Management’s Discussion & Analysis This section of Pima County’s comprehensive annual financial report presents a discussion and analysis of the County’s financial performance during the year ended June 30, 2005, and should be read in conjunction with the County’s basic financial statements in the following sections. All dollar amounts are expressed in thousands (000’s) unless otherwise noted. FINANCIAL HIGHLIGHTS • At June 30, 2005, the County’s combined assets exceeded combined liabilities (net assets) by $1,370,950, an increase of 9.1% from the prior year. Of this amount, $54,302 is available for general government expenditures (unrestricted net assets), $117,595 is restricted for specific purposes (restricted net assets), and $1,199,053 is invested in capital assets, net of related debt and accumulated depreciation. Composition of Net Assets Restricted net assets - $117,595 Unrestricted net assets - $54,302 Invested in capital assets, net of related debt $1,199,053 • Of the total fund balances of the County’s governmental funds, total fund balance increased $69,113 to $252,007, with $235,205 of this amount available for expenditure. Within the general fund, capital projects fund and the County’s other governmental funds, $33,171, $147,650 and $54,384 are available for future expenditures, respectively. • The general fund unreserved fund balance increased $7,543 from the previous year to $33,171. This balance accounts for approximately 8.9% of the County’s general fund expenditures and 4.6% of total governmental funds expenditures. • Pima Health System and Services had operating income of $1,165, an increase of $40,118 from the prior year's reported operating loss. 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As of June 30, 2005, unrestricted net assets totaled $54,302 and comprised approximately 4.0% of total net assets. The following chart shows the composition and changes in net assets for the fiscal years ended June 30, 2004 and June 30, 2005: Comparative Composition of Net Assets $1,136,303 $1,199,053 6/30/2004 6/30/2005 $83,711 $117,595 $36,254 Invested in capital assets, net of related debt Restricted net assets $54,302 Unrestricted net assets Governmental activities Governmental activities contributed $70,711, or 61.7% of the County’s $114,682 increase, in total net assets during fiscal year 2004-2005. The following table shows changes in net assets for governmental activities: 17 7DEOH *RYHUQPHQWDO$FWLYLWLHV &RPSDUDWLYH6WDWHPHQWVRI$FWLYLWLHV )RUWKH