2007 Comprehensive Annual Financial Report Pima County, Arizona For the Fiscal Year Ended June 30, 2007 PIMA COUNTY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2007 BOARD OF SUPERVISORS Richard Elías Chair District #5 Ramón Valadez Vice Chair District #2 Ann Day District #1 Sharon Bronson District #3 Ray Carroll District #4 COUNTY ADMINISTRATOR C. H. Huckelberry Prepared by the Pima County Department of Finance and Risk Management Tom Burke, Director Ellen Moulton, Deputy Director Paul Guerrero, CPA, Division Manager Financial Control & Reporting Accountants Willie Ames Claire Bice Greg Combithis Brenda DeBoo-Nicely Dana Dmitroff Toni Dunn Emilia Eveningred Mary Fellows Chuo Holliday Linda House Marilyn Hutzler Patrick McGee, CPA Grace Ochotorena Janet Peete Rosemarie Perry Shirin Reynolds, CPA Pete Rodriguez Blanca Rossetti Phil Schroeck Jennifer Serrano Kathy Talcott PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2007 TABLE OF CONTENTS Exhibit I. INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart 1–6 7 8 II. FINANCIAL SECTION Independent Auditors’ Report 9 – 11 A. MANAGEMENT’S DISCUSSION AND ANALYSIS (required supplementary information) B. Page 13 – 27 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets Statement of Activities Governmental Fund Financial Statements (Major and Other) Balance Sheet – Governmental Funds Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities A-1 A-2 29 30 – 31 A-3 32 A-4 33 A-5 34 A-6 35 Proprietary Fund Financial Statements (Major and Other) Statement of Net Assets – Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds Statement of Cash Flows – Proprietary Funds A-7 36 A-8 A-9 37 38 – 39 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets – Fiduciary Funds Statement of Changes in Fiduciary Net Assets – Fiduciary Funds A-10 A-11 40 41 Table of Contents (continued) Exhibit Notes to Financial Statements Note 1: Summary of significant accounting policies Note 2: Net asset beginning balances restated Note 3: Cash and investments Note 4: Due from other governments Note 5: Capital assets Note 6: Claims, judgments and risk management Note 7: Long-term liabilities Note 8: Landfill liabilities Note 9: Retirement plans Note 10: Interfund transactions Note 11: Construction and other significant commitments Note 12: Stewardship, compliance, and accountability (deficit fund balances) Note 13: Contingent liabilities Note 14: Subsequent event Page 42 – 47 47 48 – 52 52 53 – 54 54 – 55 56 – 64 64 – 65 65 – 67 67 – 68 68 – 69 69 69 69 C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT’S DISCUSSION AND ANALYSIS Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund B-1 Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund Schedule of Agent Retirement Plans’ Funding Progress 71 72 B-2 73 D. COMBINING STATEMENTS AND OTHER SCHEDULES Other (Nonmajor) Governmental Funds Combining Balance Sheet – Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds C-1 76 – 77 C-2 78 – 79 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Other Governmental Funds Capital Projects Fund Transportation – Special Revenue Fund Health and Animal Control – Special Revenue Fund Regional Flood Control District – Special Revenue Fund Employment and Training – Special Revenue Fund Other – Special Revenue Fund Other Grants – Special Revenue Fund School Reserve – Special Revenue Fund Environmental Quality – Special Revenue Fund Special Districts – Special Revenue Fund Solid Waste – Special Revenue Fund Library District – Special Revenue Fund Stadium District – Special Revenue Fund Debt Service Fund C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 C-13 C-14 C-15 C-16 81 82 83 84 85 86 87 88 89 90 91 92 93 94 Table of Contents (continued) Other (Nonmajor) Enterprise Funds Combining Statement of Net Assets – Nonmajor Enterprise Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets – Nonmajor Enterprise Funds Combining Statement of Cash Flows – Nonmajor Enterprise Funds Internal Service Funds Combining Statement of Net Assets – Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets – Internal Service Funds Combining Statement of Cash Flows – Internal Service Funds Fiduciary Funds Combining Statement of Fiduciary Net Assets – Investment Trust Funds Combining Statement of Changes in Fiduciary Net Assets – Investment Trust Funds Combining Statement of Fiduciary Net Assets – Agency Funds Combining Statement of Changes in Fiduciary Net Assets – Agency Funds III. STATISTICAL SECTION Financial Trends Information Net assets by component Changes in net assets Fund balances, governmental funds Changes in fund balances, governmental funds Revenue Capacity Information Taxable assessed value and estimated actual value of property Direct and overlapping property tax rates Direct and overlapping property tax rates-school districts Principal property taxpayers Real property tax levies and collections Assessed, limited and full cash (secondary) value of taxable property Comparative net valuations and tax rates Historical collections – hotel excise tax, car rental surcharges and recreational vehicle tax Streets and highways revenues Exhibit Page C-17 95 C-18 C-19 96 97 – 98 C-20 99 C-21 C-22 100 101 – 102 C-23 103 C-24 C-25 104 105 C-26 106 D-1 thru 4 107 – 111 D-5 thru 12 113 – 124 Table of Contents (continued) Exhibit D-13 thru 19 Page 125 – 134 Demographic and Economic Information Demographic and economic statistics Principal employers Population and employment Transportation and real estate Economic indicators by calendar year Population statistics Average annual jail population D-20 thru 26 135 – 142 Operating Information Employees by function Operating indicators by program Capital assets and infrastructure by program D-27 thru 29 143 – 145 Debt Capacity Information Ratios of outstanding debt by type to personal income and per capita Ratio of net general bonded debt to assessed value and net bonded debt per capita Ratio of direct and overlapping debt to property values and per capita Computation of direct and overlapping governmental activities debt outstanding Legal debt margin Wastewater Management liquid waste pledged sewer revenue debt coverage Pledged revenue bond coverage - transportation revenue bonds Pledged revenue bond coverage - lease revenue bonds Lease, lease-purchase, and purchase agreements Ratio of annual debt service expenditures for general bonded debt to total general expenditures Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2007 INTRODUCTORY SECTION Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart FINANCIAL SECTION STATISTICAL SECTION INTRODUCTION PIMA COUNTY INTRODUCTORY SECTION The purpose of the Introductory Section in a comprehensive annual financial report (CAFR) is to familiarize readers with the organizational structure of the government, the nature and scope of the services it provides and the specifics of its legal operating environment. 2 3 4 5 6 PIMA COUNTY ORGANIZATIONAL CHART RESIDENTS OF PIMA COUNTY Elected Officials _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ BOARD OF Elected Officals _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ __ RECORDER ASSESSOR __ CLERK OF THE BOARD __ CLERK OF THE SUPERIOR COURT __ CONSTABLES __ SCHOOL SUPERINTENDENT _ _ COUNTY ADMINISTRATOR SHERIFF _ _ SUPERIOR COURT _ _ TREASURER _ _ COUNTY ATTORNEY __ JUSTICE COURTS __ JUVENILE COURTS ADMINISTRATION COMMUNITY & ECONOMIC DEVELOPMENT JUSTICE & LAW ENFORCEMENT MEDICAL SERVICES PUBLIC WORKS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ 8 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ SUPERVISORS PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2007 INTRODUCTORY SECTION FINANCIAL SECTION Independent Auditors' Report Basic Financial Statements Required Supplementary Information Other than Management’s Discussion and Analysis Combining Statements and Other Schedules STATISTICAL SECTION FINANCIAL Management’s Discussion and Analysis FINANCIAL SECTION The Financial Section contains government-wide, combined, combining, and individual fund financial statements and schedules, which present a financial “overview” of Pima County. (This page is intentionally blank) 12 Management’s Discussion and Analysis 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, 2007, 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, 2007, the County’s combined assets exceeded combined liabilities (net assets) by $1,571,913, an increase of 5.1% from the prior year. Of this amount, $57,101 is available for general government expenditures (unrestricted net assets), $263,862 is restricted for specific purposes (restricted net assets), and $1,250,950 is invested in capital assets, net of related debt and accumulated depreciation. Comparative Composition of Net Assets $1,227,387 $1,250,950 6/30/2006 6/30/2007 $263,862 $214,334 $53,748 Invested in capital assets, net of related debt Restricted net assets $57,101 Unrestricted net assets • Of the total fund balances of the County’s governmental funds, total fund balance increased $16,662 to $230,660, with $207,772 of this amount available for expenditure. The amount available for expenditure is comprised of $48,671 for the General fund, $89,328 for the Capital Projects fund and $69,773 for the County’s other governmental funds. • The General fund unreserved fund balance increased $2,248 from the previous year to $48,671. This balance represents approximately 11.5% of the County’s General fund expenditures and 5.5% of total governmental funds expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements consist of four components: (1) Government-wide financial statements, (2) Fund financial statements, and (3) Notes to the basic financial statements. Required supplementary information (4) is included in addition to the basic financial statements. 13 Government-wide Financial Statements are designed to provide readers with a broad overview of County finances, in a manner similar to a private-sector business. The statement of net assets presents information on all County assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how 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 result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation or sick leave). Both of these government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or in part a portion of their costs through user fees and charges (businesstype activities). The governmental activities of the County include general government, public safety, highways and streets, sanitation, health, welfare, culture and recreation, and education and economic opportunity. The business-type activities of the County include Pima Health System & Services, Wastewater Management, Development Services and the County’s downtown parking garages. A discretely presented component unit is included in the basic financial statements and consists of a legally separate entity for which the County is financially accountable. The County reports the Southwestern Fair Commission, which operates the County Fairgrounds and the annual Pima County Fair, as a discretely presented component unit. The government-wide financial statements can be found on pages 29-31 of this report. Fund Financial Statements are groupings of related accounts that are used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance with applicable State statutes and federal OMB budgeting guidelines. All of the funds can be divided into three categories: (1) governmental funds, (2) proprietary funds, and (3) fiduciary 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 funds financial statements focus on near-term inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating the County’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 government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains fifteen individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General and Capital Projects funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. 14 The governmental fund financial statements can be found on pages 32-35 of this report. Proprietary funds are maintained in two ways. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for certain health care services, including medical and long-term health care, sewer systems maintenance and operation, real estate-related development services, and parking garage operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County’s various functions. The County uses internal service funds to account for risk management, automotive fleet maintenance and operations, printing and graphic services and telecommunications. Because these services predominantly benefit governmental rather than business-type functions, most of the assets and liabilities of these services have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Wastewater Management and Pima Health System & Services operations are considered to be major funds of the County. Data from the other enterprise funds are combined into a single, aggregated presentation. Similarly, the County’s internal service funds are combined into a single, aggregated presentation in the proprietary funds financial statements. Individual fund data for the other enterprise and internal service funds are provided in the form of combining statements elsewhere in this report. The proprietary fund financial statements can be found on pages 36-39 of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s programs. The fiduciary fund financial statements can be found on pages 40-41 of this report. Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found on pages 42-69 of this report. Required Supplementary Information (RSI) is presented concerning the County’s General fund budgetary schedule and the schedule of retirement plans’ funding progress. Required supplementary information can be found on pages 71-73 of this report. Combining Statements and Other Schedules referred to earlier provide information for non-major governmental and enterprise funds and internal service funds and are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 76-106 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve as a useful indicator of a government’s financial position over time. County assets exceeded liabilities by $1,571,913 at June 30, 2007. The following table shows condensed information for the Schedule of Assets, Liabilities, and Net Assets: 15 Table 1 Schedule of Assets, Liabilities, and Net Assets At June 30, 2007 Current and other assets Capital assets: Land, buildings, equipment, infrastructure & other Total assets Governmental Activities Fiscal Year 2006-2007 2005-2006* Business-type Activities Fiscal Year 2006-2007 2005-2006 Total Fiscal Year 2006-2007 2005-2006* $ $ $ 369,780 $ 342,488 153,227 $ 114,925 523,007 $ 457,413 1,258,762 1,628,542 1,146,334 1,488,822 646,309 799,536 597,365 712,290 1,905,071 2,428,078 1,743,699 2,201,112 Current and other liabilities Long-term liabilities Total liabilities 90,562 538,529 629,091 83,175 446,000 529,175 51,327 175,747 227,074 40,048 136,420 176,468 141,889 714,276 856,165 123,223 582,420 705,643 Net assets : Invested in capital assets, net of related debt 774,000 761,130 476,950 466,257 1,250,950 1,227,387 179,195 46,256 999,451 160,053 38,464 959,647 84,667 10,845 572,462 54,281 15,284 535,822 263,862 57,101 $ 1,571,913 214,334 53,748 $ 1,495,469 Restricted Unrestricted Total net assets $ $ $ $ *As restated - See Note 2 of the financial statements The largest portion of the County’s net assets reflects its investment in capital assets (i.e. land, buildings, infrastructure and equipment), less any related outstanding debt used to acquire those assets. As of June 30, 2007, investment in capital assets totaled $1,250,950, comprising approximately 79.6% of total net assets. The County uses a portion of these capital assets to provide services to its citizens, with the other portion available to its citizens for use; consequently, these assets are not available for future spending. The $23,563 increase in capital assets, net of related debt, is primarily due to the significant amount of capital project activity that has been completed and capitalized over the past year. Although the County’s investments in capital assets are 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. Restricted net assets represent resources that are subject to external restrictions on how they may be used. As of June 30, 2007, restricted net assets totaled $263,862 and comprised approximately 16.8% of total net assets. This represents a $49,528 increase in restricted net assets from the $214,334 balance of fiscal year 2005-06. The remaining balance of the County’s net assets represents unrestricted net assets, which may be used to meet the County’s ongoing obligations to citizens and creditors. As of June 30, 2007, unrestricted net assets totaled $57,101 and comprised approximately 3.6% of total net assets. Governmental activities Governmental activities contributed $39,804, or 52.1% of the County’s $76,444 increase, in total net assets during fiscal year 2006-07. The following table shows changes in net assets for governmental activities: 16 Table 2 Governmental Activities Schedule of Changes in Net Assets For the Years Ended June 30, 2007 and 2006 Fiscal Year 2006-2007 2005-2006* Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Property taxes State-shared taxes Investment earnings Other general revenues Total general revenues $ 66,898 139,324 15,085 221,307 $ 72,121 133,407 12,188 217,716 Variance Amount Percent $ (5,223) 5,917 2,897 3,591 -7.2% 4.4% 23.8% 1.6% 343,525 133,952 16,439 46,576 540,492 316,170 129,052 12,942 35,720 493,884 27,355 4,900 3,497 10,856 46,608 8.7% 3.8% 27.0% 30.4% 9.4% Total revenues 761,799 711,600 50,199 7.1% Expenses: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Unallocated depreciation and amortization Interest on long-term debt Total expenses 223,266 148,831 92,985 9,623 33,800 97,154 55,482 42,483 168 18,924 722,716 208,293 132,583 70,392 7,258 32,043 103,085 34,510 39,517 165 19,463 647,309 14,973 16,248 22,593 2,365 1,757 (5,931) 20,972 2,966 3 (539) 75,407 7.2% 12.3% 32.1% 32.6% 5.5% -5.8% 60.8% 7.5% 1.8% -2.8% 11.7% 39,083 64,291 (25,208) -39.2% Excess before transfers Transfers in (out) 721 Change in net assets Ending net assets (134) 39,804 $ 999,451 855 64,157 $ 959,647 -638.1% (24,353) $ 39,804 -38.0% 4.2% *As restated - See Note 2 of the financial statements • Key elements of the change in net assets from governmental activities include: Program revenues increased $3,591, reflecting increases in Operating grants and contributions and Capital grants and contributions of $8,814 and a decrease of $5,223 in Charges for services. ▪ Revenue from Operating grants and contributions increased by $5,917 due primarily to an increase of $8,886 in the function class culture and recreation. The County received $6,038 in city funding for transition costs of the County Free Library system. In addition, there was a $4,943 increase in highways and streets functional category due primarily to increased state funding for highway user fees, vehicle license tax, and lottery revenue. 17 ▪ Revenue from Capital grants and contributions increased by $2,897 due primarily to an increase of $3,928 in the function class highways and streets. The County received $4,765 in Urban-area HURF monies from the Pima Association of Governments for the Valencia Road: Mission to I-19 project. ▪ Revenue from Charges for services decreased by $5,223 due primarily to a decline in the home construction industry. Impact fee revenue has decreased by $7,711, a direct result of the decrease in residential building permits issued. • General revenues increased by $46,608, primarily due to increases in property taxes and other general revenues. Increases in real property assessed valuations were the primary factor creating a $27,355 increase in property tax revenues. Other general revenue increased by $10,856, due to increased land and building contributions and rent revenue from newly acquired buildings. • Total expenses for governmental activities increased by $75,407 due to the following: Expenses for Highways and streets increased by $22,593, due primarily to capital project expenditures for other governmental agencies. An increase of $20,972 in the culture and recreation function expenditures was primarily due to the transition of public library branches from the City of Tucson to the County Free Library District. The increase in expenditures for public safety of $16,248 is due primarily to an increase in personnel services due to salary and retirement rate increases and an increase in capital project expenditures. Expenditures for general government increased by $14,973, primarily attributable to salary adjustments of 4.5% for County employees. Business-type activities Business-type activities contributed $36,640, or 47.9%, of the County’s increase of $76,444 in total net assets during the year ended June 30, 2007. The following table shows changes in net assets for businesstype activities: 18 Table 3 Business-type Activities Schedule of Changes in Net Assets For the Years Ended June 30, 2007 and 2006 Fiscal Year 2006-2007 2005-2006 Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Capital contributions Investment earnings Other general revenues Total general revenues $ 376,195 5,174 803 382,172 $ 376,874 4,997 449 382,320 Variance Amount Percent $ (679) 177 354 (148) -0.2% 3.5% 78.8% 0.0% 25,217 5,510 1,522 32,249 14,607 3,849 1,348 19,804 10,610 1,661 174 12,445 72.6% 43.2% 12.9% 62.8% Total revenues 414,421 402,124 12,297 3.1% Expenses: Wastewater Management Pima Health System & Services Development Services Parking Garages Total expenses 98,222 261,859 15,400 1,579 377,060 82,701 256,583 14,422 1,479 355,185 15,521 5,276 978 100 21,875 18.8% 2.1% 6.8% 6.8% 6.2% 37,361 46,939 (9,578) -20.4% 134 (855) -638.1% 47,073 (10,433) -22.2% Excess before transfers Transfers in (out) (721) Change in net assets Ending net assets 36,640 $ 572,462 $ 535,822 $ 36,640 6.8% Key elements of the change in net assets from business-type activities include: • Revenue for Capital contributions increased by $10,610. Wastewater Management received developer conveyed capital assets with an estimated fair value of $25,421 for the fiscal year 200607. • Investment earnings increased by $1,661 due primarily to higher average cash balances and an increase in interest rates to 5.2%. Wastewater Management issued sewer revenue bonds in January 2007, which contributed to the higher cash balance. • Expenses for Wastewater Management increased by $15,521 due primarily to increases of $2,056 in employee compensation, the result of salary adjustments of 4.5% for County employees, $2,258 in operating supplies, $2,042 in general & administrative, $2,573 in depreciation, $1,434 loss on disposal of equipment, and $1,875 in interest expense. • Expenses for Pima Health System & Services increased by $5,276 due primarily to increases of $3,139 in medical & health care claims due to inflation and $1,200 in transition costs for the new Abrams Public Health Center. 19 FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental funds The County’s general government functions are accounted for in the General, Special Revenue, Debt Service, and Capital Project funds. Included in these funds are special districts governed by the Board of Supervisors. The focus of the County's governmental funds is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the County's financing requirements. In particular, unreserved fund balances may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. At June 30, 2007, the County's governmental funds reported combined fund balances of $230,660, an increase of $16,662 from the prior year. Approximately 90.1% of the combined fund balances, or $207,772, constitutes unreserved and undesignated fund balance, which is available to meet the County's current and future needs. The remainder of fund balance is reserved or designated to indicate that it is not available for new spending because it has been committed to the following: • $9,626 to reflect inventories and prepaid amounts • $8,155 to pay debt service • $3,276 for specified programs • $1,756 to reflect a loan receivable • $75 for capital repairs and refurbishments The General Fund is the chief operating fund of the County. At June 30, 2007, unreserved fund balance of the general fund was $48,671 while total fund balance reached $57,560. As a measure of the General fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 11.5% of total General fund expenditures, while total fund balance represents 13.7% of that same amount. Total fund balance for the General Fund increased $5,985 compared to the prior fiscal year. Revenue increased by $26,915 due to an increase of $9,402 for property taxes as a result of increased assessed property valuations, $8,289 for intergovernmental revenue as a result of increased taxes for sales, transient lodging, and vehicle license, and $6,502 for charges for services as a result of increased overhead for the Library District. Expenditures increased by $18,675 primarily due to a rise in personnel services resulting from salary and retirement rate increases. The excess of revenues over expenditures was $35,209, which is further reduced by net operating transfers out of $29,224. Operating transfers to other funds were higher for the fiscal year due to increases of $3,200 for the Facilities Renewal Fund, $3,000 for public transit costs within the Transportation Fund, $2,000 for the Information Technology Enhancement Fund, $3,200 for a Property Tax Rate Stabilization Fund, and $4,100 for the Space Acquisition Fund. Total fund balance for the Capital Projects Fund increased $4,976 compared to the prior fiscal year. The decrease of $6,444 for total revenue is related to the problems currently affecting the housing market and its impact on construction activity. Expenditures rose by $81,652 as a result of increases from construction activity on transportation projects of $21,784, from acquisitions and completions of building projects of $19,411, and from acquisitions of land under the open space preservation plan of $15,250. The defi20 ciency of revenues under expenditures was $173,639, which was offset by the issuance of general obligation bonds of $95,000, transportation bonds of $21,000, and certificates of participation of $30,320. In addition, operating transfers into the fund totaled $30,549, which included $11,500 of highway user revenue from the Transportation Fund and $14,883 of tax levy revenue from the Flood Control District Fund. Revenues for governmental functions totaled approximately $761,335 in fiscal year 2006-07, which represents an increase of $46,698 (6.5%) from the previous year. The following table presents the amount of revenues from various sources and increases or (decreases) from the prior year. Table 4 Governmental Funds Revenues Classified by Source Fiscal Year 2006-2007 2005-2006* Amount Percent Amount Percent Revenues by source: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Interest Miscellaneous Total revenues $ $ 348,700 521 7,132 303,392 63,508 6,550 13,988 17,544 761,335 45.8% 0.1% 0.9% 39.9% 8.3% 0.9% 1.8% 2.3% 100.0% $ $ 321,474 215 7,452 291,353 63,582 6,014 11,382 13,165 714,637 45.0% 0.0% 1.1% 40.8% 8.9% 0.8% 1.6% 1.8% 100.0% Variance Amount Percent $ $ 27,226 306 (320) 12,039 (74) 536 2,606 4,379 46,698 8.5% 142.3% -4.3% 4.1% -0.1% 8.9% 22.9% 33.3% 6.5% *As restated - See Note 2 of the financial statements The following provides an explanation of revenues by source that changed significantly over the prior year: • Taxes Revenues from property taxes increased $27,226. This was the result of continued increases in assessed property valuations and a County Free Library District tax rate increase from $0.2575 to $0.3675 per $100 of net assessed value. • Intergovernmental The $12,039 increase in intergovernmental revenue was due primarily to a $9,261 increase in state revenue the major portion of which was an increase in urban-HURF funding for roadway projects. In addition, $3,637 of sales tax revenue was received for the new Regional Transportation Authority roadway projects. • Miscellaneous revenue The $4,379 increase in miscellaneous revenue is due primarily to a $1,893 increase in rents from newly acquired and constructed buildings, a $1,542 increase in antiracketeering revenue, and a $1,233 increase in County Free Library District donations and grants. The following table presents expenditures by function compared to prior year amounts: 21 Table 5 Governmental Funds Expenditures by Function Fiscal Year Government Function General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service: - Principal - Interest - Miscellaneous Total expenditures 2006-2007 Amount Percent $ 222,434 24.9% 132,930 14.9% 42,683 4.8% 6,766 0.8% 32,311 3.6% 97,168 10.9% 45,197 5.1% 38,474 4.3% 202,659 22.7% 2005-2006 Amount Percent $ 203,881 26.8% 121,229 15.9% 39,394 5.2% 6,271 0.8% 30,038 3.9% 103,034 13.5% 28,561 3.8% 37,918 5.0% 121,007 15.9% Variance Amount Percent $ 18,553 9.1% 11,701 9.7% 3,289 8.4% 495 7.9% 2,273 7.6% (5,866) -5.7% 16,636 58.3% 556 1.5% 81,652 67.5% 53,733 18,965 12 $ 893,332 50,547 19,448 15 $ 761,343 3,186 (483) (3) $ 131,989 5.9% 2.1% 0.0% 100.0% 6.6% 2.6% 0.0% 100.0% 6.3% -2.5% -20.0% 17.2% Total expenditures in governmental funds increased during fiscal year 2006-07 by $131,989. • The $81,652 increase in capital outlay expenditures was due primarily to a $21,784 increase in roadway construction. In addition, there were increases of $19,411 in facilities acquisitions and $15,225 in land acquisitions. • The $18,553 increase in general government expenditures was due primarily to a 4.5% salary adjustment for County employees. • The $16,636 increase in culture and recreation expenditures resulted from the County assuming responsibility for the operations of all public library branches within the County Free Library District from the City of Tucson. Budget to Actual Comparison for the General Fund Overall, budgeted revenues and expenditures for the General Fund were generally consistent with actual fund activity. Actual revenues exceeded budgeted revenues by $13,642 and actual expenditures were less than budgeted expenditures by $18,049. No variances between the budget to actual amounts were significant enough to affect the County’s ability to provide future services. Proprietary funds The County’s proprietary fund functions are contained in the enterprise and internal service funds. The enterprise funds of the County are Pima Health System and Services, Wastewater Management, Development Services and Parking Garages. These business-type activities are accounted for in a similar fashion to private-sector businesses, and the costs for services provided are expected to be covered either fully or in part by current revenues generated, which include fees charged to external users. 22 The following table presents a comparison of this year’s enterprise fund activities with the prior year: Table 6 Enterprise Funds Schedule of Revenues, Expenses and Changes in Net Assets For the Fiscal Years ended June 30, 2007 and 2006 Fiscal Year 2006-2007 2005-2006 Operating revenues: Net patient services Charges for services Other Total net operating revenues $ 255,275 84,106 1,526 340,907 $ 252,034 82,162 1,348 335,544 Variance Amount Percent $ 3,241 1,944 178 5,363 1.3% 2.4% 13.2% 1.6% 4,175 2,171 2,035 1,246 351 1,257 4,433 1,631 2,752 20,051 5.7% 1.1% 22.4% 20.7% 27.0% 24.2% 30.9% 20.3% 13.1% 5.8% Operating expenses: Employee compensation Medical claims Operating supplies & services Utilities Sludge and refuse disposal Repair and maintenance General and administrative Consultants and professional services Depreciation and amortization Total operating expenses 77,627 208,122 11,140 7,253 1,649 6,441 18,761 9,649 23,844 364,486 Operating loss (23,579) (8,891) (14,688) 165.2% Nonoperating revenues (expenses): Intergovernmental revenue Interest income Sewer connection fees Interest expense Loss on disposal of capital assets Amortization of deferred charges Premium tax Total nonoperating revenues 12,029 5,556 30,757 (6,540) (1,601) (109) (5,091) 35,001 5,904 3,849 42,220 (4,720) (22) (97) (4,949) 42,185 6,125 1,707 (11,463) (1,820) (1,579) (12) (142) (7,184) 103.7% 44.4% -27.2% 38.6% 7177.3% 12.4% 2.9% -17.0% Income (loss) before contributions and transfers 11,422 33,294 (21,872) -65.7% Capital contributions Transfers in Transfers (out) Change in net assets 25,217 17 (738) 35,918 $ 14,607 156 (22) 48,035 10,610 (139) (716) (12,117) 72.6% -89.1% 3254.6% -25.2% $ 23 73,452 205,951 9,105 6,007 1,298 5,184 14,328 8,018 21,092 344,435 $ Key activity within the enterprise funds for fiscal year 2006-07 include the following: • While net operating revenues for the County’s Enterprise Funds increased $5,363, operating expenses increased $20,051, resulting in an operating loss of $23,579, or a decline of $14,688 from the prior year. The operating loss was due to losses reported of $20,868 by Wastewater Management, $4,010 by Development Services, and $41 by Parking Garages, as compared to the operating income reported by Pima Health System and Services of $1,340. • Net patient services revenues increased by $3,241 from fiscal year 2005-06. This is attributable to increased membership enrollment for Pima Health System and Services, which generated increases in capitation revenues. • Charges for services revenues increased by $1,944 as compared to the prior year. Wastewater Management reported an increase of $7,630 due to an increase in sewer utility service fee revenue. Development Services reported a decrease of $5,902 due to a drop in permit revenue, as a result of a decrease in construction activity. • Employee compensation expenses increased by $4,175 from fiscal year 2005-06, due to an increase of $2,056 for Wastewater Management and an increase of $1,182 for Development Services. Both increases were primarily due to the Board of Supervisor’s approved salary rate increases and position reclassifications. • Medical claims expense increased by $2,171 due to the cost of inflation and an increase in enrollment for Pima Health System and Services during the fiscal year. • Operating supplies & services increased $2,035 due to Wastewater Management treatment facility and odor control expansion. • General and administrative expenses increased $4,433 as compared to the prior year. Pima Health System and Services reported an increase of $1,200 due to transition costs for the new Abrams Public Health Center. Wastewater Management reported an increase of $2,041 due to increased interfund charges for motor pool, insurance, and overhead. • Depreciation and amortization expense increased $2,752 due to the completion of the Wastewater Management Ina Road Treatment Facility Expansion in June 2006. • Intergovernmental revenue increased $6,125 from fiscal year 2005-06. Wastewater Management reported an increase of $5,855 due primarily to a contract to construct sewer lines for the Federal Bureau of Prisons. • Sewer connection fees charged by Wastewater Management decreased by $11,463 due to a significant decline in new construction within the County. Capital Assets and Debt Administration Capital Assets The County’s investment in capital assets for its governmental and business-type activities as of June 30, 2007 amounted to $1,905,071 (net of accumulated depreciation), an increase of 9.3%. Of the $161,372 increase in net capital assets, $112,428 (69.7%) came from governmental activities and $48,944 (30.3%) came from business-type activities. The County’s investment in capital assets consists of land, buildings, sewage conveyance systems, infrastructure, equipment and construction in progress. 24 Capital assets for the governmental and business-type activities are presented below to illustrate changes from the prior year: Table 7 Governmental and Business-type Activities Capital Assets Land Construction in progress Buildings and improvements Sewage conveyance system Equipment Infrastructure Total Governmental Activities Fiscal Year 2006-2007 2005-2006 $ 257,387 $ 222,954 109,307 115,305 355,608 271,771 39,560 496,900 $ 1,258,762 38,634 497,670 $ 1,146,334 Business-type Activities Fiscal Year 2006-2007 2005-2006 $ 9,695 $ 8,706 35,637 14,842 239,576 239,799 349,455 327,335 11,946 6,683 $ 646,309 $ 597,365 Total Fiscal Year 2006-2007 2005-2006 $ 267,082 $ 231,660 144,944 130,147 595,184 511,570 349,455 327,335 51,506 45,317 496,900 497,670 $ 1,905,071 $ 1,743,699 Major capital asset events during the current fiscal year included the following: • Land increased by $35,422 due primarily to the following acquisitions for governmental activities: $11,557 for the Goff property, $5,103 for the Buckelew Farm property, $5,193 for various other open space acquisitions, $3,297 for land acquisition related to flood control projects, $2,217 for land acquisition related to transportation road projects, $2,100 for the 33 N. Stone Avenue property, $2,088 for the new justice/municipal court complex property, and $1,787 for the Sheriff’s Emergency Communications Center property. • Buildings and improvements increased by $83,614 due primarily to the newly-constructed Abrams Public Health Center for $26,863, the acquisitions of 33 N. Stone Avenue for $22,870 and of 3434 E. 22nd Street for $4,455, the expansion of the Sahuarita Landfill for $7,529, and the capitalization of the following projects: Brandi Fenton Memorial Park for $5,610 Curtis Park for $2,713 Improvements within the Summerhaven area for $1,981 Picture Rocks pool for $1,943 Midtown Public Library branch for $1,763 • Sewage conveyance systems increased by $22,120 due primarily to the contribution of developerbuilt conveyance systems for $8,701, the capitalization of the Carillo School/El Paso Street rehabilitation project for $3,634, and the capitalization of other miscellaneous conveyance rehabilitation projects for $6,153. The County’s infrastructure assets are recorded at historical cost and estimated historical cost in the government-wide financial statements. Additional information regarding the County’s capital assets can be found in Note 5 of the financial statements on pages 53-54 of this report. Long-term Debt Significant, comparative long-term debt entered into during the last two fiscal years is presented below: 25 Table 8 Governmental Activities Long-Term Debt Fiscal Year 2006-2007 2005-2006 Bonds issued (at face value): General obligation Street and highway revenue Loans COPs Capital leases Total $ 95,000 21,000 $ 4,836 $ 231 5,067 30,320 $ 146,320 During the fiscal year, the county received $95,000 in proceeds from the sale of general obligation bonds and $21,000 from the sale of transportation revenue bonds. As of June 30, 2007, $13,201 of proceeds from general obligation bonds and $1,572 from transportation revenue bonds were unspent. The majority of the general obligation bonds were spent on the Sonoran Desert open space and habitat protection plan, public safety, parks and recreational facilities, and public health and community facilities, while proceeds from transportation revenue bonds were allocated to various roadway projects. In addition, during the fiscal year, the County sold $30,320 in certificates of participation in order to finance the purchase and remodel of the 33 N. Stone Avenue building, as well as the remodel of the Jackson Employment Center for the Community Services department. During the fiscal year, Moody’s Investors Service raised its’ rating on the County’s General Obligation Debt Series 2007 from ‘A1’ to ‘Aa3’ and on the County’s Certificates of Participation Series 2003 from ‘A2’ to ‘A1’. Additionally, Standard & Poor’s Ratings Services raised its’ rating on the Street and Highway Revenue Bonds Series 2007 to “AA” from “A+’. State statutes limit the amount of general obligation debt a governmental entity may issue to 15% of its net assessed valuation. The current debt limitation for Pima County is $1,030,493, which is significantly in excess of Pima County’s outstanding general obligation debt. Additional information regarding the County’s debt can be found in Note 7 of the financial statements on pages 56-64 of this report. Economic Factors and Next Year’s Budget General Government revenues, excluding property tax revenues, is budgeted in fiscal year 2007-08 at $164.4 million, approximately $7.7 million more than the budget for fiscal year 2006-07. The slowing in the growth of these revenues is reflective of the overall economy which has been moderated by numerous factors including a downturn in residential construction, slowing rate of increase in housing prices, uncertainty in the sub-prime mortgage market, rising fuel prices and a volatile stock market. Partially offsetting these negative factors are positive components of our State and local economies including continued population growth, relatively low inflation, rising wages and higher commodity prices. Pima County is slightly less vulnerable to recession than the Phoenix metropolitan area primarily because the employment base is oriented towards national defense and higher education. Both of these sectors are expected to remain strong even though they may not grow substantially in the short term. New construction has already declined to levels not experienced since the late nineties. Sales prices of homes being sold are slowly declining which will impact valuations for taxing purposes. Employment in 26 housing construction, real estate and finance are all expected to decline in fiscal year 2007-08 and also into the next fiscal year. Population growth in Pima County will continue to increase but at a slower pace than in the last few years. The budget for fiscal year 2007-08 has expenditures for the General Fund increasing by approximately $49.2 million primarily due to the following: • • • • • • • • • • • • • • • • $24.5 million additional expenditure authority to provide for a General Fund Reserve equal to 5% of General Fund revenues $15.0 million for advance payment under the agreement with University Physicians Healthcare to operate the former Kino Community Hospital $7.5 million for an employee compensation plan (excluding commissioned and corrections officers) for a 2.1% general salary adjustment, a 2.5% market rate adjustment, and a 0.5% increase for employees who are members of the Arizona State Retirement System whose required contribution will increase by that percentage $6.1 million in supplemental funding for individual departments $2.9 million increase in General Fund Debt Service for certificates of participation issued in connection with the acquisition of the Bank of America building $1.4 million net increase in the County's contribution toward the cost of non-retirement benefits: $1.8 million net increase in state mandated employer contributions to the various state retirement system; $1.4 million increase for the County's contribution to individual employees’ Health Savings Accounts $2.5 million increase in mileage costs charged to various departments $2.4 million for a 10% increase in the step plan for commissioned officers effective January 6, 2008, a 5% increase in the step plan for correction officers and corrections specialists effective January 6, 2008, and a 10% increase in the step plan for corrections sergeants effective January 6, 2008 $1.0 million reserved for potential increases to critically deficient starting salaries - to be based on a pending market study $500,000 reserve to cover the impact of the implementation of voter approved Proposition 100 $500,000 reserve for potential Solid Waste Program operating losses $527,000 of various increases identified for General Fund departments that underwent a zero-base budget process $400,000 increase in Restoration to Competency funding $1.5 million net reduction for the primary and general elections held in 2006 partially offset by cost of the planned Presidential Preference Primary scheduled for early 2008 $18.7 million reduction in various fiscal year 2006/07 one-time expenditure items also includes the annualization of fiscal year 2006/07 supplemental requests, annualization of fiscal year 2006/07 salary adjustments, other position related adjustments, and adjustments for one time costs, etc. Request for Information This financial report is designed to provide a general overview of the County’s finances. Any questions concerning the information provided in this report or requests for additional financial information should be addressed to the Finance and Risk Management Department, 130 W. Congress, 6th Floor, Tucson, AZ, 85701. 27 (This page is intentionally blank) 28 Basic Financial Statements PIMA COUNTY, ARIZONA Statement of Net Assets As of June 30, 2007 (in thousands) Governmental Activities ASSETS Cash and cash equivalents Property taxes receivable (net) Interest receivable Internal balances Due from other governments Accounts receivable (net) Inventories Prepaids Special assessments receivable Other assets Restricted assets: Cash and cash equivalents Loans receivable Capital assets not being depreciated: Land Construction in progress Capital assets being depreciated (net): Buildings and improvements Sewage conveyance system Equipment Infrastructure $ $ LIABILITIES Accounts payable Accrued medical and healthcare claims Interest payable Contract retentions Employee compensation Due to other governments Deposits and rebates Deferred revenues Noncurrent liabilities: Due within one year Due in more than one year Total liabilities $ 351,853 9,219 2,226 Component Unit Southwestern Fair Commission $ 57,805 29,228 5,611 8,723 1,781 2,641 1,109 1,368 58 30 2 2,158 1,756 50,006 52,164 1,756 257,387 109,307 9,695 35,637 267,082 144,944 355,608 239,576 349,455 11,946 595,184 349,455 51,506 496,900 1,598 1,628,542 799,536 2,428,078 3,534 44,546 16,382 25,780 1,359 235 1,050 60,928 25,780 1,389 1,297 41,223 1,676 2,410 7,186 55,616 482,913 629,091 13,072 162,675 227,074 68,688 645,588 856,165 352 774,000 476,950 1,250,950 2,076 574 35,480 38,628 9,985 10,845 572,462 63,014 16,734 9,554 125,947 38,628 9,985 57,101 1,571,913 30 1,297 34,648 1,495 2,410 6,136 6,575 181 63,014 16,734 8,980 90,467 $ 71,047 Total 524 (2,343) 5,140 24,287 3,200 257 39,560 496,900 Total assets NET ASSETS Invested in capital assets, net of related debt Restricted for: Special revenue Highways and streets Debt service Capital projects Wastewater management Healthcare Unrestricted Total net assets 280,806 9,219 1,702 2,343 52,665 4,941 2,411 8,466 1,781 1,532 Primary Government Business-type Activities Exhibit A-1 46,256 999,451 $ $ See accompanying notes to financial statements 29 3 475 24 93 8 $ 1,098 3,182 PIMA COUNTY, ARIZONA Statement of Activities For the Year Ended June 30, 2007 (in thousands) Program Revenues Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization - unallocated Interest on long-term debt Total governmental activities Business-type activities: Wastewater Management Pima Health System & Services Development Services Parking Garages Total business-type activities Total primary government Component unit: Southwestern Fair Commission Total component units Expenses $ 223,266 148,831 92,985 9,623 33,800 97,154 55,482 42,483 168 18,924 722,716 Operating Grants and Contributions Charges for Services $ 26,663 9,797 11,732 4,747 10,270 2,991 698 28,574 8,523 62,000 1,196 11,940 607 8,894 17,590 66,898 139,324 15,085 436 4,738 803 $ 5,174 144,498 $ $ 88 88 $ 98,222 261,859 15,400 1,579 377,060 1,099,776 $ 106,266 257,142 11,239 1,548 376,195 443,093 $ $ 4,771 4,771 $ $ 4,934 4,934 $ Capital Grants and Contributions General revenues: Property taxes, levied for general purposes Property taxes, levied for regional flood control district Property taxes, levied for library district Property taxes, levied for debt service Hotel/motel taxes, levied for sports facility and tourism Other taxes, levied for stadium district Unrestricted share of state sales tax Unrestricted share of state vehicle license tax Grants and contributions not restricted to specific programs Interest and penalties on delinquent taxes Investment earnings Miscellaneous Capital and other contributions Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year, as restated Net assets at end of year See accompanying notes to financial statements 30 $ 1,461 234 11,996 1,373 21 $ 803 15,888 Exhibit A-2 Net (Expense) Revenue and Changes in Net Assets Governmental Activities $ Primary Government Business-type Activities (166,568) (130,277) (7,257) (3,680) (11,590) (96,547) (42,224) (24,174) (168) (18,924) (501,409) Total $ $ (501,409) 9,283 21 (4,161) (31) 5,112 5,112 Component Unit Southwestern Fair Commission (166,568) (130,277) (7,257) (3,680) (11,590) (96,547) (42,224) (24,174) (168) (18,924) (501,409) Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization - unallocated Interest on long-term debt Total governmental activities 9,283 21 (4,161) (31) 5,112 (496,297) Business-type activities: Wastewater Management Pima Health System & Services Development Services Parking Garages Total business-type activities Total primary government $ $ 246,640 22,832 25,144 48,909 8,715 1,884 106,985 26,967 9,468 5,149 16,439 16,309 5,051 721 541,213 39,804 959,647 999,451 $ 5,510 1,522 25,217 (721) 31,528 36,640 535,822 572,462 $ 251 251 246,640 22,832 25,144 48,909 8,715 1,884 106,985 26,967 9,468 5,149 21,949 17,831 30,268 127 15 572,741 76,444 1,495,469 1,571,913 142 393 2,789 3,182 $ Component unit: Southwestern Fair Commission Total component units General revenues: Property taxes, levied for general purposes Property taxes, levied for regional flood control district Property taxes, levied for library district Property taxes, levied for debt service Hotel/motel taxes, levied for sports facility and tourism Other taxes, levied for stadium district Unrestricted share of state sales tax Unrestricted share of state vehicle license tax Grants and contributions not restricted to specific programs Interest and penalties on delinquent taxes Investment earnings Miscellaneous Capital and other contributions Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year, as restated Net assets at end of year See accompanying notes to financial statements 31 PIMA COUNTY, ARIZONA Balance Sheet - Governmental Funds June 30, 2007 (in thousands) General Exhibit A-3 Capital Projects Other Governmental Funds Total Governmental Funds $ $ 81,827 2,964 431 1,790 22,994 2,841 1,954 104 1,781 315 $ 234,063 9,219 1,366 4,465 52,573 4,730 1,954 7,672 1,781 1,756 160 2,158 Assets Cash and cash equivalents Property taxes receivable (net) Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expenditures Special assessments receivable Loan receivable Other assets Restricted cash equivalents Total assets $ 47,916 6,255 321 1,704 24,088 1,835 104,320 614 971 5,491 54 7,448 120 1,441 160 2,158 $ 91,168 $ 113,728 $ 117,001 $ 321,897 $ 11,172 $ $ 12,514 9 84 2,716 2,144 955 $ 6,517 624 22 252 15,021 18,732 20 1,213 27 1,472 518 2,158 140 14,927 42,418 29 1,297 9,260 4,240 1,495 2,410 30,088 33,608 24,280 33,349 91,237 7,448 120 1,954 104 8,155 75 3,276 315 1,954 7,672 8,155 75 3,276 1,756 69,773 48,671 89,328 69,773 83,652 230,660 Liabilities and fund balances Liabilities: Accounts payable Interest payable Contract retentions Employee compensation Due to other funds Due to other governments Deposits and rebates Deferred revenues Total liabilities Fund balances: Reserved for: Inventory Prepaid expenditures Debt service Capital repairs and refurbishments Specified programs Loan receivable Unreserved, undesignated: General fund Capital projects Special revenue 1,441 48,671 89,328 Total fund balances Total liabilities and fund balances 57,560 $ 91,168 89,448 $ 113,728 $ 117,001 See accompanying notes to financial statements 32 $ 321,897 PIMA COUNTY, ARIZONA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2007 (in thousands) Fund balances - total governmental funds Exhibit A-4 $ 230,660 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds Governmental capital assets Less accumulated depreciation Some liabilities and their associated issuance costs are not due and payable in the current period and therefore are not reported in the governmental funds Bonds payable Certificates of participation payable Loans and leases payable Unamortized deferred issuance costs reported as other assets $ 1,827,695 (587,424) 1,240,271 (428,161) (31,731) (28,450) 1,372 (486,970) Some compensated absences are not due and payable shortly after June 30, 2007, and therefore are not reported in the governmental funds Employee compensation (24,743) Some liabilities are not due and payable shortly after June 30, 2007, and are therefore not reported in the governmental funds Landfill liability (17,330) Deferred revenue in governmental funds is susceptible to full accrual on the government-wide statements 23,952 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets 33,611 Net assets of governmental activities See accompanying notes to financial statements 33 $ 999,451 PIMA COUNTY, ARIZONA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2007 (in thousands) General Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous $ 252,350 2,795 152,271 33,604 5,526 3,321 6,828 Total revenues Capital Projects $ 456,695 Expenditures: Current: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service - principal - interest - miscellaneous Other Governmental Funds Total Governmental Funds $ $ 5,313 263 96,350 521 4,337 140,094 17,487 1,024 5,354 10,453 29,020 275,620 761,335 41,105 26,105 42,683 6,766 29,785 484 30,503 22,067 51,948 17,735 6 222,434 132,930 42,683 6,766 32,311 97,168 45,197 38,474 202,659 53,733 18,965 12 269,187 893,332 11,027 12,417 181,329 106,825 2,526 96,684 14,694 16,407 202,659 1,785 1,230 6 Total expenditures Exhibit A-5 348,700 521 7,132 303,392 63,508 6,550 13,988 17,544 421,486 202,659 35,209 (173,639) 6,433 (131,997) Other financing sources (uses): Premium on bonds Face amount of long-term debt Proceeds from sale of capital assets Transfers in Transfers (out) 2 3,560 (32,784) 1,427 146,320 390 30,549 (71) 1,429 146,320 1,426 86,089 (86,688) Total other financing sources (uses) (29,224) 178,615 Excess (deficiency) of revenues over (under) expenditures Net change in fund balances Fund balance at beginning of year, as restated 1,036 51,980 (53,833) (815) 5,985 4,976 5,618 16,579 51,575 84,472 78,245 214,292 Change in reserve for inventory Change in reserve for prepaids Fund balance at end of year 148,576 (209) (2) $ 57,560 $ 89,448 $ See accompanying notes to financial statements 34 83,652 (209) (2) $ 230,660 PIMA COUNTY, ARIZONA Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2007 (in thousands) Net change in fund balances - total governmental funds $ Exhibit A-6 16,579 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is depreciated over their estimated useful lives and reported as depreciation expense Expenditures for capital assets Less current year depreciation $ 157,162 (46,784) 110,378 Transfers of capital assets between governmental activities and proprietary funds are not reported in the governmental funds but are recognized in the statement of activities 707 The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds but increases long-term liabilities in the statement of net assets. Repayment of the principal of debt is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items Face amount of long-term debt Premium on bonds Debt service - principal payments Deferred issuance costs Amortization expense (146,320) (1,429) 53,733 902 (168) (93,282) Some revenues reported in the statement of activities do not represent the collection of current financial resources and therefore are not reported as revenues in the governmental funds. Donations of capital assets Property tax revenues Other 4,937 (26) 2,760 7,671 (3,012) (1,062) (4,309) (211) (8,594) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds Change in compensated absences Change in landfill liability Net book value of capital asset disposals Change in reservation of fund balances Internal service funds are used by management to charge the costs of certain activities to individual funds. A portion of the net expense of the internal service funds is reported with governmental activities Change in net assets of governmental activities See accompanying notes to financial statements 35 6,345 $ 39,804 PIMA COUNTY, ARIZONA Statement of Net Assets - Proprietary Funds June 30, 2007 (in thousands) Pima Health System & Services Assets Current assets: Cash and cash equivalents Restricted cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable (net) Inventory Prepaid expense Total current assets Noncurrent assets: Restricted cash and cash equivalents Capital assets: Land and other improvements Buildings and improvements Sewage conveyance system Equipment Less accumulated depreciation Construction in progress Total capital assets (net of accumulated depreciation) Deferred financing costs Total noncurrent assets $ Business-type Activities Enterprise Funds Other Wastewater Enterprise Management Funds $ 66 5 2,975 15,052 88 11 38,743 35,692 49,352 408 $ 14,809 Total Enterprise Funds $ 50 108 2,165 9,210 3,112 189 100,128 25 57 15,049 654 654 39,370 739,596 23,026 801,992 68,167 753 25,780 2,280 14,937 692 2,128 3,189 1,359 205 82 1,049 7,350 5,722 1,106 16,382 25,780 6,575 1,359 1,358 181 1,050 7,350 5,722 1 29,966 1,842 (8,653) 7,977 1 99 33,893 1,898 592 614 30,890 (13,675) 70 18,491 18,491 645 1 23 4,200 1,785 8,782 65,757 5,280 87,006 70,389 5,280 87,006 70,389 162,675 162,675 18,739 8,133 26,872 29,966 196,568 1,898 228,432 35,654 627 468,346 7,977 476,950 18,491 13,151 574 35,480 5,110 9,985 45,461 14,022 21,128 573,560 574 35,480 5,110 9,985 (1,208) $ 336 1,043 92 211 457 794 49,676 7,977 1,152 Net assets Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Wastewater management Healthcare Unrestricted 46,743 9,695 355,260 522,795 20,252 (297,330) 35,637 646,309 1,109 648,072 627 Total liabilities $ 1,861 12,927 943 (1,029) 19 627 Liabilities Current liabilities: Accounts payable Accrued medical and health care claims Employee compensation Interest payable Due to other funds Due to other governments Deferred revenues Current portion of sewer revenue bonds Current portion of wastewater loans payable Current portion reported but unpaid losses Current portion incurred but not reported losses Total current liabilities Noncurrent liabilities: Contracts and notes Sewer revenue bonds Wastewater loans payable Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities 71,047 49,352 524 113 5,140 24,287 3,200 257 153,920 Governmental ActivitiesInternal Service Funds 7,834 341,639 522,795 17,467 (287,648) 35,618 637,705 1,109 639,468 694 Total assets Total net assets 20,546 Exhibit A-7 9,404 33,518 $ 543,028 $ Some amounts reported for business-type activities in the Statement of Net Assets are different because certain internal service fund assets and liabilities are included with business-type activities. Net assets of business-type activities See accompanying notes to financial statements 36 (1,098) $ 572,462 $ 32,513 PIMA COUNTY, ARIZONA Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2007 (in thousands) Exhibit A-8 Business-type Activities Enterprise Funds Pima Health System & Services Operating revenues: Net patient services Charges for services Other $ Total net operating revenues Operating expenses: Employee compensation Medical claims Operating supplies and services Utilities Sludge and refuse disposal Repair and maintenance Incurred losses Insurance premiums General and administrative Consultants and professional services Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Intergovernmental revenue Investment earnings Sewer connection fees Interest expense Loss on disposal of capital assets Amortization of deferred charges Premium tax 255,275 1,867 979 Other Enterprise Funds Wastewater Management $ $ 69,453 330 $ 12,786 217 255,275 84,106 1,526 38,126 2,123 69,783 13,003 340,907 40,249 36,677 208,122 1,647 376 29,681 11,269 6,751 914 357 596 8,579 6,520 1,649 5,610 235 77,627 208,122 11,140 7,253 1,649 6,441 7,692 1,450 221 256,781 8,477 7,145 22,990 90,651 2,592 1,054 633 17,054 18,761 9,649 23,844 364,486 4,089 8,118 5,016 2,593 419 2,579 36,363 1,340 (20,868) (4,051) (23,579) 3,886 4,738 1,028 7,291 3,684 30,757 (6,499) (1,454) (109) 12,029 5,556 30,757 (6,540) (1,601) (109) (5,091) 844 (1) (5,091) Income (loss) before contributions and transfers $ 258,121 (41) (146) Total nonoperating revenues (expenses) Governmental ActivitiesInternal Service Funds Total Enterprise Funds 488 33,670 1,828 12,802 843 (3,208) 2,418 (21) 35,001 2,397 11,422 6,283 Capital contributions Transfers in Transfers (out) 17 Change in net assets 1,845 37,365 (3,292) 35,918 7,067 Net assets at beginning of year 7,559 505,663 24,420 537,642 25,446 21,128 573,560 32,513 Net assets at end of year 25,217 5,966 832 (654) $ 9,404 $ 543,028 25,217 17 (738) (84) $ Some amounts reported for business-type activities in the Statement of Activities are different because a portion of the net expense of certain internal service funds is reported with business-type activities. Change in net assets of business-type activities See accompanying notes to financial statements 37 722 $ 36,640 114 696 (26) PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2007 (in thousands) Pima Health System & Services Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from customers for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments for incurred losses Cash payments to employees for services Other Enterprise Funds Wastewater Management $ $ 254,741 1,031 (209,920) $ (38,182) Net cash provided by (used for) operating activities 7,670 Cash flows from noncapital financing activities: Interest paid on short-term credit Cash transfers in from other funds Cash transfers out to other funds Loans with other funds Premium tax Intergovernmental revenues Total Enterprise Funds 117 12,787 193 (3,680) (3,245) (29,483) (10,222) (77,887) 2,173 (15,501) (2,745) (10,768) (6,702) (4,050) 4,583 4,581 963 $ Cash flows from capital and related financing activities: Proceeds from issuance of bonds and loans Principal paid on bonds and loans Interest paid on bonds and loans Sewer connection fees Proceeds from sale or transfer of capital assets Proceeds from intergovernmental contract Purchase of capital assets (514) (5,091) 4,902 29 557 (739) 586 (104) Net cash provided by (used for) capital and related financing activities (87) Cash flows from investing activities: Interest received on cash and investments Net cash provided by investing activities $ 38,124 (108) (593) (5,091) 5,459 (108) (261) 599 (17) 170 752 (204) 51,429 (13,738) (6,121) 30,650 175 4,820 (44,028) (3,507) 23,448 (174) 23,187 (3,170) 963 3,276 794 5,033 2,215 963 3,276 794 5,033 2,215 7,807 28,273 (3,538) 32,542 4,378 12,739 57,425 18,347 88,511 42,365 17 Cash and cash equivalents at beginning of year $ (36) 51,429 (13,738) (6,121) 30,650 128 4,820 (43,720) Net increase (decrease) in cash and cash equivalents 117 334,217 1,554 (242,432) (10,986) Governmental ActivitiesInternal Service Funds 66,689 330 (28,832) (7,741) (36) Net cash provided by (used for) noncapital financing activities Cash and cash equivalents at end of year Exhibit A-9 20,546 $ 85,698 30 $ (Continued) See accompanying notes to financial statements 38 14,809 $ 121,053 337 $ 46,743 PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2007 (in thousands) Exhibit A-9.1 (Continued) Reconciliation of operating income (loss) to net cash provided (used) by operating activities Pima Health System & Services $ 1,340 Operating income (loss) Wastewater Management $ (20,868) Other Enterprise Funds $ (4,051) Total Enterprise Funds $ (23,579) Governmental ActivitiesInternal Service Funds $ 3,886 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Due from other governments Inventory and other assets Prepaid expenses Increase (decrease) in liabilities: Accounts payable Due to other funds Due to other governments Reported but unpaid losses Incurred but not reported losses Other current liabilities 221 22,990 633 23,844 (428) (297) 28 (11) (892) (1,872) (81) (96) (23) (55) (1,343) (2,169) (53) (162) (633) (6) 9 7,779 (6) 67 6,886 1,526 58 (69) Net cash provided by (used for) operating activities $ 7,670 198 $ 963 76 $ (4,050) 2,579 46 2 25 (3) 647 (2,825) 174 50 205 $ 4,583 $ 4,581 Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2007: Pima Health System and Services disposed of equipment with an original cost of $867 and accumulated depreciation of $721 for a loss on disposal of equipment of $146. Wastewater Management Enterprise Fund retired capital assets with a net book value of $1,582. Wastewater Management Enterprise Fund received contributed developer-built conveyance systems with estimated fair values totaling $25,421, and from other governments, capital assets with a fair value of $36. These contributions were recorded as an increase in capital assets and capital contributions. Wastewater Management Enterprise Fund recorded a Board of Supervisor approved connection fee credit agreement of $282. This credit was recorded as an increase to deferred revenue and a decrease to capital contributions. Wastewater Management Enterprise Fund retired expired sewer credit agreements totaling $42. This transaction was recorded as a decrease to deferred revenue and an increase in capital contributions. Wastewater Management Enterprise Fund transferred the capital assets of the Solid Waste Management division with a net book value of $644 to the County's general government and capital assets with a net book value of $10 to Internal Service Funds. Wastewater Management Enterprise Fund received fully-depreciated capital assets from the County's general capital assets of $80 and $7 from Other Enterprise Funds. Other Enterprise Funds transfered capital assets with a net book value of $84 and disposed of capital assets with a net book value of $1. Other Enterprise Funds transferred completely depreciated capital assets of $31 to the County's general government, $8 to the Wastewater Management Enterprise Fund, and $23 to the Transportation Fund. Internal Service Funds sold assets with a net book value of $358, resulting in a loss on disposal of $21. Internal Service Funds had unpaid transfers of $11. Internal Service Funds transferred in $57 for non cash personal services and $30 of capital assets from governmental activities. See accompanying notes to financial statements 39 PIMA COUNTY, ARIZONA Statement of Fiduciary Net Assets - Fiduciary Funds June 30, 2007 (in thousands) Investment Trust Funds ASSETS Cash and cash equivalents Interest receivable Due from other governments $ 297,267 1,485 Agency Funds $ 75,225 2,636 Total assets 298,752 LIABILITIES Employee compensation Due to other governments Deposits and rebates Total liabilities NET ASSETS Held in trust for participants Exhibit A-10 $ 298,752 See accompanying notes to financial statements 40 $ 77,861 $ 5,428 45,680 26,753 $ 77,861 PIMA COUNTY, ARIZONA Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended June 30, 2007 (in thousands) Exhibit A-11 Investment Trust Funds ADDITIONS Contributions from participants Total contributions $ Investment earnings Total investment earnings 13,551 13,551 Total additions 2,406,784 DEDUCTIONS Distributions to participants 2,345,253 Total deductions 2,345,253 Change in net assets 61,531 Net assets held in trust July 1, 2006 Net assets held in trust June 30, 2007 See accompanying notes to financial statements 41 2,393,233 2,393,233 237,221 $ 298,752 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 1 - Summary of Significant Accounting Policies The accounting policies of Pima County (County) conform to U.S. generally accepted accounting principles (GAAP) applicable to governmental units as promulgated by the Governmental Accounting Standards Board (GASB) and the regulatory requirements of the State of Arizona. A summary of the County’s significant accounting policies follows. A. Reporting Entity The County is a general-purpose local government that is governed by a separately elected board of Pima County supervisors. The accompanying financial statements present the activities of the County (the primary government) and its component units. Component units are legally separate entities for which the County is considered financially accountable. Blended component units, although legally separate entities, are in substance part of the County’s operations. Therefore, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize they are legally separate from the County. Each blended and discretely presented component unit discussed below has a June 30 yearend. The Pima County Stadium District, a legally separate entity, was formed to promote and establish major league baseball spring training in Pima County. The County Board of Supervisors is the Board of Directors of the District. Acting in the capacity of the Board of Directors, the Pima County Board of Supervisors is able to impose its will on the District. The Board of Directors levies the car rental surcharge rates and the recreation vehicle (RV) park tax for the District. The District is reported as a special revenue fund (blended component unit) in these financial statements. Complete financial statements for the District can be obtained from the Pima County Department of Finance and Risk Management located at 130 West Congress Street, Tucson, Arizona 85701. The Pima County Library District was established in 1986 when legislation allowed full taxing authority and the ability to enter into agreements with other jurisdictions for the provision of library services. The County Board of Supervisors is the Board of Directors of the District. On July 1, 2006, the District assumed control of the operations of all library branches in the City of Tucson. The transition of operations from the City of Tucson to the District is governed by an intergovernmental agreement. The Library District is reported as a special revenue fund (blended component unit) in these financial statements. Separate financial statements for the District are not available. The Pima County Regional Flood Control District was established in 1978. The District is responsible for floodplain management activities for the unincorporated areas of Pima County (except national forests, parks, monuments and Native American Nations), the City of South Tucson, and the Town of Sahuarita. The County Board of Supervisors is the Board of Directors for the Flood Control District. The Regional Flood Control District is reported as a special revenue fund (blended component unit) in these financial statements. Separate financial statements for the District are not available. The Southwestern Fair Commission, Inc. (SFC) is a nonprofit corporation, which manages and maintains the fairgrounds owned by the County and conducts an annual fair and other events at the fairgrounds. During the year ended June 30, 2007, the Commission and Pima County extended the lease agreement an additional twenty-five years. The Commission’s members are appointed, and can be removed at any time, by the Pima County Board of Supervisors. Based on these factors, and because SFC does not provide services entirely, or almost entirely to the County, but rather to the 42 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 1 - Summary of Significant Accounting Policies (continued) general citizenry, SFC is reported as a separate component unit (discrete presentation) in these financial statements. Complete financial statements for SFC can be obtained from the Pima County Department of Finance and Risk Management located at 130 West Congress Street, Tucson, Arizona 85701. Related Organization The Industrial Authority of Pima County (Authority) is a legally separate entity that was created to promote economic development and the development of affordable housing. The Authority fulfills its function through the issuance of tax-exempt bonds. The County Board of Supervisors appoints the Authority’s Board of Directors. The Authority’s operations are completely separate from the County and the County is not financially accountable for the Authority. Therefore, the financial activities of the Authority have not been included in the accompanying financial statements. B. Basis of Accounting Primary government: The government-wide, proprietary funds and fiduciary funds financial statements are presented using the economic resources measurement focus and the accrual basis of accounting, with the exception of agency funds, which have no measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenue in the year for which they are levied. Grants and donations are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental funds in the fund-based financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers all revenues reported in the governmental funds to be available if the revenues are collected within 30 days after year-end. Revenues that are collected after 30 days are reported as deferred revenues. The County’s major revenue sources that are susceptible to accrual are property taxes, intergovernmental and charges for services. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they are due and payable. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital lease agreements are reported as other financing sources. Under the terms of grant agreements, the County funds certain programs by a combination of grants and general revenues. Therefore, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. The County applies grant resources to such programs before using general revenues. The County’s business-type activities and enterprise funds follow FASB Statements and Interpretations issued on or before November 30, 1989; Accounting Principles Board Opinions; and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements. The County has chosen the option not to follow FASB statements and interpretations issued after November 30, 1989. 43 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 1 - Summary of Significant Accounting Policies (continued) Discretely presented component unit: SFC’s financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. The Commission’s policy is to apply all FASB pronouncements issued after November 30, 1989. C. Basis of Presentation The basic financial statements include both government-wide statements and fund-based financial statements. The government-wide statements focus on the County as a whole, while the fund-based financial statements focus on major funds. Each presentation provides valuable information that can be analyzed and compared between years and between governments to enhance the usefulness of the information. Government-wide statements provide information about the primary government and its component units. The statements include a statement of net assets and a statement of activities. These statements report the financial activities of the overall government, except for fiduciary activities. They also distinguish between the governmental and business-type activities of the County and between the County and its discretely presented component unit. Governmental activities are financed primarily through taxes and intergovernmental revenues. Business-type activities are financed in whole or in part by fees charged to external parties. A statement of activities presents a comparison between direct expenses and program revenues for each function of the County’s governmental activities and segment of its business-type activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The County does not allocate indirect expenses to programs or functions. Program revenues include: ƒ ƒ ƒ Charges for services (fines and forfeitures, licenses and permits, and special assessments) Operating grants and contributions Capital grants and contributions Revenues that are not classified as program revenues, including internally dedicated resources and all taxes, are reported as general revenues. The net effect of interfund activity has been eliminated from the government-wide financial statements to minimize the double counting of internal activities. Fund-based financial statements provide information about the County’s funds, including fiduciary funds and blended component units. Separate statements are presented for the governmental, proprietary, and fiduciary fund categories. The emphasis of fund-based financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as non-major funds. Fiduciary funds are aggregated and reported by fund type. Proprietary funds are financed mainly by fees and charges received from users of the services provided by the funds’ operations. 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. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. 44 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 1 - Summary of Significant Accounting Policies (continued) The County reports the following major governmental funds: The General Fund is the County’s primary operating fund. It accounts for all financial resources of the general government, except for those required to be accounted for in another fund. The Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities, other than those financed by proprietary funds. The County reports the following major enterprise funds: Pima Health System and Services provides payment for health care services including inpatient hospital care and outpatient clinical care for medical and psychiatric problems, indigent health care under the Arizona Health Care Cost Containment System (AHCCCS), an alternative to Medicaid, home health services and long-term nursing care. The Wastewater Management Fund accounts for the management and operation of wastewater treatment and water pollution control programs. The County reports the following fund types: Internal Service Funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the County, or to other governmental units, on a costreimbursement basis. These funds account for fleet maintenance and operation, insurance, printing and graphic services, and telecommunications services. Investment Trust Funds account for assets held by the County Treasurer in an external investment pool and individual investment accounts for the benefit of outside jurisdictions. Agency Funds account for the assets, held by the County as an agent, for individuals, private organizations or other governmental units. The agency fund is custodial in nature and does not present results of operations. D. Cash and Investments Primary government: For purposes of its statements of cash flows, the County considers only those highly liquid investments, with a maturity period of 3 months or less when purchased, to be cash equivalents. All investments are stated at fair value. If an individual fund has a deficit balance in the amount on deposit with the County Treasurer at yearend, that balance is reclassified as an amount due to other funds. Discretely presented component unit: SFC’s cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. 45 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 1 - Summary of Significant Accounting Policies (continued) E. Inventories and Prepaids The County accounts for its inventories in the governmental funds using the purchases method. Inventories of the governmental funds consist of expendable supplies held for consumption and are recorded as expenditures at the time of purchase. Amounts on hand at year-end are shown on the balance sheet as an asset for informational purposes only and are offset by a fund balance reserve to indicate that they do not constitute “available spendable resources.” These inventories are stated at cost using the first-in, first-out method or average cost method. Inventories in the government-wide and proprietary funds’ financial statements are recorded as assets when purchased and expensed when consumed. Inventories of Pima Health System and Services, an enterprise fund, are valued at the lower of cost or market, cost being determined on the first-in, first-out method. Inventories of Wastewater Management, an enterprise fund, are valued at lower of cost or market, cost being determined using the moving average method. Inventories of Fleet Services, an internal service fund, are valued at lower of cost or market, cost being determined using the moving average method. Prepaid expenses/expenditures are accounted for using the consumption method, except for the School Reserve Fund reported as an Other Governmental Fund, which uses the purchases method. F. Property Tax Calendar The County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. A lien assessed against real and personal property attaches on the first day of January preceding assessment and levy. G. Capital Assets Capital assets are reported at actual cost, or estimated historical cost if historical records are not available. Donated assets are reported at estimated fair value at the time received. Capitalization thresholds, depreciation methods, and estimated useful lives of capital assets reported in the government-wide statements and proprietary funds are as follows (excluding component units): C a p it a liz a t io n T h r e s h o ld D e p r e c ia t io n M e th o d E s t im a t e d U s e f u l L if e L and A ll N /A N /A L a n d im p r o v e m e n ts A ll S tr a ig h t L in e 2 0 - 3 0 Y ears $100 S tr a ig h t L in e 1 0 - 5 0 Y ears E q u ip m e n t $5 S tr a ig h t L in e 4 - 2 5 Y e a rs F le e t s e r v ic e v e h ic le s $5 U n its o f P r o d u c tio n b ased o n num b er o f h o u r s o r m ile s 5 - 1 5 Y e a rs $100 S tr a ig h t L in e 1 0 - 5 0 Y ears B u ild in g s a n d b u ild in g im p r o v e m e n ts I n f r a s tr u c tu r e 46 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 1 - Summary of Significant Accounting Policies (continued) Discretely presented component unit: SFC capital assets are reported at actual cost. Depreciation is provided by the straight-line method over the assets’ estimated useful life, which range from 3 to 40 years. H. Investment Earnings Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. I. Compensated Absences Compensated absences consist of vacation leave and a calculated amount of sick leave earned by employees based on services already rendered. Employees may accumulate up to 240 hours of vacation depending upon years of service, but any vacation hours in excess of the maximum amount that are unused at their year-end are forfeited. Upon termination of employment, all unused and unforfeited vacation benefits are paid to employees. Accordingly, vacation benefits are accrued as a liability in the financial statements. Employees may accumulate up to 1920 hours of sick leave. Generally, sick leave benefits provide for ordinary sick pay and are cumulative but are forfeited upon termination of employment. Sick leave benefits do not vest with employees; however employees who are eligible to retire from County service into the Arizona State Retirement System, Public Safety Personnel Retirement System, or Corrections Officer Retirement Plan may request sick leave be converted to annual leave, on a predetermined conversion basis. An estimate of those retirement payouts is accrued as a liability in the government-wide financial statements. Note 2: Net Asset Beginning Balances Restated The School Reserve fund reclassified certain financial activities from the County requiring the restatement of beginning net assets. The following summarizes the restatement of net assets: Governmental Activities Fund balance, Other Governmental Funds - June 30, 2006 Restatement of financial activity Fund balance, Other Governmental Funds - July 1, 2006 Net assets – June 30, 2006, as previously reported School reserve Net assets – July 1, 2006, as restated 47 $77,951 294 $78,245 $959,353 294 $959,647 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 3: Cash and Investments Primary Government The County’s cash and investment policies are governed by State statutes and by bond covenants. The County Treasurer is authorized to invest public monies in the State Treasurer’s Investment Pool; interest bearing savings accounts, certificates of deposit and repurchase agreements in eligible depositories; bonds or other obligations issued or guaranteed by the United States government or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or instrumentalities; specified state and local government bonds; specified commercial paper, bonds, debentures, and notes issued by corporations organized and doing business in the United States; and bonds of the State of Arizona or any of its counties, cities, towns, or school districts as specified by statute. In addition, the County Treasurer may invest trust funds in fixed income securities of corporations doing business in the United States or District of Columbia. Credit risk—The State statutes have the following requirements for credit risk; 1. Commercial paper must be rated P1 by Moody’s Investors Service or A1 or better by Standard and Poor’s rating service. 2. Corporate bonds, debentures, and notes must be rated A or better by Moody’s Investors Service or Standard and Poor’s rating service. 3. Fixed income securities must carry one of the two highest ratings by Moody’s Investors Service and Standard and Poor’s rating service. If only one of the above-mentioned services rates the security, it must carry the highest rating of that service. Custodial credit risk—Statutes also require collateral for demand deposits, certificates of deposit and repurchase agreements at 101 percent of all deposits not covered by federal depository insurance. Concentration of credit risk—Statutes do not include any requirements for concentration of credit risk. Interest rate risk—Statutes require that public monies invested in securities and deposits have a maximum maturity of 5 years and that public operating fund monies invested in securities and deposits have a maximum maturity of 3 years. Investments in repurchase agreements must have a maximum maturity of 180 days. Foreign currency risk—Statutes do not allow foreign investments. Deposits—At June 30, 2007, the carrying amount of the County’s deposits was $28,919 and the bank balance was $50,807. 48 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 3: Cash and Investments (continued) Custodial credit risk—Custodial credit risk is the risk that the County will not be able to recover its deposits if a financial institution fails. The County does not have a formal policy with respect to custodial credit risk. As of June 30, 2007, $907 of the County’s bank balance was exposed to custodial credit risk as follows: Uninsured with collateral held by the bank's safekeeping department $ Uninsured and uncollateralized 93 814 Total $ 907 Investments—At June 30, 2007, the County’s investments consisted of $468,073 invested in marketable securities and $279,434 invested in the State Treasurer’s Investment Pool. Cash from the County and from externally legally separate governments are pooled to purchase the investments in marketable securities and the State Treasurer’s Pool. The State Board of Investment provides oversight for the State Treasurer’s pools. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares and the participant’s shares are not identified with specific investments. Credit risk—Credit risk is the risk that an issuer or counterparty to an investment will not fulfill its obligations. The County does not have a formal investment policy with respect to credit risk. At June 30, 2007, credit risk for the County’s investments was as follows: Investment Type Commercial paper Corporate bonds Federal Farm Credit Bank Federal Home Loan Bank Fannie Mae (Federal National Mortgage Association) Freddie Mac (Federal Home Loan Mortgage Corp) U. S. Treasury money market fund State Treasurer Investment Pool Total Rating Rating Agency A1/P1 A/A1 AAA/Aaa AAA/Aaa AA-/Aa2 AAA/Aaa AAA/Aaa S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's S&P / Moody's Amount $ Unrated $ 123,847 73,051 24,918 34,606 92,579 68,442 6,212 279,434 703,089 Custodial credit risk—For an investment, custodial risk is the risk that, in the event of the counterparty’s failure, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County has no formal policy with respect to custodial credit risk. Of the County’s $747,507 of investments, $461,861, consisting of the commercial paper, corporate bonds, Federal Farm Credit, Federal Home Loan Bank, Fannie Mae and Freddie Mac discount notes, U. S. Treasury notes and tri-party repurchase agreement, is uninsured and held by a counterparty in the County’s name in book form. An additional $6,212 in a U.S. Treasury money market fund is held by a counterparty as trustee. Concentration of credit risk—The County has no formal policy with respect to limiting the amount the Treasurer may invest in any one issuer. Five (5) percent or more of the County’s investments were with the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. These investments were 12% and 9%, respectively, of the County’s total investments. 49 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 3: Cash and Investments (continued) Interest rate risk—Interest rate risk is the risk that changes in interest rates will adversely affect an investment’s fair value. The County does not have a formal investment policy with respect to interest rate risk. As of June 30, 2007, the County had the following investments: Weighted Average Investment Type State Treasurer Investment Pool 5 State Treasurer Investment Pool 7 Commercial paper Corporate bonds Federal Farm Credit Bank Federal Home Loan Bank Fannie Mae (Federal National Mortgage Association) Freddie Mac (Federal Home Loan Mortgage Corp) U.S. Treasury U.S. Treasury money market fund Tri-party repurchase agreement Amount $ 197,569 81,865 123,847 73,051 24,918 34,606 92,579 68,442 38,675 6,212 5,743 Total $ Maturity (Years) 0.21 0.14 0.11 1.84 1.71 2.11 0.55 0.60 1.98 0.00 0.00 747,507 A reconciliation of cash, deposits, and investments to amounts shown on the Statements of Net Assets follows: Cash on Hand Cash, deposits and investments: $ Governmental Activities 83 Amount of Deposits $ 28,919 Business-type Activities Investment Trust Funds Amount of Investments $ 747,507 Total $ Agency Funds 776,509 Totals Statement of Net Assets: Cash and cash equivalents Restricted cash and cash equivalents $ 280,806 2,158 $ 71,047 50,006 $ 297,267 $ 75,225 $ 724,345 52,164 Total $ 282,964 $ 121,053 $ 297,267 $ 75,225 $ 776,509 County Treasurer’s Investment Pool—Arizona Revised Statutes require community colleges, school districts, and other local governments to deposit certain public monies with the County Treasurer. The County Treasurer has a fiduciary responsibility to administer those and the County monies under her stewardship. The County Treasurer invests, on a pool basis, all idle monies not specifically invested for a fund or program. In addition, the County Treasurer determines the fair value of those pooled investments annually at June 30. The County Treasurer’s Investment Pool is not registered with the Securities and Exchange Commission as an investment company and there is no regulatory oversight of its operations. The structure of the Pool does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the value of the participants’ investments. The County Treasurer allocates interest earnings to each of the Pool’s participants. 50 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 3: Cash and Investments (continued) The Pool’s assets are subject to applicable risks as discussed above and consist of the following: $ Commerical Paper Corporate Bonds Federal Farm Credit Bank Federal Home Loan Bank Fannie Mae (Federal National Mortgage Association) Freddie Mac (Federal Home Loan Mortgage Corp) U.S. Treasury Tri-party repurchase agreement State Treasurer Investment Pool Cash Interest Recievable Prinicpal 124,560 73,958 25,000 35,000 93,655 69,200 39,300 5,743 102,118 1,900 643 Interest Rate 5.2-5.3% 4.9-5.8% 4.8-5.4% 4.9-5.5% 5.0-5.5% 4.8-5.5% 4.5-5.3% 4.30% N/A N/A N/A Maturities 4/07-5/07 7/07-2/11 7/07-9/10 7/07-8/10 7/07-6/10 7/07-10/10 2/08-5/10 7/07 N/A N/A N/A Fair Value $ 123,847 73,051 24,918 34,606 92,579 68,442 38,675 5,743 102,118 1,900 643 $ 566,522 A condensed statement of the investment pool’s net assets and changes in net assets follows: S tatem ent o f N et A ssets A ssets h eld in tru st fo r: In tern al p articip an ts E x tern al P articip an ts $ 3 5 0 ,4 6 3 2 1 6 ,0 5 9 5 6 6 ,5 2 2 0 T o tal liab ilities T o tal n et assets h eld in tru st $ S tatem en t o f C h an g es in N et A ssets T o tal ad d itio n s T o tal d ed u ctio ns $ N et in crease N et assets h eld in tru st: Ju ly 1 , 2 0 0 6 5 6 6 ,5 2 2 6 ,2 8 4 ,5 9 9 (6 ,1 7 6 ,5 6 0 ) 1 0 8 ,0 3 9 4 5 8 ,4 8 3 Ju n e 3 0 , 2 0 0 7 $ 51 5 6 6 ,5 2 2 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 3: Cash and Investments (continued) Discretely Presented Component Units Southwestern Fair Commission—At June 30, 2007, the commission’s cash and cash equivalents of $1,368 consisted of deposits with financial institutions. Of the total balance, $970 was exposed to custodial credit risk because it was uninsured and uncollateralized. Note 4: Due from Other Governments Governmental activities: Capital Projects Fund General Fund Other Governmental Funds Internal Service Funds Total Governmental Activities Federal government: Grants and contributions $ 152 $ 849 $ 10,441 $ 11,442 State of Arizona: Taxes and shared revenues 21,806 9,632 Grants and contributions 1,718 31,438 1,369 $ 4 3,091 City of Tucson: Reimbursement for services 1,671 1,076 2,747 Due from other governments: Reimbursement for services Total due from other governments fund based statements 459 $ 2,924 24,088 $ 5,491 476 $ 3,947 88 22,994 $ 92 $ 52,665 Business-type activities: P im a H e a lt h S y stem a n d S e r v ic e s W a stew a te r M anagem ent B u s in e s s - t y p e A c t iv it ie s T o t a l F e d e r a l g o v e r n m e n t: G r a n ts a n d c o n tr ib u tio n s R e im b u r s e m e n t f o r s e r v ic e s $ $ 127 2 ,1 6 5 $ 2 ,1 6 5 127 2 ,8 4 8 2 ,8 4 8 S ta te o f A r iz o n a : G r a n ts a n d c o n tr ib u tio n s T o ta l d u e f r o m o th e r G o v e r n m e n ts $ 2 ,9 7 5 52 $ 2 ,1 6 5 $ 5 ,1 4 0 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 5: Capital Assets Capital asset activity for the year ended June 30, 2007, was as follows: Balance July 1, 2006 (as reclassified) Governmental activities: Capital assets not being depreciated: Land Construction in Progress Total capital assets not being depreciated $ Capital assets being depreciated: Buildings & Improvements Infrastructure Equipment Total capital assets being depreciated 222,918 115,305 338,223 Increases $ 38,459 82,922 121,381 Balance June 30, 2007 Decreases $ (3,990) (88,920) (92,910) $ 384,056 889,651 93,224 1,366,931 93,128 29,146 11,878 134,152 Less accumulated depreciation for: Buildings & Improvements Infrastructure Equipment Total accumulated depreciation (112,249) (391,981) (54,590) (558,820) (9,220) (29,916) (10,382) (49,518) 7,096 7,239 (121,326) (421,897) (57,876) (601,099) Total capital assets, being depreciated, net 808,111 84,634 (677) 892,068 Governmental activities capital assets, net $ 1,146,334 $ Balance July 1, 2006 Business-type activities: Capital assets not being depreciated: Land Construction in Progress Total capital assets not being depreciated $ 8,706 14,842 23,548 206,015 (250) 257,387 109,307 366,694 (7,666) (7,916) 143 $ Increases $ 1,610 28,910 30,520 476,934 918,797 97,436 1,493,167 (93,587) $ Balance June 30, 2007 Decreases $ (621) (8,115) (8,736) 1,258,762 $ 9,695 35,637 45,332 Capital assets being depreciated: Buildings & Improvements Infrastructure Equipment Total capital assets being depreciated 354,303 490,600 16,265 861,168 12,877 33,064 6,918 52,859 (11,920) (869) (2,931) (15,720) 355,260 522,795 20,252 898,307 Less accumulated depreciation for: Buildings & Improvements Infrastructure Equipment Total accumulated depreciation (114,504) (163,265) (9,582) (287,351) (11,793) (10,695) (1,442) (23,930) 10,613 620 2,718 13,951 (115,684) (173,340) (8,306) (297,330) Total capital assets, being depreciated, net Business-type activities capital assets, net $ 573,817 597,365 $ 28,929 59,449 $ (1,769) (10,505) $ 600,977 646,309 At July 1, 2006, the School Reserve Land Improvements of $36 were reclassified from Land to Buildings and Improvements. The Buildings and Improvements classification is appropriate due to the depreciable nature of the assets. 53 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 5: Capital Assets (continued) Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highway and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Internal service funds Total governmental activities depreciation expense $ 6,295 9,484 25,629 457 761 8 3,604 546 2,579 49,363 $ Business-type activities: Pima Health System & Services Parking Garages Wastewater Management Development Services Total business-type activities depreciation expense $ 221 336 22,990 297 23,844 $ Balance July 1, 2006 Discretely presented component units: Southwestern Fair Commission (SFC): Capital assets not being depreciated: Construction in Progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and improvements Equipment Total capital assets being depreciated Increases $ 3 3 $ 3 3 3,707 1,612 5,319 199 161 360 3,906 1,773 5,679 Less accumulated depreciation for: Buildings and improvements Equipment Total accumulated depreciation (2,200) (1,210) (3,410) (108) (88) (196) (2,308) (1,298) (3,606) Total capital assets being depreciated, net 1,909 164 2,073 SFC capital assets, net $ Balance June 30, 2007 Decreases $ 1,909 $ 167 $ 2,076 Note 6: Claims, Judgments, and Risk Management Pima County is a defendant in a number of court actions. In the opinion of County management, the final disposition of these actions, if unfavorable, will not have a material effect upon the County's financial statements. 54 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 6: Claims, Judgments, and Risk Management (continued) The County is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; medical malpractice; environmental claims; and natural disasters. Claims against the County are accounted for in the Self Insurance Trust Fund (the Fund), an internal service fund. Annually, an actuarial evaluation is performed to determine the County’s anticipated losses except for environmental, unemployment and dental losses. Environmental losses are based on reported claims and the County risk manager’s knowledge and experience. Unemployment and dental losses are based on claims that have been submitted but not yet paid by the Fund. Losses accounted for include reported and paid, reported but unpaid, and incurred but not reported. All liabilities of the Fund except for environmental, unemployment and dental losses are reported at their present value using an expected future investment yield assumption of four percent. The County purchases commercial insurance for claims in excess of coverage provided by the Fund and for some other risks of loss. Settled claims have not exceeded insurance coverage in any of the last three fiscal years. All funds of the County participate in the Fund. With the exception of environmental, unemployment and dental losses, payments to the Fund are based on actuarial estimates of the amounts needed to pay prior and current-year claims. Payments to the Fund for environmental losses are based on historical experience, since an actuarial basis is not available. Payments for unemployment and dental losses are based on actual claims made. The claims liability of $32,857 reported in the Fund at June 30, 2007, is based on estimates of the ultimate cost of claims that have been reported but not settled, and of claims that have been incurred but not reported. The ultimate cost of claims includes incremental claim adjustment expenses that have been allocated to specific claims, as well as salvage and subrogation. No other claim adjustment expenses have been included. Claim s liability balance - beginning Current year claims and changes in estim ates Claim s paym ents Claim s liability balance - ending 55 $ $ 2007 35,508 8,118 (10,769) 32,857 $ $ 2006 30,273 12,185 (6,950) 35,508 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June30, 2007. Balance July 1, 2006 Governmental activities: General obligation bonds Plus unamortized deferred amount Total general obligation bonds $ Balance July 1, 2007 Due within 1 year 36,720 49 36,769 $ 289,590 560 290,150 $ 31,255 49 31,304 760 1,470 745 11,435 25 11,460 136,400 141 136,541 11,745 26 11,771 16 16 30,320 1,411 31,731 1,245 94 1,339 5,739 2,025 3,714 2,714 28,335 (2,106) 197 26,426 1,785 (192) 97 1,690 26,550 (1,914) 100 24,736 1,870 (192) 80 1,758 32,165 3,715 28,450 4,472 10,769 22,939 9,918 4,200 1,785 231,310 608 231,918 Reductions $ 95,000 1 95,001 $ 2,230 Flood control bonds 126,835 165 127,000 Transportation revenue bonds Plus unamortized deferred amount Total transportation revenue bonds Special assessment bonds with governmental commitment 21,000 1 21,001 911 911 30,320 1,427 31,747 Certificates of participation Plus unamortized deferred amount Total certificates of participation Loans and Leases: Transportation loans payable Capital leases payable: Jail capital lease Less unamortized deferred amount Other capital leases Total capital leases Total loans and leases Reported but unpaid losses (Note 6) Incurred but not reported losses (Note 6) Landfill closure and post-closure care costs (Note 8) Total governmental activities long-termliabilities Additions $ 25,764 9,744 7,944 174 16,268 1,062 445,089 $ 156,929 56 17,330 $ 63,489 $ 538,529 $ 55,616 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) Balance July 1, 2006 Additions Reductions Balance July 1, 2007 55,525 (3,815) 51,710 $ 50,000 442 50,442 $ $ 80,367 (219) 80,148 1,429 Due within 1 year Business-type activities: Sewer revenue bonds Less unamortized deferred amount Total revenue bonds payable $ 97,290 (2,934) 94,356 1,429 5,503 (37) 5,466 76,293 (182) 76,111 4,562 787 69 5,280 $ 136,420 $ 52,658 $ 13,331 $ 175,747 $ 244 $ 244 Wastewater loans payable Less unamortized deferred amount Total loans payable Contracts and notes Total business-type activities long-term liabilities 8,235 (439) 7,796 $ 7,350 7,350 5,722 5,722 $ 13,072 Discretely presented component unit: Southwestern Fair Commission notes payable GENERAL OBLIGATION BONDS OUTSTANDING Governmental Activities (Payments made from property tax revenues of the Debt Service Fund) General obligation bonds payable at June 30, 2007, consisted of the outstanding general obligation bonds presented below. Of the total amounts originally authorized, $28,371 from the May 20, 1997, $398,465 from the May 18, 2004, and $51,845 from the May 16, 2006 bond election remain unissued. The following table presents amounts outstanding by issue. Issue Issue Amount Series of 1998 $ 42,420 Series of 1999 50,000 Series of 2000 50,000 Series of 2001 Refunding 17,835 Series of 2002 20,000 Series of 2003 50,000 Series of 2004 65,000 Series of 2005 65,000 Series of 2007 95,000 G.O. bonds outstanding Plus unamortized deferred amount: Interest Rates 4.50 - 4.60% 5.00 - 5.08% 4.00 - 5.00% 4.50 - 5.00% 4.13 - 4.50% 3.25 - 4.25% 3.00 - 5.00% 3.50 - 5.00% 3.00 - 4.50% Maturities 2008-13 2008-10 2008-14 2008-09 2008-16 2008-17 2008-19 2008-20 2008-21 Total G.O. bonds outstanding 57 Outstanding June 30, 2007 $ 14,050 11,115 21,000 4,465 8,500 37,100 50,430 52,315 90,615 289,590 560 $ 290,150 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details general obligation bond debt service requirements to maturity at June 30, 2007. Principal $ 31,255 25,660 25,080 22,740 23,355 107,675 53,825 $ 289,590 Year Ending June 30, 2008 2009 2010 2011 2012 2013 - 2017 2018 - 2021 Total Interest 12,343 10,939 9,782 8,657 7,638 23,079 3,811 $ 76,249 $ ADVANCED REFUNDINGS OF GENERAL OBLIGATION BONDS In prior years, the County 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 liability for these defeased bonds are not included in the County’s financial statements. At June 30, 2007, the following outstanding bonds were considered defeased: Outstanding June 30, 2007 $ 980 $ 5,785 1979 General Obligation Refunding Bonds Series of 1999 FLOOD CONTROL REFUNDING BONDS OUTSTANDING Governmental Activities (Payments made from property tax revenues of the Debt Service Fund of the District) The Pima County Regional Flood Control District outstanding bonds payable at June 30, 2007 is presented below. Issue Series 2001 Refunding Issue Amount $ 4,585 Interest Rates Maturities 4.10 - 4.20% 2008-09 Outstanding June 30, 2007 $ 1,470 The following schedule details flood control bond debt service requirements to maturity at June 30, 2007. Principal $ 745 725 $ 1,470 Year Ending June 30, 2008 2009 Total 58 Interest $ 61 30 $ 91 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) TRANSPORTATION BONDS Governmental Activities (Payments made from street and highway revenues) Pima County transportation revenue bonds of 1998 were issued to provide monies to construct improvements to the County’s streets and highways. Of the total amount originally authorized, $147,800 from the November 4, 1997 bond election remains unissued. Interest Issue Issue Rates Maturities Amount Series of 1998 $ 40,000 4.50% 2008 Series of 2002 55,000 4.00 - 4.38% 2008-12 Series of 2003 35,000 3.38 - 4.38% 2008-18 Series of 2005 51,200 3.50 - 5.00% 2008-20 21,000 3.25 - 4.75% 2008-22 Series of 2007 Transportation bonds outstanding Plus unamortized deferred amount: Total transportation bonds outstanding Outstanding June 30, 2007 $ 4,000 30,410 29,790 51,200 21,000 136,400 141 $ 136,541 The following schedule details transportation bond debt service requirements to maturity at June 30, 2007. Year Ending June 30, 2008 2009 2010 2011 2012 2013 - 2017 2018 - 2022 Total Principal $ 11,745 12,215 12,720 13,280 13,865 43,900 28,675 $ 136,400 Interest 5,659 5,183 4,692 4,136 3,552 11,309 2,373 $ 36,904 $ TRANSPORTATION LOANS PAYABLE Governmental Activities During the fiscal year ended June 30, 2006, Pima County Transportation Department entered into a loan agreement to provide funds for roadway improvements of Alvernon Way. Interest on the Alvernon HELP loan is calculated and paid on an annual basis. Issue 2006 HELP Loan - Alvernon Issue Amount $ 4,836 Interest Rate 3.06% Total transportation loan payable 59 Maturities 2008-09 Outstanding June 30, 2007 $ 3,714 $ 3,714 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details transportation loans debt service requirements to maturity at June 30, 2007. Year Ending June 30, 2008 2009 Total Principal $ 2,714 1,000 $ 3,714 Interest 114 61 $ 175 $ CERTIFICATES OF PARTICIPATION Governmental Activities (Payments made from General Fund revenues) Certificates of Participation represent proportionate interests in semiannual lease payments. The County’s obligation to make lease payments is subject to annual appropriations being made by the County for that purpose. On May 1, 2007, the County issued Certificates of Participation Series 2007A for $28,765 to finance the acquisition of and improvements to a 22-story office tower located in downtown Tucson, and Taxable Series 2007-B for $1,555 to acquire and construct replacement facilities for the Pima County Community Services Department. These projects are collectively referred to as the “Justice Building Project.” The following schedule details outstanding Certificates of Participation payable at June 30, 2007. Issue Amount Issue Series 2007-A Justice Building Project $ 28,765 Series 2007-B Justice Building Project - Taxable 1,555 Interest Rates 4.00 - 5.00% 5.04 - 5.22% Maturities 2008-2022 2008-2009 Certificates of participation outstanding Plus unamortized deferred amount Total certificates of participatation outstanding Outstanding June 30, 2007 $ 28,765 1,555 $ 30,320 1,411 31,731 The following schedule details debt service requirements to maturity for the County’s Certificates of Participation payable at June 30, 2007. Year Ending June 30, 2008 2009 2010 2011 2012 2013 - 2017 2018 - 2022 Total Principal $ 1,245 1,545 1,610 1,675 1,740 9,905 12,600 $ 30,320 60 Interest 1,667 1,364 1,298 1,234 1,167 4,639 1,951 $ 13,320 $ PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) CAPITAL LEASES Governmental Activities On February 1, 1997, the County entered into an agreement to sell certain jail facilities and then lease them back for a 15-year term. The jail facilities were sold for $34,500, and the proceeds were used to finance the construction of the baseball stadium. On September 1, 1999 and October 1, 2003, Pima County amended the capital lease agreement between U.S. Bank Trust National Association and Pima County. The amendments extended the lease term to 2014 and 2018 respectively, increased the range of interest rates and increased the County’s obligation under the lease agreement. The County has also entered into capital leases for telephone and computer equipment. The outstanding balance as of June 30, 2007, for these leases totaled $100. The net book value of assets acquired through capital leases consists of $19,394 of buildings and $171 of equipment. The following schedule details capital lease debt service requirements to maturity at June 30, 2007. Governmental Activities: Year Ending June 30, 2008 2009 2010 2011 2012 2013 - 2017 2018 - 2022 Buildings Principal Interest $ 1,870 $ 1,139 1,965 1,062 2,025 982 2,125 879 2,230 774 13,400 2,032 2,935 61 $ 26,550 $ 6,929 Equipment Principal Interest $ 80 $ 2 20 $ 100 $ 2 SEWER REVENUE BONDS Business-type Activities (Payments made from user charges received in the Wastewater Management Enterprise Fund) Pima County sewer revenue bonds, as presented below, were issued to provide monies to construct improvements to the County’s wastewater management system. Of the total amount originally authorized, $3,666 from the May 20, 1997, and $100,277 from the May 18, 2004 bond election remain unissued. Issue Interest Issue Amount Rates Maturities Series of 1998 $ 29,185 4.00 - 5.50% 2008-15 Series 2001 Refunding 19,440 4.00 - 5.38% 2008-15 Series of 2004 Refunding 25,770 3.25 - 5.50% 2008-15 Series of 2007 50,000 3.75 - 5.00% 2008-26 Sewer revenue bonds outstanding Less unamortized deferred amount: Total sewer revenue bonds outstanding 61 Outstanding June 30, 2007 15,555 $ 13,845 20,555 47,335 97,290 (2,934) 94,356 $ PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details sewer revenue bond debt service requirements to maturity at June 30, 2007. Year Ending June 30, 2008 2009 2010 2011 2012 2013 - 2017 2018 - 2022 2023 - 2026 Principal $ 7,350 7,650 6,990 7,310 8,395 31,755 13,955 13,885 $ 97,290 Interest $ 4,352 4,049 3,706 3,409 3,078 9,619 4,744 1,439 $ 34,396 LOANS PAYABLE Business-type Activities (Payments made from user charges received in the Wastewater Management Enterprise Fund) Wastewater Management (WWM) entered into loan agreements (1996, 1997, 2000 and 2004 loans payable) to provide funds for the defeasance of prior sewer revenue bonds and the construction and improvement of wastewater treatment facilities. Interest is payable semiannually and is calculated based on the principal amount of the loan outstanding during such period. During fiscal year 05-06 the 2004 WIFA loan was amended to a total of $19,967. On March 21, 2007, the remaining balance of $1,490 was drawn down. Issue Issue Amount 1996 Loans Payable $ 11,313 1997 Loans Payable 7,500 2000 Loans Payable 61,180 2004 Loans Payable 19,967 Loans payable Less unamortized deferred amount Total loans payable Interest Rates 3.19% 2.95% 2.20% 1.81% Maturities 2008-12 2008-11 2008-16 2008-24 Outstanding June 30, 2007 $ 7,132 3,102 46,092 19,967 76,293 (182) $ 76,111 The following schedule details loans payable debt service requirements to maturity at June 30, 2007. Year Ending June 30, 2008 2009 2010 2011 2012 2013 - 2017 2018 - 2022 2023 - 2024 Principal $ 5,722 5,955 6,317 7,604 7,891 32,480 6,134 4,190 $ 76,293 62 Interest $ 2,624 2,423 2,200 1,949 1,667 4,665 1,214 210 $ 16,952 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) CONTRACTS AND NOTES Business-type Activities (Payments made from restricted assets in the Wastewater Management Fund) Contracts and notes consist of contract retentions for several construction projects. Generally, interest is not accrued and the timing of payments is based on completion of the related construction projects. NOTES PAYABLE Component Unit - Southwestern Fair Commission (SFC) (Payments made from user charges) In prior years, the Commission had incurred long-term debt to construct the drag strip. The debt had an original maturity of July 2008. During the year ended June 30, 2007, the Commission paid off $ 244 in total debt, leaving no balance on their long-term debt. LEGAL DEBT MARGIN County General Obligation Bonds General obligation debt may not exceed six percent of the value of the County’s taxable property as of the latest assessment. However, Pima County received voter approval to increase the debt limit to 15 percent of the value of taxable property. The legal debt margin at June 30, 2007, is as follows: Net assessed valuation $ 6,869,955 Debt Limit (15% of net assessed valuation): 1,030,493 Amount of debt applicable to debt limit: General obligation bonds outstanding $ 289,590 Less net assets in debt service fund available for payment of general obligation bond principal (7,431) Legal debt margin available (282,159) $ 63 748,334 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 7: Long-Term Liabilities (continued) Flood Control General Obligation Bonds Flood Control general obligation debt may not exceed 5 percent of the value of the Flood Control District’s taxable property as of the latest assessment. Legal debt margin at June 30, 2007, is as follows: Net assessed valuation $ 6,113,953 305,698 Debt Limit (5% of net assessed valuation): Amount of debt applicable to debt limit: Flood control general obligation bonds outstanding Less net assets in debt service fund available for payment of flood control bond principal $ 1,470 (23) Legal debt margin available (1,447) $ 304,251 Note 8: Landfill Liabilities SOLID WASTE LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS: State and Federal laws and regulations require the County to place a final cover on its solid waste landfill sites when these sites stop accepting waste and to perform certain maintenance and monitoring functions at the sites for thirty years after their closure. Although closure and post-closure care costs will not be paid until near or after the date the landfills stop accepting waste, the County records a portion of these closure and post-closure care costs as a long-term liability in each period , based on landfill capacity used as of each balance sheet date. The $17,330 reported as landfill closure and postclosure care long-term liability within the governmental activities represents the cumulative amount reported to date, based on the percentage used of each landfill's total estimated capacity. The County will recognize the remaining estimated cost of closure and post-closure care of $6,278 as the remaining estimated capacities are used. These amounts are based on what it would cost to perform all closure and post-closure care in the fiscal year ended June 30, 2007; actual costs may change due to inflation, changes in technology, or changes in regulations. Landfill Site Capacity Used June 30, 2007 Estimated Remaining Service Life Ajo * Sahuarita Tangerine 100% 43% 86% 0 Year 16 Years 3 Years *Life extending facility development options are presently being considered for the Ajo Landfill, including vertical and/or horizontal expansion. 64 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 8: Landfill Liabilities (continued) The County plans to fund the estimated closure and post-closure care costs with proceeds of general obligation bonds and with solid waste tipping fees. According to state and federal laws and regulations, the County must comply with the local government financial test requirements that assure the County can meet the costs of landfill closure, post-closure, and corrective action when needed. The County is in compliance with these requirements. The Ina Road Landfill facility is closed to municipal solid waste and only receives construction debris. It is not subject to the closure and post-closure cost requirements referred to above. Pima County estimates that it will cost approximately $9,272 when closure occurs and plans to fund the cost with proceeds of general obligation bonds and with solid waste tipping fees. At this time, there is no closure date available. Note 9: Retirement Plans Plan Descriptions The County contributes to the Arizona State Retirement System (ASRS), the Corrections Officer Retirement Plan (CORP), the Public Safety Personnel Retirement System (PSPRS), consisting of Pima County Sheriffs and Pima County - County Attorney Investigators, and the Elected Officials Retirement Plan (EORP). The EORP and the PSPRS - Pima County, County Attorney Investigators, are not described due to their relative insignificance to the County’s financial statements. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The ASRS administers a cost-sharing multiple-employer defined benefit pension plan that covers general employees of the County. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The PSPRS is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and 212 local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The CORP is an agent multiple-employer defined benefit pension plan that covers certain employees of the State of Arizona’s Departments of Corrections and Juvenile Corrections, and County employees whose primary duties require direct inmate contact. The CORP is governed by the Fund Manager of PSPRS and 21 local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 6. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by contacting the applicable plan. A SRS PSPR S and C O R P 3 3 0 0 N . C e n te ra l A v e P h o e n ix , A Z 8 5 0 1 2 (6 0 2 ) 2 4 0 -2 0 0 0 o r (8 0 0 ) 6 2 1 -3 7 7 8 3 0 1 0 E a s t C a m e lb a c k R o a d S u ite 2 0 0 P h o e n ix , A Z 8 5 0 1 6 -4 4 1 6 (6 0 2 ) 2 5 5 -5 5 7 5 65 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 9: Retirement Plans (continued) Funding Policy The Arizona State Legislature establishes and may amend active plan members’ and the County’s contribution rates. Cost-sharing plans For the year ended June 30, 2007, active ASRS members and the County were each required by statute to contribute at the actuarially determined rate of 9.10 percent (8.60 percent retirement and 0.50 percent long-term disability) of the members’ annual covered payroll. The County’s contributions to ASRS for the years ended June 30, 2007, 2006 and 2005 were $23,105, $17,551 and $12,602 respectively, which were equal to the required contributions for the applicable year. Agent plans For the year ended June 30, 2007, active PSPRS members were required by statute to contribute 7.65 percent of the members’ annual covered payroll, and the County was required to contribute at the actuarially determined rate of 18.85 percent. As allowed by statute, the County contributed 3.65 percent of the members’ required contribution, with the members contributing 4.00 percent. Active CORP members were required by statute to contribute 8.50 percent of the members’ annual covered payroll, and the County was required to contribute at the actuarially determined rate of 8.46 percent. Annual Pension Cost: The County’s pension cost for the two agent plans for the year ended June 30, 2007, and related information follow: Contribution rates: County PSPRS CORP 22.50% 8.46% Plan members Annual pension cost Contributions made Actuarial valuation date Actuarial cost method Actuarial Assumptions: Investment rate of return Projected salary increases includes inflation at Amortization method Remaining amortization period 8.50% 5.50% - 8.50% 5.00% Level percentage open 30 Years 8.50% 5.50% - 8.50% 5.00% Level percentage open 30 Years Asset valuation method Smoothed market value Smoothed market value 4.00% 5,422 5,422 June 30, 2005 Projected unit credit $ $ 66 $ $ 8.50% 1,224 1,224 June 30, 2005 Projected unit credit PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 9: Retirement Plans (continued) Trend Information: Information for each of the three most recent actuarial valuations for each of the agent plans follows: Contributions Required and Contributions Made Plan Annual Pension Cost (APC) Year Ended June 30 Percentage of APC Contributed Net Pension Obligation PSPRS 2007 2006 2005 $ 5,422 4,720 3,325 100% 100% 100% $ - CORP 2007 2006 2005 $ 1,224 1,088 782 100% 100% 100% $ - Note 10: Interfund Transactions A. Interfund Assets/ Liabilities Due from / Due to Other Funds are used to record loans or unpaid operating transfers between funds. Other Governmental 497 21 499 $ vi ce Se r 3 $ 108 $ 1,243 $ 793 33 178 17 1 16 To ta l In te rn al En te r O PH S th er & Se r vi ce s $ $ Pima Health System & Services $ 1,472 818 2,144 1,152 10 Other Enterprise 1 Internal Service 21 $ 1,704 624 208 1,152 Wastewater Management Total O G the ov r er nm en ta l Ca pi ta lP ro je ct s l en er a G Amounts recorded as due to: General Capital Projects pr ise Amounts recorded as due from: 205 1 1 $ 971 $ 1,790 $ 5 1 $ 108 $ 1,043 23 $ 5,621 B. Transfers Transfers are used to record transactions between individual funds to subsidize their operations and fund debt service payments and capital construction projects. $ 71 $ Capital Projects Other Governmental Se rv ic es 3,489 To ta l $ 30,549 $ 32,186 19,794 51,980 $ Internal Service 598 $ 32,784 1 $ $ 67 71 $ 53,833 3,560 30,549 Pima Health System & Services Total In te rn al W as M tew an at ag er em en t m en ta l O th er G ita lP ov er n ro je ct s General Ca p G en er al Amounts recorded as transfers transfers iin: n: Amounts recorded as transfers out: $ 17 17 10 10 609 $ 17 $ 86,715 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 10: Interfund Transactions (continued) The table above does not include transfers of capital assets and long-term liabilities from the proprietary funds to the governmental activities because these are not reported in the governmental funds. During the year, the County transferred in to the Internal Service Funds $57 to record the transfer of a long-term liability to the Governmental Activities. In addition, the following proprietary funds transferred capital assets with Governmental Activities: Transfer from Wastewater Management Enterprise Fund Other Enterprise Internal Services Transfer to Capital assets $ Capital assets Capital assets Subtotal Total $ Transfer from 644 84 9 737 (30) 707 Capital assets Transfer to Internal Services Note 11: Construction and Other Significant Commitments At June 30, 2007, Pima County had the following major contractual commitments related to Cultural Resources, Facilities Management, General Government, Pima Health System and Services, Transportation and Wastewater Management. Cultural Resources At June 30, 2007, the Pima County Cultural Resources Department had construction contractual commitments of $6,654. Funding for these expenditures will be provided from general obligation bonds. Facilities Management At June 30, 2007, the Pima County Facilities Management Department had construction contractual commitments of $11,670. Funding for these expenditures will be provided from general obligation bonds. General Government At June 30, 2007, Pima County had contractual commitments related to service contracts for Institutional Health of $79,166 and Risk Management of $1,663. Funding for these expenditures will be primarily provided from general fund revenues. Pima Health System & Services At June 30, 2007, Pima County had contractual commitments related to service contracts for Pima Health System & Services of $89,388. Funding for these expenditures will be primarily provided from federal and state funding sources. Transportation At June 30, 2007, the Pima County Transportation Department had construction contractual commitments of $57,651 and other contractual commitments related to service contracts of $14,317. Funding for these expenditures will be primarily provided from Transportation Revenue Bonds and Highway User Tax Revenue, the primary source of revenue for the Transportation Department. 68 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2007 (in thousands) Note 11: Construction and Other Significant Commitments (continued) Wastewater Management At June 30, 2007, the Wastewater Management Enterprise fund had construction contractual commitments of $18,350 and other contractual commitments related to service contracts of $4,051. Funding for these expenditures will be primarily from Sewer Revenue Bonds and related fees. Note 12: Stewardship, Compliance and Accountability (Deficit Fund Balances) The Special Revenue Other Grants Fund and the Special Districts Fund (both non-major governmental funds) had deficit fund balances at June 30, 2007, of $740 and $593 respectively. These deficits can be eliminated in the future through normal operations. Note 13: Contingent Liabilities The County has entered into settlement negotiations with Arizona Department of Environmental Quality (ADEQ) to resolve litigation associated with the cleanup of the Camino del Cerro landfill. Cleanup expenses have been incurred and include a soil vapor extraction system, a series of drainage improvements, re-grade landfill cap and groundwater remediation. The liability is not presented within the financial statements because the outcome of the litigation is uncertain and the amount of the loss cannot be reasonably estimated. Pima County has been named a co-defendant, along with the State of Arizona in lawsuits filed by the Qwest and Cox companies. The litigation challenges the taxes assessed on their assets. The future outcome of this litigation is uncertain and any potential liability is not estimable. Note 14: Subsequent Event On October 17, 2007, the town of Marana, Arizona filed a lawsuit against Pima County after negotiations over the transfer of the sewer treatment facilities and conveyance system, failed to produce an agreement. The town of Marana rescinded the 1979 agreement with Pima County to operate and supply sewer services to the town. The liability and future outcome of this litigation is unknown at this time. 69 (This page is intentionally blank) 70 Required Supplementary Information Other Than Management’s Discussion & Analysis PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual - General Fund For the Year Ended June 30, 2007 (in thousands) Budgeted Amounts Original Final Revenues: Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Expenditures: Assessor Board of Supervisors Clerk of Superior Court Community & Economic Development Constables County Administration County Attorney Department of Institutional Health Forensic Science Center Justice Courts Juvenile Court Justice & Law Enforcement Public Works Recorder Sheriff Superior Court Superior Court Mandated Services School Superintendent Treasurer Debt Service - principal - interest - miscellaneous Total expenditures Excess of revenues over expenditures 253,565 2,473 145,517 30,648 5,495 1,623 3,732 443,053 $ Exhibit B-1 Variance Over/Under Actual 253,565 2,473 145,517 30,648 5,495 1,623 3,732 443,053 $ 252,350 2,795 152,271 33,604 5,526 3,321 6,828 456,695 $ (1,215) 322 6,754 2,956 31 1,698 3,096 13,642 8,470 1,675 10,653 15,610 847 52,477 19,062 98,146 2,579 7,579 23,907 27,839 28,438 2,826 103,697 27,426 1,575 1,332 2,377 1,785 1,230 5 439,535 8,470 1,675 10,653 15,610 847 52,477 19,062 98,146 2,579 7,579 23,907 27,839 28,438 2,826 103,697 27,426 1,575 1,332 2,377 1,785 1,230 5 439,535 8,190 1,639 10,631 15,078 874 36,018 18,266 96,684 2,526 7,253 23,150 28,442 28,177 2,519 106,825 27,150 1,840 1,329 1,874 1,785 1,230 6 421,486 280 36 22 532 (27) 16,459 796 1,462 53 326 757 (603) 261 307 (3,128) 276 (265) 3 503 (1) 18,049 3,518 3,518 35,209 31,691 Other financing sources (uses): Transfers in Transfers (out) Total other financing uses 3,301 (29,658) (26,357) 3,301 (29,658) (26,357) 3,560 (32,784) (29,224) 259 (3,126) (2,867) Net change in fund balance (22,839) (22,839) 5,985 28,824 Fund balance at beginning of year Fund balance at end of year $ 45,839 23,000 $ 45,839 23,000 See notes to required supplementary information 71 $ 51,575 57,560 $ 5,736 34,560 PIMA COUNTY, ARIZONA Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund June 30, 2007 (in thousands) Note 1: Budgetary Basis of Accounting Arizona Revised Statutes (ARS § 42-17101) requires that on or before the third Monday in July of each year, the Board of Supervisors adopt a tentative budget for the fiscal year. A public hearing and special board meeting is scheduled at which time the final budget is adopted. The County adopts, on a modified accrual basis, budgets for all governmental fund types (General, Special Revenue, Debt Service, and Capital Projects Fund). Operating plans for all Enterprise Funds are also adopted as part of the budget document. Per ARS § 42-17106, expenditures may not be in excess of the amounts specified for each purpose in the budget, except as provided by law. Each Special Revenue Fund maintains budgetary control at the fund or sub-fund level where applicable. Budgetary control for the Capital Projects Fund and the Debt Service Fund are at the fund level. Adopted budgets provide that the beginning unreserved fund balance plus revenues and other financing sources equal expenditures and other uses. ARS § 42-17106 requires that amendments to the budget, including transfers of appropriations between departments or funds are not permissible unless the Board of Supervisors determines that it is in the public interest and it is based on a demonstrated need. Note 2: Excess of Expenditures Over Appropriations For the year ended June 30, 2007, expenditures exceeded appropriations in the following General Fund departments (the legal level of budgetary control) by the following amounts: Sheriff, $3,128; Justice & Law Enforcement, $603; Superior Court Mandated Services, $265; Constables, $27; and Debt Service Miscellaneous, $1. These over-expenditures were funded by greater than anticipated revenues. 72 PIMA COUNTY, ARIZONA Schedule of Agent Retirement Plans' Funding Progress June 30, 2007 (in thousands) Plan Year Ended June 30 Actuarial Value of Plan Assets Actuarial Accrued Liability Funding Liability (Excess) Exhibit B-2 Annual Covered Payroll Funded Ratio Unfunded Liability as Percentage of Covered Payroll PSPRS 2007 2006 2005 $ 128,524 133,450 132,736 $ 197,365 181,084 162,817 $ 68,841 47,634 30,081 65.1% 73.7% 81.5% $ 29,428 28,556 24,313 233.9% 166.8% 123.7% CORP 2007 2006 2005 $ 44,196 43,318 41,729 $ 54,488 49,891 45,244 $ 10,292 6,573 3,515 81.1% 86.8% 92.2% $ 20,190 17,658 15,681 51.0% 37.2% 22.4% 73 (This page is intentionally blank) 74 Combining Statements and Other Schedules Other (Nonmajor) Governmental Funds OTHER GOVERNMENTAL FUNDS (Nonmajor) Transportation Fund - to account for administrative and operating costs, as well as resources transferred to the Capital Projects Fund for construction of highways and streets. Financing is provided primarily from the County share of gasoline and vehicle license taxes collected by the State. Health and Animal Control Fund - to account for resources used to finance activities involved in the conservation and improvement of public health. Major sources of funding include Federal and State grants, charges for services provided, and operating transfers from the General Fund. Regional Flood Control District Fund - to account for amounts expended to protect persons and property from floodwaters. Revenues are provided by taxes on real property and government grants. The Regional Flood Control District is a blended component unit of Pima County. Employment and Training Fund - to account for resources controlled by the County as a prime sponsor under the Workforce Investment Act. Financing is provided by the Federal Government. Other Special Revenue Fund - to account for resources specifically identified to be expended for the various other programs of the County. These include various probation programs, consumer protection programs, family support, antiracketeering programs, law library, etc. Revenues are provided by fines, intergovernmental revenues, fees and forfeitures, and charges for services. Other Special Revenue Grants Fund - to account for Federal and State grants received by the County not required to be accounted for in a separate fund. Each grant has a specific project objective and the grants funds must be used for a stated purpose. School Reserve Fund - to account for Federal and State grants received by the Superintendent of Schools. Each grant has a specific project objective and the grants funds must be used for a stated purpose. Environmental Quality Fund - to account for resources specifically identified to be expended for protection of water, air and land from pollutants. Revenues are provided by fines, fees and forfeitures, licenses, permits and Federal and State grants. Special Districts Fund - to account for financial activity related to Improvement Districts, which are legally separate districts not accounted for elsewhere. Solid Waste Fund – to account for the resources used to finance the operations of the County’s landfills and transfer stations, and to account for the state shared revenue tax for the tire recycling program. Library District Fund – to account for the resources used to finance activities to provide library services to Pima County and the City of Tucson. Revenues are provided primarily by Library District taxes. The Library District is a blended component unit of Pima County. Stadium District Fund - to account for resources specifically identified to be expended for the Stadium District. Revenues are provided by the car rental, hotel/motel bed and recreation vehicle park taxes and charges for services provided. The Stadium District is a blended component unit of Pima County. Debt Service Fund - to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. (This page is intentionally blank) 75 PIMA COUNTY, ARIZONA Combining Balance Sheet - Nonmajor Governmental Funds June 30, 2007 (in thousands) Transportation Health and Animal Control Special Revenue Funds Regional Flood Control Employment District and Training $ $ $ Other Grants Other Assets Cash and cash equivalents Property taxes receivable (net of allowances for uncollectables) Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expenditures Special assessments receivable Loan receivable Total assets 8,207 19 1,132 10,535 4 1,772 36 1,552 891 732 15 120 1,254 2 2,329 120 182 17 $ $ 3 42,731 $ 455 2,943 70 136 247 283 1,750 7 15 3,682 13 16 11 1 315 $ 22,020 $ 4,202 $ 3,015 $ 3,029 $ 45,158 $ 4,173 $ 3,363 $ 1,336 $ 1,677 $ 1,121 $ 1,493 $ 1,459 9 Liabilities and fund balances Liabilities: Accounts payable Interest payable Contract retentions Employee compensation Due to other funds Due to other governments Deferred revenues Total liabilities 595 467 254 4,465 442 8 82 133 24 82 442 615 2 177 364 180 1,108 613 8 304 2,520 1,102 621 9,144 2,888 2,537 2,260 3,324 4,913 1 Fund balances: Reserved for inventory Reserved for prepaid expenditures Reserved for debt service Reserved for capital repairs and refurbishments Reserved for specified programs Reserved for loan receivable Unreserved 1,772 36 182 17 3 16 11 315 10,753 1,115 475 753 41,823 (741) Total fund balances 12,876 1,314 478 769 41,834 (740) Total liabilities and fund balances $ 22,020 $ 4,202 $ 76 3,015 $ 3,029 $ 45,158 $ 4,173 Exhibit C-1 Special Revenue Funds School Reserve $ Environmental Quality 1,794 $ 1,161 629 42 4 27 507 101 9 1 Special Districts $ 225 Solid Waste $ Library District 3,025 $ Debt Service Fund Stadium District 13,446 10 18 285 425 759 57 3 249 36 2 8 $ 829 $ 7,511 Total Other Governmental Funds $ 1,473 182 1 226 298 280 2,964 431 1,790 22,994 2,841 1,954 104 1,781 315 1,781 $ 2,474 $ 1,801 $ 115 $ 75 130 89 1 $ $ 2,006 $ 3,765 $ 14,558 $ 1,634 $ 307 $ 1,475 $ 93 54 12 818 491 1,781 245 656 2,599 9 1 394 7 217 877 127 373 2,963 227 2 8 $ $ 209 9,166 $ 117,001 $ 1,220 12,514 9 84 2,716 2,144 955 14,927 1,220 33,349 7,946 1,954 104 8,155 75 1,039 $ 1,655 582 2,220 105 (802) 1,735 11,005 1,332 2,229 1,145 (593) 3,392 11,595 1,407 2,474 $ 1,801 $ 2,006 $ 3,765 $ 77 14,558 $ 1,634 81,827 75 3,276 315 69,773 7,946 $ 9,166 83,652 $ 117,001 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended June 30, 2007 (in thousands) Transportation Revenues: Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Special Revenue Funds Regional Flood Control Employment District and Training Health and Animal Control $ $ Total revenues Expenditures: Current: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Debt service - principal - interest - miscellaneous 244 62,608 815 $ 677 437 2,214 9,841 2,425 213 3 238 64,781 14,934 22,739 1,440 226 $ 11,561 $ 4,635 8,054 $ 35,729 278 256 161 1,974 6,860 66 803 24,939 11,722 21,523 36,598 16,883 4,743 44 24,222 7,037 14,325 42,639 25,288 42,639 25,288 14,325 Excess (deficiency) of revenues over (under) expenditures 22,142 (10,354) 10,614 Other financing sources (uses): Premium on bonds Proceeds from sale of capital assets Transfers in Transfers (out) 527 3,031 (30,324) 9,515 (149) (15,764) Total other financing sources (uses) (26,766) 9,366 (15,764) Net change in fund balance (4,624) Fund balance at beginning of year, as restated 17,755 Change in reserve for inventory Change in reserve for prepaid expenditures (988) 2,220 (255) $ 12,876 12,017 (5,150) 23,685 (2,162) (719) 289 16,030 (3,641) 256 (17) 289 12,389 239 10,227 (480) 31,643 (260) 775 82 $ 37,317 (295) (6) 5,628 484 95 5,458 21 349 1,585 76 5 12,017 Total expenditures Fund balance at end of year Other Grants Other (36) 1,314 $ 78 478 $ 769 $ 41,834 $ (740) Exhibit C-2 Total Other Governmental Funds Special Revenue Funds School Reserve Environmental Quality Special Districts Solid Waste Library District $ $ $ $ 3,090 3,090 Debt Service Fund Stadium District 24,889 $ 48,722 $ 521 1,879 1,035 $ 1,196 4,747 7,034 $ 1,907 1,220 18 63 85 92 7 176 88 748 469 1,517 7 1 1,612 3,154 528 6,207 34,657 3,135 50,352 275,620 50,940 17,672 6 41,105 26,105 42,683 6,766 29,785 484 30,503 22,067 51,948 17,735 6 68,618 269,187 6,766 4,497 27,529 2,530 3,007 911 58 3,007 83 4,497 969 (1,343) (441) 6,766 (559) 27,529 2,530 7,128 605 (18,266) 6,433 2 2 1,036 51,980 (53,833) 509 400 (263) (485) 2,915 (3,021) (485) (106) 19,377 6,643 499 1,111 5,618 4,952 908 6,835 78,245 509 400 (263) 592 (943) (704) 1,639 2,088 (559) 111 3,951 19,544 (169) (815) (209) (2) (2) $ 2,229 96,350 521 4,337 140,094 17,487 1,024 5,354 10,453 $ 1,145 $ (593) $ 3,392 $ 79 11,595 $ 1,407 $ 7,946 $ 83,652 (This page is intentionally blank) 80 Combining Statements and Other Schedules Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual – Other Governmental Funds PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Capital Projects Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ 11,881 17,408 4,177 1,741 35,207 Exhibit C-3 Variance Over/Under Actual $ 11,027 12,417 5,313 263 29,020 $ (854) (4,991) 1,136 (1,478) (6,187) Expenditures: Capital outlay 155,902 202,659 (46,757) Total expenditures 155,902 202,659 (46,757) (120,695) (173,639) (52,944) 120,000 146,320 1,427 390 30,549 (71) 178,615 26,320 1,427 390 1,601 (71) 29,667 Deficiency of revenues under expenditures Other financing sources (uses): Face amount of long-term debt Premium on bonds Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing sources 28,948 148,948 Net change in fund balance Fund balance at beginning of year Fund balance at end of year 28,253 $ 51,764 80,017 81 4,976 $ 84,472 89,448 (23,277) $ 32,708 9,431 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Transportation - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Exhibit C-4 Variance Over/Under Actual 295 61,419 520 300 185 62,719 $ 244 62,608 815 677 437 64,781 $ (51) 1,189 295 377 252 2,062 Expenditures: Highways and streets Total expenditures 41,434 41,434 42,639 42,639 Excess of revenues over expenditures 21,285 22,142 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing uses (32,808) (32,808) 527 3,031 (30,324) (26,766) 527 3,031 2,484 6,042 Net change in fund balance (11,523) (4,624) 6,899 15,673 17,755 (255) 12,876 2,082 (255) 8,726 Fund balance at beginning of year Change in reserve for inventory Fund balance at end of year $ 4,150 82 $ (1,205) (1,205) 857 $ PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Health and Animal Control - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ Exhibit C-5 Variance Over/Under Actual 2,498 10,305 2,420 206 111 15,540 2,214 9,841 2,425 213 3 238 14,934 Expenditures: Health Health grants Total expenditures 15,983 9,318 25,301 15,185 10,103 25,288 798 (785) 13 Deficiency of revenues under expenditures (9,761) (10,354) (593) 9,515 (149) 9,366 (149) (149) (988) (742) Other financing sources (uses): Transfers in Transfers (out) Total other financing sources 9,515 9,515 Net change in fund balance (246) Fund balance at beginning of year Change in reserve for inventory Fund balance at end of year $ 1,262 $ 1,016 83 $ 2,220 82 $ 1,314 (284) (464) 5 7 3 127 (606) 958 82 $ 298 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Regional Flood Control District - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Taxes Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Variance Over/Under Actual 22,664 3 1 100 25 22,793 Expenditures: Flood control Total expenditures Exhibit C-6 $ 22,739 1,440 226 278 256 24,939 $ 75 1,437 225 178 231 2,146 8,743 8,743 14,325 14,325 (5,582) (5,582) 14,050 10,614 (3,436) Other financing (uses): Transfers (out) Total other financing (uses) (14,744) (14,744) (15,764) (15,764) (1,020) (1,020) Net change in fund balance (694) (5,150) (4,456) Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year 5,329 4,635 $ 84 $ 5,628 478 $ 299 (4,157) PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Employment and Training - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Intergovernmental Miscellaneous Total revenues $ Expenditures: Employment and training Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 11,686 11,686 Other financing sources: Transfers in Total other financing sources (288) (295) 289 289 289 289 386 387 85 11,561 161 11,722 $ 12,017 12,017 1 $ Variance Over/Under Actual 11,396 2 11,398 Deficiency of revenues under expenditures Exhibit C-7 (331) (331) (7) (6) $ 775 769 165 159 324 (7) $ 389 382 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Other - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ 4,890 6,747 645 637 7,155 20,074 Exhibit C-8 Variance Over/Under Actual $ 4,635 8,054 $ 1,974 6,860 21,523 (255) 1,307 (645) 1,337 (295) 1,449 Expenditures: Current: General government Public Safety Highways and streets Culture and recreation Education and economic opportunity Debt service - principal - interest Total expenditures 35,933 5,502 45 1,876 2,156 124 19 45,655 16,883 4,743 44 349 1,585 76 5 23,685 19,050 759 1 1,527 571 48 14 21,970 Deficiency of revenues under expenditures (25,581) (2,162) 23,419 15,916 (2,020) 13,896 16,030 (3,641) 12,389 114 (1,621) (1,507) (11,685) 10,227 21,912 26,923 31,643 (36) Other financing sources (uses): Transfers in Transfers (out) Total other financing sources Net change in fund balance Fund balance at beginning of year Change in reserve for inventory Fund balance at end of year $ 15,238 86 $ 41,834 4,720 (36) $ 26,596 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Other Grants - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Clerk of Superior Court Grants Community Services Grants County Attorney Grants Institutional Health Grants Justice Court Grants Juvenile Court Grants Legal Defender Grants Parks and Recreation Grants Public Defender Grants Adult Probation Grants Sheriff Grants Superior Court Grants County Administrator Grants Debt Service - principal Total expenditures Variance Over/Under Actual 35,159 17 192 35,368 $ 73 6,746 2,652 500 35,930 (562) Other financing sources (uses): Transfers in Transfers (out) Total other financing sources Net change in fund balance (562) 856 294 $ 87 35,729 66 803 36,598 $ 52 5,458 2,459 484 29 11,304 19 95 46 9,793 7,037 428 92 21 37,317 11,154 21 139 57 8,514 5,488 579 7 Deficiency of revenues under expenditures Fund balance at beginning of year Fund balance at end of year Exhibit C-9 $ 570 49 611 1,230 21 1,288 193 16 (29) (150) 2 44 11 (1,279) (1,549) 151 (85) (21) (1,387) (719) (157) 256 (17) 239 256 (17) 239 (480) 82 (260) (740) $ (1,116) (1,034) PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual School Reserve - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Intergovernmental Total revenues $ $ 3,910 3,910 Excess (deficiency) of revenues over (under) expenditures (94) Other financing sources: Proceeds from sale of capital assets Total other financing sources Net change in fund balance (94) Fund balance at beginning of year (as restated) 1,349 Change in reserve for prepaid expenditures Fund balance at end of year Variance Over/Under Actual 3,816 3,816 Expenditures: School Reserve Grants Total expenditures Exhibit C-10 3,090 3,090 $ 3,007 3,007 903 903 83 177 509 509 509 509 592 686 1,639 290 (2) $ 1,255 88 $ (726) (726) 2,229 (2) $ 974 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Environmental Quality - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Licenses and permits Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues $ Expenditures: Environmental quality Environmental quality grants Total expenditures 2,473 1,245 $ 45 48 3,811 1,879 1,035 63 85 92 3,154 3,473 1,128 4,601 3,207 1,290 4,497 266 (162) 104 (1,343) (553) (790) Other financing sources: Transfers in Total other financing sources Net change in fund balance $ Variance Over/Under Actual Deficiency of revenues under expenditures Fund balance at beginning of year Fund balance at end of year Exhibit C-11 400 400 400 400 (390) (943) 1,846 1,456 89 $ 2,088 1,145 $ (594) (210) 63 40 44 (657) (553) $ 242 (311) PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Special Districts - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Special assesments Investment earnings Total revenues Exhibit C-12 Variance Over/Under Actual $ Expenditures: Debt service - principal - interest Total expenditures 521 7 528 $ 521 7 528 911 58 969 (911) (58) (969) Deficiency of revenues under expenditures (441) (441) Other financing (uses): Transfers (out) Total other financing (uses) (263) (263) (263) (263) Net change in fund balance (704) (704) Fund balance at beginning of year Fund balance at end of year $ 90 111 (593) $ 111 (593) PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Solid Waste - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: Sanitation Total expenditures Exhibit C-13 Variance Over/Under Actual 1,200 5,782 40 101 7,123 $ 8,468 8,468 1,196 4,747 176 88 6,207 $ 6,766 6,766 (4) (1,035) 136 (13) (916) 1,702 1,702 Deficiency of revenues under expenditures (1,345) (559) 786 Net change in fund balance (1,345) (559) 786 Fund balance at beginning of year Fund balance at end of year $ 3,031 1,686 91 $ 3,951 3,392 $ 920 1,706 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget to Actual Library District - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Taxes Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues $ Exhibit C-14 Variance Over/Under Actual 24,764 7,247 500 1,088 33,599 24,889 7,034 748 469 1,517 34,657 Expenditures: Culture and recreation Total expenditures 34,917 34,917 27,529 27,529 7,388 7,388 Excess (deficiency) of revenues over (under) expenditures (1,318) 7,128 8,446 Other financing (uses): Transfers (out) Total other financing (uses) (485) (485) Net change in fund balance (1,803) Fund balance at beginning of year Fund balance at end of year 2,913 1,110 $ 92 $ $ 125 (213) 248 469 429 1,058 (485) (485) 6,643 $ 4,952 11,595 8,446 $ 2,039 10,485 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Stadium District - Special Revenue Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Expenditures: Stadium District Total expenditures 1,655 1,124 20 2,799 1,907 1,220 7 1 3,135 2,479 2,479 2,530 2,530 320 605 $ 2,951 (3,021) (70) Net change in fund balance Fund balance at beginning of year Fund balance at end of year Variance Over/Under Actual Excess of revenues over expenditures Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) Exhibit C-15 738 988 93 285 (36) (36) 499 $ 908 1,407 252 96 (13) 1 336 (51) (51) 2,915 (3,021) (106) 250 $ $ 249 $ 170 419 PIMA COUNTY, ARIZONA Schedule of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund For the Year Ended June 30, 2007 (in thousands) Budget Revenues: Taxes Special assessments Intergovernmental Investment earnings Total revenues $ Expenditures: Debt service - principal - interest - miscellaneous Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Premium on bonds Transfers in Transfers (out) Total other financing sources Variance Over/Under Actual 49,446 291 8 693 50,438 $ 48,722 $ 18 1,612 50,352 (724) (291) 10 919 (86) 54,777 18,614 27 73,418 50,940 17,672 6 68,618 3,837 942 21 4,800 (22,980) (18,266) 4,714 2 19,544 (169) 19,377 2 (2,485) (169) (2,652) 1,111 2,062 22,029 22,029 Net change in fund balance Fund balance at beginning of year Fund balance at end of year Exhibit C-16 (951) 5,732 4,781 $ 94 $ 6,835 7,946 $ 1,103 3,165 Combining Statements and Other Schedules Other (Nonmajor) Enterprise Funds Other (Nonmajor) Enterprise Funds Development Services – to account for the operations of providing zoning permits, enforcing ordinances in compliance with state statutes and administering uniform building codes. Parking Garages – to account for the management and operation of six public parking garages located in downtown Tucson. PIMA COUNTY, ARIZONA Combining Statement of Net Assets Nonmajor Enterprise Funds June 30, 2007 (in thousands) Development Services Assets Current assets: Cash and cash equivalents Interest receivable Due from other funds Accounts receivable Prepaid expense Total current assets $ Total Other Enterprise Funds Parking Garages 1,934 14,809 50 108 25 57 15,049 $ 1,591 (727) 1,861 12,927 251 (7,926) 1,861 12,927 1,842 (8,653) 864 864 7,113 7,113 7,977 7,977 13,979 9,047 23,026 Liabilities Current liabilities: Accounts payable Employee compensation Due to other funds Due to other governments Total current liabilities 427 1,085 1 265 21 1,513 99 385 692 1,106 1 99 1,898 Total liabilities 1,513 385 1,898 864 11,602 7,113 1,549 7,977 13,151 24 57 13,115 Noncurrent assets: Capital assets: Land and other improvements Buildings and improvements Equipment Less accumulated depreciation Total capital assets (net of accumulated depreciation) Total noncurrent assets Total assets Net assets Invested in capital assets Unrestricted Total net assets 12,990 44 Exhibit C-17 $ 12,466 95 $ 1,819 6 108 1 8,662 $ $ 21,128 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended June 30, 2007 (in thousands) Development Services Operating revenues: Charges for services Other $ 11,238 217 Exhibit C-18 Total Other Enterprise Funds Parking Garages $ 1,548 $ 12,786 217 Total net operating revenues 11,455 1,548 13,003 Operating expenses: Employee compensation Operating supplies and services Utilities Repair and maintenance General and administrative Consultants and professional services Depreciation Total operating expenses 10,999 895 167 66 2,004 1,037 297 15,465 270 19 190 169 588 17 336 1,589 11,269 914 357 235 2,592 1,054 633 17,054 Operating loss (4,010) (41) (4,051) Nonoperating revenues (expenses): Investment earnings Loss on disposal of capital assets 763 (1) 81 844 (1) Total nonoperating revenues: 762 81 843 Income (loss) before contributions and transfers (3,248) 40 Transfers (out) Change in net assets (3,248) Net assets at beginning of year 15,714 Net assets at end of year $ 12,466 96 (3,208) (84) (84) (44) (3,292) 8,706 $ 8,662 24,420 $ 21,128 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2007 (in thousands) Exhibit C-19 Development Services Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from customers for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments to employees for services $ Net cash provided by (used for) operating activities 117 11,238 193 (2,834) (3,217) (9,952) Total Other Enterprise Funds Parking Garages $ $ (4,455) (846) (28) (270) 117 12,787 193 (3,680) (3,245) (10,222) 405 (4,050) 1,549 Cash flows from noncapital financing activities: Loans with other funds (108) (108) Net cash used for noncapital financing activities (108) (108) Cash flows from capital and related financing activities: Proceeds from sale of capital assets Purchase of capital assets 30 (120) (84) 30 (204) Net cash used for capital and related financing activities (90) (84) (174) Cash flows from investing activities: Interest on cash and investments 719 75 794 Net cash provided by investing activities 719 75 794 Net increase (decrease) in cash and cash equivalents (3,826) Cash and cash equivalents at beginning of year 16,816 Cash and cash equivalents at end of year $ (Continued) 97 12,990 288 (3,538) 1,531 $ 1,819 18,347 $ 14,809 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2007 (in thousands) Exhibit C-19.1 (Continued) Reconciliation of operating loss to net cash provided by (used for) operating activities (41) Total Other Enterprise Funds $ (4,051) 336 633 (24) (55) 1 (23) (55) (731) (6) (2) 76 98 (633) (6) 9 76 Development Services $ (4,010) Operating loss Adjustments to reconcile operating loss to net cash provided by (used for) operating activities: Depreciation Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Prepaid expenses Increase (decrease) in liabilities: Accounts payable Due to other funds Due to other governments Other current liabilities Parking Garages $ 297 Net cash provided by (used for) operating activities $ (4,455) 11 $ 405 $ (4,050) Noncash investing, capital, and financing activities: During the year ended June 30, 2007, the Development Services Enterprise Fund disposed of capital assets with an original cost of $175 and accumulated depreciation of $174 for a loss on disposal of $1. During the year ended June 30, 2007, the Development Services Enterprise Fund transferred the following completely depreciated capital assets: $31 to the County's general government, $8 to the Wastewater Management Enterprise Fund, and $23 to the Transportation Fund. During the year ended June 30, 2007, the Parking Garages Enterprise Fund transferred capital assets with a net book value of $84 to the County's general capital assets. 98 Combining Statements and Other Schedules Internal Service Funds Internal Service Funds Self Insurance Trust Fund – to account for the risk management function of the County. The Fund provides self-insurance coverage to the County for medical malpractice, workers’ compensation, unemployment, dental, general liability, environmental liability and property damage as well as acquiring coverage for other risks. Other Internal Service – to account for the acquisition, operation and maintenance of automotive equipment provided to County departments, as well as to account for the provision of printing, graphics and telecommunication services to County departments. PIMA COUNTY, ARIZONA Combining Statement of Net Assets Internal Service Funds June 30, 2007 (in thousands) Assets Current assets: Cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable Inventory Prepaid expense Total current assets Exhibit C-20 Self Insurance Trust Other Internal Service Total Internal Service Funds $ $ $ 41,569 322 818 202 731 43,642 Noncurrent assets: Capital assets: Land and other improvements Buildings and improvements Equipment Less accumulated depreciation Construction in progress Total capital assets (net of accumulated depreciation) Total noncurrent assets 5,174 14 225 92 9 457 63 6,034 592 Total assets 46,743 336 1,043 92 211 457 794 49,676 162 (81) 60 614 30,728 (13,594) 10 592 614 30,890 (13,675) 70 733 733 17,758 17,758 18,491 18,491 44,375 23,792 68,167 1,133 125 995 520 1 21 2,128 645 1 23 4,200 1,785 8,782 Liabilities Current liabilities: Accounts payable Employee compensation Interest payable Due to other funds Current portion reported but unpaid losses Current portion incurred but not reported losses Total current liabilities Noncurrent liabilities: Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities 18,739 8,133 26,872 Total liabilities 34,117 1,537 35,654 733 9,525 17,758 4,497 18,491 14,022 2 4,200 1,785 7,245 Net assets Invested in capital assets Unrestricted Total net assets $ 10,258 99 1,537 18,739 8,133 26,872 $ 22,255 $ 32,513 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2007 (in thousands) Self Insurance Trust Operating revenues: Charges for services Other $ 17,588 654 Exhibit C-21 Total Internal Service Funds Other Internal Service $ 20,538 1,469 $ 38,126 2,123 Total operating revenues 18,242 22,007 40,249 Operating expenses: Employee compensation Operating supplies and services Utilities Incurred losses Insurance premiums General and administrative Repair and maintenance Consultants and professional services Depreciation Total operating expenses 1,881 226 26 8,118 3,939 712 66 393 11 15,372 4,870 5,740 806 1,077 1,881 4,023 26 2,568 20,991 6,751 5,966 832 8,118 5,016 2,593 4,089 419 2,579 36,363 Operating income 2,870 1,016 3,886 Nonoperating revenues (expenses): Investment earnings Loss on disposal of capital assets 2,207 211 (21) 2,418 (21) Total nonoperating revenues 2,207 190 2,397 5,077 1,206 6,283 114 114 656 (26) 696 (26) Income before capital contributions and transfers: Capital contributions Transfers in Transfers (out) 40 Change in net assets 5,117 1,950 7,067 Net assets at beginning of year 5,141 20,305 25,446 Net assets at end of year $ 10,258 100 $ 22,255 $ 32,513 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2007 (in thousands) Cash flows from operating activities: Cash received from other funds for goods and services provided Cash received from miscellaneous operations Cash payments to suppliers for goods and services Cash payments to other funds for goods and services Cash payments for incurred losses Cash payments to employees for services Self Insurance Trust Other Internal Service Total Internal Service Funds $ $ $ Net cash provided by operating activities Cash flows from noncapital financing activities: Transfers in Transfers out Loans with other funds Net cash provided by noncapital financing activities Cash flows from capital and related financing activities: Proceeds from sale of equipment Purchase of capital assets Net cash used for capital and related financing activities Exhibit C-22 17,587 688 (3,675) (740) (10,768) (1,857) 1,235 20,537 1,485 (11,826) (2,005) (4,845) 38,124 2,173 (15,501) (2,745) (10,768) (6,702) 3,346 4,581 95 599 (17) 75 599 (17) 170 95 657 752 (76) 337 (3,431) 337 (3,507) (76) (3,094) (3,170) Cash flows from investing activities: Interest on cash and investments 2,017 198 2,215 Net cash provided by investing activities 2,017 198 2,215 Net increase in cash and cash equivalents 3,271 1,107 4,378 38,298 4,067 42,365 Cash and cash equivalents at beginning of year $ Cash and cash equivalents at end of year (Continued) 101 41,569 $ 5,174 $ 46,743 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2007 (in thousands) Exhibit C-22.1 (Continued) Reconciliation of operating income to net cash provided by operating activities Operating income Self Insurance Trust $ 2,870 Other Internal Service $ 1,016 Total Internal Service Funds $ 3,886 11 2,568 2,579 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Due from other governments Inventory Prepaid expenses Increase (decrease) in liabilities: Accounts payable Reported but unpaid losses Incurred but not reported losses Other current liabilities Net cash provided by operating activities 33 53 894 (2,825) 174 25 $ 1,235 13 2 25 (56) 46 2 25 (3) (247) 647 (2,825) 174 50 25 $ 3,346 $ 4,581 Noncash investing, capital, and financing activities: During the year ended June 30, 2007, the Self Insurance Trust Fund transferred in $10 of capital assets from Wastewater Management Enterprise Fund and $30 of capital assets from governmental activities. During the year ended June 30, 2007, Other Internal Service Funds (Fleet Services) received proceeds of $337 for retired assets that cost $358. During the year ended June 30, 2007, Other Internal Service Funds (Graphics) had unpaid transfers totaling $11. During the year ended June 30, 2007, Other Internal Service Funds (Graphics) transferred in $57 from governmental activities for non cash personal services. 102 Combining Statements and Other Schedules Fiduciary Funds PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Assets Investment Trust Funds June 30, 2007 (in thousands) Treasurer's Investment Pool ASSETS Cash and cash equivalents Interest receivable $ 215,416 643 Total assets Exhibit C-23 Total Investment Trust Funds Individual Investment Accounts $ 216,059 81,851 842 $ 82,693 297,267 1,485 298,752 LIABILITIES Total liabilities NET ASSETS Held in trust for participants $ 216,059 103 $ 82,693 $ 298,752 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Assets Investment Trust Funds For the Year Ended June 30, 2007 (in thousands) Treasurer's Investment Pool ADDITIONS Contributions: Participants Total contributions $ Investment earnings Total investment earnings 2,268,075 2,268,075 Exhibit C-24 Total Investment Trust Funds Individual Investment Accounts $ 125,158 125,158 $ 2,393,233 2,393,233 7,367 7,367 6,184 6,184 13,551 13,551 2,275,442 131,342 2,406,784 DEDUCTIONS Distributions to participants 2,205,455 139,798 2,345,253 Total deductions 2,205,455 139,798 2,345,253 Total additions Net increase (decrease) Net assets held in trust July 1, 2006 Net assets held in trust June 30, 2007 $ 104 69,987 (8,456) 61,531 146,072 91,149 237,221 216,059 $ 82,693 $ 298,752 PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Assets Agency Funds June 30, 2007 (in thousands) Treasurer's Clearing Payroll ASSETS Cash and cash equivalents Due from other governments $ Total assets $ 5,428 LIABILITIES Employee compensation Due to other governments Deposits and rebates Total liabilities 5,428 (1,724) 2,636 Exhibit C-25 Other $ 71,521 Total $ 912 71,521 77,861 912 45,680 25,841 5,428 45,680 26,753 5,428 $ 5,428 105 $ 75,225 2,636 912 $ 71,521 $ 77,861 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Assets Agency Funds For the Year Ended June 30, 2007 (in thousands) Payroll Clearing Assets Cash and cash equivalents Total assets Balance 06/30/06 $ Liabilities Employee compensation Total liabilities Additions 7,558 7,558 $ 7,558 7,558 Treasurer's Clearing Assets Cash and cash equivalents Due from other governments Total assets (3,715) 3,715 Liabilities Due to other governments Deposits and rebates Total liabilities 409,225 409,225 Exhibit C-26 Balance 06/30/07 Deductions $ 411,355 411,355 $ 5,428 5,428 409,225 409,225 411,355 411,355 5,428 5,428 1,285,448 2,636 1,288,084 1,283,457 3,715 1,287,172 915,799 372,285 1,288,084 915,799 371,373 1,287,172 912 912 (1,724) 2,636 912 Other Assets Cash and cash equivalents Total assets 49,678 49,678 621,540 621,540 599,697 599,697 71,521 71,521 Liabilities Due to other governments Deposits and rebates Total liabilities 26,594 23,084 49,678 499,693 121,847 621,540 480,607 119,090 599,697 45,680 25,841 71,521 Totals - All Agency Funds Assets Cash and cash equivalents Due from other governments Total assets 53,521 3,715 57,236 2,316,213 2,636 2,318,849 2,294,509 3,715 2,298,224 75,225 2,636 77,861 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 7,558 26,594 23,084 57,236 409,225 1,415,492 494,132 2,318,849 411,355 1,396,406 490,463 2,298,224 5,428 45,680 26,753 77,861 $ 106 $ $ $ PIMA COUNTY Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2007 INTRODUCTORY SECTION FINANCIAL SECTION STATISTICAL SECTION Financial Trends Information Revenue Capacity Information Debt Capacity Information Demographic and Economic Information Operating Information STATISTICAL STATISTICAL SECTION FINANCIAL TRENDS: The financial trends schedules are intended to provide users with information to assist them in understanding and assessing how a government’s financial position has changed over time. Financial trends information is considered to be a primary source of the historical perspective that helps users comprehend the direction in which a government’s economic condition is heading. It also serves the purpose of giving users a form of information that is among their most highly valued, comparative information over time. PIMA COUNTY, ARIZONA Net Assets by Component Last Six Fiscal Years (in thousands) (accrual basis of accounting) Exhibit D-1 Fiscal Year 2002 Governmental activities Invested in capital assets, net of related debt Restricted for: Special revenue Highways and streets Debt service Capital projects Worker's compensation Unrestricted Total governmental activities net assets $ 107 Business-type activities Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Wastewater Management Healthcare Unrestricted (deficit) Total business-type activities net assets Primary government Invested in capital assets, net of related debt Restricted for: Special revenue Highways and streets Debt service Capital projects Worker's compensation Wastewater management Healthcare Unrestricted Total primary government net assets $ 215,646 2003 $ 272,130 2004 $ 391,514 2005 $ 2006 741,453 43,339 29,322 52,363 59,789 5,450 33,752 2,926 35,686 5,686 17,368 60,050 358,237 66,015 406,079 380,916 $ 2007 761,130 $ 774,000 63,014 16,734 8,980 90,467 41,020 507,951 11,439 27,027 9,042 33,451 882,201 53,384 21,353 7,934 77,088 38,464 959,353 46,256 999,451 444,590 451,162 457,600 466,257 476,950 1,216 18,982 15,748 19,684 (4,109) 432,437 1,245 3,008 3,669 13,217 (24,744) 440,985 499 88 3,696 4,011 (4,766) 454,690 468 438 3,511 6,319 20,851 488,749 48,379 5,464 15,284 535,822 574 35,480 38,628 9,985 10,845 572,462 596,562 716,720 842,676 1,199,053 1,227,387 1,250,950 43,339 29,322 52,363 59,789 6,666 52,734 4,171 38,694 6,185 17,456 63,014 16,734 9,554 125,947 15,748 19,684 55,941 790,674 3,669 13,217 41,271 847,064 3,696 4,011 36,254 962,641 11,907 27,027 9,042 3,511 6,319 54,302 1,370,950 53,384 21,353 8,372 77,088 48,379 5,464 53,748 1,495,175 38,628 9,985 57,101 1,571,913 $ $ $ $ $ PIMA COUNTY, ARIZONA Changes in Net Assets Last Six Fiscal Years (amounts in thousands) (accrual basis of accounting) Exhibit D-2 Fiscal Year 2002 Expenses Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Depreciation-unallocated * Amortization-unallocated Interest on long-term debt Total governmental activities expenses $ 108 Business-type activities: Wastewater Management Pima Health System & Services Development Services Parking Garages Total business-type activities expenses Total primary government expenses Program revenues Governmental activities: Charges for services General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Operating grants and contributions Capital grants and contributions Subtotal governmental activities program revenues $ 137,296 123,513 42,515 2003 $ 131,925 132,939 39,492 2004 $ 140,827 151,860 42,133 2005 $ 194,873 118,412 65,414 23,120 73,243 27,081 37,565 727 649 14,391 480,100 23,917 84,457 31,326 35,033 820 654 15,779 496,342 30,165 76,894 32,727 33,093 805 967 15,012 524,483 31,798 96,199 29,663 39,714 849 161 16,152 593,235 65,494 195,445 7,917 1,254 270,110 750,210 74,816 221,970 8,373 1,346 306,505 802,847 71,804 268,869 9,617 1,377 351,667 876,150 21,542 8,498 4,916 18,667 10,804 5,339 6,971 1,379 1,787 214 121,934 18,207 185,448 7,822 1,037 1,662 196 121,587 5,665 172,779 $ $ 2006 $ 208,293 132,583 70,392 7,258 32,043 103,085 34,510 39,517 2007 $ 223,266 148,831 92,985 9,623 33,800 97,154 55,482 42,483 165 19,463 647,309 168 18,924 722,716 76,079 249,809 10,857 1,494 338,239 931,474 82,701 256,583 14,422 1,479 355,185 1,002,494 98,222 261,859 15,400 1,579 377,060 1,099,776 21,422 10,289 11,728 22,881 6,985 20,549 8,772 918 1,709 101 135,119 17,413 207,471 9,526 26,033 8,136 21,617 4,531 9,693 26,663 9,797 11,732 4,747 10,270 1,643 298 125,121 23,663 210,666 1,797 314 133,113 12,188 217,422 2,991 698 139,324 15,085 221,307 $ $ $ (continued) * Due to the changes in the County's asset management system in fiscal year 2005-2006, depreciation - unallocated is included in the general government activities. PIMA COUNTY, ARIZONA Changes in Net Assets Last Six Fiscal Years (amounts in thousands) (accrual basis of accounting) (Continued) Fiscal Year 2002 Program revenues Business-type activities: Charges for services Wastewater Management Pima Health System & Services Development Services Parking Garages Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues Exhibit D-2 $ Net (expense) revenue Governmental activities Business-type activities Total governmental activities net expense 109 General revenues and other changes in net assets Governmental activities: Taxes Property taxes Hotel/motel taxes Other taxes levied for stadium district Shared sales tax Shared vehicle licenses Unrestricted grants and contributions Interest and penalties on delinquent taxes Investment earnings Miscellaneous Capital contributions Gain on sale of capital assets Extraordinary item Transfers Total governmental activities 63,601 179,322 7,754 1,454 6,505 2003 $ Business-type activities: State shared tax Investment earnings Miscellaneous Capital contributions Extraordinary item Transfers Total business-type activities 325,319 532,790 357,786 568,452 (294,652) (11,474) (306,126) (323,563) (24,221) (347,784) (317,012) (26,348) (343,360) (382,569) 19,547 (363,022) (429,887) 27,135 (402,752) (501,409) 5,112 (496,297) 237,049 2,495 1,600 76,752 21,093 9,550 5,479 8,157 10,340 251,844 2,557 1,597 78,504 21,904 9,216 7,052 5,064 12,774 2,789 272,507 2,745 1,709 83,202 23,413 3,201 6,321 3,102 14,063 5,441 294,643 2,822 1,819 91,510 23,630 7,571 6,771 6,140 16,254 185 316,170 6,856 1,808 103,158 25,894 7,975 5,683 12,942 12,828 247 323 343,525 8,715 1,884 106,985 26,967 9,468 5,149 16,439 16,309 5,051 (7,447) (17,980) 367,874 (13,196) 402,508 1,935 453,280 (134) 493,750 721 541,213 1,146 747 2,750 22,214 1,163 1,609 2,865 20,722 3,849 1,348 14,607 5,510 1,522 25,217 13,196 40,053 (1,935) 24,424 134 19,938 (721) 31,528 13,954 32,317 $ 92,379 244,932 14,730 1,507 4,238 $ 2007 282,284 455,063 959 1,727 5,828 12,479 (2,673) 17,980 36,300 82,432 224,820 11,830 1,460 4,777 2006 258,636 444,084 905 2,888 3,309 11,261 $ 2005 104,501 253,748 17,140 1,485 4,997 449 382,320 599,742 (13,954) 358,561 71,626 195,872 8,464 1,413 4,909 2004 $ 106,266 257,142 11,239 1,548 5,174 803 382,172 603,225 Total primary government 390,878 404,174 442,561 477,704 513,688 572,741 Change in net assets Governmental activities Business-type activities Total primary government 63,909 20,843 84,752 44,311 12,079 56,390 85,496 13,705 99,201 70,711 43,971 114,682 63,863 47,073 110,936 39,804 36,640 76,444 $ $ $ $ $ $ PIMA COUNTY, ARIZONA Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts in thousands) (modified accrual basis of accounting) Exhibit D-3 Fiscal Year 1998 General Fund Reserved Unreserved Subtotal general fund $ All other governmental funds Reserved Unreserved, reported in: Special revenue funds Capital projects funds Total all other governmental funds $ 1,602 2,332 3,934 1999 $ 2,479 6,030 8,509 2000 $ 1,846 24,721 26,567 2001 $ 2,233 19,653 21,886 2002 $ 2,486 28,656 31,142 2003 $ 2,549 30,999 33,548 2004 $ 7,068 25,628 32,696 2005 $ 4,056 33,171 37,227 2006 $ 5,152 46,423 51,575 2007 $ 8,889 48,671 57,560 14,335 10,472 10,412 9,176 8,542 6,742 7,603 12,746 11,784 13,999 16,009 77,252 27,114 34,580 40,785 27,790 48,616 30,986 61,134 46,985 42,312 82,793 45,325 97,270 54,384 147,650 66,167 84,472 69,773 89,328 107,596 $ 72,166 $ 78,987 $ 88,778 $ 116,661 $ 131,847 $ 150,198 $ 214,780 $ 162,423 $ 173,100 110 PIMA COUNTY, ARIZONA Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts in thousands) (modified accrual basis of accounting) 1998 1999 2000 Fiscal Year 2002 2001 Exhibit D-4 2003 2004 2005 2006 2007 Revenues Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous $ Total revenues 111 Expenditures General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Capital outlay Debt service - principal - interest - miscellaneous Total expenditures Excess (deficiency) of revenues over (under) expenditures 181,398 925 3,389 180,970 18,714 3,411 4,119 16,485 $ 194,948 874 4,306 211,006 24,404 3,930 9,009 10,208 $ 214,332 703 4,541 241,225 27,308 4,245 11,384 9,452 $ 227,542 845 4,882 253,863 26,613 4,365 15,468 8,131 $ 244,807 598 6,077 260,218 31,112 4,882 6,952 8,143 $ 258,375 1,023 6,087 245,378 35,721 5,047 4,152 10,356 $ 279,527 505 6,566 273,225 43,505 5,010 2,656 11,918 $ 300,972 244 7,265 278,414 53,568 5,967 5,181 14,806 $ 321,474 215 7,452 291,059 63,582 6,014 11,382 13,165 $ 348,700 521 7,132 303,392 63,508 6,550 13,988 17,544 409,411 458,685 513,190 541,709 562,789 566,139 622,912 666,417 714,343 761,335 101,156 91,835 21,166 102,390 103,679 21,923 110,022 109,815 25,689 122,023 117,058 24,977 125,416 123,021 27,835 132,416 127,155 26,741 140,319 146,275 29,170 193,308 109,798 38,363 18,763 68,101 18,605 29,486 50,139 27,472 13,329 29 20,142 69,687 19,447 30,103 66,671 42,833 14,860 76 22,579 69,368 20,263 33,135 89,215 37,480 13,981 83 22,584 71,260 22,242 32,458 87,673 39,823 15,003 186 23,102 73,136 25,581 37,524 109,670 37,342 14,128 391 24,029 84,238 25,214 35,057 97,147 45,544 15,695 24 30,322 76,725 27,141 32,146 103,167 49,025 14,851 161 30,802 96,996 23,172 38,098 127,632 42,891 16,127 25 203,881 121,229 39,394 6,271 30,038 103,034 28,561 37,918 121,007 50,547 19,448 15 222,434 132,930 42,683 6,766 32,311 97,168 45,197 38,474 202,659 53,733 18,965 12 440,081 491,811 531,630 555,287 597,146 613,260 649,302 717,212 761,343 893,332 (30,670) (33,126) (18,440) (13,578) (34,357) (47,121) (26,390) (50,795) (47,000) (131,997) Other financing sources (uses): Refunding bonds Issuance cost on bonds Premium on bonds Payments to refunded bond escrow agent Capital leases Proceeds from sale of capital assets Face amount of long-term debt Transfers in Transfers (out) 7,466 Debt service as a percentage of noncapital expenditures 332 307 25,976 (26,024) 77,169 28,565 (28,613) Extraordinary item Residual equity - net Change in reserves - net 6,880 (163) 410 796 (22,551) 590 (7,466) Total other financing sources (uses) Net change in fund balances 22,420 54,129 33,084 (46,218) 50,358 34,335 (72,276) 81,921 52,753 (65,658) 177 37 85,000 78,457 (93,597) 12,417 70,271 70,321 77,121 591 40,995 1,126 204 1,588 92 348 160 148 (6,846) 250 1,429 406 65,000 68,583 (89,916) 27 116,200 50,008 (46,962) 231 416 4,836 59,948 (56,263) 1,426 146,320 86,089 (86,688) 44,255 119,523 9,168 148,576 (6,237) $ 47,781 10.47% $ (30,855) 13.59% $ 23,063 11.65% 4,315 (107) $ 3,047 11.76% 50 $ 35,964 10.26% 629 $ 17,592 11.56% (366) $ 17,499 11.53% 385 $ 69,113 9.87% (177) $ (38,009) 10.90% (211) $ 16,368 9.88% (This page is intentionally blank) 112 STATISTICAL SECTION REVENUE CAPACITY: The revenue capacity information is intended to assist users to understand and assess the factors affecting a government’s ability to generate its own-source revenues. The presentation here is not limited to property tax revenues, but certain other revenues are presented to comply with debt disclosure requirements, e.g., hotel taxes, car rental and RV taxes and street and highway revenues. PIMA COUNTY, ARIZONA Taxable Assessed Value and Estimated Actual Value of Property Last Ten Tax Years (in thousands) Tax Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Commercial Property 1,424,832 1,446,979 1,532,186 1,601,929 1,678,649 1,764,657 1,823,592 1,882,879 2,001,137 2,204,072 Residential Property 2,006,740 2,154,367 2,324,927 2,494,934 2,709,068 2,955,066 3,265,040 3,615,603 4,076,600 4,689,972 Vacant Land 233,782 236,602 239,298 246,938 263,270 281,243 302,323 323,147 359,662 428,486 Other 17,043 15,682 15,253 17,692 18,348 21,508 21,595 27,920 29,803 30,802 Taxable Assessed Value 3,682,397 3,853,630 4,111,664 4,361,493 4,669,335 5,022,474 5,412,550 5,849,549 6,467,202 7,353,331 Total Direct Tax Rate 5.2487 5.5651 5.5635 5.5828 5.4998 5.4981 5.4967 5.4611 5.3406 5.0674 Exhibit D-5 Estimated Limited Value 33,930,287 32,801,718 34,898,941 37,257,921 39,908,791 42,927,737 46,754,009 50,631,267 56,437,790 64,347,659 Assessed Value as a Percentage of Limited Value 10.85% 11.75% 11.78% 11.71% 11.70% 11.70% 11.58% 11.55% 11.46% 11.43% 113 Source: Pima County Assessor's Office. Notes: Property in Pima County is assessed annually with values being set by either the County Assessor or the Arizona Department of Revenue. The values are the basis for Primary Taxes and annual changes therein are restricted by the State Constitution. Assessment ratios are set by the legislature for individual property types. The taxable assessed value is arrived at by multiplying an assessment ratio that has varied from ten percent for residential property, to twenty-five percent for commercial property. Tax rates are per $100 of assessed value. PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates Last Ten Tax Years (per $100 of assessed value) Exhibit D-6 County Direct Rates Tax Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 County Secondary Flood Control District (1) 3.6852 4.0720 4.0720 4.0720 4.0720 4.0720 4.0720 4.0720 3.8420 3.6020 0.9650 0.9350 0.9350 0.8950 0.8150 0.8150 0.8150 0.7150 0.7150 0.6850 0.3246 0.3046 0.3046 0.3546 0.3546 0.3546 0.3546 0.3746 0.3746 0.3446 Flowing Wells Irrigation District (2) Silverbell Irrigation District (2) 6.9300 6.9300 6.9300 10.4000 10.4000 10.4000 12.9000 12.9000 12.9000 12.9000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 County Primary County Library District 0.2224 0.2024 0.2024 0.2124 0.2124 0.2124 0.2124 0.2575 0.3675 0.3975 Fire District Assistance Total 0.0515 0.0511 0.0495 0.0488 0.0458 0.0441 0.0427 0.0420 0.0415 0.0383 5.2487 5.5651 5.5635 5.5828 5.4998 5.4981 5.4967 5.4611 5.3406 5.0674 CortaroMarana Irrigation District (2) Mobile Home Relocation District (3) Town of Casas Adobes Incorporation Costs 1.0000 1.0000 1.0000 24.7500 24.7500 50.0000 60.0000 60.0000 60.0000 65.0000 0.5000 0.5000 0.5000 0.5000 Overlapping Rates 114 Tax Year State of Arizona Education Assistance 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.5300 0.5217 0.5123 0.4974 0.4889 0.4717 0.4560 0.4358 0.0000 0.0000 Community College District 1.1922 1.3696 1.5574 1.5470 1.5333 1.4884 1.3428 1.3114 1.2515 1.1845 City of Tucson City of South Tucson Central AZ Water Conserv District 0.9601 1.0238 1.1270 1.1202 1.1202 1.1569 1.1847 1.2364 1.2257 1.1321 0.2937 0.2937 0.2918 0.2828 0.2706 0.2513 0.2383 0.2383 0.2383 0.2258 0.1400 0.1400 0.1300 0.1300 0.1300 0.1200 0.1200 0.1200 0.1200 0.1000 (1) The Pima County Flood Control District tax levy applies only to real property. (2) Irrigation districts tax rates shown are levied on a per acre basis. (3) Mobile Home Relocation levy applies only to unsecured mobile homes (not presented after 2001-02). Notes: Primary and secondary tax rates (per $100 of net assessed value) are set by the County Board of Supervisors or the governing boards of other taxing jurisdictions. (A) The Towns of Marana, Oro Valley and Sahuarita do not currently levy a property tax. (B) The Tucson Business Improvement District levy (on a per-business basis) is not shown. 0.1438 Town of Tortolita Incorporation Costs Gladden Farms Community Facilities District Vanderbilt Farms Community Facilities District 2.8000 2.8000 2.8000 2.8000 0.3000 0.3000 Quail Creek Community Facilities District 0.2313 3.3000 PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates - School Districts Last Ten Tax Years (per $100 of assessed value) School District Tucson Unified (#1) 1998 $ 8.8281 1999 $ 8.7869 2000 $ 9.0494 2001 $ 9.8088 2002 $ 9.2780 Exhibit D-6a 2003 $ 8.7610 2004 $ 8.3286 2005 $ 7.8829 2006 $ 2007 7.3857 $ 7.0500 Marana Unified (#6) 6.9743 7.6408 7.5418 7.7028 7.3623 6.7979 6.5034 6.0991 5.9117 5.7887 Flowing Wells Unified (#8) 7.7804 8.8612 8.4928 8.0490 7.2175 6.6568 6.5883 7.1232 6.8677 6.5674 Amphitheater Unified (#10) 7.0881 7.1715 6.8816 7.4427 7.0207 6.7601 6.3375 6.4258 6.1193 5.4964 10.5437 10.6897 10.3609 10.3706 9.6945 9.1041 8.4846 8.6482 9.1529 8.1490 Tanque Verde Unified (#13) 6.9273 6.8939 6.9434 6.8484 6.6818 7.1785 5.6661 5.7985 5.4806 5.1033 Ajo Unified (#15) 4.9511 4.6791 6.0973 7.0508 4.1555 5.3016 4.4316 4.4994 4.4929 4.8627 Catalina Foothills Unified (#16) 7.9121 7.8515 7.7258 7.5344 7.0956 7.0256 6.6459 6.8422 6.7428 6.3942 Vail Elementary (#20) 7.5128 7.3298 7.2604 7.2314 7.2295 7.1748 7.0008 6.7510 6.7032 6.0327 Sahuarita Unified (#30) 7.6282 8.3204 8.7007 8.7860 9.1329 9.0113 8.3095 8.1495 7.7345 6.1807 3.7121 3.7481 3.7900 Sunnyside Unified (#12) 115 San Fernando Elementary (#35) Empire Elementary (#37) 7.0259 10.3858 8.5371 7.6596 6.6965 6.4699 6.1171 8.0930 8.4864 7.5703 Continental Elementary (#39) 2.6371 2.5439 2.4983 2.4346 2.4398 2.3198 2.2216 2.1532 2.0682 1.8970 Indian Oasis Unified (#40) 9.9071 10.4568 9.1002 Redington Elementary (#44) 4.6590 7.7641 5.0186 6.3661 6.4230 5.6853 3.9915 4.8856 4.8853 4.8952 Altar Valley Elementary (#51) 7.3093 6.3348 6.5620 6.3052 6.3035 6.3615 6.2759 6.2607 5.7696 5.8086 Unorganized* 2.2000 2.1654 2.1265 2.0647 2.0296 1.9583 1.8931 1.8090 1.7394 1.6020 *County Education District; applies only to those geographical areas within Pima County not part of formal school districting. PIMA COUNTY, ARIZONA Principal Property Taxpayers Current Year and Nine Years Ago (amounts in thousands) 1998 Taxpayer Tucson Electric Power Co. Estimated Assessed Value (1) Rank $ 166,300 1 78,336 2 QWEST Phelps Dodge 0 1999 Percent of Total Assessed Value Estimated Assessed Value (1) Rank 4.3% $ 166,300 1 2.0% 78,336 2 0.0% 0 Exhibit D-7 2000 Percent of Total Assessed Value 2001 Percent of Total Assessed Value Estimated Assessed Value (1) Rank Estimated Assessed Value (1) Rank 4.2% $ 166,949 1 3.9% $ 136,337 1 2.0% 78,642 2 1.9% 84,382 2 0.0% 0 0.0% 0 2002 Percent of Total Assessed Value Percent of Total Assessed Value Estimated Assessed Value (1) Rank 3.0% $ 137,315 1 2.8% 1.9% 87,757 2 1.8% 0.0% 18,250 6 0.4% 116 Southwest Gas Corporation 46,441 3 1.2% 46,441 3 1.2% 46,191 3 1.1% 51,214 3 1.1% 53,668 3 1.1% Raytheon/Hughes Aircraft ** 15,040 7 0.4% 14,193 8 0.4% 14,193 8 0.3% 13,642 9 0.3% 13,349 10 0.3% Arizona Portland Cement 13,267 9 0.3% 13,363 9 0.3% 13,146 9 0.3% 16,614 6 0.4% 18,213 7 0.4% Dnd Neffson (Tucson Mall) 19,071 6 0.5% 18,910 6 0.5% 15,168 6 0.4% 19,362 4 0.4% 18,733 5 0.4% 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.4% 15,669 0.4% 15,097 0.4% 16,183 0.4% 16,703 0.0% 0 0.0% 0 0.0% 13,632 0.3% 13,898 TRICO 0 Westin La Paloma 14,486 8 7 Star Pass Resorts 0 0.0% 0 0.0% El Conquistador Hotel 0 0.0% 0 0.0% 0 7 0 7 10 0.0% 8 0.3% 0.0% 9 0.3% Ventana Hotel Associates 11,720 10 0.3% 12,983 10 0.3% 12,950 10 0.3% 0 0.0% 0 0.0% Cyprus/Sierrita Mining Co. 27,300 5 0.7% 27,300 5 0.7% 20,000 5 0.5% 0 0.0% 0 0.0% 0.0% 0 0.0% 0.3% 0 0.0% 0.0% 0 0.0% 0.4% 27,736 8.5% $ 405,622 Union Pacific Railroad 0 0.0% 0 0.0% 0 0.0% 0 AT&T 0 0.0% 0 0.0% 0 0.0% 14,292 HDP Northwest 0 0.0% 0 0.0% 0 0.0% 0 0.9% 35,170 0.5% 18,911 11.0% $ 428,665 ASARCO Mining Total Top Ten 35,170 $ 427,131 4 4 0.9% 21,200 10.9% $ 403,536 4 9.6% $ 384,569 8 5 4 0.6% 8.4% Sources: Arizona Department of Revenue, Pima County Assessor's Office. (1) Secondary Assessed Valuation for tax year * * Name change 2001 $ 3,852,574 $ 4,000,624 $ 4,236,070 $ 4,491,395 $4,835,561 (continued) PIMA COUNTY, ARIZONA Principal Property Taxpayers Current Year and Nine Years Ago (amounts in thousands) Exhibit D-7 (continued) 2003 2004 Percent of Total Assessed Value Estimated Assessed Value (1) Rank $ 122,499 1 2.3% 108,829 2 Phelps Dodge 14,375 Southwest Gas Corporation Taxpayer Tucson Electric Power Co. Estimated Assessed Value (1) 125,597 1 2.2% 2.1% 104,944 2 8 0.3% 15,250 55,710 3 1.1% Raytheon/Hughes Aircraft ** 13,290 9 Arizona Portland Cement 19,990 DND Neffson (Tucson Mall) Estimated Assessed Value (1) Estimated Assessed Value (1) Rank 2007 Percent of Total Assessed Value Estimated Assessed Value (1) Rank Percent of Total Assessed Value 1 2.4% $ 143,362 1 2.1% $ 150,771 1 1.8% 1.9% 104,468 2 1.7% 87,093 2 1.3% 94,300 2 1.1% 7 0.3% 21,209 6 0.4% 55,176 4 0.8% 93,656 3 1.1% 59,528 3 1.1% 62,970 3 1.0% 62,846 3 0.9% 62,919 4 0.8% 0.3% 13,895 9 0.2% 16,069 8 0.3% 21,665 6 0.3% 58,987 5 0.7% 4 0.4% 21,296 4 0.4% 22,459 4 0.4% 22,858 5 0.3% 23,468 6 0.3% 18,703 5 0.4% 19,364 5 0.3% 22,377 5 0.4% 19,087 7 0.3% 19,897 7 0.2% TRICO 11,467 10 0.2% 12,925 10 0.2% 0 0.0% 14,806 10 0.2% 18,044 8 0.2% Westin La Paloma 16,057 6 0.3% 15,943 6 0.3% 16,358 0.3% 15,504 9 0.2% 15,959 9 0.2% 0.0% 0 0.0% 0 0.0% 17,068 8 0.2% 15,280 10 0.2% 0.3% 14,655 0.3% 13,653 0.2% 0 0.0% 0 0.0% 117 Star Pass Resorts 0 El Conquistador Hotel 14,461 7 8 $ Rank 2006 Percent of Total Assessed Value 145,937 QWEST $ Rank 2005 Percent of Total Assessed Value 7 10 Ventana Hotel Associates 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% Cyprus/Sierrita Mining Co. 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% Union Pacific Railroad 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% AT&T 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% HDP Northwest 0 0.0% 0 0.0% 14,708 0.2% 0 0.0% 0 0.0% ASARCO Mining 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% $ 395,381 7.7% 403,397 7.2% 440,208 7.3% $ 459,465 6.6% $ 553,281 6.7% Total Top Ten $ $ 9 Sources: Arizona Department of Revenue, Pima County Assessor's Office. (1) Secondary Assessed Valuation for Tax Year * * Name change 2001 $5,221,271 $5,620,156 $6,050,950 $6,869,955 $8,220,396 PIMA COUNTY, ARIZONA Real Property Tax Levies and Collections Last Ten Fiscal Years (in thousands) Collected to June 30, End of Tax Fiscal Year (2) 118 Fiscal Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Original Real Property Tax Levy 168,688 180,550 201,925 214,642 228,477 241,416 260,570 281,172 302,127 330,240 Tax Roll Corrections (748) (1,553) (1,167) (974) (1,023) (1,013) (987) (729) (489) (1,271) Real Property Tax Levy (Adjusted) 167,940 178,997 200,758 213,668 227,454 240,403 259,583 280,443 301,638 328,969 Amount 160,593 172,330 192,409 204,424 218,192 231,619 250,929 271,841 292,019 318,520 Percent of Original Levy 95.20% 95.45% 95.29% 95.24% 95.50% 95.94% 96.30% 96.68% 96.65% 96.45% NOTES: (1) Represents the difference between the adjusted levy and collected to June 30, 2007. (2) Amounts collected are on a cash basis rather than the modified accrual basis used in the financial statements. Exhibit D-8 Collected to June 30, 2007 (2) Collections in Subsequent Years 6,632 7,159 8,561 9,154 8,986 8,666 8,635 8,772 9,634 Amount 167,225 179,489 200,970 213,578 227,178 240,285 259,564 280,613 301,653 318,520 Percent of Adjusted Levy 99.57% 100.27% 100.11% 99.96% 99.88% 99.95% 99.99% 100.06% 100.00% 96.82% Delinquent Taxes Receivable (1) 715 (492) (212) 90 276 118 19 (170) (15) 10,449 PIMA COUNTY, ARIZONA Assessed, Limited and Full Cash (Secondary) Value of Taxable Property Last Ten Fiscal Years (in thousands) Fiscal Year Net Assessed Value Limited and Full Cash Values (1) Exhibit D-9 Ratio of Net Assessed to Full Cash Value 1997-98 Primary 1997-98 Secondary 3,468,269 3,700,218 32,144,456 34,305,592 10.79% 10.79% 1998-99 Primary 1998-99 Secondary 3,682,397 3,852,574 33,930,287 35,297,284 10.85% 10.91% 1999-00 Primary 1999-00 Secondary 3,853,630 4,000,624 32,801,718 33,893,530 11.75% 11.80% 2000-01 Primary 2000-01 Secondary 4,111,664 4,236,070 34,898,941 35,819,691 11.78% 11.83% 2001-02 Primary 2001-02 Secondary 4,361,493 4,491,395 37,257,921 38,196,337 11.71% 11.76% 2002-03 Primary 2002-03 Secondary 4,669,336 4,835,561 39,908,791 41,109,997 11.70% 11.76% 2003-04 Primary 2003-04 Secondary 5,022,474 5,221,271 42,927,737 44,423,165 11.70% 11.75% 2004-05 Primary 2004-05 Secondary 5,412,550 5,620,156 46,754,009 48,474,537 11.58% 11.59% 2005-05 Primary 2005-06 Secondary 5,849,549 6,050,950 50,631,267 52,335,111 11.55% 11.56% 2006-07 Primary 2006-07 Secondary 6,467,202 6,869,955 56,437,790 59,890,229 11.46% 11.47% (1) Limited value is the basis for primary taxes and annual changes therein are restricted by statute; Full Cash Value or Secondary Value approximates market value. 119 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates (per $100 assessed value) (valuation $ amounts in thousands) Jurisdiction State of Arizona FY 2006-07 (Tax Year 2006) Valuation Rate $ 6,467,202 $0.0000 Pima County General Fund - Primary Debt Service - Secondary Free Library - Secondary Exhibit D-10 FY 2007-08 (Tax Year 2007) Valuation Rate $ 7,353,331 $0.0000 6,467,202 6,869,955 6,869,955 3.8420 0.7150 0.3675 7,353,331 8,220,396 8,220,396 3.6020 0.6850 0.3975 6,467,202 6,869,955 3.8420 1.0825 4.9245 7,353,331 8,220,396 3.6020 1.0825 4.6845 Education Assistance 6,467,202 0.0000 7,353,331 0.0000 Flood Control District - Secondary 6,113,953 0.3746 7,412,190 0.3446 Fire District Assistance - Secondary 6,869,955 0.0415 8,220,396 0.0383 Pima Community College District Primary Secondary Total 6,467,202 6,869,955 1.0570 0.1945 1.2515 7,353,331 8,220,396 1.0191 0.1654 1.1845 6,869,955 0.1200 8,220,396 0.1000 2,839,163 3,016,231 0.3411 0.8846 1.2257 3,133,310 3,484,462 0.3296 0.8025 1.1321 City of South Tucson Primary 19,000 0.2383 20,445 0.2258 School Districts Unorganized - Primary 9,370 1.7394 11,225 1.6020 2,782,666 2,951,009 5.9922 1.3935 7.3857 3,079,057 3,436,035 5.7500 1.3000 7.0500 Total County - Primary Total County - Secondary Grand Total Central Arizona Water Conservation District Secondary Cities & Towns City of Tucson Primary Secondary Total Tucson Unified (District #1) Primary Secondary Total (continued) 120 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates (per $100 assessed value) (valuation $ amounts in thousands) Exhibit D-10 (continued) Jurisdiction Marana Unified (District #6) Primary Secondary Total FY 2006-07 (Tax Year 2006) Valuation Rate 555,272 593,167 $3.8618 2.0499 5.9117 656,187 750,524 $3.8368 1.9519 5.7887 Flowing Wells Unified (District #8) Primary Secondary Total 176,501 184,631 4.5715 2.2962 6.8677 191,524 211,004 4.4196 2.1478 6.5674 Amphitheater Unified (District #10) Primary Secondary Total 1,176,348 1,253,085 4.1240 1.9953 6.1193 1,322,814 1,491,531 3.7983 1.6981 5.4964 Sunnyside Unified (District #12) Primary Secondary Total 345,217 368,703 5.6887 3.4642 9.1529 389,900 427,586 4.6857 3.4633 8.1490 Tanque Verde Unified (District #13) Primary Secondary Total 155,295 169,903 4.0917 1.3889 5.4806 175,387 203,700 3.7882 1.3151 5.1033 14,851 15,767 4.4929 0.0000 4.4929 15,475 16,570 4.8627 0.0000 4.8627 Catalina Foothills Unified (District #16) Primary Secondary Total 504,862 528,079 4.3099 2.4329 6.7428 564,911 634,764 4.1359 2.2583 6.3942 Vail Elementary (District #20) Primary Secondary Total 300,483 324,978 4.6184 2.0848 6.7032 362,131 414,651 4.0570 1.9757 6.0327 Ajo Unified (District #15) Primary Secondary Total $ FY 2007-08 (Tax Year 2007) Valuation Rate $ (continued) 121 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rates (per $100 assessed value) (valuation $ amounts in thousands) Exhibit D-10 (continued) Jurisdiction Sahuarita Unified (District #30) Primary Secondary Total FY 2006-07 (Tax Year 2006) Valuation Rate $ 174,384 183,014 $4.2452 3.4893 7.7345 818 832 FY 2007-08 (Tax Year 2007) Valuation Rate 248,840 267,294 $4.0631 2.1176 6.1807 3.7481 0.0000 3.7481 858 880 3.7900 0.0000 3.7900 4,988 5,489 8.4864 0.0000 8.4864 5,374 5,792 7.5703 0.0000 7.5703 236,964 249,038 1.7394 0.3288 2.0682 278,996 312,815 1.6020 0.2950 1.8970 Indian Oasis Unified (District #40) Primary Secondary Total 1,182 1,183 0.0000 0.0000 0.0000 1,059 1,059 0.0000 0.0000 0.0000 Redington Elementary (District #44) Primary Secondary Total 1,219 1,339 4.8853 0.0000 4.8853 1,272 1,387 4.8952 0.0000 4.8952 26,781 28,088 4.7765 0.9931 5.7696 29,071 30,747 4.8733 0.9353 5.8086 San Fernando Elementary (District #35) Primary Secondary Total Empire Elementary (District #37) Primary Secondary Total Continental Elementary (District #39) Primary Secondary Total Altar Valley Elementary (District #51)* Primary Secondary Total *Formerly known as the Mary E. Dill School District 122 $ PIMA COUNTY, ARIZONA Historical Collections - Hotel Excise Tax, Car Rental Surcharges and Recreational Vehicle Tax Last Ten Fiscal Years (amounts in thousands) Fiscal Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Car Rental Surcharges (2) Hotel Excise Tax (1) $ Exhibit D-11 2,378 2,438 2,625 2,824 2,495 2,536 2,717 2,885 5,212 7,796 $ 1,385 1,396 1,477 1,557 1,377 1,436 1,277 1,595 1,589 1,357 Recreational Vehicle Tax (3) $ (1) Tax increased from 1% to 2% January 1, 1997; the additional 1% can only be used for County sports facilities. In January of 2006, the tax increased from 2% to 6%, of which only 34% can be used for sports facilities. (2) Car rental surcharges increased from $2.50 to $3.50 per rental contract July 1, 1996. Usage is restricted to County sports facilities. (3) Recreational vehicle taxes apply at the rate of $0.50 per vehicle per night and became effective July 1, 1997. Usage of this tax is limited to Spring Training activities. Source: Pima County Finance and Risk Management Department 123 182 217 213 199 190 195 209 200 214 210 PIMA COUNTY, ARIZONA Streets and Highways Revenues Last Ten Fiscal Years (amounts in thousands) Fiscal Year Exhibit D-12 Amount 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 $ 33,370 39,535 47,699 48,317 47,071 48,072 51,334 53,878 56,937 44,607 Source: Pima County Finance and Risk Management Department 124 STATISTICAL SECTION DEBT CAPACITY: The debt capacity information is intended to assist users to understand and assess a government’s debt burden and ability to issue debt. Debt capacity information is cited as being very useful for assessing economic condition as frequently as revenue or tax capacity. Five of the schedules presented provide tenyear comparisons. Certain schedules, for example; leases, lease-purchase and purchase agreements, are provided to comply with debt disclosure requirements. PIMA COUNTY, ARIZONA Ratios of Outstanding Debt by Type to Personal Income and Per Capita Last Ten Fiscal Years ($ amounts in thousands) Exhibit D-13 Governmental Activities Fiscal Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 General Obligation Bonds $ 186,990 153,295 173,985 192,640 183,381 200,554 232,553 267,927 231,918 290,150 Flood Control Bonds $ 8,135 7,360 6,595 5,840 5,348 4,585 3,805 3,010 2,230 1,470 Transportation Revenue Bonds $ 40,000 36,000 32,000 28,000 79,206 105,541 95,461 137,736 127,000 136,541 Lease Revenue Bonds $ 1,340 1,220 1,095 965 825 495 Special Assessment Bonds $ 2,828 2,300 1,697 1,053 2,506 2,121 1,736 1,093 911 Business-Type Activities Certificates of Participation Transportation Loans $ $ 8,945 6,725 4,505 3,045 1,560 $ 5,100 4,060 3,020 1,943 5,739 3,714 31,731 49,678 36,368 35,338 34,008 32,596 31,049 29,323 27,879 26,426 24,736 125 Fiscal Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Total Primary Government $ 384,434 339,192 349,955 370,881 440,959 483,463 515,686 584,227 530,644 664,089 Personal Income $ 17,687,372 18,999,743 20,855,000 21,827,000 21,991,000 22,973,000 23,965,000 26,302,000 28,421,000 30,899,000 Percentage of Personal Income 2.17% 1.79% 1.68% 1.70% 2.01% 2.10% 2.15% 2.22% 1.87% 2.15% Population at July 1 817,851 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 (a) See schedule D-20 for population data. Note: Details regarding outstanding debt can be found in Note 7 page 56 in Notes to the Financial Statements. Sewer Revenue Bonds Capital Leases Debt per Capita ( a ) $ 470 401 410 425 495 532 557 619 552 661 $ 82,017 79,473 75,564 71,444 67,811 63,098 60,064 55,809 51,710 94,356 Wastewater Loans Payable $ 13,094 13,967 14,477 32,314 57,456 63,551 83,941 83,978 80,148 76,111 Contracts and Notes $ 352 264 2,479 112 3,685 6,849 5,783 4,852 4,562 5,280 Total Primary Government $ 384,434 339,192 349,955 370,881 440,959 483,463 515,686 584,227 530,644 664,089 PIMA COUNTY, ARIZONA Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years ($ amounts in thousands) General Obligation Bond Debt Fiscal Year 126 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Flood Control General Obligation Bond Debt $ 186,990 153,295 173,985 192,640 183,381 200,554 232,553 267,927 231,918 290,150 $ 8,135 7,360 6,595 5,840 5,348 4,585 3,805 3,010 2,230 1,470 Debt Service Funds Available for Principal $ 10,931 6,827 6,249 4,309 4,883 2,226 2,648 8,899 5,571 7,431 Secondary Net Assessed Value Net General Bond Debt $ 184,194 153,828 174,331 194,171 183,846 202,913 233,710 262,038 228,577 284,189 $ 3,700,218 3,852,574 4,000,624 4,236,070 4,491,395 4,835,561 5,221,271 5,620,156 6,050,950 6,869,955 Note: Details regarding outstanding debt can be found in Note 7 on page 56 in Notes to the Financial Statements. Percent Net General Bond Debt to Assessed Value 4.98% 3.99% 4.36% 4.58% 4.09% 4.20% 4.48% 4.66% 3.78% 4.14% Exhibit D-14 Net General Bond Debt per Capita Population at July 1 817,851 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 $ 225 182 204 223 206 223 252 278 238 283 PIMA COUNTY, ARIZONA Ratio of Direct and Overlapping Debt to Property Values and Per Capita Last Ten Fiscal Years ($ amounts in thousands) Total Overlapping Debt Fiscal Year 127 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Note: $ 1,124,003 1,090,052 1,067,544 1,135,282 1,134,289 1,129,103 1,091,892 1,185,435 1,146,388 1,107,662 Secondary Net Assessed Value $ 3,700,218 3,852,574 4,000,624 4,236,070 4,491,395 4,835,561 5,221,271 5,620,156 6,050,950 6,869,955 Percentage of Assessed Value 30.38% 28.29% 26.68% 26.80% 25.25% 23.35% 20.91% 21.09% 18.95% 16.12% Exhibit D-14a Population at July 1 Debt per Capita 817,851 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 $ Overlapping governments are those that coincide (at least in part), with the geographic boundaries of the County. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Pima County. When considering the County's ability to issue and repay long-term debt, the process should recognize the entire debt burden borne by the residents and business therein. However, this does not imply that every taxpayer is a resident, and therefore is responsible for the repayment of debt of each overlapping government. 1,374 1,289 1,250 1,301 1,274 1,243 1,179 1,256 1,192 1,103 PIMA COUNTY, ARIZONA Computation of Direct and Overlapping Governmental Activities Debt Outstanding At June 30, 2007 ($ amounts in thousands) Exhibit D-15 Debt Outstanding Governmental Unit Debt repaid with property tax School Districts $ City of Tucson 521,169 Amount Overlapping $ 294,774 Total overlapping Debt repaid with property tax Direct: Pima County * $ Flood Control District 290,150 294,774 $ 815,943 $ 290,150 1,470 Total direct 521,169 1,470 $ 291,620 $ 31,731 Other Debt: Certificates of participation $ Jail capital lease 31,731 24,636 24,636 100 100 Transportation bonds 136,541 136,541 Transportation loans 3,714 3,714 Other capital leases Total other debt $ 196,722 Total direct and overlapping debt $ 1,304,285 *Excludes improvement districts. Note: Overlapping governments are those that coincide with the geographic boundaries of the County. All overlapping governments are 100% within the County's boundaries. This schedule estimates the portion of the outstanding debt borne by the residents and businesses of Pima County. When considering the county's ability to issue and repay long-term debt, the process should recognize the entire debt burden borne by the residents and businesses therein. However, this does not imply that every taxpayer is a resident of each government and therefore is responsible for the repayment of debt of each overlapping government. 128 PIMA COUNTY, ARIZONA Legal Debt Margin Last Ten Fiscal Years ($ amounts in thousands) 1998 Assessed Value $ 3,700,218 1999 $ 3,852,574 2000 $ 4,000,624 2001 $ 4,236,070 Exhibit D-16 2002 $ 4,491,395 2003 $ 4,835,561 2004 $ 5,221,271 2005 $ 5,620,156 2006 $ 6,050,950 2007 $ 6,869,955 Legal Debt Margin Debt limit (15% of assessed value) 555,033 577,886 600,094 635,410 673,709 725,334 783,191 843,023 907,643 1,030,493 186,990 153,295 173,985 192,640 183,070 200,275 232,105 267,270 231,310 289,590 Debt applicable to limit: General obligation bonds Less: Net a ssets reserved for repayment of general obligation debt (11,844) Total net debt applicable to the limit 129 Legal debt margin Total net debt applicable to the limit as a percentage of debt limit. (6,827) 175,146 $ 379,887 31.56% (6,249) 146,468 $ 431,418 25.35% (4,309) 167,736 $ 432,358 27.95% (4,883) 188,331 $ 447,079 178,187 $ 29.64% Note: General obligation debt may not exceed six percent of the value of the County's taxable property as of the latest assessment. However, Pima County received voter approval to increase the debt limit to fifteen percent of the value of taxable property. Amount reserved for payment of principal is the reserved fund balance of the Debt Service Fund. See Notes to the Financial Statements (Note 7 page 63) for calculation of the legal debt margin for the current year. (2,226) 495,522 26.45% (2,648) 198,049 $ 527,285 27.30% (8,899) 229,457 $ 553,734 29.30% (5,571) 258,371 $ 584,652 30.65% (7,431) 225,739 $ 681,904 24.87% 282,159 $ 748,334 27.38% PIMA COUNTY, ARIZONA Wastewater Management Liquid Waste Pledged Sewer Revenue Debt Coverage Last Ten Fiscal Years (amounts in thousands) Fiscal Year 130 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 (1) (2) (3) (4) Sewer User Revenues (2) $ 48,235 49,979 56,589 58,647 59,021 66,756 78,393 88,768 104,494 100,540 Less: Operating Expense (3) $ 33,920 31,114 34,742 36,438 39,183 46,378 44,704 47,037 56,902 67,662 Exhibit D-17a Debt Service (1) Available Net Revenue $ 14,315 18,865 21,847 22,209 19,838 20,378 33,689 41,731 47,592 32,878 Principal $ 3,169 4,727 5,006 6,611 8,887 9,235 9,656 9,501 11,073 13,072 Interest $ 5,594 5,031 4,650 4,783 5,704 5,666 5,990 5,706 5,350 6,976 Debt Service r equirements include principal and interest payable in the 12 months following each fiscal year. Includes sewer connection fees. Excludes depreciation, interest expense and amortization. Sewer revenue debt rate covenants require minimum coverage of 1.20. Note: Details regarding outstanding debt can be found in Notes to Financial Statements. Coverage Ratio (4) 1.63 1.93 2.26 1.95 1.36 1.37 2.15 2.74 2.90 1.64 PIMA COUNTY, ARIZONA Pledged Revenue Bond Coverage - Transportation Revenue Bonds Last Ten Fiscal Years (amounts in thousands) Fiscal Year 131 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Less: Operating Expense Transportation Revenue $ 42,017 52,345 53,264 50,599 51,852 55,777 57,819 61,944 64,781 $ 27,173 31,714 31,006 34,855 34,059 36,865 38,349 39,336 42,639 Available Net Revenue $ 14,844 20,631 22,258 15,744 17,793 18,912 19,470 22,608 22,142 Exhibit D-17b Debt Service * Principal Interest $ 4,000 4,000 4,000 8,535 10,215 8,905 10,710 11,435 11,745 $ 1,644 1,444 1,244 3,370 4,394 3,965 6,058 5,257 5,659 Note: Details regarding the County's outstanding debt can be found in Notes to Financial Statements. Operating expenditures do not include interest, depreciation, or amortization. There was no Transportation debt issued prior to FY 1998 - 1999. * Debt Service r equirements include principal and interest payable in the 12 months following each fiscal year. Coverage Ratio 2.63 3.79 4.24 1.32 1.22 1.47 1.16 1.35 1.27 PIMA COUNTY, ARIZONA Pledged Revenue Bond Coverage - Lease Revenue Bonds Last Ten Fiscal Years (amounts in thousands) Fiscal Year 132 1997-98 $ 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 * 2005-06 * 2006-07 * Less: Operating Expense Lease Revenue 8 6 6 6 2 1 0 $ 7 7 7 7 7 7 27 * This debt was satisfied in full during FY 2003-04. Available Net Revenue $ 1 (1) (1) (1) (5) (6) (27) Debt Service Principal Interest $ 120 125 130 140 145 155 460 $ Exhibit D-17c Coverage Ratio 82 75 68 61 52 31 99 0.00 (0.01) (0.01) (0.00) (0.03) (0.03) (0.05) PIMA COUNTY, ARIZONA Lease, Lease-Purchase and Purchase Agreements Scheduled Payments (amounts in thousands) Function/Department Elections Clerk of Superior Court Jail * Juvenile Court Public Works Building Sheriff Superior Court FY 03-04 $ $ FY 04-05 195 3,824 74 1,643 42 $ 5,778 $ 147 2,764 FY 05-06 $ 42 2,953 Exhibit D-18 31 3,042 133 $ 42 $ 3,115 * Funds derived from a sale/leaseback of the County's Adult Corrections Facility provided funding for construction of Kino Veteran's Memorial Sportspark & Tucson Electric Park Stadium. Source: Pima County Finance and Risk Management Department FY 06-07 82 3,015 FY 07-08 $ 82 5,920 $ 6,002 21 $ 3,118 PIMA COUNTY, ARIZONA Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures Last Ten Fiscal Years (amounts in thousands) Fiscal Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Principal $ 26,128 39,118 34,803 36,873 35,358 43,648 46,998 41,255 48,672 50,940 Total Debt Service Interest $ 10,533 12,809 12,122 13,173 12,366 13,904 13,702 14,794 18,147 17,672 $ 36,661 51,927 46,925 50,046 47,724 57,552 60,700 56,049 66,819 68,612 Total General Expenditures * $ Exhibit D-19 Ratio of Debt Service To General Expenditures 389,942 425,140 442,415 467,614 487,476 515,774 546,136 589,708 640,336 689,968 * Includes General, Special Revenue and Debt Service Funds, while excluding Capital Projects Fund. 134 9.4% 12.2% 10.6% 10.7% 9.8% 11.2% 11.1% 9.5% 10.4% 9.9% STATISTICAL SECTION DEMOGRAPHIC AND ECONOMIC INFORMATION: The dual objectives of the demographic and economic information are to assist users in understanding certain aspects of the environment in which a government operates and to provide information that facilitates the comparisons of financial statement data over time and across governments. Information of this type can help readers assess a government’s condition by providing information about community expansion, average age increases or decreases, and changes in personal income and unemployment. This type of data is important to readers in assessing economic condition. PIMA COUNTY, ARIZONA Demographic and Economic Statistics Last Ten Years Calendar Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Population (a) 817,851 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 Personal Income (b) $ 17,687,372 18,999,743 20,855,000 21,827,000 21,991,000 22,973,000 23,965,000 26,302,000 28,421,000 30,899,000 Per Capita Personal Income $ Exhibit D-20 Unemployment Rate (a) 21,468 22,464 24,057 24,698 24,787 25,395 25,797 27,599 28,894 30,813 Note : a) Population and unemployment data are obtained from projections supplied by the Arizona Department of Economic Security Statistics Unit. b) Personal income is obtained from "Arizona's Economy" magazine (in thousands). 135 2.7% 2.7% 2.6% 2.8% 4.7% 4.8% 3.5% 4.1% 4.4% 3.3% PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 1998 Employees Rank Employer Fort Huachuca 1999 Percent of County Employment Employees Rank Exhibit D-21 2000 Percent of County Employment Employees Rank 2001 Percent of County Employment Employees Rank 2002 Percent of Total County Employment Employees Rank Percent of Total County Employment 10,321 2 2.5% 10,312 2 2.3% 11,140 1 2.8% 11,376 1 2.9% 10,969 2 2.8% 7,700 6 1.8% 7,700 6 1.7% 9,800 4 2.5% 10,149 3 2.6% 10,400 3 2.6% 10,416 1 2.5% 10,520 1 2.4% 10,850 2 2.8% 11,032 2 2.8% 11,606 1 2.9% State of Arizona 9,763 3 2.3% 9,694 3 2.2% 10,071 3 2.6% 9,978 4 2.5% 9,932 4 2.5% Davis Monthan AFB 8,362 4 2.0% 8,352 4 1.9% 8,346 5 2.1% 8,796 6 2.2% 9,200 5 2.3% Tucson Unified School District 8,115 5 1.9% 8,187 5 1.9% 8,239 6 2.1% 9,102 5 2.3% 8,278 6 2.1% Pima County Government 6,686 7 1.6% 7,028 7 1.6% 6,832 7 1.7% 7,119 7 1.8% 7,175 7 1.8% City of Tucson 5,420 8 1.3% 5,497 8 1.2% 5,494 8 1.4% 6,058 8 1.5% 5,933 8 1.5% 3,060 10 0.7% 3,800 9 1.0% 3,783 10 1.0% Raytheon University of Arizona 136 T M C HealthCare Inc. B H P Copper 3,679 10 0.9% Phelps Dodge Carondelet Health Network Total Total Work Force 4,041 74,503 9 1.0% 5,497 17.8% 75,847 9 421,039 3,275 10 0.8% 4,200 9 1.1% 1.2% 3,596 9 0.9% 3,329 10 0.8% 17.1% 77,643 19.7% 81,139 440,254 394,100 20.5% 393,200 81,076 20.5% 397,900 (continued) Note: Data is obtained from www.azstarnet.com/sn/star200, a website of the Arizona Daily Star. PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago Exhibit D-21 (continued) 2003 Employees Rank Employer 2004 Percent of Total County Employment Employees Rank 2005 Percent of Total County Employment Employees Rank 2006 Percent of Total County Employment Employees Rank 2007 Percent of Total County Employment Employees Rank Percent of Total County Employment Raytheon 10,100 3 2.4% 10,171 2 2.4% 10,300 3 2.3% 10,756 2 2.4% 11,184 1 2.5% University of Arizona 11,335 2 2.7% 10,078 3 2.3% 10,348 2 2.3% 10,282 3 2.3% 10,354 2 2.3% 9,732 5 2.3% 9,753 4 2.3% 9,750 4 2.2% 9,742 4 2.2% 9,927 3 2.2% 11,580 1 2.7% 11,939 1 2.8% 12,250 1 2.8% 13,098 1 3.0% 9,119 4 2.0% Davis Monthan AFB 9,947 4 2.3% 7,692 5 1.8% 8,727 5 2.0% 8,233 5 1.9% 8,233 5 1.8% Tucson Unified School District 8,234 6 1.9% 7,690 6 1.8% 7,684 6 1.7% 7,623 6 1.7% 7,419 6 1.6% Pima County Government 7,135 7 1.7% 6,987 7 1.6% 6,767 7 1.5% 6,765 7 1.5% 7,290 7 1.6% City of Tucson 6,168 8 1.5% 5,495 8 1.3% 6,757 8 1.5% 5,306 8 1.2% 5,848 8 1.3% Wal-Mart Stores, Inc. 4,000 9 0.9% 4,420 9 1.0% 4,595 9 1.0% 4,980 9 1.1% 5,625 9 1.2% Phelps Dodge Tohono O'odam Nation 4,500 10 1.0% 4,123 10 0.9% 4,900 10 1.1% 3,375 10 0.8% 3,515 10 0.8% 19.2% 77,740 18.3% 80,908 18.2% 79,899 State of Arizona Fort Huachuca 137 Carondelet Health Network Total Total Work Force 81,606 424,400 Note: Data is obtained from www.azstarnet.com/sn/star200, a website of the Arizona Daily Star. 18.1% 431,400 81,678 443,100 443,300 17.6% 453,500 PIMA COUNTY, ARIZONA Population and Employment Last Ten Calendar Years Exhibit D-22 EMPLOYMENT Calendar Year 138 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Population 817,851 845,775 854,329 872,394 890,356 908,227 926,052 943,795 961,519 1,003,918 Civilian Labor Force 421,039 440,254 394,100 393,200 397,900 424,400 431,400 443,100 443,300 453,500 Total Unemployment Rate 2.7% 2.7% 2.6% 2.8% 4.7% 4.8% 3.5% 4.1% 4.4% 3.3% Mining Construction 2,300 2,000 1,800 1,800 1,500 1,400 1,200 1,500 1,700 1,900 20,900 21,600 22,100 21,600 21,800 23,700 24,000 26,600 28,500 28,100 Manufacturing 29,500 29,600 33,500 34,000 32,300 29,100 28,500 28,600 29,300 29,000 Trades and Services 169,800 182,600 191,600 190,800 184,500 184,500 185,000 199,300 219,200 228,600 Finance, Insurance and Real Estate 12,600 13,400 13,800 14,100 15,100 14,800 15,600 18,200 17,500 17,800 Sources: Arizona Department of Economic Security; Economic Forecasting Project, University of Arizona; "Arizona's Economy", U of A Business Research Program. Note: Beginning with the July, 2003 issue, "Arizona's Economy" stopped using the Standard Industrial Classification System Reporting Format (SICS) and began using the North American Industrial Classification System reporting format (NAICS). PIMA COUNTY, ARIZONA Transportation and Real Estate Last Ten Calendar Years Calendar Year 139 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Aircraft Movements 242,966 284,149 262,845 260,258 259,794 271,802 239,966 261,037 289,440 263,910 Transportation No. of Air Bus Passengers Ridership 3,484,674 3,497,788 3,526,164 3,733,205 3,459,183 3,522,401 3,611,696 3,928,773 4,251,710 4,284,880 14,925,612 15,279,274 15,334,429 14,513,188 13,628,899 15,016,131 15,393,817 15,847,429 17,179,275 17,857,865 Riders Per Mile 1.91 1.90 1.90 1.87 1.80 1.91 1.96 2.00 2.18 2.21 Exhibit D-23 Residential Bldg Permits Real Estate Multiple Listings 2,101 2,508 2,453 3,182 3,367 9,441 10,432 12,103 11,903 6,265 Sources: "Arizona's Economy", U of A Business Research Program (EBR), College of Business & Public Administration, Pima Association of Governments, Tucson Association of Realtors, Multiple Listing Service, Inc. 8,906 10,627 11,127 11,229 11,860 12,933 15,054 17,039 16,630 13,821 Sales Volume In $ 000's 1,221,214 1,517,076 1,667,928 1,775,178 1,955,348 2,271,131 2,899,012 3,908,054 4,462,020 3,757,536 PIMA COUNTY, ARIZONA Economic Indicators by Calendar Year Last Ten Calendar Years ($ amounts in thousands) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Construction Activity No. of Dwelling Construction Units Awards Awarded Aggregate Retail Sales Calendar Year $ 7,260,497 7,807,773 8,170,826 8,632,021 8,728,079 8,804,946 9,550,501 10,366,181 11,478,781 11,829,081 Exhibit D-24 $ 1,001,909 1,041,542 1,561,110 1,536,760 1,678,354 Source: "Arizona's Economy", U of A Business Research Program (EBR) College of Business & Public Administration. 140 5,667 8,806 8,489 7,694 7,716 8,015 9,281 12,640 10,313 6,110 Bank Deposits $ 5,280,000 5,737,000 5,619,000 5,664,000 6,554,000 7,175,000 7,895,000 9,013,000 10,134,000 10,497,000 PIMA COUNTY, ARIZONA Population Statistics June 30, 2007 Age Group Population 0-4 5-9 10-14 15-19 20-24 25-39 40-54 55-59 60-64 65-69 70-74 75+ 66,930 64,763 61,594 66,407 72,539 207,374 203,426 61,104 50,353 39,540 34,089 75,799 Total 1,003,918 POPULATION PROJECTIONS Year Projected Population 2007 2010 2015 2020 2040 2050 1,003,918 1,070,723 1,175,967 1,271,912 1,585,983 1,709,026 Source: Arizona Department of Economic Security 141 Exhibit D-25 PIMA COUNTY, ARIZONA Average Annual Jail Population Last Ten Calendar Years Calendar Year Average Jail Population 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 1,229 1,362 1,339 1,330 1,481 1,462 1,539 1,739 2,009 2,028 Source: Pima County Sheriff's Department 142 Exhibit D-26 STATISTICAL SECTION OPERATING INFORMATION: The objectives of the operating information are to provide contextual information about a government’s operations and resources to assist users in using financial information to understand and assess a government’s economic condition. Two types of information are considered important. 1. Basic information about infrastructure assets, utilities and public works; in essence, the capital resources at the government’s disposal. Examples include miles of streets and sewers and wastewater treatment volume. 2. Descriptive service information, which would help to evaluate the size of the government. This would include types of services, the related demand and volume, and the non-financial resources employed to provide the services. PIMA COUNTY, ARIZONA Employees by Function Last Five Fiscal Years Exhibit D-27 Full-time employees (FTEs) as of 6/30: 2004 2005 2006 2003 2007 Function/Program Governmental activities General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity 1,851 1,986 290 0 407 174 180 140 2,040 1,902 288 0 413 185 197 117 2,952 1,434 351 0 408 20 164 250 2,911 1,401 526 45 414 23 180 289 2,776 1,442 334 41 408 22 466 179 Total governmental activities 5,028 5,142 5,579 5,789 5,668 506 43 607 511 141 3 481 42 548 162 149 3 449 42 0 631 116 3 668 0 0 634 156 3 472 0 0 559 153 3 Total business-type activities 1,811 1,385 1,241 1,461 1,187 Total 6,839 6,527 6,820 7,250 6,855 Business-type activities Wastewater management-liquid Wastewater management-solid Kino Hospital Pima Health System & Services Development Services Parking Garages Note: Internal service funds FTEs were added to the General Government function. Internal service fund employees contribute through their labors to Pima County funds. Variances can be noted in the Governmental Activities categories due to a change in classification criteria in fiscal year 2005. Variances can be noted in the Governmental Activities categories due to employees being added to the Library District from the City of Tucson on July 1, 2006. Variances can also be noted in the Business Activities categories due to the closure of Kino Hospital which resulted in the absorption of some Kino employees into Pima Health System & Services and the transference of Solid Waste operations to Sanitation, a governmental activity. 143 PIMA COUNTY, ARIZONA Operating Indicators by Program Last Five Fiscal Years Fiscal Year 2005 2004 2003 Exhibit D-28 2006 2007 Program: Sheriff Physical arrests 32,159 33,815 32,501 30,686 33,929 Traffic violations/citations Criminal Total Civil Total Total violations/citations 3,920 3,813 4,148 3,170 3,927 42,074 45,994 36,823 40,636 37,868 42,016 27,846 31,016 30,204 34,131 Wastewater Avg. daily sewage treated (MGD) New connections 64.5 8,289 65.0 9,718 65.5 11,245 66.4 8,325 68.5 8,734 Cultural and Recreational Spring training Sidewinders 137,302 167,552 147,117 165,387 146,739 165,441 155,377 171,179 142,773 153,595 Parks & Recreation Athletic field permits issued Community center admissions Volunteer hours 101 280,850 23,070 107 344,470 22,465 129 388,092 23,785 135 391,295 17,218 141 438,051 25,700 1,300,000 5,761,423 458,736 1,338,000 6,063,771 486,402 1,430,690 6,249,123 474,045 1,390,792 6,276,794 488,250 1,395,849 6,371,480 492,973 Library Volumes in collection Total volumes borrowed Number of cardholders Capital Projects Completed Land Buildings Improvements Infrastructure $ 12,908,101 9,356,754 2,598,134 72,540,294 $ 20,698,771 18,609,343 5,592,348 67,890,856 $ 42,755,555 42,916,920 5,071,608 7,476,315 $ 16,646,964 2,018,849 3,568,917 76,950,908 $ $ 97,403,283 $ 112,791,318 $ 98,220,398 $ 99,185,638 $ 154,588,664 144 37,402,683 66,095,100 21,944,399 29,146,482 PIMA COUNTY, ARIZONA Capital Assets and Infrastructure by Program Last Five Fiscal Years 2003 2004 6 5 252 6 5 280 Exhibit D-29 Fiscal Year 2005 2006 2007 6 5 303 7 4 302 Program: Sheriff Stations Zone offices Patrol Units Transportation (streets and highways) Streets (miles) Pothole repair Flood Control Bank protection (miles) Flood plain / drainageway (acres) $ 1,750 691,236 $ 1,773 672,427 6 5 276 $ 1,782 926,828 $ 1,798 964,051 $ 1,801 1,150,950 138 10,219 138 10,313 138 10,558 138 10,622 139 10,840 Parks & Recreation Urban parks (acres) Playgrounds (1) Baseball/softball diamonds Soccer/football fields Community centers Swimming pools 2,366 30 64 12 8 7 2,411 32 67 12 9 8 2,419 34 73 14 9 8 2,885 36 78 14 9 9 2,932 41 84 16 9 9 Wastewater Sanitary sewers (miles) Treatment capacity (MGD) 3,049 74.76 3,177 74.76 3,249 81.50 3,314 87.45 3,464 92.45 12 12 12 12 12 12 12 13 25 2 606 7,437 18 7 10,334 17,771 25 7 13,942 31,713 32 17 1,235 32,948 49 18 3,668 36,616 67 Libraries County (2) City Open Space Acquisitions Properties added Acres Cumulative acreage Total properties (1) 2005 Baseball/softball diamonds adjusted after department review (2) On July 1, 2006, the Pima County Library District assumed control of the operations of the libraries. 145 (This page is intentionally blank) 146