fiscal Year 2006 $ 116,449,443 2007 $ 74,720,000 $ 41,729,443 388,164,810 $ 303,339,810 22% $ $ $ (1) 597,837,975 $ 199,515,517 691,035,056 $ (1) 450,790,056 210,484,297 2010 $ 10,934,000 $ 199,550,297 $ 701,614,322 $ 35% 229,348,322 67% 151 $ 200,990,297 $ 701,614,322 $ 243,188,322 65% 134,756,597 9% $ 458,426,000 $ 148,117,597 13,361,000 5% 472,266,000 $ 210,484,297 2011 9,494,000 5% 240,245,000 404,812,975 32% $ 4% 193,025,000 $ 207,310,517 2009 7,795,000 112,891,393 37% 84,825,000 $ 179,351,393 66,460,000 64% $ 2008 493,725,323 446,354,000 $ 47,371,323 90% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Highway User Taxes 10,946,942 11,443,762 12,225,100 12,852,329 13,870,790 16,490,129 15,856,863 13,849,284 13,116,481 13,287,878 Less: Operating Expenses 6,859,931 7,453,094 7,125,374 8,302,871 7,731,437 8,527,904 8,299,229 10,599,041 9,018,598 9,336,554 Net Available Revenue 4,087,011 3,990,668 5,099,726 4,549,458 6,139,353 7,962,225 7,557,634 3,250,243 4,097,883 3,951,324 Debt Service Principal Interest 1,910,000 2,025,000 2,110,000 2,095,000 2,440,000 2,825,000 2,965,000 3,050,000 3,180,000 2,875,000 2,460,983 2,021,322 2,255,270 1,863,289 1,870,433 1,735,306 1,628,797 1,572,829 1,198,194 1,176,009 Coverage 0.94 0.99 1.17 1.15 1.42 1.75 1.65 0.70 0.94 0.98 Water Revenue Bonds Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Utility Service Charges 32,210,935 34,895,930 36,148,220 36,860,006 38,112,680 39,054,531 40,613,727 39,707,910 42,276,145 43,708,974 Less: Operating Expenses 18,245,708 21,435,429 24,536,695 25,371,528 22,633,168 23,844,731 32,812,618 31,084,108 31,137,157 26,834,274 Net Available Revenue 13,965,227 13,460,501 11,611,525 11,488,478 15,479,512 15,209,800 7,801,109 8,623,802 11,138,988 16,874,700 Debt Service Principal Interest 3,561,504 7,255,900 3,853,756 4,282,606 4,275,097 4,447,321 4,643,032 4,854,151 5,471,256 6,007,332 3,366,721 2,965,187 3,232,596 2,798,390 3,181,666 2,881,971 2,700,799 2,419,526 2,205,623 1,875,330 Coverage 2.02 1.32 1.64 1.62 2.08 2.08 1.06 1.19 1.45 2.14 Excise Tax Revenue Obligations Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Excise Tax Collections 148,768,677 141,025,083 136,164,353 Less: Operating Expenses Net Available Revenue - 148,768,677 141,025,083 136,164,353 Debt Service Principal 500,000 1,100,000 Interest 462,667 1,133,063 1,118,063 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. See Note 6 for breakdown of revenue pledged for Excise Tax Revenue Obligations first pledged February 4, 2009. 152 Coverage 0.00 0.00 0.00 0.00 0.00 0.00 0.00 321.55 86.36 61.39 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13b Wastewater Revenue Bonds Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Utility Service Charges 18,627,080 19,253,061 19,849,892 20,541,547 20,499,458 21,083,587 25,145,258 25,922,530 28,406,808 31,610,009 Less: Operating Expenses 10,878,826 11,701,023 11,845,344 12,802,253 14,217,466 14,349,752 17,923,089 17,663,644 15,821,939 15,759,431 Net Available Revenue 7,748,254 7,552,038 8,004,548 7,739,294 6,281,992 6,733,835 7,222,169 8,258,886 12,584,869 15,850,578 Debt Service Principal Interest 1,548,496 10,714,100 1,296,244 3,207,394 3,499,903 3,647,679 3,786,968 3,915,849 3,678,744 1,602,668 2,098,401 2,295,089 1,713,875 1,592,081 1,828,920 1,691,169 1,554,504 1,341,752 1,104,530 947,148 Coverage 2.12 0.58 2.66 1.61 1.18 1.26 1.35 1.57 2.63 6.22 Solid Waste Revenue Bonds Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Utility Service Charges 8,571,736 9,257,218 9,825,572 9,773,505 - Less: Operating Expenses 7,781,800 13,627,896 9,035,882 8,703,517 - Net Available Revenue 789,936 (4,370,678) 789,690 1,069,988 - Debt Service Principal Interest 125,000 125,000 125,000 - 215,750 206,969 152,469 71,844 - Coverage 2.32 -13.17 2.85 14.89 0.00 0.00 0.00 0.00 0.00 0.00 (1) (2) Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. (1) Expenses for FY 03 include $5,323,714 in landfill closure and post closure costs. The amount expensed in FY 02 was $812,319. The increase in comparable amounts is due to an increase in costs related to a change in the planned usage of the property following closure. (2) All debt was defeased June 29, 2005. 153 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13c Municipal Property Corporation Certificates of Participation Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Water & Sewer Utility Service Charges 50,838,015 54,148,991 55,998,112 57,401,553 - Less: Operating Expenses 29,124,534 33,136,452 36,382,039 38,173,781 - Debt Service Net Available Revenue 21,713,481 21,012,539 19,616,073 19,227,772 - Principal 700,000 775,000 825,000 875,000 - (1) All remaining debt was defeased in 2006. Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. 154 Interest 915,595 867,295 813,045 755,295 - Coverage 13.44 12.79 11.98 11.79 (1) - CITY OF CHANDLER, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Schedule 14 Total Fiscal Year Population (1) Per Capita Personal Median Unemployment Personal Income (2) Age (2) Rate (3) Income (4) 2002 201,262 5,139,225,170 31.2 4.2% 25,535 2003 211,984 5,310,835,152 31.2 4.0% 25,053 2004 224,644 5,805,699,536 31.2 3.1% 25,844 2005 236,877 5,928,557,556 30.8 3.3% 25,028 2006 241,910 6,351,347,050 31.6 3.0% 26,255 2007 247,097 6,412,414,247 31.1 2.5% 25,951 2008 250,619 7,269,204,095 31.2 3.2% 29,005 2009 252,056 7,409,186,120 32.8 6.2% 29,395 2010 254,602 7,016,321,916 32.5 6.9% 27,558 2011 237,776 6,536,224,464 31.7 6.6% 27,489 Sources: 1 City's Long Range Planning Division 2 City's Economic Development Division 3 Arizona Department of Economic Security 4 SitesUSA Notes: Total personal income is composed of earned income, dividends, interest and rents, and government transfer payments. Per capita personal income is calculated by dividing total personal income by population; amounts may not be exact due to rounding. 155 CITY OF CHANDLER, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO 2011 Percentage Employer Employees Rank of Total City Employment Intel Corporation 9,700 1 7.05% Bank of America 3,500 2 2.54% Chandler Unified School District 3,000 3 2.18% Wells Fargo Ocotillo Corp. Campus 2,600 4 1.89% Ebay/Paypal 2,000 5 1.45% Chandler Regional Hospital 1,600 6 1.16% Microchip Technology 1,538 7 1.12% City of Chandler 1,511 8 1.10% Verizon Wireless 1,500 9 1.09% Freescale Semiconductors 1,450 10 1.05% Bank First - - - Motorola - - - MDT Outdoor Products, Inc. - - - JH Kelly - - - Speedfam/IPEC - - - Total 28,399 Source: City's Economic Development Division and City of Chandler Human Resources 156 20.63% Schedule 15 2002 Percentage Employees 10,000 Rank of Total City Employment 1 8.61% - - - 2,400 3 2.07% - - - - - - 1,100 6 0.95% 950 8 0.82% 1,523 4 1.31% - - - - - - 795 9 0.68% 2,600 2 2.24% 1,000 7 0.86% 1,500 5 1.29% 675 10 0.58% 22,543 19.41% 157 CITY OF CHANDLER, ARIZONA EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year 2002 2003 2004 2005 4 6 30 11 40 23 124 4 6 69 17 41 25 97 4 6 71 17 41 23 99 5 6 70 18 40 24 96 Total General Government 238 259 261 259 Total Transportation and Development 115 117 117 111 Total Community Services 170 178 183 178 Airport Engineering, development and Real estate Total Public Works 5 53 6 2 53 5 3 53 6 3 48 6 75 139 72 132 78 140 74 131 Police Fire Total Public Safety 423 174 597 440 181 621 438 179 617 436 195 631 4 81 38 24 147 5 90 39 24 158 5 85 29 20 139 5 85 41 18 149 1,406 1,465 1,457 1,459 Full Time Equivalent Personnel Mayor and council City clerk City manager Communications/public affairs City magistrate Law Management services Public works administration Streets Municipal utilities administration Water Wastewater Solid waste Total Municipal Utilities Total Primary Government (1) (1) Source: City's Human Resources Division (1) The significant change in this year is a result of the Information Technology Division moving from the Management Services Department to the City Manager Department. (2) The significant change in this year is a result of the Neighborhood Programs moving from the Mayor and Council to the City Manager Department. The Code Enforcement, Tourism, and Real Estate Services Downtown are new to the City Manager Department. (3) The significant change in this year is a result of the City offering a retirement incentive, voluntary separation packages, and movement between departments to retain employees. (4) The significant change in this year is the result of the combination of Planning and Development to Transportation and Development. Notes: The calculation of full time equivalent personnel includes full time and part time regular employees as of the last pay period of the fiscal year. 158 Schedule 16 Fiscal Year 2006 2007 2008 2009 2010 2011 5 5 74 18 39 25 95 5 5 5 5 5 6 79 17 6 104 18 6 103 18 6 96 15 5 122 12 44 27 101 48 29 106 43 28 105 41 27 95 40 27 85 261 279 316 308 285 108 111 114 103 80 (3) 172 182 219 243 207 226 (3) 229 3 55 6 3 59 3 64 3 57 3 50 0 0 6 6 6 6 0 71 135 76 144 85 158 80 146 74 133 0 0 460 207 667 487 219 706 496 228 724 483 223 706 478 219 697 467 218 685 5 85 41 21 152 5 5 5 6 5 85 42 21 153 88 43 20 156 86 41 18 150 80 42 20 148 88 42 20 155 1,505 1,612 1,711 1,620 1,569 1,537 (2) 159 (3) 296 CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION / PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program General Government Privilege tax licenses issued Meeting notices posted City council actions and agenda items prepared Grant awards received Inventory turnover ratio Planning & Development Building permits issued Community Services Library circulation Center for the arts events & exhibits Public Safety Crime rate (per 1,000 population) Total calls for police services (estimated) Total calls for fire services Fire inspections Fire investigations Municipal Utilities Water connections Operating wells Daily pumping capacity - wells (gallons) Daily pumping capacity - plants (gallons) Sewer connections Sanitary sewer (miles) Solid waste customers served Solid waste refuse collected (tons) Solid waste refuse recycled (tons) 2002 2003 2004 2005 13,437 450 1,109 43 2.95 14,843 501 947 46 3.72 15,713 504 996 47 3.77 16,663 534 1,542 49 3.46 8,737 9,723 11,688 8,951 1,501,217 523 1,700,786 535 1,817,536 1,010 1,967,446 1,027 51.8 125,817 13,646 2,386 86 54.1 126,710 13,614 3,705 49 48.1 113,501 14,560 2,236 33 40.7 136,942 15,310 3,767 58 58,962 23 62,090,000 45,000,000 56,313 712 52,615 110,495 19,490 64,862 21 55,800,000 45,000,000 61,911 755 55,526 125,158 20,417 68,757 21 55,800,000 45,000,000 62,107 780 59,107 134,571 21,678 70,375 23 57,400,000 45,000,000 66,750 796 62,591 117,813 23,379 Source: City of Chandler Departments (1) The 2010 Center for the arts events & exhibits is the result of renovations within the Center for the Arts (2) The 2010 increase in Daily pumping capacity-plants (gallons) is the result of the completion of the San Tan Water Treatment Plant and the Chandler Water Treatment Plant 160 Schedule 17 Fiscal Year 2006 2007 2008 2009 2010 2011 20,464 505 1,292 57 2.78 20,652 721 1,292 57 3.32 22,980 470 1,188 61 3.94 23,460 479 1,055 66 2.5 22,715 481 977 40 2.1 23,821 506 848 43 2.2 7,909 6,474 5,750 3,800 3,883 2,330 2,004,000 1,024 2,082,000 1,024 2,349,232 989 2,506,602 977 38.0 160,355 16,682 4,878 74 34.9 159,535 16,709 3,585 57 35.2 157,039 18,474 3,891 49 74,406 23 58,400,000 45,000,000 70,169 828 66,451 97,646 25,877 74,841 26 65,100,000 60,000,000 70,863 837 67,433 94,633 25,555 77,596 29 66,020,000 60,000,000 71,880 857 67,902 89,408 24,596 39.9 151,941 16,662 4,375 73 73,822 23 59,900,000 45,000,000 68,515 814 65,173 99,547 25,017 161 2,592,243 335 (1) 31.8 146,508 16,904 3,208 43 76,894 31 70,700,000 72,000,000 (2) 73,042 862 68,362 85,160 22,245 2,494,009 1,050 34.4 141,279 17,892 4,424 46 77,408 30 64,460,000 72,000,000 73,118 866 69,480 88,466 20,832 CITY OF CHANDLER, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION / PROGRAM LAST TEN FISCAL YEARS Function/Program Community Services Developed parks Developed acres Undeveloped acres Swimming pools Other recreational facilities (lighted fields) Library bookstock Public Works Total miles streets (center line) Street lights Signalized intersections Based aircraft Public Safety Police stations Fire stations Municipal Utilities Water mains (miles) Fire hydrants Average daily treament (mgd) 2002 2003 2004 2005 48 752 432 49 796 405 51 870 333 51 874 349 5 5 5 5 32 373,527 32 405,986 32 422,841 32 450,068 743 20,400 118 415 762 22,154 136 411 768 23,140 153 433 775 24,218 166 434 1 5 1 7 1 8 1 9 985 8,617 19 1,000 9,393 19 1,021 10,368 21 1,051 10,799 21 Source: City of Chandler Departments (1) The 2006 increase in Undeveloped Acres is due to the purchasing of more land at the following sites: Tumbleweed, Landfill and Veteran Oasis. (2) The 2010 decrease in Fire Hydrants is due to the City adjusting the count to include only hydrants owned and maintained by the City. 162 Schedule 18 Fiscal Year 2006 2007 53 889 535 (1) 2008 2009 2010 2011 54 959 468 58 1,099 455 59 1,133 407 61 1,198 336 61 1,192 342 5 5 5 6 6 6 33 469,000 34 483,128 34 469,023 34 472,266 34 446,675 34 429,604 785 25,100 189 457 812 25,307 192 499 822 26,326 200 442 832 26,500 205 449 829 26,600 208 449 1,977 26,600 208 437 2 9 2 10 3 10 3 10 3 10 3 10 1,063 10,952 22 1,080 12,291 24 1,117 13,033 24 1,189 13,750 24 163 1,194 12,318 (2) 22 1,223 12,925 24