Pima County, Arizona Comprehensive Annual Financial Report 2011 For the Fiscal Year Ended June 30, 2011 PIMA COUNTY, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2011 BOARD OF SUPERVISORS Ramón Valadez Chair District #2 Sharon Bronson Vice Chair District #3 Ann Day District #1 Ray Carroll District #4 Richard Elías District #5 COUNTY ADMINISTRATOR C. H. Huckelberry Prepared by the Department of Finance and Risk Management Tom Burke, Director Michelle Campagne, Deputy Director Ellen Moulton, Deputy Director Paul Guerrero, CPA, Division Manager Financial Control & Reporting Supervisors Emilia Eveningred Marilyn Hutzler Pete Rodriguez Accountants Brenda Aguirre Kakoli Basu Leslie Butler Brenda DeBoo-Nicely Dana Dmitroff Ted Garza Linda House Jean Lee, CPA Janet Meinhausen Lorraine Nuñez Janet Peete Rosemarie Perry Blanca Rossetti Phil Schroeck PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 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 A. B. Page 9 - 10 MANAGEMENT'S DISCUSSION AND ANALYSIS (required supplementary information) 11 - 29 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 31 32 - 33 A-3 34 A-4 35 A-5 36 A-6 37 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 38 A-8 A-9 39 40 - 41 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets - Fiduciary Funds Statement of Changes in Fiduciary Net Assets - Fiduciary Funds A-10 A-11 42 43 Component Unit Financial Statements Combining Statement of Net Assets Combining Statement of Activities A-12 A-13 44 45 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 Table of Contents (continued) Exhibit Notes to Financial Statements Note 1: Summary of significant accounting policies Note 2: Fund balance classifications 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: Subsequent events C. 46 - 52 53 54 - 57 58 59 - 60 61 - 62 63 - 70 70 - 71 71 - 75 76 - 77 77 - 78 78 78 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 Retirement Plans' Funding Progress D. Page 79 80 B-2 81 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 84 - 85 C-2 86 - 87 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Other Governmental Funds Capital Projects Fund Debt Service Fund Transportation - Special Revenue Fund Health - Special Revenue Fund Regional Flood Control - 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 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 89 90 91 92 93 94 95 96 97 98 99 100 101 102 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 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-17 103 C-18 C-19 104 105 - 106 C-20 107 C-21 C-22 108 109 - 110 C-23 111 C-24 C-25 112 113 C-26 114 D-1 through 4 115 - 119 D-5 through 12 121 - 132 PIMA COUNTY, ARIZONA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 Table of Contents (continued) Exhibit Page 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 Regional Wastewater Reclamation pledged sewer revenue debt coverage Transportation revenue bonds - pledged revenue bond coverage 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 D-13 through 19 133 - 142 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 through 26 143 - 150 Operating Information Employees by function Operating indicators by program Capital assets and infrastructure by program D-27 through 29 151 - 153 COUNTY ADMINISTRATOR’S OFFICE PIMA COUNTY GOVERNMENTAL CENTER 130 W. CONGRESS, TUCSON, AZ 85701-1317 (520) 740-8661 FAX (520) 740-8171 C.H. HUCKELBERRY County Administrator Pima County and County Services Pima County is situated in the southern part of Arizona with a portion of its southern boundary bordering Mexico. The County was organized in 1864 under the Arizona Territorial Legislature as one of the State’s four original counties. A five-member Board of Supervisors is responsible for implementing the County’s governmental and administrative affairs. Each member is elected from a designated district to serve a four-year term. The Chair is selected by the Board from among its members. The Board is also responsible for establishing the policies of the County, which provide guidance to the various County constitutional officers and departments. The Board also appoints a County Administrator who is responsible for the general administrative and overall operations of the various departments of the County. Pima County includes in its financial statements all funds, agencies, boards, commissions, and authorities for which the Pima County Board of Supervisors is financially accountable. As the primary government, Pima County is financially accountable if it appoints a voting majority of an organization’s governing body and either it is able to impose its will on that organization or a potential exists for that organization to provide specific benefits to, or impose specific financial burdens on Pima County. Additionally, the primary government may be financially accountable if an organization is fiscally dependent on the primary government. Pima County offers a wide variety of governmental services, including: • Justice and Law Enforcement: Clerk of the Superior Court, Constables, County Attorney, Superior Court, Juvenile Court, Justice Court, Sheriff, Indigent Defense, and Public Fiduciary • Medical Services: Pima Health System & Services (including Posada del Sol), Institutional Health, Public Health (including Animal Control), and Forensic Science Center • Community and Economic Development: Superintendent of Schools, Community Development and Neighborhood Conservation, Economic Development and Tourism, Community Services, Employment and Training, Community Resources, County Free Library District, Pima County Sports and Tourism Authority, Southwestern Fair Commission, and Stadium District • Public Works: Regional Flood Control District, Development Services (including Planning & Zoning), Transportation, Regional Wastewater Reclamation, Solid Waste, Environmental Quality, Fleet Services, Graphic Services, Cultural Resources, and Natural Resources, Parks and Recreation • County Administration: Board of Supervisors, County Administrator, Assessor, Clerk of the Board, Elections, Finance and Risk Management, Human Resources, Information Technology, Procurement, Recorder, Treasurer, Facilities Management Pima County is responsible for reporting the financial activities of its component units. These units are either discretely presented or blended. Although they are separate legal entities, blended component units are substantially a part of the County’s financial activities and are combined with data for the County. Blended and discrete component units include: • Southwestern Fair Commission - Activities of the Commission are reported as a discrete component unit of the County in the accompanying financial statements • Pima County Sports and Tourism Authority - Activities of this discrete component unit are reported in the accompanying financial statements • Pima County Stadium District, Regional Flood Control District, and Library District. Activities are reported in special revenue funds as blended component units in the accompanying financial statements 2 • Special Districts. Pima County includes the financial activities of various improvement districts in its financial statements. Improvement districts are established to pay for the construction or maintenance of specific public works projects that benefit citizens of a limited geographical area. The County’s currently active improvement districts include La Cholla Boulevard, Hayhook Ranch Road, and Camino Ojo De Agua as well as various street and lighting districts. The County also has various independently governed school, irrigation, fire, street lighting districts, and a health district and other entities for which the County is not financially accountable. These entities include the Industrial Development Authority, Pima Association of Governments, Pima Council on Aging, the Workforce Investment Board, Regional Transportation Authority and the Tucson Regional Economic Opportunity, Inc. The financial statements of such districts and entities are not included in the accompanying financial statements except to reflect amounts held in a fiduciary capacity by the County Treasurer. Economic Outlook Over the last few years, Pima County has taken specific actions in response to the economic recession. Declining revenues and increased service demands generated specific actions to address redundancy and waste. Some of those actions include centralization of administrative services, a reduction in workforce through attrition, elimination of some lines of business, and a steady decrease in departmental budgets. Over the last three years, the County has reduced operating budgets by 11.5% with the exception of the Sheriff’s Office which has been reduced by 2.5%. The Adopted Budget for fiscal year 2011-12 continues this trend by reducing most department budgets by 1.5% (except law enforcement functions) and is reflected in the County’s reduced combined fiscal year 2011-12 total budget of $1.295 million. The recommended combined total County budget for fiscal year 2011-12 is $1.295 million which is 9.53% less than the current year, a large portion of which is a result of the County discontinuing to be a plan administrator for the Arizona Health Care Cost Containment System (AHCCCS). The MD&A beginning on page 11 provides for a general and specific discussion regarding the County’s economic outlook. Expenditure Limitation Arizona voters approved a proposition in 1980 amending the state constitution that established expenditure limitations for local governments, including Pima County. The expenditure limitation is determined each year by adjusting the amount of actual payments of local revenues received by the County during fiscal year 1979-80 to reflect inflation and subsequent population growth for the County. Not subject to this limitation are items such as bond proceeds, related debt service, interest earnings, special voter approved districts, certain highway user revenue funds, federal grant and aid funds, monies received pursuant to intergovernmental agreements, and state grants which are to be used for specific purposes. As in previous years, the County’s expenditures for fiscal year 2010-11 are expected to be under the limit of $516.3 million. Major Program Initiatives and Developments Several significant program initiatives and developments during the year include: Pima Health System & Services On September 30, 2011, the County’s contracts with the Arizona Health Care Cost Containment System (AHCCCS) terminated. In preparation for the closure of this major enterprise fund, the County implemented strategic plans for the transition of County employees into new positions within or outside of the County. In addition, the County has decided to privatize the County’s nursing facility, Posada del Sol, the sale of which is scheduled for December 31, 3 2011. As a result, the County’s Adopted Budget for fiscal year 2011-12 was significantly decreased and the Adopted Budget for fiscal year 2012-13 will no longer report activities of Pima Health System & Services as an enterprise fund of the County. Regional Optimization Master Plan The Regional Optimization Master Plan is a master plan to allow Pima County to meet environmental regulatory requirements mandated by the Arizona Department of Environmental Quality (ADEQ) for the County’s sewer system. ADEQ directed the County to meet new stringent quality based on mandates set by the United States Environmental Protection Agency (EPA). The County is pursuing the most cost-effective option for the 32 MGD Wastewater Reclamation Facility (WRF): a design-build-operate contract, with a contractor providing all three elements. The DBO contract was awarded to CH2MHill on December 7, 2010, for $164 million. The WRF is projected to be operational in September 2014. Additionally, work has just been completed on a new Central Laboratory Complex, which will gather all laboratory services into one location and provide staff facilities for the Compliance and Regulatory Affairs Office and for training. For fiscal year 2011-12, the capital budget for wastewater infrastructure is $238.6 million, an increase of $68.1 million. The Regional Optimization Master Plan capital program is primarily funded with obligations paid for with revenues generated mostly by user fees. Debt Management Pima County continues to be one of the major debt issuers for Arizona counties. Of the total amounts originally authorized, $9.5 million from the May 20, 1997, $121.3 million from the May 18, 2004, and $7.9 million from the May 16, 2006 bond election remain unissued at June 30, 2011. Bond sales anticipated for fiscal year 2011-12 include $60 million of general obligation debt, $13 million of Street and Highway bonds and $189 million of sewer revenue obligations. Please refer to the MD&A beginning on page 11 and Note 7 beginning on page 63 for specific details on debt issuances, defeasances and refundings. Capital Improvements During the year, the County began implementation of a new system to replace significant portions of its outdated financial and procurement systems through Project PimaCore. Next fiscal year, the human resources module of the project is expected to be implemented. Additional major project expenditure budgets for next year include the Justice Court/Municipal Court Complex for $27.2 million, the Communications Emergency Operations Center for $17.1 million, new courtrooms for Superior Court for $8.5 million and $6.1 million for the Regional Public Safety Communications System. Significant transportation projects budgeted for the year include Magee Road/Cortaro Farms Road: Mona Lisa to La Canada project (budget of $8.5 million), La Canada Drive: Ina Road to River Road (budget of $6.7 million), La Cholla Boulevard: Magee Road to Overton Road (budget of $6.5 million) and the Magee Road/Cortaro Farms Road: Corridor Study and Thornydale Road to Mona Lisa project (budget of $5.7 million). Please refer to the MD&A beginning on page 11 for details on these and other significant projects. 4 Financial Information Accounting System and Budgetary Control In developing and evaluating the County’s accounting system, consideration is given to the adequacy of internal control procedures. Internal controls for accounting purposes are designed to provide reasonable, but not absolute, assurance regarding: (1) safeguarding of assets against loss from unauthorized use or disposition and (2) reliability of financial records for preparing financial statements and maintaining accountability of assets. The concept of reasonable assurance recognizes that the costs of implementing controls should not exceed their likely derived benefits, and the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that the County’s internal control structure adequately safeguards assets and provides reasonable assurance of proper recording of financial transactions. Budgetary control is maintained at the elected official or department level with each department budgeted on a cost center/account line item basis. Each year, the budget is presented emphasizing the programmatic components of County services by identifying the costs and funding of those programs. Cash Management Most cash, other than imprest accounts, is on deposit with the County Treasurer or the State Treasurer. Amounts temporarily available during the course of the fiscal year are invested by the County Treasurer according to statutory guidelines. To address cash flow needs in the short term, the County maintains a revolving line-of-credit with Bank of America, N.A. For short term needs within the County, the County uses internal borrowings among funds that are recorded in its accounting records. Risk Management Pima County has established a Self Insurance Trust Fund to account for the risk management function of the County. The Fund has an appointed Board of Trustees and provides self-insured coverage to the County for medical malpractice, workers’ compensation, unemployment, general liability, property damage, environmental damage, and employee dental benefits, as well as obtaining coverage for other risks. The Fund is financed by charges to other County funds. Other Information Independent Audit Arizona Revised Statutes require an annual audit of the financial statements. The County is fully compliant with this legal requirement. An independent auditor’s report is included in this CAFR. 5 http://www.pima.gov/finance/PDFs/FCR/SAR/2010SAFinal.pdf C. H. Huckelberry County Administrator Tom Burke Director, Finance and Risk Management ASSESSOR CLERK OF THE SUPERIOR COURT RECORDER SCHOOL SUPERINTENDENT TREASURER __ __ __ __ __ ADMINISTRATION COMMUNITY & ECONOMIC DEVELOPMENT _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ 8 JUSTICE & LAW ENFORCEMENT COUNTY ADMINISTRATOR SUPERVISORS BOARD OF MEDICAL SERVICES CLERK OF THE BOARD PUBLIC WORKS JUSTICE COURTS SUPERIOR COURT JUDGES CONSTABLES COUNTY ATTORNEY SHERIFF _ _ _ _ _ _ _ _ __ Elected Officials Elected Officials _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ RESIDENTS OF PIMA COUNTY PIMA COUNTY ORGANIZATIONAL CHART _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Independent Auditors’ Report Members of the Arizona State Legislature The Board of Supervisors of Pima County, Arizona We have audited the accompanying financial statements of the governmental activities, business-type activities, aggregate discretely presented component units, each major fund, and aggregate remaining fund information of Pima County as of and for the year ended June 30, 2011, which collectively comprise the County’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of certain departments, one major fund, and the component units, which account for the following percentages of the assets, liabilities, revenues, and expenses or expenditures of the opinion units affected: Opinion Unit/Department Government-Wide Statements Governmental Activities: Stadium District School Reserve Fund Self-Insurance Trust Business-Type Activities: Regional Wastewater Reclamation Department Development Services Self-Insurance Trust Aggregate Discretely Presented Component Units: Southwestern Fair Commission Sports & Tourism Authority Fund Statements Major Fund: Regional Wastewater Reclamation Department Enterprise Fund Aggregate Remaining Fund Information: Stadium District School Reserve Fund Development Services Self-Insurance Trust Assets Expenses/ Expenditures Liabilities Revenues 0.10% 0.10% 2.75% 0.03% 0.03% 5.21% 0.25% 0.51% 0.09% 0.60% 0.60% 0.72% 94.82% 0.32% 0.00% 95.08% 0.16% 0.00% 39.95% 1.54% 0.00% 35.21% 2.17% 0.30% 98.86% 1.14% 94.20% 5.80% 99.24% 0.76% 97.36% 2.64% 100.00% 100.00% 100.00% 100.00% 0.32% 0.30% 0.49% 8.39% 0.17% 0.15% 0.51% 29.70% 0.77% 1.58% 2.25% 8.06% 1.61% 1.65% 2.81% 6.09% Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinions, insofar as they relate to the amounts included for those entities, are based solely on the reports of the other auditors. We conducted our audit in accordance with U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of the other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, aggregate discretely presented component units, each major fund, and aggregate remaining fund information of Pima County as of June 30, 2011, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with U.S. generally accepted accounting principles. The Management’s Discussion and Analysis on pages 11 through 29, the Budgetary Comparison Schedule on pages 79 and 80, and the Schedule of Agent Retirement Plans’ Funding Progress on page 81 are not required parts of the basic financial statements, but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The introductory section, combining and individual fund statements and schedules, and statistical section listed in the table of contents are presented for purposes of additional analysis and are not required parts of the basic financial statements. The combining and individual fund statements and schedules have been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements and, in our opinion, based on our audit and the reports of the other auditors, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. In accordance with Government Auditing Standards, we will also issue our report on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters at a future date. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Debbie Davenport Auditor General December 19, 2011 Management’s Discussion and Analysis Management’s Discussion and 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, 2011 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, 2011, net assets for the County increased $160 million from the prior year. Increases were experienced in all net asset categories, with a $112 million increase in invested in capital assets, net of related debt, an increase of $30 million in restricted net assets and an increase of $18 million in unrestricted net assets. • Assets of the County exceeded its liabilities by $2,148,945, an increase of 8.1% from the prior year. Of this amount, $198,054 is available for general government expenditures (unrestricted net assets). Unrestricted net assets increased by $18,174 from last year, or approximately 10.1%. • $239,333 is restricted for specific purposes (restricted net assets), and $1,711,558 is invested in capital assets, net of related debt and accumulated depreciation. The chart below presents the composition of restricted and unrestricted net assets for the current and prior year: Comparative Composition of Pima County Net Assets $239,333 6/30/2011 $209,214 6/30/2010 $198,054 $179,880 Restricted net assets Unrestricted net assets ● General Fund revenues decreased by $16,568 from the prior year while expenditures only increased by $2,821. • The General Fund unassigned fund balance decreased to $73,547, from $73,837 in the prior year. The unassigned fund balances comprise 92.8% of the total fund balance of $77,555. 11 General Fund - Unassigned Fund Balance 2011 $73,547 2010 (in Millions) $73,837 $60,000 $65,000 2010 $70,000 $75,000 $80,000 $85,000 $90,000 2011 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 three components: (1) Government-wide statements, (2) Fund statements, and (3) Notes. Required supplementary information is included in addition to the basic financial statements. 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 a portion of their costs through user fees and charges (business-type 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, Regional Wastewater Reclamation, Development Services and the County’s downtown parking garages. 12 Discretely presented component units are included in the basic financial statements. They consist of two legally separate entities 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 County is also presenting the Pima County Sports and Tourism Authority (S&TA) as a discrete component unit. S&TA is a nonprofit municipal corporation established to promote professional and amateur sports events and other suitable activities for the benefit of the public. The government-wide financial statements can be found on pages 31-33. 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 Office of Management and Budget 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 fund 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 fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains fifteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General, Capital Projects and Debt Service funds which are reported as major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements. The governmental fund financial statements can be found on pages 34-37. statements for non-major governmental funds can be found on pages 84-87. The combining 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 services, telecommunications, wireless and IT network infrastructure. 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. 13 Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Regional Wastewater Reclamation 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. The proprietary fund financial statements can be found on pages 38-41. The combining statements for other enterprise and internal service funds can be found on pages 103-110. 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 42-43. 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 46-78. 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 79-81. Combining Statements and Other Schedules referred to earlier provide information for non-major governmental, enterprise, internal service and fiduciary funds and are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 84-114. 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 $2,148,945 at June 30, 2011. The following table shows condensed information for the Schedule of Assets, Liabilities, and Net Assets: 14 Table 1 Schedule of Assets, Liabilities, and Net Assets At June 30, 2011 and 2010 Governmental Activities 2011 2010 Current and other assets Capital assets (net): Land, buildings, equipment, infrastructure & other assets Total assets Current and other liabilities Long-term liabilities Total liabilities Net assets : Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $529,767 $536,514 Business-type Activities 2011 2010 $226,442 $293,569 Total 2011 2010 $756,209 $830,083 1,718,730 2,248,497 1,634,662 2,171,176 905,710 1,132,152 808,945 1,102,514 2,624,440 3,380,649 2,443,607 3,273,690 71,038 715,013 786,051 106,057 714,248 820,305 51,975 393,678 445,653 47,342 417,588 464,930 123,013 1,108,691 1,231,704 153,399 1,131,836 1,285,235 1,136,033 1,048,821 575,525 550,540 1,711,558 1,599,361 161,807 164,606 $1,462,446 152,084 149,966 $1,350,871 77,526 33,448 $686,499 57,130 29,914 $637,584 239,333 198,054 $2,148,945 209,214 179,880 $1,988,455 Assets Current and other assets decreased by $73,874 primarily due to a decrease in restricted cash and cash equivalents of $95,636, mainly due to the spending of debt proceeds by the Regional Wastewater Reclamation department. Capital assets increased by $180,883 primarily due to the following: ƒ ƒ ƒ ƒ A net increase of $15,692 in land for governmental activities. A net increase of $99,531 in construction in progress, with $26,228 for governmental activities and $73,303 for business-type activities. Buildings increased by $50,349 for governmental activities. Sewage conveyance systems increased by $36,737 for business-type activities. Total liabilities for the primary government decreased by $53,531. Current liabilities decreased $30,386 mainly due to an overall decrease in accounts payable, with accounts payable for governmental activities decreasing $33,707 and accounts payable for business-type activities increasing by $9,734. Net Assets 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, 2011, investment in capital assets totaled $1,711,558, 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. 15 The $112,197 increase in capital assets, net of related debt, is primarily due to the significant amount of capital project activity. 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. Unrestricted net assets for the primary government increased $18,174 mainly due to an increase in governmental activities of 9.8% ($14,640). The table below provides the composition of net assets for the County as of June 30, 2011. Composition of Net Assets Invested in capital assets, net of related debt - 80% Restricted net assets Unrestricted net assets - 11% 9% Restricted net assets represent resources that are subject to external restrictions on how they may be used. As of June 30, 2011, restricted net assets totaled $239,333 and comprised approximately 11.1% of total net assets. This represents a $30,119 increase in restricted net assets from the prior fiscal year. 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, 2011, unrestricted net assets totaled $198,054 and comprised approximately 9.2% of total net assets. Governmental activities The following table shows details of the changes in net assets for governmental activities: 16 Table 2 Governmental Activities Schedule of Changes in Net Assets For the Years Ended June 30, 2011 and 2010 2011 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 $ 60,077 136,472 65,030 261,579 Variance Amount Percent 2010 $ 64,247 142,840 65,820 272,907 $ (4,170) (6,368) (790) (11,328) -6.5% -4.5% -1.2% -4.2% 416,985 111,804 2,153 33,336 564,278 416,501 108,970 5,266 35,803 566,540 484 2,834 (3,113) (2,467) (2,262) 0.1% 2.6% -59.1% -6.9% -0.4% Total revenues 825,857 839,447 (13,590) -1.6% Expenses: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Amortization Interest on long-term debt Total expenses 218,843 146,395 73,348 6,208 36,475 90,521 67,063 56,626 (2,626) 26,079 718,932 218,504 145,697 68,691 6,669 33,086 87,107 61,642 52,023 428 26,403 700,250 339 698 4,657 (461) 3,389 3,414 5,421 4,603 (3,054) (324) 18,682 0.2% 0.5% 6.8% -6.9% 10.2% 3.9% 8.8% 8.8% -713.6% -1.2% 2.7% Excess before contributions and transfers 106,925 139,197 (32,272) -23.2% Transfers in Change in net assets 4,650 111,575 538 139,735 4,112 (28,160) 764.3% -20.2% 111,575 8.3% Ending net assets $ 1,462,446 $ 1,350,871 $ As indicated in the above schedule, ending net assets for governmental activities increased by $111,575, an 8.3% increase. This increase is $28,160 less than the increase in the prior year primarily due to decreases in revenues and increases in expenses. Factors affecting the $13,590 decrease in revenues from governmental activities: • Charges for services decreased by $4,170 primarily due to a decrease of $559 in photo traffic enforcement fees, a decrease of $466 in voter registration fees, a decrease of $1,636 in corrections bureau staffing fees and a decrease of $1,781 in contributions from general government overhead allocation revenue. 17 • Revenue from operating grants and contributions decreased by $6,368 due primarily to three state revenue sources not being received in the current fiscal year, as follows: • • • Statewide election grant revenue of $953 was a one time grant received in fiscal year 2009-10. Kino – University Physician’s Hospital program revenue of $2,934 ended in fiscal year 2009-10. Proposition 204 Hold Harmless ($3,818) program ended in fiscal year 2009-10. Total expenses for governmental activities were $718,932, up 2.7% or $18,682 compared to the previous year’s total of $700,250. Factors contributing to the increase in expenses: • Highways and streets expenses increased by $4,657, of which $4,324 was related to expenses incurred in transportation capital projects. Two of the largest transportation projects were: • $3,926 for Tanque Verde: Catalina Hwy to Houghton Rd. • $3,354 for Magee/Cortaro Farms: Magee/LaCholla. • Culture and recreation expenses increased by $5,421, of which $5,808 was related to expenses incurred in Library and Parks and Recreation capital projecs. Two of the largest culture and recreation projects were: • $2,954 for Wilmot Branch Library. • $2,414 for Eastside Sports Complex & Senior Center. • The increase of $4,603 in education and economic opportunity was due mostly to grant related expenses for the following American Recovery and Reinvestment grants: • Pima Neighborhood Investment Partnership with Southern Arizona Land Trust for $2,486. • Pima Neighborhood Stabilization Program for $2,143. The increase in the Transfers in line item of $4,112 was primarily due to an equity transfer of $4,596 from Pima Health System & Services to the General Fund. The chart below presents general and program revenues, as a percentage to total revenues. The amount provided from each revenue source for governmental activities, as a percentage to total revenue for governmental activities, has not changed significantly from the prior fiscal year. Property taxes, operating grants, and state-shared taxes continue to account for approximately 80% of the County’s revenues. 18 General and Program Revenues - Governmental Activites Property Taxes 50% State-shared taxes Capital grants & contributions 14% 8% Investment Earnings Other general revenue 1% Operating grants 16% Charges for Services 4% 7% The chart below presents expenses by function, as a percentage to total expenses by function for governmental activities: Expenses by Function - Governmental Activites Health 5% General Government 30% Public Safety 20% Sanitation 1% Education & Economic Opportunity 8% Interest on long-term debt 4% Culture & Recreation 9% Highways and Streets 10% Welfare 13% Each expense by function as a proportion to total expenses for governmental activities has not changed significantly from the prior fiscal year. General government, public safety, and welfare account for approximately two-thirds of the County’s total expenses. 19 Business-type activities Business-type activities, which are composed exclusively of enterprise funds, are intended to recover all or a significant portion of their costs through user fees and charges. Change in net assets for businesstype activities added $48,915 or 30.5% to the County's $160,490 change in total net assets for the year ended June 30, 2011. The following table shows changes in net assets for business-type activities: Table 3 Business-type Activities Schedule of Changes in Net Assets For the Years Ended June 30, 2011 and 2010 2011 Program revenues: Charges for services Operating grants and contributions Capital grants and contributions Total program revenues General revenues: Investment earnings Other general revenues Total general revenues $ $ 22,485 270 (5,127) 17,628 6.6% 6.1% -55.0% 5.0% 900 2,681 3,581 1,236 2,884 4,120 (336) (203) (539) -27.2% -7.0% -13.1% Total revenues 375,885 358,796 17,089 4.8% Expenses: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Total expenses 113,495 200,305 6,982 1,538 322,320 110,618 204,619 7,924 1,906 325,067 2,877 (4,314) (942) (368) (2,747) 2.6% -2.1% -11.9% -19.3% -0.8% 53,565 33,729 19,836 58.8% (4,112) Transfers in (out) $ Variance Amount Percent 340,936 4,421 9,319 354,676 Excess before contributions and transfers 363,421 4,691 4,192 372,304 2010 Change in net assets 48,915 33,191 15,724 764.3% 47.4% Beginning net assets 637,584 604,393 33,191 5.5% 637,584 $ 48,915 7.7% Ending net assets (4,650) $ 686,499 (538) $ Key elements of the change in net assets from business-type activities include: • Charges for service revenue increased by $22,485 due primarily to an $18,187 increase in sewer fees associated with a rate increase effective July 1, 2010. There was also an increase in sewer connection revenue of $1,500 from the Tucson Housing Authority. Additionally, Pima Health System & Services had an increase of $4,531 in reinsurance claims less a $1,783 decrease in capitation revenues. • The decrease in capital grants and contributions of $5,127 primarily resulted because of a downturn in construction activities. • The decrease of $4,314 in expenses for Pima Health System & Services is primarily due to a decrease of $5,937 in medical and health care claims expenses. 20 • The decrease of $4,112 in the transfers in line item is primarily due to an equity transfer from Pima Health Systems & Services to the General Fund. 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 (i.e. Flood Control, Library and Stadium Districts). 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, unassigned fund balances may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Major Governmental Funds General Fund The General Fund is the chief operating fund of the County. At June 30, 2011, total fund balance of the General Fund was $77,555. The net change in fund balance for the General Fund was a decrease of $3,986. Revenues decreased by $15,585 within four revenue streams: taxes, intergovernmental revenues, charges for services and fines and forfeits. • Property taxes decreased $2,948 primarily due to lower assessed property valuations with the tax rates remaining constant. • Intergovernmental revenue decreased by $5,975 primarily due to decreases in three revenue streams: shared vehicle license tax revenue decreased $1,029, state shared revenue tax decreased by $3,969, and $953 of revenue that was received last year for May 18, 2010 statewide elections was not received this year. • Charges for Service revenue decreased by $4,995 primarily in three areas: • a $1,781 decrease in contributions from administration overhead allocations primarily from: Internal Service Fund Risk Management of $787, Transportation of $316, Library District of $304 and Development Services of $236. • a decrease in revenue from the City of Tucson for Correctional Housing of $1,635. • a decrease in revenue from photo traffic enforcement of $558 and voter registration of $466. • Fines and forfeits decreased by $1,667 within two areas of Justice Courts: traffic fines decreased by $610 and forfeits decreased by $1,065. 21 Expenditures for the General Fund increased by $2,821 primarily due to: • • The net increase in Welfare expenditures of $3,483 reported within the Department of Institutional Health primarily due to changes in the following three areas: • Arizona long-term care contract expenditures increased by $13,278. • Kino—University Physician’s Hospital expenditures decreased by $6,545. • Psychiatric expenditures decreased by $2,408. There was a decrease in Education and Economic Opportunity expenditures of $1,047 with three areas showing the most change: • Community services had a decrease of $457. • Community development & neighborhood conservation had a decrease of $276. • Community resources Kino/Sam Lena had a decrease of $165. Budget to Actual Comparison for the General Fund Overall, actual revenues were less than budgeted revenues by $2,579 and actual expenditures were less than budgeted expenditures by $58,486. No variances between the budget to actual amounts at the departmental level were significant enough to affect the County’s ability to provide future services. Capital Projects Fund Revenues for the Capital Projects Fund increased by $14,926 and expenditures in capital outlay decreased by $9,103. The net change in fund balance was a decrease of $7,632. • The majority of the increase in revenues was in intergovernmental revenues which had a $16,182 increase. The increase was primarily related to increases in American Recovery and Reinvestment Act funded grants received of $6,256 and from Regional Transportation Authority sales tax received of $10,562. • Expenditures decreased by $9,103 in capital outlay primarily due to a decrease of $23,675 in open space land purchases offset by a $15,557 increase in building construction. The fund reported a $101,190 deficiency of revenues under expenditures that was offset by both a $75,000 proceeds from the issuance of bonds and a net transfer in of $18,491, resulting in a $7,632 net decrease in the fund balance for the Capital Projects Fund. Debt Service Fund The fund accounts for the accumulation of resources for and the payment of principal and interest of general long-term debt. The net change in fund balance was a decrease of $4,965. Secondary tax revenues remained relatively constant with a decrease of $662. Expenditures, mainly as a result of decreased principal payments, decreased $11,608 from last fiscal year. 22 Overview of all governmental funds At June 30, 2011, the County's governmental funds reported combined fund balances of $361,730, an increase of $15,460 from the prior year. Approximately 17.1% of the combined fund balances, or $61,975, constitutes unassigned fund balance, which is available to meet the County's current and future needs. 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 For the Years Ended June 30, 2011 and 2010 2011 2010 Amount Percent Amount Percent Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Interest Miscellaneous Total revenues $ $ 421,623 330 8,494 308,219 54,491 6,786 1,723 14,162 815,828 51.7% 0.1% 1.0% 37.8% 6.7% 0.8% 0.2% 1.7% 100.0% $ $ 423,443 536 7,791 296,004 60,376 8,443 4,612 17,442 818,647 51.6% 0.1% 1.0% 36.2% 7.4% 1.0% 0.6% 2.1% 100.0% Variance Amount Percent $ $ (1,820) (206) 703 12,215 (5,885) (1,657) (2,889) (3,280) (2,819) -0.4% -38.4% 9.0% 4.1% -9.7% -19.6% -62.6% -18.8% -0.3% The following provides an explanation of revenues by source that changed significantly over the prior year: • The $12,215 increase in intergovernmental revenue was due primarily to a $16,182 increase within Capital Projects Fund, increase of $2,067 in Special Revenue Funds less a decrease of $5,975 in General Fund. The Capital Projects increase was due to an increase in ARRA stimulus grants of $6,256 and RTA sales tax revenue of $10,562. The increase in Special Revenue Funds was due to increases in ARRA stimulus grants received in FY11. The General Fund revenues decrease was primarily due to three prior year revenue sources not being received in fiscal year 2011: May 18 2010 Statewide elections of $953, Kino - University Physician’s Hospital of $2,934 and Proposition 204 Hold Harmless program revenues of $3,818. • The $5,885 decrease in charges for services was from three decreases in revenue sources within the General fund, including administration overhead allocation revenue collected from the County’s funds of $1,781, Correctional Housing from the City of Tucson of $1,635 and General Government Fees of $1,376. • Miscellaneous revenues decreased by $3,280 due primarily to a decrease of $3,164 of antiracketeering monies received by the County Attorney’s office. 23 The following table presents expenditures by function compared to prior year amounts: Table 5 Governmental Funds Expenditures by Function For the Years Ended June 30, 2011 and 2010 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 2011 Amount Percent 2010 Amount Percent $ 223,611 136,709 34,614 5,375 36,511 90,572 49,986 50,432 153,203 25.3% 15.5% 3.9% 0.6% 4.1% 10.3% 5.7% 5.7% 17.3% $ 221,144 136,744 34,274 5,637 32,737 87,089 50,198 48,402 162,306 24.8% 15.3% 3.8% 0.6% 3.7% 9.8% 5.6% 5.4% 18.2% 76,361 26,086 21 $ 883,481 8.6% 3.0% 0.0% 100.0% 87,307 26,414 433 $ 892,685 9.8% 3.0% 0.0% 100.0% Variance Amount Percent $ 2,467 (35) 340 (262) 3,774 3,483 (212) 2,030 (9,103) 1.1% 0.0% 1.0% -4.6% 11.5% 4.0% -0.4% 4.2% -5.6% (10,946) (328) (412) $ (9,204) -12.5% -1.2% -95.2% -1.0% Total expenditures in governmental funds decreased during the year by $9,204 due to the following: • Health expenditures increased by $3,774 due to increases in grant funded activities, specifically the Communities Putting Prevention to Work – ARRA program for $2,162 and Public Health Nursing –Child program for $1,451. • Expenditures decreased by $9,103 in capital outlay primarily due to the net effect of decreases in cost for open space land acquisitions of $23,675 and an increase in costs of $15,557 for building construction. • Debt service principal payments on debt decreased by $10,946 because of lower principal payments made on general obligation bonds. Proprietary funds The County’s proprietary fund functions are contained in the Enterprise and Internal Service funds. The Enterprise Funds are Pima Health System & Services, Regional Wastewater Reclamation, 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 generated revenues, which include fees charged to external users. The Internal Service Funds consist of the Self-Insurance Trust Fund and multiple smaller funds consisting of Fleet Services, Print Shop, and Wireless/Telecom. The change in net assets for all Internal Service Funds was $5,487 primarily from the operations of the Self-Insurance Trust Fund. 24 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 Years Ended June 30, 2011 and 2010 2011 Operating revenues: Net patient services Charges for services Other Total net operating revenues $ 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 205,814 137,838 2,821 346,473 2010 $ 203,067 120,149 2,882 326,098 Variance Amount Percent $ 2,747 17,689 (61) 20,375 1.4% 14.7% -2.1% 6.2% 67,469 157,607 8,986 5,845 1,438 7,611 19,058 8,157 32,022 308,193 67,724 161,230 8,791 5,765 1,502 6,760 19,432 7,568 31,543 310,315 (255) (3,623) 195 80 (64) 851 (374) 589 479 (2,122) -0.4% -2.2% 2.2% 1.4% -4.3% 12.6% -1.9% 7.8% 1.5% -0.7% Operating gain (loss) 38,280 15,783 22,497 142.5% Nonoperating revenues (expenses): Intergovernmental revenue Investment earnings Sewer connection fees Interest expense Loss on disposal of capital assets Amortization of deferred charges Premium tax Total nonoperating revenues 4,856 952 19,624 (9,567) (596) (750) (4,099) 10,420 6,412 1,257 17,705 (8,738) (2,259) (263) (4,117) 9,997 (1,556) (305) 1,919 (829) 1,663 (487) 18 423 -24.3% -24.3% 10.8% 9.5% -73.6% 185.2% -0.4% 4.2% Income (loss) before contributions and transfers 48,700 25,780 22,920 88.9% Capital contributions Transfers in Transfers (out) Change in net assets 4,027 866 (5,516) 48,077 7,319 26,001 (26,539) 32,561 $ $ (3,292) (25,135) 21,023 $ 15,516 -45.0% -96.7% -79.2% 47.7% The increase in revenues, in addition to a decrease in expenses, contributed to an operating gain for all enterprise funds this year. Regional Wastewater Reclamation contributed approximately 71%, or $27,163 to the $38,280 in the operating gain for all enterprise funds. • Net patient services increased by $2,747 due to an increase of $4,531 in reinsurance claims less $1,783 decrease in capitation revenues in Pima Health System & Services. 25 • Charges for service revenue increased by $17,689 due primarily to an $18,187 increase in Regional Wastewater Reclamation Sewer Utility Service fees for user fee volume and monthly standard service fees effective July 1, 2010. • Medical and health care claims expense decreased $3,623 due to Pima Health System & Services lowering the rates/reimbursements to its providers because AHCCCS lowered its capitation rates paid to Pima Health System & Services. • The decrease of $1,556 in intergovernmental revenue is primarily a result of a $2,054 forgivable loan from WIFA that was not provided this year. • There was an increase of $1,919 in sewer connection fee revenue due to $1,500 received from the Tucson Housing Authority. • The decrease in capital contributions of $3,292 is due to a continuing decrease in construction activity. • Transfers in and transfers out are significantly less this year. Transfers in the Regional Wastewater Reclamation fund were lower because of reduced construction activity and debt service requirements. In the current year, Pima Health System & Services transferred out $4,596 as an equity transfer to the General fund. The chart below presents the revenues and expenses for business-type activities: Revenues and Expenses - Business-type Activities $250,000 Revenues Expenses $200,000 $150,000 $100,000 $50,000 $0 Pima Health System & Regional Wastewater Development Services Services Reclamation 26 Parking Garages Capital Assets and Debt Administration Capital Assets The County’s total investment in capital assets as of June 30, 2011 amounted to $2,624,440 (net of accumulated depreciation), an increase of 7.4% ($180,833). Of this amount, $84,068 (46.5%) came from governmental activities and $96,765 (53.5%) 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. 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 For the Years Ended June 30, 2011 and 2010 Governmental Activities 2011 2010 Land Construction in progress Buildings and improvements Infrastructure Sewage conveyance systems Equipment Total $ 448,790 202,977 432,149 593,946 $ 433,098 176,749 381,800 600,634 Total Business-type Activities 2011 2010 $ 15,409 165,481 207,081 40,868 42,381 435,232 82,507 $ 1,718,730 $ 1,634,662 $ 905,710 $ $ 15,178 92,178 217,321 2011 $ 398,495 85,773 464,199 368,458 639,230 593,946 435,232 123,375 808,945 $ 2,624,440 2010 $ 448,276 268,927 599,121 600,634 398,495 128,154 $ 2,443,607 Major capital asset events during the current fiscal year included the following: Governmental activities • Land acquisitions increased $15,692, or 3.6% due primarily to the following acquisitions: land received as contributed capital of $8,997 for transportation purposes; land purchased for $626 on north Oracle Road; a purchase of $4,751 for parks and recreational purposes that includes land off of northwest Camino De Oeste and Sweetwater for $1,600, land related to the intersection of Tanque Verde and Houghton of $1,573; and land at north Camino De La Canada for $552. • Construction in progress increased $26,228 or 14.8% compared to last fiscal year. Current major projects still in progress include: ƒ the Regional Public Safety Communication System ƒ La Canada Dr: Ina Rd to Calle Concordia ƒ La Cholla Blvd I-10 to River Road ƒ Interstate 19 - northbound Frontage Rd, Canoa to Continental ƒ Justice Court/Municipal Court Complex ƒ PimaCore Project Business-type activities • Construction in progress increased approximately $73,303, or 79.5%, mainly due to Regional Optimization Master Planning (ROMP) activities. 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 page 59-60. 27 Long-term Debt Significant, comparative long-term debt entered into during the last two fiscal years is presented below: Table 8 Long-Term Debt For the Years Ended June 30, 2011 and 2010 2011 Bonds issued (at face value): General Obligation $75,000 Street and Highway Revenue Sewer Revenue 43,625 Sewer System Revenue Obligations Certificate of Participation (COPs) WIFA Loans Payable Total 2010 $113,535 23,420 165,000 20,000 8,002 $ 118,625 $ 329,957 $75,000 in General Obligation Bonds were issued during the fiscal year. General Obligations bonds were issued to help finance the following areas: Parks & Recreation Facilities ($18,866), Sonoran Desert Open Space, Historic Preservation and Habitat Protection ($3,669), Public Health, Safety, Recreational and Cultural Facilities ($43,822), Flood Control & River Parks Improvements ($4,685), Solid Waste improvements ($501) and Psychiatric Urgent Care Facilities ($3,457). The County received $43,625 in Sewer Revenue Refunding Bond proceeds. The net proceeds of the refunding was used to refund Sewer Revenue Bonds Series 1998 and Series 2001 and Wastewater loans payable Series 2000. The most recent ratings (uninsured) for Pima County’s bonds and COPs are: Table 9 Credit Ratings Standard & Poor's Rating Date Certificate of Participation (COPs) General Obligation Street and Highway Revenue Sewer Bonds* Sewer Revenue Obligations A+ AAAA AAA+ Apr-2011 Apr-2011 Oct-2009 Nov-2011 Nov-2011 Fitch Ratings Rating Date AAAA AA AA AA- Apr-2011 Apr-2011 Apr-2011 Nov-2011 Nov-2011 * This excludes the 2011A Sewer Refunding bonds which have ratings equal to the Obligations. The State constitution limits the amount of general obligation debt a governmental entity may issue to 6% of its net assessed valuation without voter approval. However, Pima County has voter approval for general obligation debt up to 15%. The current debt limitation for Pima County is $1,401,384, 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 63-70. 28 Economic Factors and Next Year’s Budget The continuing economic recession has put the County in an increasingly uncertain operating environment. After decreases in 2010 in areas such as population, non-agricultural jobs, retail jobs and housing permits, the local economy is expected to experience slight gains in the current year. Pima Health System & Services Effect on County Budget The combined County Budget for fiscal year 2011-12 is $1.295 billion, a decrease of 9.53% from the prior year. The majority of the decrease is due to a $136.4 million decrease in the Pima Health System & Services enterprise fund because the County’s contracts with the Arizona Health Care Cost Containment System expired on September 30, 2011 and were not renewed. The Pima Health System & Services enterprise fund will not be reported after June 30, 2012 Primary property taxes The contraction of the property tax base is expected to continue into the next few years. The Primary Net Assessed Value of the County experienced a net 0.51% decrease in fiscal year 2010-11, the first decrease in the primary property tax base since 1993. Market values of existing properties are expected to decrease by over 8% in the next fiscal year. University Physician Healthcare Hospital Beginning in fiscal year 2010-11, the County entered into a two year agreement with the Arizona Board of Regents (ABOR) on behalf of the University of Arizona College of Medicine for funding of the University Physician Healthcare Hospital as it transitioned into a newly structured, integrated twohospital medical education system. $15 million of the remaining payment of the ABOR contract is budgeted for fiscal year 2011-12. 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. 29 (This page is intentionally blank) 30 Basic Financial Statements PIMA COUNTY, ARIZONA Statement of Net Assets June 30, 2011 (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 Total assets $ Primary Government Business-type Activities 439,555 $ 17,897 154 (883) 60,084 2,695 2,569 3,460 239 2,733 519,694 17,897 207 53 883 1,337 20,804 3,924 191 $ 61,421 23,499 6,493 3,651 239 7,259 4,526 1,039 16 57 65 3 114,827 1,022 448,790 202,977 15,409 165,481 464,199 368,458 432,149 207,080 435,233 82,507 639,229 435,233 123,375 593,946 3,380,649 2,160 241 1,486 43,093 19,544 431 1,965 50,417 475 420 6,668 88,053 626,960 786,051 16,805 376,873 445,653 104,858 1,003,833 1,231,704 276 1,136,033 575,525 1,711,558 2,839 12,567 24,236 17,161 23,562 33,448 686,499 64,446 32,906 12,567 84,617 17,161 27,636 198,054 2,148,945 1,132,152 24,502 19,544 428 3 1,965 44,577 300 420 5,182 5,840 175 64,446 32,906 60,381 $ $ 114,585 18,591 Net Assets Invested in capital assets, net of related debt Restricted for: Facilities, justice, library, tax stabilization and community development Highways and streets Debt service Capital projects Regional wastewater Healthcare Unrestricted Total net assets Component Units Total 242 1,022 40,868 593,946 2,248,497 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 80,139 Exhibit A - 1 4,074 164,606 1,462,446 $ $ See accompanying notes to financial statements 31 1,499 679 5,518 26 9 $ 2,403 5,242 PIMA COUNTY, ARIZONA Statement of Activities For the Year Ended June 30, 2011 (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: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Total business-type activities Total primary government Expenses $ $ Component units: Sports & Tourism Authority Southwestern Fair Commission Total component units $ $ 218,843 $ 146,395 73,348 6,208 36,475 90,521 67,063 56,626 (2,626) 26,079 718,932 113,495 200,305 6,982 1,538 322,320 1,041,252 137 5,044 5,181 Operating Grants and Contributions Charges for Services $ $ $ 27,802 9,034 4,891 3,699 11,436 $ 28,530 9,487 50,772 1,092 12,687 Capital Grants and Contributions $ 1,257 6,313 52,821 2,191 1,024 342 33,562 1,881 2,758 60,077 136,472 65,030 148,010 207,652 5,688 2,071 363,421 423,498 33 5,247 5,280 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 Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year Net assets at end of year See accompanying notes to financial statements 32 4,027 4,691 $ $ $ 4,691 141,163 8 120 128 165 $ 4,192 69,222 Exhibit A - 2 Net (Expense) Revenue and Changes in Net Assets Governmental Activities $ Primary Government Business-type Activities (161,254) (121,561) 35,136 (1,417) (12,352) (90,521) (62,649) (19,282) 2,626 (26,079) (457,353) $ $ (457,353) Component Units Total 38,542 12,038 (1,129) 533 49,984 49,984 (161,254) (121,561) 35,136 (1,417) (12,352) (90,521) (62,649) (19,282) 2,626 (26,079) (457,353) 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 38,542 12,038 (1,129) 533 49,984 (407,369) Business-type activities: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Total business-type activities Total primary government $ $ $ 295,904 22,386 28,860 69,835 5,591 1,538 88,631 23,173 4,527 8,125 2,153 13,555 4,650 568,928 111,575 1,350,871 1,462,446 $ 900 2,681 (4,650) (1,069) 48,915 637,584 686,499 $ (96) 323 227 295,904 22,386 28,860 69,835 5,591 1,538 88,631 23,173 4,527 8,125 3,053 16,236 241 567,859 160,490 1,988,455 2,148,945 241 468 4,774 5,242 $ Component units: Sports & Tourism Authority 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 Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year Net assets at end of year See accompanying notes to financial statements 33 PIMA COUNTY, ARIZONA Balance Sheet - Governmental Funds June 30, 2011 (in thousands) General 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 $ 70,694 12,550 41 6,071 21,836 999 Capital Projects $ 123,135 Debt Service $ 17 11 18,073 15 2,161 35,714 3,060 33 Exhibit A - 3 Other Governmental Funds Total Governmental Funds $ 132,132 2,287 49 2,246 20,117 1,515 1,618 261 239 87 1,018 45 $ 361,675 17,897 139 8,329 60,043 2,529 1,618 2,434 239 1,022 1,237 242 17 12 935 219 197 $ 115,506 $ 141,460 $ 38,824 $ 161,614 $ 457,404 $ 4,112 1 $ 7,690 $ 230 $ 6,103 2 $ 18,135 3 1,965 15,435 7,709 300 420 51,707 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 197 12,650 2,691 4,257 6,092 224 2 15,190 37,951 22,932 2,921 31,870 95,674 3,315 336 12 112,668 6,639 2,011 94,567 37,978 4,368 (9,180) 5,338 207,571 44,617 40,628 63,576 Fund balances: Nonspendable Restricted Committed Assigned Unassigned 357 73,547 Total fund balances 77,555 Total liabilities and fund balances $ 1,965 22 408 11,156 1,209 76 221 21,176 115,506 35,903 (791) 118,528 $ 141,460 35,903 $ 38,824 See accompanying notes to financial statements 34 129,744 $ 161,614 361,730 $ 457,404 PIMA COUNTY, ARIZONA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2011 (in thousands) Fund balances - total governmental funds Exhibit A - 4 $ 361,730 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 $ 2,490,801 (790,831) 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 (587,231) (48,235) (17,775) 1,496 Some compensated absences are not due and payable shortly after June 30, 2011, and therefore are not reported in the governmental funds Employee compensation Some liabilities are not due and payable shortly after June 30, 2011, and are therefore not reported in the governmental funds Landfill liability Pollution remediation liability 1,699,970 (651,745) (28,335) (19,944) (1,033) (20,977) Deferred revenue in governmental funds is susceptible to full accrual on the government-wide statements 46,525 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 55,278 Net assets of governmental activities $ 1,462,446 See accompanying notes to the financial statements 35 PIMA COUNTY, ARIZONA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2011 (in thousands) Revenues: Property taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous General $ 301,493 2,681 122,952 35,361 5,344 418 4,722 Total revenues Capital Projects $ $ 472,971 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 Debt Service 69,308 47,288 3,895 19 265 565 350 52,013 69,677 Other Governmental Funds Total Governmental Funds $ $ 186,193 116,573 2,792 90,572 14,183 12,949 Total expenditures Excess (deficiency) of revenues over (under) expenditures 50,822 330 5,813 137,960 15,235 1,442 690 8,875 421,623 330 8,494 308,219 54,491 6,786 1,723 14,162 221,167 815,828 37,418 20,136 34,614 5,375 33,719 223,611 136,709 34,614 5,375 36,511 90,572 49,986 50,432 153,203 76,361 26,086 21 35,803 37,483 153,203 3,800 2,113 7 Exhibit A - 5 72,525 23,945 14 36 28 429,182 153,203 96,484 204,612 883,481 43,789 (101,190) (26,807) 16,555 (67,653) 67 75,000 3,209 23,368 (4,877) 21,578 (2,945) 48 54,788 (39,418) 3,276 75,000 59 109,715 (105,007) Other financing sources (uses): Premium on bonds Face amount of long-term debt Proceeds from sale of capital assets Transfers in Transfers (out) 11 9,981 (57,767) Total other financing sources (uses) (47,775) 93,558 21,842 15,418 83,043 Net change in fund balances (3,986) (7,632) (4,965) 31,973 15,390 Fund balances at beginning of year 81,541 40,868 97,701 346,270 43 27 43 27 126,160 Changes in nonspendable fund balance: Change in reserve for inventory Change in reserve for prepaids Fund balances at end of year $ 77,555 $ 118,528 $ 35,903 See accompanying notes to financial statements 36 $ 129,744 $ 361,730 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, 2011 (in thousands) Net change in fund balances - total governmental funds $ Exhibit A - 6 15,390 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 $ 126,908 (55,037) 71,871 Transfers of capital assets between governmental activities and proprietary funds or internal service funds are not reported in the governmental funds but are recognized in the statement of activities (78) 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 (75,000) (3,276) 76,361 170 2,626 881 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 17,270 3,487 3,108 23,865 152 (320) 702 (5,607) 70 (5,003) 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 Pollution remediation 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 37 4,649 $ 111,575 PIMA COUNTY, ARIZONA Statement of Net Assets - Proprietary Funds June 30, 2011 (in thousands) Exhibit A - 7 Business-type Activities Enterprise Funds 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 expenses 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 Pima Health System & Services $ $ 15 44 1,288 2,976 91 78 45,115 32,806 82,805 36 2 Other Enterprise Funds $ 6,710 Total Enterprise Funds $ 2 7 49 149 17,679 3,833 36 137,197 77 6,994 31,780 1,354 (1,726) 535 535 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 of reported but unpaid losses Current portion of incurred but not reported losses Total current liabilities Noncurrent liabilities: Contracts and notes Sewer revenue bonds and obligations payable Wastewater loans payable Reported but unpaid losses Incurred but not reported losses Total noncurrent liabilities $ 77,880 14 1,767 41 166 951 1,025 81,844 1,768 12,927 15,409 369,351 681,720 110,063 (436,314) 165,481 905,710 4,526 942,016 1,232 (9,907) 6,020 6,020 592 614 35,811 (18,415) 158 18,760 18,760 45,650 1,072,658 13,014 1,131,322 100,604 310 19,544 1,079 24,117 75 456 4,040 428 323 721 24,502 19,544 5,840 428 944 175 1,486 13,120 3,685 599 39 22 136 1,486 13,120 3,685 21,571 Total liabilities 80,139 82,805 53 53 1,337 20,804 3,924 191 189,306 Governmental ActivitiesInternal Service Funds 31,780 13,641 355,517 681,720 107,477 (424,681) 165,481 899,155 4,526 935,461 907 Total assets 47,199 954 807 1,494 4,324 3,156 10,237 69,724 4,657 348,511 23,705 4,657 348,511 23,705 376,873 376,873 19,132 14,183 33,315 21,571 424,072 954 446,597 43,552 535 568,970 6,020 575,525 18,760 6,040 12,567 24,236 17,161 23,562 31,674 38,292 12,060 684,725 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. 1,774 Net assets Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Regional wastewater reclamation Healthcare Unrestricted Total net assets 40,623 Regional Wastewater Reclamation 12,567 24,236 17,161 23,562 (18) $ 24,079 25,652 $ 648,586 $ Net assets of business-type activities See accompanying notes to financial statements 38 $ 686,499 $ 57,052 PIMA COUNTY, ARIZONA Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2011 (in thousands) Exhibit A - 8 Business-type Activities Enterprise Funds Operating revenues: Net patient services Charges for services Other Pima Health System & Services $ 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 Gain/(loss) on disposal of capital assets Amortization of deferred charges Premium tax 205,814 1,838 561 Regional Wastewater Reclamation $ 7,759 231 $ 205,814 137,838 2,821 $ 39,483 2,187 130,270 7,990 346,473 41,670 26,992 157,607 746 417 34,598 5,879 6,947 40 252 218 8,200 5,176 1,438 7,201 192 67,469 157,607 8,986 5,845 1,438 7,611 8,499 1,834 215 196,528 8,676 6,278 31,540 103,107 1,883 45 267 8,558 19,058 8,157 32,022 308,193 3,735 9,099 3,981 2,271 512 2,746 36,540 11,685 27,163 (568) 38,280 5,130 165 33 4,856 952 19,624 (9,567) (596) (750) (4,099) 622 19,624 (9,517) (600) (750) (50) 5 (4,099) Income (loss) before contributions and transfers $ Governmental ActivitiesInternal Service Funds Total Enterprise Funds 208,213 4,691 297 T otal nonoperating revenues 128,241 2,029 Other Enterprise Funds (1) 6,240 1,009 512 (188) 844 9,379 197 10,420 324 12,529 36,542 (371) 48,700 5,454 694 (114) 4,027 866 (5,516) Capital contributions Transfers in Transfers (out) (4,596) Change in net assets 7,933 39,935 209 48,077 5,487 16,146 608,651 11,851 636,648 51,565 12,060 684,725 Net assets at beginning of year Net assets at end of year $ 24,079 4,027 172 (806) $ 648,586 $ 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 39 838 $ 48,915 13 72 (52) $ 57,052 PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2011 (in thousands) 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 Pima Health System & Services $ Net cash provided by (used for) operating activities 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 29 205,348 2,399 (169,902) (5,394) Regional Wastewater Reclamation $ (34,509) 9,685 57,049 Other Enterprise Funds $ (4,683) 102 8,025 164 (1,444) (2,534) Total Enterprise Funds $ (4,621) (308) (500) 131 340,267 4,447 (198,522) (17,972) Governmental ActivitiesInternal Service Funds $ 39,483 (61,925) 2,108 (17,117) (3,480) (6,682) (6,096) 66,426 8,216 20 (68) 129 (52) (3,902) (826) (61) (4,099) 4,470 713 (4,470) (48) 694 (114) 4 (712) 212 (277) (4,099) 4,341 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 126,894 1,884 (27,176) (10,044) (22,795) (52) (4,596) Net cash (used for) noncapital financing activities Exhibit A - 9 (32) 279 (117,292) (13) 43,625 (67,184) (9,586) 19,210 5 279 (117,337) Net cash (used for) capital and related financing activities (27) (130,948) (13) (130,988) Cash flows from investing activities: Interest received on cash and investments 323 645 36 1,004 579 Net cash provided by investing activities 323 645 36 1,004 579 428 (68,028) 5,217 262,752 72,663 5 Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 43,625 (67,184) (9,586) 19,210 $ 5,298 (73,754) 35,325 221,145 40,623 $ 147,391 6,282 $ (continued) See accompanying notes to financial statements 40 6,710 $ 194,724 98 $ (3,628) (3,530) 77,880 PIMA COUNTY, ARIZONA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2011 (in thousands) Exhibit A - 9.1 (continued) Reconciliation of operating income (loss) to net cash provided by (used for) operating activities Operating income (loss) Pima Health System & Services $ 11,685 Regional Wastewater Reclamation $ 27,163 Other Enterprise Funds $ (568) 215 31,540 267 1,176 (77) (10) 159 (1,492) 189 10 (130) 115 (733) (1,527) 472 (708) Total Enterprise Funds $ 38,280 Governmental ActivitiesInternal Service Funds $ 5,130 32,022 2,746 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 governments Reported but unpaid losses Incurred but not reported losses Other current liabilities (1,203) Net cash provided by (used for) operating activities $ 9,685 89 $ 57,049 (23) (127) (67) (140) 251 (151) 72 (567) (328) (216) 21 (477) (2,214) (1,200) 12 $ (308) (1,102) $ 66,426 Noncash investing, capital, and noncapital financing activities during the year ended June 30, 2011: Regional Wastewater Reclamation Enterprise Fund received developer-built conveyance systems with an estimated fair value of $4,038. This contribution was recorded as an increase in capital assets and capital contributions. Regional Wastewater Reclamation Enterprise Fund recorded a Board of Supervisors' approved connection fee credit agreement of $93. This credit was recorded as an increase to deferred revenue and a decrease to capital contributions. Regional Wastewater Reclamation Enterprise Fund retired expired Sewer Credit Agreements totaling $82. This transaction was recorded as a decrease to deferred revenue and an increase in capital contributions. Regional Wastewater Reclamation Enterprise Fund retired capital assets with a net book value of $600. Regional Wastewater Reclamation Enterprise Fund received capital assets with a net book value of $78 from the County's general government. Other Enterprise Funds retired capital assets with a net book value of $1. Internal Service Funds received a capital contribution with a net book value of $13. Internal Service Funds sold capital assets with a net book value of $286. See accompanying notes to financial statements 41 1,591 826 97 $ 8,216 PIMA COUNTY, ARIZONA Statement of Fiduciary Net Assets - Fiduciary Funds June 30, 2011 (in thousands) Investment Trust Funds Assets Cash and cash equivalents Interest receivable Due from other governments $ Total assets $ 398,276 $ 66,766 $ 1,971 43,628 21,167 $ 66,766 Total liabilities $ Agency Funds 398,180 96 Liabilities Employee compensation Due to other governments Deposits and rebates Net Assets Held in trust for pool participants Exhibit A - 10 398,276 See accompanying notes to financial statements 42 63,426 3,340 PIMA COUNTY, ARIZONA Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Year Ended June 30, 2011 (in thousands) Exhibit A - 11 Investment Trust Funds Additions Contributions from participants Total contributions $ Investment earnings Total investment earnings 1,282 1,282 2,858,029 Total additions Deductions Distributions to participants 2,781,934 2,781,934 Total deductions 76,095 Change in net assets 322,181 Net assets held in trust July 1, 2010 Net assets held in trust June 30, 2011 See accompanying notes to financial statements 43 2,856,747 2,856,747 $ 398,276 PIMA COUNTY, ARIZONA Combining Statement of Net Assets Component Units June 30, 2011 (in thousands) Sports & Tourism Authority ASSETS Cash and cash equivalents Accounts receivable (net) Inventories Prepaids Other assets Restricted assets: Cash and cash equivalents Capital assets (net): Buildings and improvements Equipment Total assets $ Southwestern Fair Commission 44 16 $ NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets $ Total Component Units 995 $ 57 65 3 LIABILITIES Accounts payable Interest payable Deposits and rebates Deferred Revenues Total liabilities Exhibit A - 12 1,039 16 57 65 3 1,499 1,499 63 2,160 679 5,455 2,160 679 5,518 16 225 241 16 26 9 260 26 9 276 47 47 2,839 2,356 5,195 2,839 2,403 5,242 $ See accompanying notes to financial statements 44 $ See accompanying notes to financial statements 45 Total component units Southwestern Fair Commission (SFC) Operations Total SFC Sports & Tourism Authority Operations Total PC Sports & Tourism Authority (S&TA) 5,181 5,044 5,044 137 137 $ $ General revenues: Miscellaneous Total general revenues Change in net assets Net assets at beginning of year Net assets at end of year $ $ Expenses 5,280 5,247 5,247 33 33 Charges for Services $ $ 128 120 120 8 8 Operating Grants and Contributions Program Revenues $ $ S&TA PIMA COUNTY, ARIZONA Combining Statement of Activities Component Units For the Year Ended June 30, 2011 (in thousnads) $ 71 71 (25) 72 47 $ (96) (96) (96) SFC 170 170 493 4,702 5,195 323 323 323 $ $ Net (Expense) Revenue 241 241 468 4,774 5,242 227 323 323 (96) (96) Total Exhibit A - 13 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (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 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 year-end. 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 Pima County Board of Supervisors is the Board of Directors of the District. 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 Pima County Board of Supervisors is the Board of Directors for the Regional 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. 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 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. 46 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) The Pima County Sports and Tourism Authority (S&TA) is a nonprofit municipal corporation established to promote professional and amateur sports events and other suitable activities for the benefit of the public and to increase opportunities for amateur youth sports in Pima County. S&TA members are appointed and can be removed at any time by the Board of Directors. Based on these factors, and because S&TA does not provide services entirely, or almost entirely to the County, but rather to the general citizenry, S&TA is reported as a separate component unit (discrete presentation) in these financial statements. Complete financial statements for S&TA 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 fund and fiduciary fund 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, landfill closure and post closure care costs and pollution remediation, 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. The County may fund certain programs by a combination of restricted, committed, assigned and/or unassigned (general) revenues. When an expenditure/expense is incurred that can be paid from either restricted or unrestricted fund balances/net assets, the County uses restricted fund balance first. When an expenditure is incurred that can be paid from more than one category of unrestricted fund balances, the County will use committed amounts first, followed by assigned amounts and lastly unassigned amounts. Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable, restricted and unrestricted, which includes committed, assigned and unassigned fund balance classifications. 47 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) The nonspendable fund balance classification includes amounts that cannot be spent because they are either not in spendable form such as inventories, or are legally or contractually required to be maintained intact. Restricted fund balances are those that have externally imposed restrictions on their usage by creditors, such as through debt covenants, grantors, contributors, or laws and regulations. Committed fund balances are self imposed limitations set prior to the year end closing. The Pima County Board of Supervisors is the highest level of decision making authority. Imposed limitations on the use of funds must be approved by the Board of Supervisors at a regular supervisory meeting. Any modifications and/or rescissions must also be approved by the board. Assigned fund balances are limitations resulting from the intended use of funds. The Pima County Board of Supervisors and/or its representative the County Administrator can authorize the constraints for the specific purpose. Modifications or rescissions of the constraints can also be removed by the same action that limited the funds. The unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not reported in the other classifications. Also, deficits in fund balances of the other governmental funds are reported as unassigned. The County does not have a minimum fund balance policy in place. 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. C. Basis of Presentation The basic financial statements include both government-wide and fund-based financial statements. The government-wide statements focus on the County as a whole, while the fund-based 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: 48 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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 governmentwide 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 fund’s operations. Proprietary funds distinguish operating revenues and expenses from non-operating 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. 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 capital facilities and other capital assets, other than those financed by proprietary funds. The Debt Service Fund accounts for the accumulation of resources for, and the payment of, general long-term debt principal and interest. The County reports the following major enterprise funds: Pima Health System and Services (PHS&S) 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. Regional Wastewater Reclamation (RWR) 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 cost-reimbursement basis. These funds account for fleet maintenance and operation, insurance, graphic services and telecommunications services. 49 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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 year-end, that balance is reclassified as an amount due to other funds. E. Inventories and Prepaids The County accounts for its inventories in the Health Fund using the purchase method. Inventories of the Health Fund 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 reserve within nonspendable fund balance 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 of the Transportation Department are recorded as assets when purchased and expensed when used. Inventories in Transportation are valued at lower of cost or market, cost being determined using the moving average 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 using the first-in, first-out method. Inventories of RWR, an enterprise fund, are valued at lower of cost or market, cost being determined using the moving average method. Inventories of Internal Service Funds 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 purchase method. 50 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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): Capitalization Threshold Depreciation Method Estimated Useful Life Land All N/A N/A Land improvements (Reported in buildings and building improvements) All Straight Line 20 - 30 Years $100 Straight Line 10 - 50 Years Equipment $5 Straight Line 4 - 25 Years Fleet service vehicles (Reported in equipment) $5 Units of Production based on number of hours or miles 5 - 15 Years Infrastructure/Sewer conveyance systems $100 Straight Line 10 - 50 Years Intangible (Reported in land, equipment and infrastructure) $100 Straight Line Varies Buildings and building improvements 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 5 to 40 years. S&TA had no capital assets to report on June 30, 2011. H. Investment Earnings Investment earnings are composed of interest, dividends and net changes in the fair value of applicable investments. 51 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 1: Summary of Significant Accounting Policies (continued) 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 in Employee Compensation. 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 and proprietary financial statements in Employee Compensation. 52 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 2: Fund Balance Classifications The table below details the fund balance categories and classifications: General Fund Capital Projects Fund Debt Service Fund Other Governmental Funds CAFR Total Fund balances: Nonspendable: Inventory Prepaid expenses Loan receivable Permanent fund principal Other assets held for resale Total nonspendable $ $ 2,161 935 $ 219 3,315 Restricted for: Capital Projects Streets and highways Other Judicial activities Flood Control District Health Law enforcement Library District Parks and recreation School reserve Social services Streets and highways Tire fund Other purposes Total restricted 112,668 23,339 13,851 3,923 3,797 16,088 66 1,412 745 28,236 1,311 1,799 94,567 35,835 67,212 23,339 23,472 3,923 3,797 16,088 66 1,412 745 28,236 1,311 2,135 207,571 1 6,638 6,639 4,440 33,538 37,978 4,441 40,176 44,617 12 1,618 261 87 45 $ 35,835 67,212 9,621 336 336 Committed to: Sports promotion (Stadium) Other purposes Total committed Assigned to: Debt service reserve Judicial activities Health Parks and recreation Landfill Law enforcement School Reserve Social services Other purposes Total assigned Unassigned: Total fund balances 2,011 1,618 2,434 1,022 45 219 5,338 12 $ 35,903 99 258 357 $ 73,547 77,555 35,903 118 453 1,326 2,009 (28) 591 (2) 258 40,628 19 453 1,326 2,009 (28) 591 (2) 35,903 (791) 118,528 $ 53 $ 35,903 4,368 $ (9,180) 129,744 $ 63,576 361,730 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (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 or other evidences of indebtedness 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. Credit risk—The State statutes have the following requirements for credit risk: 1. Commercial paper must be of prime quality and be rated within the top two ratings by a nationally recognized rating agency. 2. Corporate bonds, debentures and notes must be rated within the top three ratings by a nationally recognized rating agency. 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 require collateral for demand deposits and certificates of deposit 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. 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, 2011, the carrying amount of the County’s deposits was $8,000 and the bank balance was $40,892. 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, 2011, $1,251 of the County’s bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. 54 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 3: Cash and Investments (continued) Investments—At June 30, 2011, the County’s investments consisted of $302,415 invested in marketable securities and $785,658 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, 2011, 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) Money market mutual fund State Treasurer Investment Pool 5 State Treasurer Investment Pool 500 State Treasurer Investment Pool 7 Rating Rating Agency A1/P1 A-/A3 AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAAm/Aaa AAAf Unrated Unrated 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 S&P Amount $ 67,481 105,936 7,707 24,143 9,996 10,998 11,177 487,537 48,673 249,448 $1,023,096 Total 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 $1,088,073 of investments, $291,238, consisting of the commercial paper, corporate bonds, Federal Farm Credit Bank, Federal Home Loan Bank, Fannie Mae and Freddie Mac discount notes and U.S. Treasury notes, is uninsured and held by a counterparty in the County’s name in book entry form. Concentration of credit risk—The County has no formal policy with respect to limiting the amount the Treasurer may invest in any one issuer. The County’s exposure as of June 30, 2011 is less than 5% per issuer. 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. 55 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 3: Cash and Investments (continued) As of June 30, 2011, the County had the following investments: Investment Type Weighted Average Maturity (Years) Amount $ State Treasurer Investment Pool 5 State Treasurer Investment Pool 500 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 Money market mutual fund 487,537 48,673 249,448 67,481 105,936 7,707 24,143 9,996 10,998 64,977 11,177 0.07 5.32 0.13 0.21 0.96 0.05 0.70 0.49 0.46 1.87 0.12 $ 1,088,073 Total A reconciliation of cash, deposits and investments to amounts shown on the Statements of Net Assets follows: Cash on Hand Cash, deposits and investments: $ 54 Amount of Deposits $ 8,000 Amount of Investments $ 1,088,073 Total $ 1,096,127 Governmental Business-type Investment Activities Activities Trust Funds Statement of Net Assets: Cash and cash equivalents Restricted cash and cash equivalents Total $ $ 439,555 242 439,797 $ $ 80,139 114,585 194,724 Agency Funds $ 398,180 $ 63,426 $ 398,180 $ 63,426 Totals $ 981,300 114,827 $ 1,096,127 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. 56 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (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: 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 State Treasurer Investment Pool 5 Interest Receivable Total assets Less: Reduction of Pool's assets-outstanding warrants Total Principal Interest Rates Maturities Fair Value $ 67,500 101,414 7,500 23,975 10,000 10,955 62,290 328,461 96 0.1-0.2% 0.3-7.3% 5.4% 0.3-1.8% N/A 1.1% 1.1-4.8% N/A N/A 07/11-12/11 07/11-05/14 07/11 12/11-12/12 12/11 12/11 12/11-07/14 N/A N/A $ $ A condensed statement of the investment pool’s net assets and changes in net assets follows: Statement of Net Assets Assets held in trust for: Internal participants External participants Total assets Total liabilities Total net assets held in trust Statement of Changes in Net Assets Total additions Total deductions Net decrease Net assets held in trust: July 1, 2010 June 30, 2011 $ $ 456,659 148,827 605,486 0 605,486 $ 7,392,740 (7,395,447) (2,707) $ 57 608,193 605,486 67,481 105,936 7,707 24,143 9,996 10,998 64,977 328,461 96 619,795 (14,309) 605,486 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 4: Due from Other Governments Governmental activities: General Fund Federal government: Grants and contributions State of Arizona: Taxes and shared revenues Grants and contributions City of Tucson: Reimbursement for services Other governments: Reimbursement for services Total due from other governments fund based statements $ Capital Projects Fund 121 $ 8,554 19,857 228 Debt Other Internal Total Service Governmental Service Governmental Fund Funds Funds Activities $ 7,364 1,099 1,605 $ 253 9,291 $ 21,836 $ 18,073 9,986 $ 17 17 $ $ 18,661 1 27,449 1,100 1,602 39 3,263 66 1 9,611 20,117 $ $ 41 $ 60,084 Business-type activities: Pima Health System & Services Federal government: Grants and contributions $ 641 State of Arizona: Reimbursement for services Grants and contributions Other local governments: Reimbursement for services Grants and contributions Total due from other governments fund based statements Other Enterprise Funds Business-type Activities Total $ 132 507 132 507 $ 49 $ 49 49 8 8 $ 1,288 58 641 $ 1,337 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 5: Capital Assets Capital asset activity for the year ended June 30, 2011, was as follows: Balance July 1, 2010 Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated $ Capital assets being depreciated: Buildings and improvements Infrastructure Equipment Total capital assets being depreciated $ 539,662 1,128,701 115,881 1,784,244 Less accumulated depreciation for: Buildings and improvements Infrastructure Equipment Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net 433,098 176,749 609,847 Increases (157,862) (528,067) (73,500) (759,429) $ 1,024,815 1,634,662 $ Balance July 1, 2010 Business-type activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated $ Capital assets being depreciated: Buildings and improvements Sewage conveyance system Equipment Total capital assets being depreciated $ (150,760) (234,138) (20,404) (405,302) $ 701,589 808,945 59 $ $ (809) (88,521) (89,330) 66,439 28,500 10,186 105,125 (4,156) (1,603) (7,401) (13,160) (13,511) (34,100) (10,213) (57,824) 1,577 515 5,915 8,007 47,301 178,551 $ Increases 368,081 632,633 106,177 1,106,891 Less accumulated depreciation for: Buildings and improvements Sewage conveyance system Equipment Total accumulated depreciation Total capital assets being depreciated, net Business-type activities capital assets, net 15,178 92,178 107,356 16,501 114,749 131,250 231 115,927 116,158 Balance June 30, 2011 Decreases (5,153) (94,483) $ 448,790 202,977 651,767 601,945 1,155,598 118,666 1,876,209 (169,796) (561,652) (77,798) (809,246) $ 1,066,963 1,718,730 Balance June 30, 2011 Decreases (42,624) (42,624) 15,409 165,481 180,890 4,069 49,109 4,320 57,498 (2,799) (22) (434) (3,255) 369,351 681,720 110,063 1,161,134 (12,073) (12,367) (7,582) (32,022) 563 17 430 1,010 25,476 141,634 $ $ $ (2,245) (44,869) (162,270) (246,488) (27,556) (436,314) $ 724,820 905,710 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 5: Capital Assets (continued) Depreciation expense was charged to functions as follows: Governmental activities: General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Internal service funds Total governmental activities depreciation expense $ 7,733 10,719 29,186 159 676 17 5,609 938 2,746 57,783 $ Business-type activities: Pima Health System & Services Parking Garages Regional Wastewater Reclamation Development Services Total business-type activities depreciation expense $ 215 219 31,540 48 32,022 $ Balance July 1, 2010 Increases Balance June 30, 2011 Decreases Discretely presented component units: Southwestern Fair Commission (SFC): Capital assets being depreciated: Buildings and improvements Equipment Total capital assets being depreciated $ Less accumulated depreciation for: Buildings and improvements Equipment Total accumulated depreciation 4,488 2,328 6,816 546 152 698 $ (17) (63) (80) $ 5,017 2,417 7,434 (2,695) (1,650) (4,345) (175) (151) (326) 13 63 76 (2,857) (1,738) (4,595) 2,471 372 (4) 2,839 Total capital assets being depreciated, net SFC capital assets, net $ $ 2,471 60 $ 372 $ (4) $ 2,839 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 6: Claims, Judgments and Risk Management Risk Management and Claims Liability 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 Fund is liable for any single general or automobile liability claim up to $2,000,000 per occurrence, workers’ compensation claim up to $750,000 per occurrence or any medical malpractice claims in aggregate up to $5,000,000 in any policy year. 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. Payment of unemployment and dental claims is fully self-funded. Payment of environmental claims is generally self-funded, although some claims filed could result in past insurers being liable for such losses. All of the County’s departments participate in the Fund. With the exception of environmental, dental and unemployment losses, charges are based on actuarial estimates of the amounts needed to pay prior- and current-year claims. Charges for environmental losses are based on historical experience. Charges for dental and unemployment losses are based on actual claims paid. The claims liability of $40,795 reported in the Fund at June 30, 2011, 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. Claims liabilities - beginning Current-year claims and changes in estimates Claims payment $ Claims liabilities balance - ending $ 2011 38,378 9,099 (6,682) 40,795 $ $ 2010 36,994 9,893 (8,509) 38,378 Litigation 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. The following lawsuit is currently pending against Pima County: Estate of Jack Rappeport v. Royal and Pima County - a petition has been asserted by the Estate of Jack Rappeport against Anita Royal, in her capacity as the Pima County Public Fiduciary, and Pima County. In January 2007, the 61 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 6: Claims, Judgments and Risk Management (continued) Public Fiduciary’s Office was appointed conservator of an elderly woman suffering from dementia. When she passed away, the Estate of Jack Rappeport took from her any claims she might have against the Public Fiduciary’s Office and filed the pending Petition/Complaint alleging gross malfeasance. Currently, Pima County on behalf of the Public Fiduciary’s motion seeking dismissal of most of the lawsuit/petition is pending. No discovery or disclosure has yet been conducted or exchanged. If Rappeport did prevail upon the bulk of its claims, the potential loss could exceed $1 million. The likelihood of the potential loss in excess of $1 million is unknown at this time. Pollution Remediation The County has estimated and reported an environmental liability of $1,033 in the government-wide financial statements for governmental activities (in noncurrent liabilities). Remediation efforts are currently underway at one County site: El Camino del Cerro. Remediation efforts continue at the El Camino del Cerro site which is approximately bordered by the Santa Cruz River on the west, Interstate 10 on the east and El Camino del Cerro Road on the south. The groundwater contamination is suggested to resonate from the municipal and solid waste landfill operated on the site from 1973 to 1977. The estimated liability was calculated based upon the expected future outlays associated with the estimate of one pump-and-treat system for one year. There is potential for changes due to increased costs associated with sewage disposal costs, construction costs for extraction and injection wells and/or changes in the estimated extent of contamination. There are no estimated recoveries at this time. 62 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 7: Long-Term Liabilities The following schedule details the County’s long-term liability and obligation activity for the year ended June 30, 2011. Balance July 1, 2010 Additions Balance Due within Reductions June 30, 2011 1 year $ $ $ Governmental activities: General obligation bonds Plus unamortized deferred amount Total general obligation bonds 417,995 2,266 420,261 75,000 3,276 78,276 40,245 2,436 42,681 $ 452,750 3,106 455,856 $ 56,980 1,393 58,373 141,940 286 142,226 10,530 321 10,851 131,410 (35) 131,375 11,015 135 11,150 Certificates of participation Plus unamortized deferred amount Total certificates of participation 70,320 2,318 72,638 23,425 978 24,403 46,895 1,340 48,235 8,165 298 8,463 Capital leases payable: Jail capital lease Less unamortized deferred amount Other capital leases Total capital leases 20,690 (1,340) 36 19,386 2,125 (550) 36 1,611 18,565 (790) 2,230 (144) 17,775 2,086 Reported but unpaid losses (Note 6) Incurred but not reported losses (Note 6) 21,865 16,513 8,273 826 6,682 23,456 17,339 4,324 3,156 Landfill closure and post-closure care costs (Note 8) 19,624 789 469 19,944 702 1,033 Transportation revenue bonds Plus unamortized deferred amount Total transportation revenue bonds 1,735 Pollution remediation (Note 6) Total governmental activities long-term liabilities $ 714,248 63 $ 88,164 $ 87,399 $ 715,013 501 $ 88,053 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 7: Long-Term Liabilities (continued) Balance July 1, 2010 Additions Reductions Balance June 30, 2011 Due within 1 year Business-type activities: Sewer revenue bonds Less unamortized deferred amount Total revenue bonds payable $ 167,110 $ (175) 166,935 $ 165,000 13,138 178,138 Sewer revenue obligations Plus unamortized deferred amount Total revenue obligations payable Regional Wastewater Reclamation (RWR) loans payable Less unamortized deferred amount Total loans payable 6,305 $ 417,588 28,305 $ (483) 27,822 4,721 $ 50,390 $ 182,430 2,352 184,782 38,879 (59) 38,820 27,404 (14) 27,390 6,369 4,657 74,300 $ 13,120 13,120 165,000 11,849 176,849 1,289 1,289 66,283 (73) 66,210 Contracts and notes Total business-type activities long-term liabilities 43,625 2,044 45,669 $ 393,678 3,685 3,685 $ 16,805 GENERAL OBLIGATION BONDS OUTSTANDING Governmental Activities (Payments made from property tax revenues of the Debt Service Fund) General obligation bonds payable at June 30, 2011, consisted of the outstanding general obligation bonds presented below. Of the total amounts originally authorized, $9,530 from the May 20, 1997, $121,276 from the May 18, 2004, and $7,875 from the May 16, 2006 bond election remain unissued. The following table presents amounts outstanding by issue. Issue Amount Issue Series of 2003 50,000 Series of 2004 65,000 Series of 2005 65,000 Series of 2007 95,000 Series of 2008 100,000 Series of 2009 75,000 Series of 2009A 90,000 Series of 2009A Refunding 23,535 Series of 2011 75,000 G.O. bonds outstanding Plus unamortized deferred amount: Interest Rates 4.00 - 4.25% 3.00 - 5.00% 3.50 - 5.00% 3.00 - 4.50% 3.50 - 4.00% 3.00 - 4.13% 3.00 - 4.00% 3.00 - 3.50% 1.50 - 5.00% Maturities 2012-17 2012-19 2012-20 2012-21 2012-22 2012-23 2012-24 2012-16 2012-26 Total G.O. bonds outstanding 64 Outstanding June 30, 2011 $ 23,350 36,510 39,270 68,125 75,000 40,000 78,315 17,180 75,000 452,750 3,106 $ 455,856 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details general obligation bond debt service requirements to maturity at June 30, 2011. Year Ending June 30, 2012 2013 2014 2015 2016 2017 - 2021 2022 - 2026 Total Principal 56,980 39,025 35,355 34,665 35,485 176,235 75,005 $ 452,750 $ Interest 17,335 15,467 14,060 12,639 11,280 35,708 6,719 $ 113,208 $ TRANSPORTATION BONDS PAYABLE Governmental Activities (Payments made from street and highway revenues) Pima County transportation revenue bonds were issued to provide monies to construct improvements to the County’s streets and highways. Of the total amount originally authorized, $107,800 from the November 4, 1997 bond election remains unissued. Issue Interest Amount Rates Maturities Issue Series of 2002 $ 55,000 4.38% 2012 Series of 2003 35,000 4.00 - 4.38% 2012-18 Series of 2005 51,200 3.50 - 5.00% 2012-20 Series of 2007 21,000 3.25 - 4.75% 2012-22 Series of 2008 25,000 3.00 - 4.50% 2012-22 Series of 2009 15,000 3.00 - 4.00% 2012-24 Series of 2009 Refunding 8,420 3.00 - 4.00% 2012-24 Transportation bonds outstanding Less unamortized deferred amount: Total transportation bonds outstanding Outstanding June 30, 2011 $ 3,650 20,500 40,655 18,635 24,550 15,000 8,420 131,410 (35) $ 131,375 The following schedule details transportation bond debt service requirements to maturity at June 30, 2011. Year Ending June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2024 Total Principal $ 11,015 11,170 11,600 12,055 12,540 59,125 13,905 $ 131,410 65 Interest $ 5,244 4,785 4,354 3,906 3,435 9,165 901 $ 31,790 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 7: Long-Term Liabilities (continued) Pima County has pledged future highway user revenues, net of specified operating expenses, to repay $131,410 in transportation revenue bonds issued between 2002 and 2010. Proceeds from the bonds provide financing for construction of various highways and streets within Pima County. The bonds are payable from net highway user revenues and are payable through 2024. Annual principal and interest payments on the bonds are expected to require approximately 88 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $163,200. Principal and interest paid for bonds in the current year and total customer net revenues were $16,239 and $18,159, respectively. 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 to acquire and construct replacement facilities for the Pima County Community Services Department. On June 10, 2009, the County issued Certificates of Participation Series 2009 for $34,400 to finance capital costs for public infrastructure of the County, including expansion and upgrades to the County’s sewer treatment system. On February 4, 2010, the County issued Certificates of Participation Series 2010 for $20,000 to finance the replacement computer enterprise system composed of servers and other hardware, computer terminals, software and system training. The new enterprise system will serve the County with finance, budget, procurement, human resources and material management systems. The following schedule details outstanding Certificates of Participation payable at June 30, 2011. Issue Interest Issue Amount Rates Maturities Series of 2007A $ 28,765 4.00 - 5.00% 2012-22 Series of 2009 34,400 4.00% 2012 Series of 2010 20,000 2.00 - 5.25% 2012-19 Certificates of participation outstanding Plus unamortized deferred amount: Total certificates of participation outstanding Outstanding June 30, 2011 $ 24,245 4,400 18,250 46,895 1,340 $ 48,235 The following schedule details debt service requirements to maturity for the County’s Certificates of Participation payable at June 30, 2011. Year Ending June 30, 2012 2013 2014 2015 2016 2017 - 2021 2022 Total Principal $ 8,165 3,875 4,020 4,170 4,345 19,550 2,770 $ 46,895 66 Interest $ 2,052 1,766 1,627 1,472 1,297 3,204 139 $ 11,557 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (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 net book value of assets acquired through capital leases consists of $16,606 of buildings. The following schedule details capital lease debt service requirements to maturity at June 30, 2011. Governmental Activities: Year Ending June 30, 2012 2013 2014 2015 2016 2017 - 2018 Buildings Principal Interest $ 2,230 $ 774 2,780 647 2,485 511 2,605 399 2,710 293 5,755 243 $ 18,565 $ 2,867 SEWER REVENUE BONDS AND LOANS Business-type Activities (Payments made from user charges received in the Regional Wastewater Reclamation Enterprise Fund) Pima County sewer revenue bonds, as presented below, were issued to provide monies to construct improvements to the County’s Regional Wastewater Reclamation system. As of June 30, 2011, the County has issued the total amount originally authorized from the May 18, 2004 bond election. Issue Interest Amount Rates Maturities Issue Series of 2004 Refunding 25,770 4.60 - 5.50% 2012-15 Series of 2007 50,000 3.75 - 5.00% 2012-26 Series of 2008 75,000 4.00 - 5.00% 2012-23 Series of 2009 18,940 3.25 - 4.25% 2012-24 Series of 2011 Refunding 43,625 2.00 - 5.00% 2012-16 Sewer revenue bonds outstanding Plus unamortized deferred amount: Total sewer revenue bonds outstanding 67 Outstanding June 30, 2011 $ 12,455 40,655 73,580 17,115 38,625 182,430 2,352 $ 184,782 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 7: Long-Term Liabilities (continued) The following schedule details sewer revenue bond debt service requirements to maturity at June 30, 2011. Year Ending June 30, 2012 2013 2014 2015 2016 2017 - 2021 2022 - 2026 Total Principal 13,120 14,895 16,765 17,555 15,950 62,175 41,970 $ 182,430 $ Interest 7,923 7,347 6,661 5,882 5,057 16,870 3,830 $ 53,570 $ On June 17, 2010, Pima County entered into an agreement, whereby future revenues were pledged, that provided monies to be used primarily to pay a portion of the capital project costs associated with the construction, expansion and improvement of sewer treatment facilities and conveyance systems for the countywide sewer system, including the Ina Road and Roger Road Wastewater Reclamation Facilities. Issue Interest Amount Rates Maturities Issue Series of 2010 $ 165,000 2.50 - 5.00% 2014-25 Sewer revenue obligations outstanding Plus unamortized deferred amount: Total sewer revenue obligations outstanding Outstanding June 30, 2011 $ 165,000 165,000 11,849 $ 176,849 The following schedule details sewer revenue obligation debt service requirements to maturity at June 30, 2011. Year Ending June 30, 2012 2013 2014 2015 2016 2017 - 2021 2022 - 2026 Total Principal Interest 8,026 8,026 8,026 7,946 7,891 31,960 10,146 $ 82,021 $ $ $ 68 2,000 2,000 2,000 79,765 79,235 165,000 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 7: Long-Term Liabilities (continued) In prior years, the Regional Wastewater Reclamation Enterprise Fund entered into loan agreements (1996 to provide funds for the defeasance of prior sewer revenue bonds, and 1997 and 2004 which were used for construction and improvement of wastewater treatment facilities). In October 2009, the County entered into an additional loan agreement for the funding of construction of wastewater treatment facilities. Interest is payable semiannually and is calculated based on the principal amount of the loan outstanding during such period. Issue Amount Issue 1996 Loans payable $ 11,313 1997 Loans payable 7,500 2004 Loans payable 19,967 2009 Loans payable 8,002 Loans payable Less unamortized deferred amount: Interest Rate 3.19% 2.95% 1.81% 0.96% Maturities 2012 2011 2012-24 2012-24 Total loans payable Outstanding June 30, 2011 $ 2,729 657 16,463 7,555 27,404 (14) $ 27,390 The following schedule details loans payable debt service requirements to maturity at June 30, 2011. Year Ending June 30, 2012 2013 2014 2015 2016 2017 - 2021 2022 - 2026 Total Principal 3,685 2,550 1,489 1,535 1,581 8,658 7,906 $ 27,404 $ Interest 792 687 622 576 529 1,881 490 $ 5,577 $ Pima County has pledged future user charges, net of specified operating expenses, to repay $182,430 in sewer revenue bonds issued between 1998 and 2011, $27,404 in sewer revenue loans issued between 1996 and 2009, and $165,000 in sewer revenue obligations issued in 2010. Proceeds from the bonds, loans and obligations provided financing for construction of various treatment facilities and sewer infrastructure within Pima County. The bonds, loans and obligations are payable from net sewer revenues and are payable through fiscal year 2026. Annual principal and interest payments on the bonds and obligations are expected to require approximately 37 percent of net revenues. The annual principal and interest payments on the loans are expected to require approximately 14 percent of net revenues. Total principal and interest remaining to be paid on the bonds is $236,000. Total principal and interest remaining to be paid on the loans is $32,981. Total principal and interest remaining to be paid on the obligations is $247,021. Principal and interest paid for bonds, loans and obligations in the current year and total customer net revenues were $20,943, $10,473, and $84,005, respectively. REFUNDED SEWER REVENUE BONDS AND LOANS In March 2011, the County issued for the Regional Wastewater Reclamation Enterprise Fund $43,625 in Sewer Revenue Refunding Bonds, Series 2011A. The net proceeds of the refunding bonds were used to advance refund $6,115 of the Sewer Revenue Bonds, (Series 1998); $8,765 of the Sewer Revenue Bonds (Series 2001); and $30,827 of the Wastewater Loans payable (Series 2000). Accordingly, the refunded sewer revenue bonds and the wastewater loans payable are considered defeased and the related liabilities are not included in the financial statements. 69 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 7: Long-Term Liabilities (continued) As a result of the Sewer Revenue Refunding Bonds Series 2011A issue, the County decreased its total debt service payment by $1,871. This resulted in an economic gain of $1,745. CONTRACTS AND NOTES Business-type Activities (Payments made from restricted assets in the Regional Wastewater Reclamation Enterprise 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. LEGAL DEBT MARGIN County General Obligation Bonds General obligation debt may not exceed 6 percent of the value of the County’s taxable property as of the latest assessment. However, with voter approval, debt may be incurred up to 15 percent of the value of taxable property. Pima County has received voter approval for all general obligation debt. The legal debt margin at June 30, 2011, is as follows: Net assessed valuation $ 9,342,561 1,401,384 Debt Limit (15% of net assessed valuation): Less amount of debt applicable to debt limit: General obligation bonds outstanding $ Less fund balance in debt service fund available for payment of general obligation bond principal 452,750 (27,904) Legal debt margin available 424,846 $ 976,538 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 longterm liability in each period, based on landfill capacity used as of each balance sheet date. The $19,944 reported as landfill closure and post-closure 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 $5,984 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, 2011; actual costs may change due to inflation, changes in technology or changes in regulations. 70 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 8: Landfill Liabilities (continued) Landfill Site Ajo Sahuarita Tangerine Capacity Used June 30, 2011 Estimated Remaining Service Life 70% 49% 93% 41 Years 30 Years 8 Years 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 ensure 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 green waste and construction debris. It is not subject to the closure and postclosure cost requirements referred to above. Pima County estimates that it will cost approximately $10,374 when closure occurs and plans to fund the costs 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 Pension 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, longterm disability, survivor, and health insurance premium benefits. The retirement benefits are generally paid at a percentage, based on years of service, of the retirees’ average compensation. Long-term disability benefits vary by circumstance, but generally pay a percentage of the employee’s monthly compensation. Health insurance premium benefits are generally paid as a fixed dollar amount per month towards the retiree’s healthcare insurance premiums, in amounts based on whether the benefit is for the retiree or for the retiree and his or her dependents. The ASRS administers a cost-sharing multiple-employer defined benefit pension plan; a cost-sharing, multipleemployer defined benefit health insurance premium plan; and a cost-sharing multiple-employer defined benefit longterm disability plan that covers employees of the State of Arizona and employees of participating political subdivisions, including general employees of the County, and school districts. 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 administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium 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 seven-member board, known as The Board of Trustees, and the participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. 71 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 9: Retirement Plans (continued) The CORP administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium 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 Board of Trustees of PSPRS and the participating 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. ASRS PSPRS and CORP 3300 N. Central Ave Phoenix, AZ 85012 (602) 240-2000 or (800) 621-3778 3010 East Camelback Road Suite 200 Phoenix, AZ 85016-4416 (602) 255-5575 Funding Policy The Arizona State Legislature establishes and may amend active plan members’ and the County’s contribution rates for ASRS, PSPRS and CORP. Cost-sharing plans For the year ended June 30, 2011, active ASRS members were required by statute to contribute at the actuarially determined rate of 9.85 percent (9.6 percent for retirement and 0.25 percent for long-term disability) of the members’ annual covered payroll. The County is required by statute to contribute at an actuarially determined rate. For the year ended June 30, 2011 the County contributed 9.85 percent (9.01 percent for retirement, 0.59 percent for health insurance premium, and 0.25 percent for long-term disability) of the members’ annual covered payroll. For the year ended June 30, 2010 the County contributed 9.4 percent (8.34 percent for retirement, 0.66 percent for health insurance premium, and 0.40 percent for long-term disability) of the members’ annual covered payroll. For the year ended June 30, 2009 the County contributed 9.45 percent (7.99 percent for retirement, 0.96 percent for health insurance premium, and 0.50 percent for long-term disability) of the members’ annual covered payroll. ASRS Retirement Fund Health Benefit Supplement Fund Long-term Disability Fund Year ended June 30, 2011 2010 2009 $ $ $ 21,774 20,234 20,127 $ $ $ 72 1,426 1,601 2,418 $ $ $ 604 970 1,259 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 9: Retirement Plans (continued) Agent plans For the year ended June 30, 2011, 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 29.16 percent, the aggregate of which is the actuarially required amount. As allowed by statute, the County contributed 3.65 percent of the members’ required contribution, with the members contributing 4.00 percent. The health insurance premium portion of the contribution was set at 1.74 percent of covered payroll. Active CORP members were required by statute to contribute 8.41 percent of the members’ annual covered payroll, and the County was required to contribute at the actuarially determined rate of 12.08 percent, the aggregate of which is the actuarially required amount. The health insurance premium portion of the contribution rate was actuarially set at 1.17 percent of covered payroll. Actuarial methods and assumptions The contribution requirements for the year ended June 30, 2011 were established by the June 30, 2009 actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plans and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on 1) the plans as understood by the County and plans’ members and include the types of benefits in force at the valuation date, and 2) the pattern of sharing benefit costs between the County and plans’ members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The significant actuarial methods and assumptions used are the same for all plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2011 contribution requirements, are as follows: Actuarial valuation date Actuarial cost method Actuarial Assumptions: Investment rate of return Projected salary increases includes inflation at Amortization method Remaining amortization period Asset valuation method PSPRS June 30, 2009 Projected unit credit 8.50% 5.50% - 8.50% 5.50% Level percent-of-pay closed CORP June 30, 2009 Projected unit credit 8.50% 5.50% - 8.50% 5.50% Level percent-of-pay closed 27 Years for unfunded actuarial accrued liability, 20 years for excess 27 Years for unfunded actuarial accrued liability, 20 years for excess 7-year Smoothed market value 7-year Smoothed market value 73 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 9: Retirement Plans (continued) Annual Pension and Healthcare Cost The County’s pension/healthcare cost for the PSPRS and CORP agent plans for the year ended June 30, 2011, and related information follows: PSPRS CORP Health Insurance Pension Health Insurance Pension Annual pension/Healthcare cost $ 8,303 $ 624 $ 1,824 $ 282 Contibutions made $ 8,535 $ 392 $ 1,963 $ 142 Trend Information Annual pension cost information for the current and 2 preceding years follows for the PSPRS and CORP agent plans. Annual healthcare cost information for the same periods is included. Plan Year Ended June 30 Annual Pension/ Healthcare Cost Percentage of Annual Cost Contributed Net Pension/ Healthcare Obligation PSPRS Pension 2011 $ 8,303 103% Health insurance 2011 $ 624 62.9% Pension 2010 $ 8,761 102% Health insurance 2010 $ 591 74.5% Pension 2009 $ 8,268 100% Health insurance 2009 $ 627 73.8% Pension 2011 $ 1,824 108% Health insurance 2011 $ 282 50.4% Pension 2010 $ 1,943 102% Health insurance 2010 $ 232 78.8% Pension 2009 $ 2,162 100% Health insurance 2009 $ 236 77.1% $ 232 $ 151 $ 164 $ 140 $ 49 $ 54 CORP 74 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 9: Retirement Plans (continued) Funded Status The funded status of the plans, as of the most recent valuation date June 30, 2011, along with the actuarial assumptions and methods used in those valuations follow. Additionally, the required schedule of funding progress, presented as Exhibit B-2 following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. PSPRS Pension CORP Health Insurance Actuarial accrued liability $ 242,778 Actuarial value of assets Unfunded actuarial accrued liability (funding excess) $ 149,088 $ 93,690 $ 61.4 % 30,805 $ Funded ratio Covered payroll Unfunded actuarial accrued liability (funding excess) as a percentage of covered payroll Actuarial valuation date Actuarial cost method Actuarial Assumptions: Investment rate of return Projected salary increases includes inflation at Amortization method Remaining amortization period Asset valuation method 304.1 % $ $ Pension 7,353 $ 75,051 0 $ 51,477 7,353 $ 23,574 Health Insurance $ 3,261 0 $ 0 % 30,805 $ 68.6 % 20,441 $ 23.9 % 115.3 % 3,261 0 % 20,441 16.0 % PSPRS June 30, 2011 Entry Age Normal CORP June 30, 2011 Entry Age Normal 8.25% 5.00% - 8.00% 5.00% Level percentage closed 8.25% 5.00% - 8.00% 5.00% Level percentage closed 25 Years for unfunded , 20 years for overfunded 7-year smoothed market 25 Years for unfunded , 20 years for overfunded 7-year smoothed market 75 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) 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. Amounts recorded as due to: General $ Capital Projects $ 252 Pima Health System & Services 577 118 Other Enterprise 7 Internal Services 13 $ 1 $ 250 Se r 5 $ 898 11 $ 2,246 408 1 628 6,092 2 $ 44 $ 1,209 25 1,462 $ $ 1 44 6,071 To ta l In te th O 44 $ rn al er En te r R RW S PH $ vi ce s ise pr ic es & Se rv ta l O t ov her er nm en $ 238 5,212 RWR B. 10 144 Other Governmental Total G G Ca p ita l en er al Pr oj ec ts Amounts recorded as due from: 2 $ 7 $ 22 599 159 323 15 22 19 1,494 1,766 $ 10,147 Transfers Transfers are used to record transactions between individual funds to subsidize their operations and fund debt service payments and capital construction projects. Capital Projects $ $ 5,271 Debt Service $ $ Other Governmental 51,802 2,675 In te rn al Se rv To ic es ta l ise O th er En t RW R & $ $ 16,243 303 er pr ic es 4,596 $ Se rv 5,385 17,782 4,502 RWR 25 $ 781 9,981 23,368 114 $ 52 21,578 54,788 8 94 94 Other Enterprise 694 694 Internal Service Total 176 PH S D eb tS General O th er G ov er n er vi ce Pr oj ec ts Ca pi ta l l G en er a Amounts recorded as transfers in: m en ta l Amounts recorded as transfers out: 72 72 $ 57,767 $ 4,877 $ 2,945 $ 39,418 $ 4,596 $ 806 $ 114 $ 52 $ 110,575 The table above does not include transfers of capital assets from proprietary funds to the governmental activities because these are not reported in the governmental funds. The following proprietary funds transferred capital assets with the governmental activities. 76 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 10: Interfund Transactions (continued) Total $ Transfer from 78 Government activities $ 78 Transfer to RWR Note 11: Construction and Other Significant Commitments At June 30, 2011, Pima County had the following major contractual commitments related to Environmental Quality, Facilities Management, General Government, Natural Resources, Parks & Recreation, Pima Health Systems and Services, Regional Wastewater Reclamation and Transportation. Environmental Quality At June 30, 2011, the Pima County Environmental Quality Department had contractual commitments related to service contracts of $8,256. Funding for these expenditures will be provided from general fund revenues. Facilities Management At June 30, 2011, the Pima County Facilities Management Department had contractual commitments related to service contracts of $13,508. Funding for these expenditures will be provided from general fund revenues. General Government At June 30, 2011, Pima County had contractual commitments related to service contracts for Finance and Risk Management of $15,068, Fleet Services of $9,364, Human Resources of $95,140, Institutional Health of $34,674 and Sheriff of $50,996. Funding for these expenditures will be provided from general fund revenues. Real Property had contractual commitments related to land acquisitions of $4,612, for which the funding of these expenditures will be provided by general obligation bonds. Natural Resources, Parks and Recreation At June 30, 2011, Pima County had contractual commitments related to construction contracts for Natural Resources, Parks and Recreation of $16,830. Funding for these expenditures will be provided from general obligation bonds. Pima Health Systems and Services At June 30, 2011, Pima County had contractual commitments related to service contracts for Pima Health Systems and Services of $160,739. Funding for these expenditures will be primarily provided from federal and state funding sources. Regional Wastewater Reclamation At June 30, 2011, the Regional Wastewater Reclamation Enterprise Fund had construction contractual commitments of $17,648 and other contractual commitments related to service contracts of $6,301. Funding for these expenses will be primarily from Sewer Revenue Bonds and related fees. 77 PIMA COUNTY, ARIZONA Notes to Financial Statements June 30, 2011 (in thousands) Note 11: Construction and Other Significant Commitments (continued) Transportation At June 30, 2011, the Pima County Transportation Department had construction contractual commitments of $16,237 and other contractual commitments related to service contracts of $5,044. 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. Note 12: Stewardship, Compliance, and Accountability (Deficit Fund Balances) The following non-major governmental funds reported fund balance deficits at June 30, 2011: 6/30/2011 Special District Fund $ Employment and Training Fund 177 196 Other Special Revenue Fund - Grants 2,579 Total $ 2,952 These deficits can be eliminated in the future through normal operations. Note 13: Subsequent Events Pima County’s contracts with the Arizona Health Care Cost Containment System expired on September 30, 2011. As such, Pima County’s management discontinued certain operations of the Fund that include the pending sale of Posada Del Sol Nursing Home. As a result, the Pima Health System and Services Fund is scheduled to close during fiscal year 2012. 78 Required Supplementary Information Other Than Management’s Discussion & Analysis PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund For the Year Ended June 30, 2011 (in thousands) Exhibit B - 1 Budgeted Amounts Original Final Variance Over/Under Revenues: Property taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues $ 301,398 2,463 122,016 36,591 7,682 871 4,527 475,548 $ 301,398 2,463 122,016 36,591 7,682 871 4,527 475,548 Actual $ 301,493 2,681 122,952 35,361 5,344 418 4,722 472,971 $ 95 218 936 (1,230) (2,338) (453) 195 (2,577) Expenditures: Assessor Board of Supervisors Clerk of Superior Court Community & Economic Development Constables County Administration County Attorney Institutional Health Forensic Science Center Graphics 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 8,362 1,887 10,041 12,394 1,038 86,372 19,285 94,403 2,699 461 10,638 21,963 27,314 30,041 3,208 118,051 27,741 1,824 1,582 2,444 3,800 2,113 6 487,667 8,362 1,887 10,041 12,394 1,038 86,372 19,285 94,403 2,699 461 10,638 21,963 27,314 30,041 3,208 118,051 27,741 1,824 1,582 2,444 3,800 2,113 6 487,667 7,537 1,732 10,060 11,604 1,028 38,362 18,393 90,572 2,792 351 7,576 21,321 30,700 28,725 3,214 116,573 27,674 1,745 1,345 1,958 3,800 2,113 7 429,182 (1) 58,485 Excess (deficiency) of revenues over (under) expenditures (12,119) (12,119) 43,789 55,908 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing sources (uses) 5,211 (46,725) (41,514) 5,211 (46,725) (41,514) 11 9,981 (57,767) (47,775) 11 4,770 (11,042) (6,261) Net change in fund balance (53,633) (53,633) (3,986) 49,647 Fund balance at beginning of year Fund balance at end of year $ 53,633 - $ 53,633 - See accompanying notes to schedule 79 $ 81,541 77,555 825 155 (19) 790 10 48,010 892 3,831 (93) 110 3,062 642 (3,386) 1,316 (6) 1,478 67 79 237 486 $ 27,908 77,555 PIMA COUNTY, ARIZONA Notes to Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund June 30, 2011 (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 Funds). 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, 2011, expenditures exceeded appropriations in the following General Fund departments (the legal level of budgetary control) by the following amounts: Justice & Law Enforcement, $3,386; Forensic Science Center, $93; Clerk of Superior Court, $19; Recorder, $6; and Debt Service miscellaneous, $1. These expenditures were funded by greater than anticipated revenues and unspent appropriations. 80 PIMA COUNTY, ARIZONA Schedule of Retirement Plans' Funding Progress June 30, 2011 (in thousands) Actuarial Value of Plan Assets Actuarial Accrued Liability Funding (Liability) Excess Funded Ratio (93,690) 61.4% Plan Year Ended June 30 PSPRS Pension 2011 Health Insurance 2011 0 7,353 (7,353) Pension 2010 145,388 220,865 Health Insurance 2010 0 Pension 2009 Health Insurance 2009 CORP Pension 2011 Health Insurance 2011 0 Pension 2010 Health Insurance $ 30,805 304.1% 0.0% 30,805 23.9% (75,477) 65.8% 31,302 241.1% 7,040 (7,040) 0.0% 31,302 22.5% 142,164 212,291 (70,127) 67.0% 33,557 209.0% 0 7,088 (7,088) 0.0% 33,557 21.1% (23,574) 68.6% 20,441 115.3% 3,261 (3,261) 0.0% 20,441 16.0% 50,077 64,614 (14,537) 77.5% 19,885 73.1% 2010 0 3,092 (3,092) 0.0% 19,885 15.6% Pension 2009 48,740 60,217 (11,477) 80.9% 20,411 56.2% Health Insurance 2009 0 3,095 (3,095) 0.0% 20,411 15.1% $ 149,088 51,477 $ $ 242,778 75,051 $ Annual Covered Payroll $ 81 $ Unfunded Liability as Percentage of Covered Payroll $ (This page is intentionally blank) 82 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’s share of gasoline and vehicle license taxes collected by the State. Health Fund - to account for resources used to finance activities involved in the conservation and improvement of public health, animal control and emergency managment. 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 secondary taxes on real property and government grants. The Regional Flood Control District is a blended component unit of Pima County. Employment and Training Fund - primarily to account for resources received under the Workforce Investment Act. Financing is provided by the Federal Government and County resources. 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 grant 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 grant 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. The Special Districts are a blended component unit of Pima County. 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 for management and operation of the Library District. Revenues are provided primarily by secondary taxes on real property. 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. (This page intentionally left blank) 83 PIMA COUNTY, ARIZONA Combining Balance Sheet - Nonmajor Governmental Funds Jun 30, 2011 (in thousands) Transportation Special Revenue Funds Regional Flood Control Employment District and Training Health 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 Loan receivable Accounts receivable Inventory Prepaid expenditures Other assets Special assessments receivable Restricted cash and cash equivalents Total assets $ 25,538 $ 1,071 10 342 7,145 1 1 2,681 100 1,499 2 1,018 249 119 117 $ 14,283 1,024 6 38 19 $ 65,383 10 4 21 83 60 87 537 13 18 36 $ 18 2,913 $ 1,584 6,372 33 45 $ 35,654 $ 4,239 $ 15,393 $ 2,953 $ 66,207 $ 8,034 $ 1,162 $ 735 1 823 105 6 $ 347 $ 630 $ 372 $ 1,828 Liabilities and fund balances Liabilities: Accounts payable Interest payable Employee compensation Due to other funds Due to other governments Deposits and rebates Deferred revenues Total liabilities Fund balances: Nonspendable Restricted Committed Assigned Unassigned 171 928 259 1,219 966 3,085 205 1,341 245 32 1 1 903 1,420 1,706 4,529 5,917 3,011 1,529 3,149 3,556 10,613 1,501 28,236 236 2,715 13 13,851 18 557 123 27,705 33,508 1,315 45 1,523 (1,723) Total fund balances Total liabilities and fund balances 752 315 12 1 3,675 29,737 $ 35,654 (771) 1,228 $ 13,864 4,239 $ 84 15,393 (4,147) (196) $ 2,953 62,651 $ 66,207 (2,579) $ 8,034 Exhibit C - 1 Special Revenue Funds School Reserve $ Environmental Quality 1,818 $ 1,569 Special Districts $ Solid Waste 91 $ Library District 3,043 237 1 6 149 1 47 278 169 84 254 $ Total Other Governmental Funds Stadium District 17,437 $ 1,263 7 1,899 $ 2,287 49 2,246 20,117 87 1,515 1,618 261 1,018 239 45 2 127 251 12 75 27 3 239 45 $ 2,251 $ 1,809 $ 96 $ 1 $ 330 105 97 7 20 82 239 221 187 507 27 1,412 1,169 591 453 $ $ 3,623 $ 18,767 $ 2,354 $ 161,614 $ 157 $ 764 $ $ 720 36 11 1 60 10 1,111 164 6,103 2 4,257 6,092 224 2 15,190 303 2,631 246 31,870 1,311 48 16,088 59 87 268 30 $ 2,251 1,622 $ 1,809 2,011 94,567 37,978 4,368 (9,180) 4,440 2,009 (207) 2,030 (2,332) (177) $ 330 132,132 3,320 $ 3,623 85 16,136 $ 18,767 2,108 $ 2,354 129,744 $ 161,614 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Governmental Funds For the Year Ended June 30, 2011 (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 $ $ Total revenues Expenditures: Current: General government Public safety Highways and streets Sanitation Health Culture and recreation Education and economic opportunity Debt service - principal - interest 811 51,326 185 $ Other Grants Other 22,275 143 246 2,967 13,561 2,764 204 18 279 2 52 71 70 100 208 5,523 8,099 429 312 7,343 52,711 19,793 22,570 15,847 21,706 44,209 14,055 2,318 61 23,363 7,530 $ 15,639 $ 10,288 34,552 $ 43,953 9 247 30,353 496 48 15,285 16,623 328 1,452 36 16,623 18,250 46,722 (2,513) Total expenditures 34,552 30,353 10,288 Excess (deficiency) of revenues over (under) expenditures 18,159 (10,560) 12,282 (776) 3,456 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) 3 5,570 (16,242) 8,777 13 50 (8,003) 283 33,492 (11,796) 29 (362) Total other financing sources (uses) (10,669) 8,777 (7,940) 283 21,696 (333) 7,490 (1,783) 4,342 (493) 25,152 (2,846) 22,247 2,968 9,522 297 37,499 Net change in fund balances Fund balance at beginning of year Change in reserve for inventory Change in reserve for prepaid expenditures Fund balance at end of year 267 43 $ 29,737 $ 1,228 $ 86 13,864 $ (196) $ 62,651 $ (2,579) Exhibit C - 2 Special Revenue Funds School Reserve Environmental Quality Special Districts Solid Waste Library District $ $ $ $ 4,292 4,292 Total Other Governmental Funds Stadium District 28,547 $ 1,092 3,641 2 12 58 366 688 84 331 24 44 50,822 330 5,813 137,960 15,235 1,442 690 8,875 4,805 30,016 2,081 221,167 330 2,033 618 $ 119 9 19 9 2,798 339 $ 1,538 475 37,418 20,136 34,614 5,375 33,719 35,803 37,483 36 28 1 5,375 2,870 31,401 4,026 31,401 4,026 204,612 (1,385) (1,945) 16,555 4,123 28 4,123 2,870 169 29 (72) 5,375 310 (570) 388 32 1,500 9 4,690 (3,015) 48 54,788 (39,418) 388 1,532 9 1,675 15,418 169 316 1,834 1,306 310 962 (487) (1,376) 2,358 (270) 17,512 31,973 2,378 97,701 43 27 27 $ 2,030 $ 1,622 $ (177) $ 3,320 87 $ 16,136 $ 2,108 $ 129,744 (This page intentionally left blank) 88 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 Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Capital Projects Fund For the Year Ended June 30, 2011 (in thousands) Budget Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues $ Variance Over/Under Actual 404 74,330 47,288 3,895 265 565 52,013 Expenditures: Capital outlay 198,702 153,203 45,499 Total expenditures 198,702 153,203 45,499 (124,372) (101,190) 23,182 Deficiency of revenues under expenditures Other financing sources (uses): Face amount of long-term debt Premium on bonds Transfers in Transfers out Total other financing sources $ 75,000 Net change in fund balance Fund balance at beginning of year Fund balance at end of year 67,261 6,665 Exhibit C - 3 $ 18,773 (4,173) 89,600 75,000 67 23,368 (4,877) 93,558 (34,772) (7,632) 188,235 153,463 89 $ 126,160 118,528 $ (19,973) (2,770) 265 161 (22,317) 67 4,595 (704) 3,958 27,140 $ (62,075) (34,935) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund For the Year Ended june 30, 2011 (in thousands) Budget Revenues: Taxes Intergovernmental Investment earnings Total revenues $ 68,771 8 1,000 69,779 Exhibit C - 4 Variance Over/Under Actual $ 69,308 19 350 69,677 $ 537 11 (650) (102) Expenditures: Debt service - principal - interest - miscellaneous Total expenditures 80,025 26,195 58 106,278 72,525 23,945 14 96,484 7,500 2,250 44 9,794 Deficiency of revenues under expenditures (36,499) (26,807) 9,692 21,425 3,209 21,578 (2,945) 21,842 3,209 153 (2,945) 417 (15,074) (4,965) 10,109 Other financing sources (uses): Premium on bonds Transfers in Transfers (out) Total other financing sources 21,425 Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 38,689 23,615 90 $ 40,868 35,903 $ 2,179 12,288 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transportation - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Budget $ Exhibit C - 5 Variance Over/Under Actual 200 50,391 125 219 205 51,140 $ 811 51,326 185 143 246 52,711 $ 611 935 60 (76) 41 1,571 Expenditures: Highways and streets Total expenditures 37,313 37,313 34,552 34,552 2,761 2,761 Excess of revenues over expenditures 13,827 18,159 4,332 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing (uses) 2,944 (16,605) (13,661) 3 5,570 (16,242) (10,669) 3 2,626 363 2,992 7,490 7,324 Net change in fund balance Fund balance at beginning of year Fund balance at end of year 166 $ 17,875 18,041 91 $ 22,247 29,737 $ 4,372 11,696 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Health - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues Budget $ Exhibit C - 6 Variance Over/Under Actual 2,729 23,064 3,476 201 111 29,581 2,967 13,561 2,764 204 18 279 19,793 Expenditures: Health Health grants Total expenditures 17,384 21,484 38,868 17,642 12,711 30,353 (258) 8,773 8,515 Deficiency of revenues under expenditures (9,287) (10,560) (1,273) 8,777 8,777 8,777 8,777 Other financing sources (uses): Transfers in Total other financing sources Net change in fund balance (510) Fund balance at beginning of year Change in reserve for inventory Fund balance at end of year $ (1,783) 3,081 $ 2,571 92 $ (1,273) 2,968 43 $ 1,228 238 (9,503) (712) 3 18 168 (9,788) (113) 43 $ (1,343) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Regional Flood Control - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Taxes Licenses and permits Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Budget $ Exhibit C - 7 Variance Over/Under Actual 10 25 35 181 22,472 22,275 2 52 71 70 100 22,570 Expenditures: Flood control Total expenditures 12,227 12,227 10,288 10,288 1,939 1,939 Excess of revenues over expenditures 10,245 12,282 2,037 (8,000) (8,000) 13 50 (8,003) (7,940) 2,245 4,342 Other financing sources (uses): Proceeds from sale of capital assets Transfers in Transfers (out) Total other financing (uses) 22,221 Net change in fund balance Fund balance at beginning of year Fund balance at end of year 7,105 9,350 $ 93 $ $ 9,522 13,864 $ 54 2 42 46 35 (81) 98 13 50 (3) 60 2,097 $ 2,417 4,514 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Employment and Training - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Budget Revenues: Intergovernmental Miscellaneous Total revenues $ $ 21,948 21,948 Deficiency of revenues under expenditures Other financing sources: Transfers in Total other financing sources 15,639 208 15,847 $ 16,623 16,623 (283) (776) 283 283 283 283 Net change in fund balance Fund balance at beginning of year Fund balance at end of year Variance Over/Under Actual 21,471 194 21,665 Expenditures: Employment and training Total expenditures Exhibit C - 8 5,325 5,325 (493) (493) 693 693 $ 94 $ 297 (196) (5,832) 14 (5,818) (493) $ (396) (889) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Other - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues Budget $ Expenditures: General government Public safety Highways and streets Culture and recreation Education and economic opportunity Debt service - principal - interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in Transfers (out) Total other financing sources Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ Variance Over/Under Actual 4,888 7,176 560 457 8,153 21,234 $ Exhibit C - 9 5,523 8,099 429 312 7,343 21,706 $ 635 923 (131) (145) (810) 472 47,895 4,229 60 1,162 1,360 111 10 54,827 14,055 2,318 61 328 1,452 36 18,250 33,840 1,911 (1) 834 (92) 75 10 36,577 (33,593) 3,456 37,049 26,522 (9,111) 17,411 33,492 (11,796) 21,696 6,970 (2,685) 4,285 (16,182) 25,152 41,334 55,510 39,328 95 $ 37,499 62,651 $ (18,011) 23,323 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Other Grants - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Budget Revenues: Intergovernmental Investment earnings Miscellaneous Total revenues $ Expenditures: Community Development County Attorney Facilities Management Elections Justice Court Juvenile Court Parks and Recreation Adult Probation Sheriff Superior Court Forensic Science Center County Administrator Total expenditures $ 21,139 4,379 1,577 1,173 118 9,451 36 9,157 12,564 354 39 (317) Other financing sources (uses): Transfers in Transfers (out) Total other financing (uses) Fund balance at beginning of year Fund balance at end of year (317) 144 (173) $ 96 43,953 9 247 44,209 $ 15,285 4,137 59,987 Net change in fund balance Variance Over/Under Actual 59,541 18 111 59,670 Deficiency of revenues under expenditures Exhibit C - 10 $ (15,588) (9) 136 (15,461) 99 9,223 48 9,481 7,530 410 496 13 46,722 5,854 242 1,577 1,173 19 228 (12) (324) 5,034 (56) (457) (13) 13,265 (2,513) (2,196) 29 (362) (333) 29 (362) (333) (2,846) (2,529) 267 (2,579) $ 123 (2,406) PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual School Reserve - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Intergovernmental Total revenues Budget $ Expenditures: School Reserve grants Total expenditures 4,227 4,227 Exhibit C - 11 Variance Over/Under Actual $ 4,227 4,227 4,292 4,292 $ 65 65 4,123 4,123 104 104 Excess of revenues over expenditures 169 169 Net change in fund balance 169 169 1,834 27 1 27 Fund balance at beginning of year Change in reserve for prepaid expenditures Fund balance at end of year 1,833 $ 97 1,833 $ 2,030 $ 197 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Environmental Quality - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Licenses and permits Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues Budget $ Expenditures: Environmental quality Environmental quality grants Total expenditures Variance Over/Under Actual 1,921 761 18 18 2,718 2,033 618 119 9 19 2,798 2,371 761 3,132 2,088 782 2,870 Deficiency of revenues under expenditures $ (414) (72) Other financing sources: Transfers in Total other financing sources 388 388 388 388 Net change in fund balance (26) 316 Fund balance at beginning of year Fund balance at end of year Exhibit C - 12 137 111 $ 98 $ 1,306 1,622 $ 112 (143) 119 (9) 1 80 283 (21) 262 342 342 $ 1,169 1,511 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Special Districts - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Special assesments Investment earnings Total revenues Budget $ Variance Over/Under Actual 304 $ 304 Expenditures: Highways and streets Debt service - principal - interest Total expenditures Exhibit C - 13 330 9 339 $ 26 9 35 1 (1) 29 29 28 29 1 Excess of revenues over expenditures 275 310 35 Net change in fund balance 275 310 35 Fund balance at beginning of year Fund balance at end of year $ (557) (282) 99 $ (487) (177) $ 70 105 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Solid Waste - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Total revenues Budget $ Expenditures: Sanitation Total expenditures Deficiency of revenues under expenditures Fund balance at beginning of year Fund balance at end of year 1,050 3,072 $ 30 34 4,186 1,092 3,641 2 12 58 4,805 6,783 6,783 5,375 5,375 (1,097) $ 1,485 388 100 $ $ 42 569 2 (18) 24 619 1,408 1,408 (570) 1,500 1,500 Net change in fund balance Variance Over/Under Actual (2,597) Other financing sources: Proceeds from sale of capital assets Transfers in Total other financing sources Exhibit C - 14 2,027 32 1,500 1,532 32 962 2,059 2,358 3,320 32 $ 873 2,932 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library District - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Taxes Intergovernmental Fines and forfeits Investment earnings Miscellaneous Total revenues Budget $ Exhibit C - 15 Variance Over/Under Actual 28,425 408 600 271 320 30,024 $ 28,547 366 688 84 331 30,016 $ 122 (42) 88 (187) 11 (8) Expenditures: Culture and recreation Total expenditures 34,809 34,809 31,401 31,401 3,408 3,408 Deficiency of revenues under expenditures (4,785) (1,385) 3,400 Other financing sources: Transfers in Total other financing sources 9 9 Net change in fund balance Fund balance at beginning of year Fund balance at end of year (4,785) $ 12,399 7,614 101 9 9 (1,376) $ 17,512 16,136 3,409 $ 5,113 8,522 PIMA COUNTY, ARIZONA Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Stadium District - Special Revenue Fund For the Year Ended June 30, 2011 (in thousands) Revenues: Intergovernmental Charges for services Investment earnings Miscellaneous Total revenues Budget $ Exhibit C - 16 Variance Over/Under Actual 1,796 1,538 475 24 44 2,081 4,348 4,348 4,026 4,026 322 322 Deficiency of revenues under expenditures (2,552) (1,945) 607 Other financing sources (uses): Transfers in Transfers (out) Total other financing sources 3,011 (3,009) 2 4,690 (3,015) 1,675 1,679 (6) 1,673 Net change in fund balance (2,550) (270) Expenditures: Culture and recreation Total expenditures Fund balance at beginning of year Fund balance at end of year $ 1,427 309 60 1,860 (690) 102 $ $ 2,378 2,108 $ 111 166 (36) 44 285 2,280 $ 518 2,798 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 seven public parking garages located in downtown Tucson. PIMA COUNTY, ARIZONA Combining Statement of Net Assets Nonmajor Enterprise Funds June 30, 2011 (in thousands) Development Services Assets Current assets: Cash and cash equivalents Interest receivable Due from other funds Due from other governments Accounts receivable Prepaid expense Total current assets 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 $ 3,332 1 1 45 138 77 3,594 Exhibit C - 17 Total Other Enterprise Funds Parking Garages 3,400 6,710 2 7 49 149 77 6,994 1,768 12,927 244 (8,928) 1,768 12,927 1,232 (9,907) 9 9 6,011 6,011 6,020 6,020 3,603 9,411 13,014 Liabilities Current liabilities: Accounts payable Employee compensation Due to other funds Due to other governments Total current liabilities 5 713 17 735 70 8 5 136 219 75 721 22 136 954 Total liabilities 735 219 954 9 2,859 6,011 3,181 6,020 6,040 988 (979) Total assets Net assets Invested in capital assets Unrestricted Total net assets $ $ 2,868 103 $ 3,378 1 6 4 11 9,192 $ $ 12,060 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Year Ended June 30, 2011 (in thousands) Operating revenues: Charges for services Other Development Services $ 5,688 231 Exhibit C - 18 Other Enterprise Funds Parking Garages $ 2,071 $ 7,759 231 Total net operating revenues 5,919 2,071 7,990 Operating expenses: Employee compensation Operating supplies and services Utilities Repair and maintenance General and administrative Consultants and professional services Depreciation Total operating expenses 5,554 19 75 78 1,197 45 48 7,016 325 21 177 114 686 5,879 40 252 192 1,883 45 267 8,558 Operating revenue (loss) 219 1,542 (1,097) 529 (568) Nonoperating revenues: (Loss) on disposal of capital assets Investment earnings Intergovernmental revenue (1) 17 165 16 (1) 33 165 Total nonoperating revenues: 181 16 197 Income/(loss) before transfers (916) 545 (371) Transfers in Transfers (out) 694 (114) Change in net assets (336) Net assets at beginning of year Net assets at end of year 694 (114) 3,204 $ 2,868 104 $ 545 209 8,647 11,851 9,192 $ 12,060 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2011 (in thousands) 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 Exhibit C - 19 Development Services $ 102 5,945 164 (218) (2,582) (4,289) Net cash provided by (used for) operating activities (878) Cash flows from noncapital financing activities: Cash transfers in from other funds Cash transfers out to other funds Loans with other funds Intergovernmental revenue 694 (114) (4) 129 Net cash provided by noncapital financing activities Other Enterprise Funds Parking Garages $ 2,080 $ (1,226) 48 (332) 570 (308) 694 (114) 4 129 8 705 102 8,025 164 (1,444) (2,534) (4,621) 8 713 Cash flows from capital and related financing activities: Purchase of capital assets (13) (13) Net cash used for capital and related financing activities (13) (13) Cash flows from investing activities: Interest on cash and investments 19 17 36 Net cash provided by investing activities 19 17 36 (154) 582 428 2,796 6,282 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year 3,486 Cash and cash equivalents at end of year $ (continued) 105 3,332 $ 3,378 $ 6,710 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2011 (in thousands) Exhibit C - 19.1 (continued) Reconciliation of operating income/(loss) to net cash provided by (used for) operating activities Operating income/(loss) Adjustments to reconcile operating income/(loss) to net cash provided by (used for) operating activities: Development Services $ (1,097) Depreciation and amortization Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Due from other governments Prepaid expenses Increase (decrease) in liabilities: Accounts payable Due to other governments Other current liabilities Parking Garages $ 529 48 Total Other Enterprise Funds $ (568) 219 190 267 (1) 10 189 10 (23) (201) 21 (7) (216) 21 12 (23) (15) 19 Net cash provided by (used for) operating activities $ (878) $ Noncash investing, capital and financing activities during the year ended June 30, 2011: Development Services Enterprise Fund retired capital assets with a book value of $1. 106 570 $ (308) 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 fleet services equipment provided to County departments, as well as to account for the provision of printing, network infrastructure and telecommunication services to County departments. PIMA COUNTY, ARIZONA Combining Statement of Net Assets Internal Service Funds June 30, 2011 (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 $ $ $ 60,219 8 133 1 926 61,287 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 592 77,880 14 1,766 41 166 951 1,026 81,844 614 35,651 (18,301) 592 614 35,811 (18,415) 158 796 796 17,964 17,964 18,760 18,760 62,083 38,521 100,604 154 71 1,487 4,324 3,156 9,192 302 736 7 456 807 1,494 4,324 3,156 10,237 160 (114) 158 Total assets 17,661 6 1,633 41 165 951 100 20,557 Liabilities Current liabilities: Accounts payable Employee compensation 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 19,132 14,183 33,315 Total liabilities 42,507 1,045 43,552 Net assets Invested in capital assets Unrestricted 796 18,780 17,964 19,512 18,760 38,292 Total net assets $ 19,576 107 1,045 19,132 14,183 33,315 $ 37,476 $ 57,052 PIMA COUNTY, ARIZONA Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2011 (in thousands) Operating revenues: Charges for services Other Self Insurance Trust $ 21,085 348 Exhibit C - 21 Total Internal Service Funds Other Internal Service $ 18,398 1,839 $ 39,483 2,187 Total operating revenues 21,433 20,237 41,670 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 1,635 339 14 9,099 2,774 791 93 417 29 15,191 5,312 5,901 995 1,207 1,480 3,642 95 2,717 21,349 6,947 6,240 1,009 9,099 3,981 2,271 3,735 512 2,746 36,540 6,242 (1,112) 5,130 Nonoperating revenues (expenses): Investment earnings (Loss) on disposal of capital assets 444 68 (188) 512 (188) Total nonoperating revenues (expenses): 444 (120) 324 6,686 (1,232) 5,454 Operating income (loss) Income before transfers: Capital contributions Transfers in Transfers out 72 Change in net assets Net assets at beginning of year Net assets at end of year 13 $ (52) 6,758 (1,271) 5,487 12,818 38,747 51,565 19,576 108 13 72 (52) $ 37,476 $ 57,052 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2011 (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 Exhibit C - 22 Self Insurance Trust Other Internal Service Total Internal Service Funds $ $ $ 21,085 362 (4,811) (1,306) (6,682) (886) 18,398 1,746 (12,306) (2,174) (5,210) 454 39,483 2,108 (17,117) (3,480) (6,682) (6,096) Net cash provided by operating activities 7,762 8,216 Cash flows from noncapital financing activities: Cash transfers out to other funds Loans with other funds 72 1,562 (52) (1,630) 20 (68) Net cash provided by (used for) noncapital financing activities 1,634 (1,682) (48) Cash flows from capital and related financing activities: Proceeds from sale of equipment Purchase of capital assets 98 (3,628) 98 (3,628) Net cash used for capital and related financing activities (3,530) (3,530) Cash flows from investing activities: Interest on cash and investments 496 83 579 Net cash provided by investing activities 496 83 579 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ (continued) 109 9,892 (4,675) 5,217 50,327 22,336 72,663 60,219 $ 17,661 $ 77,880 PIMA COUNTY, ARIZONA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2011 (in thousands) Exhibit C - 22.1 (continued) Reconciliation of operating income (loss) to net cash provided by operating activities Self Insurance Trust $ 6,242 Operating income (loss) Other Internal Service $ (1,112) Total Internal Service Funds $ 5,130 Adjustments to reconcile operating income to net cash provided by (used for) 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 29 2,717 14 (363) (572) 1,591 826 (5) Net cash provided by (used for) operating activities $ 7,762 2,746 (165) 72 (567) 35 (151) 72 (567) (328) (628) (1,200) 1,591 826 97 102 $ 454 $ 8,216 Noncash investing, capital and financing activities during the year ended June 30, 2011: Other Internal Service Funds (Fleet Services) received a capital contribution with a value of $9 and sold capital assets with a net book value of $286. Other Internal Services Funds (Telecommunications) received a capital contribution with a value of $4 from General Government. 110 Combining Statements and Other Schedules Fiduciary Funds PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Assets Investment Trust Funds June 30, 2011 (in thousands) Treasurer's Investment Pool Assets Cash and cash equivalents Interest receivable $ 148,731 96 Total Investment Trust Funds Individual Investment Accounts $ 148,827 Total assets Exhibit C - 23 249,449 $ 249,449 398,180 96 398,276 Liabilities Total liabilities Net Assets Held in trust for pool participants $ 148,827 111 $ 249,449 $ 398,276 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Assets Investment Trust Funds For the Year Ended June 30, 2011 (in thousands) Treasurer's Investment Pool Additions Contributions: Participants Total contributions $ Investment earnings: Total investment earnings 2,541,725 2,541,725 Exhibit C - 24 Total Investment Trust Funds Individual Investment Accounts $ 315,022 315,022 $ 2,856,747 2,856,747 971 971 311 311 1,282 1,282 2,542,696 315,333 2,858,029 Deductions Distributions to participants 2,539,013 242,921 2,781,934 Total deductions 2,539,013 242,921 2,781,934 3,683 72,412 76,095 145,144 177,037 322,181 Total additions Net increase Net assets held in trust July 1, 2010 Net assets held in trust June 30, 2011 $ 112 148,827 $ 249,449 $ 398,276 Exhibit C - 25 PIMA COUNTY, ARIZONA Combining Statement of Fiduciary Net Assets Agency Funds June 30, 2011 (in thousands) Treasurer's Clearing Payroll Assets Cash and cash equivalents Due from other governments $ $ $ Total assets 1,971 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 1,971 Other 61,455 Total $ 3,340 3,340 61,455 66,766 818 2,522 42,810 18,645 1,971 43,628 21,167 1,971 $ 1,971 113 $ 63,426 3,340 3,340 $ 61,455 $ 66,766 PIMA COUNTY, ARIZONA Combining Statement of Changes in Fiduciary Net Assets Agency Funds For the Year Ended June 30, 2011 (in thousands) Payroll Clearing Assets Cash and cash equivalents Total assets Balance 06/30/10 $ Liabilities Employee compensation Total liabilities Additions 3,067 3,067 $ 621,043 621,043 Exhibit C - 26 Balance 06/30/11 Deductions $ 622,139 622,139 $ 1,971 1,971 3,067 3,067 621,043 621,043 622,139 622,139 3,007 2,073,719 3,007 2,070,712 3,340 2,074,052 2,073,719 3,340 3,340 Liabilities Due to other governments Deposits and rebates Total liabilities 165 2,842 3,007 1,097,406 976,646 2,074,052 1,096,753 976,966 2,073,719 818 2,522 3,340 Other Assets Cash and cash equivalents Total assets 68,416 68,416 266,309 266,309 273,270 273,270 61,455 61,455 Liabilities Due to other governments Deposits and rebates Total liabilities 51,017 17,399 68,416 183,713 82,596 266,309 191,920 81,350 273,270 42,810 18,645 61,455 74,490 2,969,128 2,969,128 63,426 3,340 66,766 622,139 1,288,673 1,058,316 2,969,128 1,971 43,628 21,167 66,766 Treasurer's Clearing Assets Cash and cash equivalents Due from other governments Total assets Totals - All Agency Funds Assets Cash and cash equivalents Due from other governments Total assets 74,490 2,958,064 3,340 2,961,404 Liabilities Employee compensation Due to other governments Deposits and rebates Total liabilities 3,067 51,182 20,241 74,490 621,043 1,281,119 1,059,242 2,961,404 $ 114 $ $ 1,971 1,971 $ 115 (2) $ $ $ 716,720 29,322 4,171 38,694 3,669 13,217 41,271 847,064 43,339 6,666 52,734 15,748 19,684 55,941 790,674 1,245 3,008 3,669 13,217 (24,744) 440,985 1,216 18,982 15,748 19,684 (4,109) 432,437 596,562 444,590 66,015 406,079 60,050 358,237 380,916 2,926 35,686 5,450 33,752 272,130 29,322 $ 43,339 215,646 2003 $ $ 3,696 4,011 36,254 962,641 6,185 17,456 52,363 842,676 499 88 3,696 4,011 (4,766) 454,690 451,162 41,020 507,951 5,686 17,368 52,363 391,514 2004 Beginning in fiscal year 2005-06 and in 2008-09, all special revenue funds were reclassified and reported from a functional perspective. Primary government Invested in capital assets, net of related debt Restricted for: (2) Facilities, justice, library, tax stabilization and community development (2) Special revenue (2) Highways and streets Debt service Capital projects Worker's compensation Regional Wastewater Reclamation Healthcare Unrestricted Total primary government net assets Business-type activities Invested in capital assets, net of related debt Restricted for: Debt service Capital projects Regional Wastewater Reclamation Healthcare Unrestricted (deficit) Total business-type activities net assets Governmental activities Invested in capital assets, net of related debt Restricted for: Special revenue Highways and streets Debt service Capital projects Healthcare Worker's compensation Unrestricted Total governmental activities net assets 2002 $ $ 11,907 27,027 9,042 3,511 6,319 54,302 1,370,950 59,789 1,199,053 48,379 5,464 53,748 1,495,175 53,384 21,353 8,372 77,088 1,227,387 48,379 5,464 15,284 535,822 3,511 6,319 20,851 488,749 466,257 38,464 959,353 53,384 21,353 7,934 77,088 761,130 438 $ $ 2006 468 457,600 9,042 33,451 882,201 11,439 27,027 59,789 741,453 Fiscal Year 2005 PIMA COUNTY, ARIZONA Net Assets by Component Last Ten Fiscal Years (in thousands) (accrual basis of accounting) 38,628 9,985 57,101 $ 1,571,913 63,014 16,734 9,554 125,947 1,250,950 574 35,480 38,628 9,985 10,845 572,462 476,950 46,256 999,451 63,014 16,734 8,980 90,467 $ 774,000 2007 5,883 9,017 69,327 $ 1,815,529 21,349 45,385 74,424 17,390 14,403 118,847 5,956 13,732 110,175 $ 1,717,367 78,080 71,618 819 14,479 5,883 9,017 34,477 604,393 539,718 34,850 1,211,136 78,080 21,349 44,566 59,945 972,346 1,512,064 $ 2009 1,365,246 791 37,925 5,956 13,732 56,397 597,623 482,822 53,778 1,119,744 71,618 17,390 13,612 80,922 $ 882,424 2008 16,110 19,348 179,880 $ 1,988,455 25,749 13,454 69,562 64,991 1,599,361 13,454 11,623 16,110 15,943 29,914 637,584 550,540 17,161 27,636 198,054 $ 2,148,945 32,906 12,567 84,617 64,446 1,711,558 12,567 24,236 17,161 23,562 33,448 686,499 575,525 164,606 1,462,446 60,381 4,074 57,939 3,405 149,966 1,350,871 64,446 32,906 $ 1,136,033 2011 64,991 25,749 $ 1,048,821 2010 Exhibit D - 1 116 $ $ 7,822 1,037 1,662 196 121,587 5,665 172,779 6,971 1,379 1,787 214 121,934 18,207 185,448 74,816 221,970 8,373 1,346 306,505 802,847 23,917 84,457 31,326 35,033 820 654 15,779 496,342 131,925 132,939 39,492 18,667 10,804 5,339 $ $ 21,542 8,498 4,916 65,494 195,445 7,917 1,254 270,110 750,210 23,120 73,243 27,081 37,565 727 649 14,391 480,100 137,296 123,513 42,515 2003 $ $ 8,772 918 1,709 101 135,119 17,413 207,471 21,422 10,289 11,728 71,804 268,869 9,617 1,377 351,667 876,150 30,165 76,894 32,727 33,093 805 967 15,012 524,483 140,827 151,860 42,133 2004 $ $ 1,797 314 133,113 12,188 217,422 1,643 298 125,121 23,663 210,666 82,701 256,583 14,422 1,479 355,185 1,002,494 165 19,463 647,309 208,293 132,583 70,392 7,258 32,043 103,085 34,510 39,517 $ $ Fiscal Year 9,526 $ $ 2006 26,033 8,136 21,617 4,531 9,693 22,881 6,985 20,549 76,079 249,809 10,857 1,494 338,239 931,474 31,798 96,199 29,663 39,714 849 161 16,152 593,235 194,873 118,412 65,414 2005 * 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. 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 Business-type activities: Regional Wastewater Reclamation Pima Health System & Services Development Services Parking Garages Total business-type activities expenses Total primary government expenses 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 2002 PIMA COUNTY, ARIZONA Changes in Net Assets Last Ten Fiscal Years (in thousands) (accrual basis of accounting) 2,991 698 139,324 15,085 221,307 26,663 9,797 11,732 4,747 10,270 98,222 261,859 15,400 1,579 377,060 1,099,776 168 18,924 722,716 223,266 148,831 92,985 9,623 33,800 97,154 55,482 42,483 2007 3,031 716 144,479 48,672 $ 257,161 25,502 9,550 9,316 5,930 9,965 106,803 295,494 14,750 1,877 418,924 1,196,617 138 22,860 777,693 $ 239,399 165,715 88,488 9,658 36,977 106,546 60,616 47,296 2008 $ $ 2,754 691 131,361 68,535 259,782 26,283 10,386 4,616 4,668 10,488 105,139 224,959 9,992 1,696 341,786 1,070,809 (235) 26,780 729,023 212,196 149,253 79,251 7,434 31,541 115,513 60,520 46,770 2009 $ $ 2,532 749 142,840 65,820 272,907 31,050 10,218 5,317 3,378 11,003 110,618 204,619 7,924 1,906 325,067 1,025,317 428 26,403 700,250 218,504 145,697 68,691 6,669 33,086 87,107 61,642 52,023 2010 $ $ (continued) 2,191 1,024 136,472 65,030 261,579 27,802 9,034 4,891 3,699 11,436 113,495 200,305 6,982 1,538 322,320 1,041,252 (2,626) 26,079 718,932 218,843 146,395 73,348 6,208 36,475 90,521 67,063 56,626 2011 Exhibit D - 2 117 63,909 32,317 96,226 Change in net assets Governmental activities Business-type activities Total primary government $ 390,878 13,954 32,317 905 2,888 3,309 11,261 (13,954) 358,561 237,049 2,495 1,600 76,752 21,093 9,550 5,479 8,157 10,340 Total primary government Business-type activities: State shared tax Investment earnings Miscellaneous Capital contributions Extraordinary item Transfers Total business-type activities 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 (294,652) (294,652) Net (expense) revenue Governmental activities Business-type activities Total governmental activities net expense 63,601 179,322 7,754 1,454 6,505 258,636 444,084 $ 2002 Program revenues Business-type activities: Charges for services Regional Wastewater Reclamation 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 (continued) $ $ 44,311 12,079 56,390 404,174 959 1,727 5,828 12,479 (2,673) 17,980 36,300 85,496 13,705 99,201 442,561 13,196 40,053 1,146 747 2,750 22,214 (13,196) 402,508 (7,447) (17,980) 367,874 (317,012) (26,348) (343,360) 325,319 532,790 82,432 224,820 11,830 1,460 4,777 272,507 2,745 1,709 83,202 23,413 3,201 6,321 3,102 14,063 5,441 $ $ 2004 251,844 2,557 1,597 78,504 21,904 9,216 7,052 5,064 12,774 2,789 (323,563) (24,221) (347,784) 282,284 455,063 71,626 195,872 8,464 1,413 4,909 2003 $ $ 70,711 43,971 114,682 477,704 (1,935) 24,424 1,163 1,609 2,865 20,722 1,935 453,280 294,643 2,822 1,819 91,510 23,630 7,571 6,771 6,140 16,254 185 (382,569) 19,547 (363,022) 357,786 568,452 92,379 244,932 14,730 1,507 4,238 2005 $ $ 63,863 47,073 110,936 513,688 134 19,938 3,849 1,348 14,607 (134) 493,750 316,170 6,856 1,808 103,158 25,894 7,975 5,683 12,942 12,828 247 323 (429,887) 27,135 (402,752) $ $ Fiscal Year 104,501 253,748 17,140 1,485 4,997 449 382,320 599,742 2006 PIMA COUNTY, ARIZONA Changes in Net Assets Last Ten Fiscal Years (in thousands) (accrual basis of accounting) 39,804 36,640 76,444 572,741 (721) 31,528 5,510 1,522 25,217 721 541,213 343,525 8,715 1,884 106,985 26,967 9,468 5,149 16,439 16,309 5,051 (501,409) 5,112 (496,297) 106,266 257,142 11,239 1,548 5,174 803 382,172 603,479 2007 $ $ 43,711 25,868 69,579 572,137 (113) 7,894 6,721 1,286 113 564,243 377,810 8,176 1,952 103,171 27,166 7,748 6,365 16,326 15,416 (520,532) 17,974 (502,558) 106,448 291,980 8,992 1,720 4,806 22,952 436,898 694,059 2008 $ $ 91,392 6,770 98,162 561,047 (4,005) 414 2,025 2,394 4,005 560,633 1,140 393,255 6,591 1,534 89,177 25,869 5,741 6,123 5,875 21,323 (469,241) 6,356 (462,885) 105,162 216,108 5,654 1,676 4,626 14,916 348,142 607,924 2009 $ $ 139,735 33,191 172,926 570,659 (538) 3,582 1,236 2,884 538 567,077 416,501 5,688 1,515 84,767 24,203 4,081 7,940 5,266 16,579 (427,343) 29,609 (397,734) 127,889 205,176 5,886 1,985 4,421 9,319 354,676 627,583 2010 $ $ 111,575 48,915 160,490 567,859 (4,650) (1,069) 900 2,681 4,650 568,928 416,985 5,591 1,538 88,631 23,173 4,527 8,125 2,153 13,555 (457,353) 49,984 (407,369) 148,010 207,652 5,688 2,071 4,691 4,192 372,304 633,883 2011 Exhibit D - 2 118 $ $ 131,847 82,793 46,985 116,661 42,312 61,134 33,548 2,549 30,999 6,742 $ $ 8,542 31,142 2,486 28,656 2003 $ $ 150,198 97,270 45,325 7,603 32,696 7,068 25,628 2004 $ $ 214,780 147,650 54,384 12,746 37,227 4,056 33,171 Fiscal Year 2005 $ $ 162,423 84,472 66,167 11,784 51,575 5,152 46,423 2006 $ $ 173,100 89,328 69,773 13,999 57,560 8,889 48,671 2007 $ $ 247,188 152,643 77,451 17,094 70,389 5,415 64,974 2008 *Due to implementation of GASB 54 in FY 2010 catagories regarding fund balances have been redefined. See Note 1 pages 47-48 for further explanation of categories. See Note 2 page 53 for purpose details. All other governmental funds Reserved Unreserved, reported in: Special revenue funds Nonspendable* Restricted Committed Assigned Unassigned Capital projects funds Nonspendable* Restricted Committed Assigned Unassigned Debt Service Assigned Total other governmental funds General Fund Reserved Unreserved Nonspendable* Restricted Committed Assigned Unassigned Total general fund 2002 PIMA COUNTY, ARIZONA Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts in thousands) (modified accrual basis of accounting) $ $ 252,081 126,821 86,121 39,139 40,166 4,363 35,803 2009 $ $ (791) 35,903 284,175 12 112,668 6,639 18 124,830 1,487 52 (227) 40,868 264,729 357 73,547 77,555 3,315 336 2,011 94,567 37,978 4,368 (9,180) $ $ 2011 2,011 82,957 15,305 3,221 (5,793) 3,093 73,837 81,541 4,089 522 2010 Exhibit D - 3 119 Debt service as a percentage of noncapital expenditures Net change in fund balances Extraordinary item Change in reserves - net Total other financing sources (uses) Proceeds-refunding bonds Issuance cost on bonds Premium on bonds Payments to refund escrow agents Capital leases Proceeds from sale of capital assets Face amount of long-term debt Transfers in Transfers (out) Other financing sources (uses): Excess (deficiency) of revenues over (under) expenditures Total expenditures 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 revenues Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Miscellaneous Revenues $ $ 10.26% 35,964 50 70,271 81,921 52,753 (65,658) 796 (22,551) 590 22,420 (34,357) 597,146 11.56% 17,592 (6,237) 629 70,321 177 37 85,000 78,457 (93,597) (163) 410 (47,121) 613,260 24,029 84,238 25,214 35,057 97,147 45,544 15,695 24 23,102 73,136 25,581 37,524 109,670 37,342 14,128 391 566,139 258,375 1,023 6,087 245,378 35,721 5,047 4,152 10,356 132,416 127,155 26,741 $ $ 2003 125,416 123,021 27,835 562,789 244,807 598 6,077 260,218 31,112 4,882 6,952 8,143 2002 $ $ 11.53% 17,499 (366) 44,255 406 65,000 68,583 (89,916) 148 (6,846) 6,880 (26,390) 649,302 30,322 76,725 27,141 32,146 103,167 49,025 14,851 161 140,319 146,275 29,170 622,912 279,527 505 6,566 273,225 43,505 5,010 2,656 11,918 2004 $ $ 9.87% 69,113 385 119,523 27 116,200 50,008 (46,962) 250 (50,795) 717,212 30,802 96,996 23,172 38,098 127,632 42,891 16,127 25 193,308 109,798 38,363 666,417 300,972 244 7,265 278,414 53,568 5,967 5,181 14,806 2005 $ $ 10.90% (38,009) (177) 9,168 231 416 4,836 59,948 (56,263) (47,000) 761,343 203,881 121,229 39,394 6,271 30,038 103,034 28,561 37,918 121,007 50,547 19,448 15 714,343 $ $ Fiscal Year 321,474 215 7,452 291,059 63,582 6,014 11,382 13,165 2006 9.88% 16,368 (211) 148,576 1,426 146,320 86,089 (86,688) 1,429 (131,997) 893,332 222,434 132,930 42,683 6,766 32,311 97,168 45,197 38,474 202,659 53,733 18,965 12 761,335 348,700 521 7,132 303,392 63,508 6,550 13,988 17,544 2007 PIMA COUNTY, ARIZONA Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts in thousands) (modified accrual basis of accounting) $ $ 10.48% 86,917 (55) 178,017 312 27 175,000 128,406 (127,692) 1,964 (91,045) 895,147 237,640 149,475 43,741 8,310 34,352 106,607 50,509 42,286 139,539 59,719 22,639 330 804,102 381,862 556 7,710 312,634 58,890 6,480 14,218 21,752 2008 $ $ 15.89% (25,330) (55) 115,818 876 109,400 171,186 (166,319) 675 (141,093) 926,378 222,309 144,617 38,132 6,666 31,626 115,481 51,657 42,299 146,334 100,384 26,849 24 785,285 396,241 441 6,989 292,236 55,346 6,283 5,335 22,414 2009 $ $ 15.31% 54,478 128,066 1,118 125,000 98,800 (98,355) 1,909 (32,361) 31,955 (73,588) 892,235 221,144 136,744 34,274 5,637 32,737 87,089 50,198 48,402 162,306 87,307 26,414 433 818,647 423,443 536 7,791 296,004 60,376 8,443 4,612 17,442 2010 $ $ 13.54% 15,460 70 83,043 59 75,000 109,715 (105,007) 3,276 (67,653) 883,481 223,611 136,709 34,614 5,375 36,511 90,572 49,986 50,432 153,203 76,361 26,086 21 815,828 421,623 330 8,494 308,219 54,491 6,786 1,723 14,162 2011 Exhibit D - 4 (This page is intentionally left blank) 120 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. 121 2,709,068 2,955,066 3,265,040 3,615,603 4,076,600 4,689,972 5,352,916 5,853,947 5,889,572 5,332,608 $ 263,270 281,243 302,323 323,147 359,662 428,486 493,055 525,779 536,958 500,836 $ 18,348 21,508 21,595 27,920 29,803 30,802 35,442 37,783 39,797 39,803 $ 4,669,335 5,022,474 5,412,550 5,849,549 6,467,202 7,353,331 8,239,672 8,985,712 8,939,647 8,310,120 5.4998 5.4981 5.4967 5.4611 5.3406 5.0674 4.6702 4.5917 4.6798 4.8491 Total Direct Tax Rate $ 39,908,791 42,927,737 46,754,009 50,631,267 56,437,790 64,347,659 73,122,499 80,593,121 82,348,215 78,036,208 Estimated Limited Value 11.70% 11.70% 11.58% 11.55% 11.46% 11.43% 11.27% 11.15% 10.86% 10.65% Assessed Value as a Percentage of Limited Value 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. $ Other Taxable Assessed Value Notes: 1,678,649 1,764,657 1,823,592 1,882,879 2,001,137 2,204,072 2,358,259 2,568,203 2,473,320 2,436,692 Vacant Land Pima County Assessor's Office. $ Residential Property Exhibit D - 5 Source: 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Tax Year Commercial Property PIMA COUNTY, ARIZONA Taxable Assessed Value and Estimated Actual Value of Property Last Ten Tax Years (amounts in thousands) 122 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1.1202 1.1569 1.1847 1.2364 1.2257 1.1321 0.9601 0.9344 0.9550 1.1621 0.2706 0.2513 0.2383 0.2383 0.2383 0.2258 0.2143 0.2035 0.1999 2.6603 0.1300 0.1200 0.1200 0.1200 0.1200 0.1000 0.1000 0.1000 0.1000 0.1000 10.4000 10.4000 12.9000 12.9000 12.9000 12.9000 19.3500 19.3500 19.3500 19.3500 Flowing Wells Irrigation District (2) 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 3.0000 Silverbell Irrigation District (2) 4.0720 4.0720 4.0720 4.0720 3.8420 3.6020 3.3913 3.3133 3.3133 3.4178 County Primary 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. (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. 1.5333 1.4884 1.3428 1.3114 1.2515 1.1845 1.1355 1.0770 1.0848 1.1094 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 Tax Year 0.4889 0.4717 0.4560 0.4358 0.0000 0.0000 0.0000 0.3306 0.3564 0.4259 State Community of Education College Arizona Assistance District Central AZ City City Water of of South Conserv Tucson Tucson District 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Tax Year 24.7500 50.0000 60.0000 60.0000 60.0000 65.0000 66.0000 66.0000 66.0000 66.0000 CortaroMarana Irrigation District (2) 0.8150 0.8150 0.8150 0.7150 0.7150 0.6850 0.6050 0.7100 0.7500 0.7800 County Secondary 0.2124 0.2124 0.2124 0.2575 0.3675 0.3975 0.3393 0.2643 0.3100 0.3460 County Library District 0.5000 Mobile Home Relocation District (3) 0.1438 Town of Casas Adobes Incorporation Costs Overlapping Rates 0.3546 0.3546 0.3546 0.3746 0.3746 0.3446 0.2935 0.2635 0.2635 0.2635 Flood Control District (1) County Direct Rates 0.2313 Town of Tortolita Incorporation Costs 0.0458 0.0441 0.0427 0.0420 0.0415 0.0383 0.0411 0.0406 0.0430 0.0418 Fire District Assistance 5.4998 5.4981 5.4967 5.4611 5.3406 5.0674 4.6702 4.5917 4.6798 4.8491 Total 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 2.8000 0.3000 0.3000 0.3000 0.3000 0.3000 0.3000 Gladden Farms Vanderbilt Farms Community Community Facilities Facilities District District PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates Last Ten Tax Years (per $100 of assessed value) 3.3000 3.3000 3.3000 3.3000 3.3000 Quail Creek Community Facilities District 0.3000 0.3000 0.3000 0.3000 Gladden Farms Saguaro Springs Phase II Community Community Facilities Facilities District District Exhibit D - 6 123 7.0956 7.2295 9.1329 Catalina Foothills Unified (#16) Vail Elementary (#20) Sahuarita Unified (#30) 6.3035 2.0296 Altar Valley Elementary (#51) Unorganized* 1.9583 6.3615 5.6853 1.8931 6.2759 3.9915 2.2216 6.1171 8.3095 7.0008 6.6459 4.4316 8.1495 6.7510 6.8422 4.4994 5.7985 1.8090 6.2607 4.8856 2.1532 1.7394 5.7696 4.8853 2.0682 8.4864 3.7481 7.7345 6.7032 6.7428 4.4929 5.4806 9.1529 6.1193 6.8677 5.9117 7.3857 2006 *County Education District; applies only to those geographical areas within Pima County not part of formal school districting. 6.4230 Redington Elementary (#44) Indian Oasis Unified (#40) 2.3198 6.4699 9.0113 7.1748 7.0256 5.3016 5.6661 8.6482 2.4398 4.1555 Ajo Unified (#15) 7.1785 8.4846 6.4258 Continental Elementary (#39) 6.6818 Tanque Verde Unified (#13) 9.1041 6.3375 7.1232 8.0930 9.6945 Sunnyside Unified (#12) 6.7601 6.5883 6.0991 6.6965 7.0207 Amphitheater Unified (#10) 6.6568 6.5034 7.8829 2005 Empire Elementary (#37) 7.2175 Flowing Wells Unified (#8) 6.7979 8.3286 2004 3.7121 7.3623 Marana Unified (#6) 8.7610 2003 San Fernando Elementary (#35) 9.2780 2002 Tucson Unified (#1) School District 1.6020 5.8086 4.8952 1.8970 7.5703 3.7900 6.1807 6.0327 6.3942 4.8627 5.1033 8.1490 5.4964 6.5674 5.7887 7.0500 2007 1.4622 5.7451 7.4720 1.7343 4.9021 3.7920 5.9176 5.5360 6.1053 4.5964 4.3682 7.8009 4.8589 6.2665 5.4815 6.5659 2008 PIMA COUNTY, ARIZONA Direct and Overlapping Property Tax Rates - School Districts Last Ten Tax Years (per $100 of assessed value) 1.3726 6.0506 7.6340 1.6122 2.9383 4.5954 5.4230 5.2016 4.9970 4.3158 3.1837 7.0899 4.6112 6.1239 4.9286 6.0701 2009 1.4797 6.2500 7.0689 1.6945 2.9195 3.6883 6.5753 4.8839 4.2154 4.9069 3.3545 6.9680 5.0511 6.0407 4.6995 6.2976 2010 1.7682 6.5675 6.7630 2.0258 2.7531 4.8541 5.4067 4.6550 4.2095 5.6740 3.8042 6.9415 5.4033 5.9689 5.2047 6.9480 2011 Exhibit D - 6a 124 13,349 16,703 13,898 Raytheon Westin La Paloma El Conquistador Hotel $ 405,622 9 8 10 4 7 5 2 3 6 1 Rank 8.4% 0.0% 0.3% 0.3% 0.3% 0.5% 0.3% 0.0% 0.0% 0.0% 0.4% 0.0% 1.7% 0.0% 1.0% 0.3% 2.6% Percent of Total Assessed Value (1) Secondary Assessed Valuation for tax year $4,835,561 Sources: Arizona Department of Revenue, Pima County Assessor's Office. Total Top Ten 0 27,736 ASARCO Mining HDP Northwest 18,213 0 Starr Pass Resort Developments LLC Arizona Portland Cement 0 0 18,733 0 87,757 Northwest Hospital LLC Target Corporation DND Neffson Co. (Tucson Mall) Trico Electric Co-Op Inc. QWEST Corporation 0 53,668 Southwest Gas Corporation ASARCO LLC 18,250 $ 137,315 Phelps Dodge Corporation Unisource/Tucson Electric Power Co. Taxpayer Estimated Assessed Value (1) 2002 $ 395,381 0 14,461 16,057 13,290 0 19,990 0 0 0 18,703 11,467 108,829 0 55,710 14,375 $ 122,499 Estimated Assessed Value (1) 7 6 9 4 5 10 2 3 8 1 Rank 2003 $5,221,271 7.7% 0.0% 0.3% 0.3% 0.2% 0.0% 0.4% 0.0% 0.0% 0.0% 0.3% 0.2% 1.9% 0.0% 1.0% 0.3% 2.2% Percent of Total Assessed Value $ 403,397 0 14,655 15,943 13,895 0 21,296 0 0 0 19,364 12,925 104,944 0 59,528 15,250 $ 125,597 Estimated Assessed Value (1) 8 6 9 4 5 10 2 3 7 1 Rank 2004 $5,620,156 7.2% 0.0% 0.3% 0.4% 0.3% 0.0% 0.5% 0.0% 0.0% 0.0% 0.5% 0.3% 2.5% 0.0% 1.4% 0.4% 3.0% Percent of Total Assessed Value PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Tax Years (amounts in thousands) $ 440,208 14,708 13,653 16,358 16,069 0 22,459 0 0 0 22,377 0 104,468 0 62,970 21,209 $ 145,937 Estimated Assessed Value (1) 9 10 7 8 4 5 2 3 6 1 Rank 2005 $6,050,950 7.3% 0.2% 0.2% 0.2% 0.2% 0.0% 0.3% 0.0% 0.0% 0.0% 0.3% 0.0% 1.5% 0.0% 0.9% 0.3% 2.1% Percent of Total Assessed Value $ 459,465 0 0 15,504 21,665 0 22,858 17,068 0 0 19,087 14,806 87,093 0 62,846 55,176 $ 143,362 Estimated Assessed Value (1) 9 6 5 8 7 10 2 3 4 1 Rank 2006 (continued) $6,869,955 6.7% 0.0% 0.0% 0.2% 0.3% 0.0% 0.3% 0.2% 0.0% 0.0% 0.2% 0.2% 1.1% 0.0% 0.8% 0.7% 1.7% Percent of Total Assessed Value Exhibit D - 7 125 Taxpayer 19,897 DND Neffson Co. (Tucson Mall) 9 5 6 10 7 8 2 4 3 1 Rank 2007 6.6% 0.0% 0.0% 0.2% 0.6% 0.0% 0.2% 0.2% 0.0% 0.0% 0.2% 0.2% 1.0% 0.0% 0.7% 1.0% 1.6% Percent of Total Assessed Value (1) Secondary Assessed Valuation for Tax Year $8,220,396 Sources: Arizona Department of Revenue, Pima County Assessor's Office. $ 553,281 0 HDP Northwest Total Top Ten 0 15,959 Westin La Paloma El Conquistador Hotel 58,987 Raytheon 0 23,468 Arizona Portland Cement ASARCO Mining 15,280 0 Starr Pass Resort Developments LLC Northwest Hospital LLC 0 18,044 Trico Electric Co-Op Inc. Target Corporation 94,300 QWEST Corporation 0 62,919 Southwest Gas Corporation ASARCO LLC 93,656 $ 150,771 Estimated Assessed Value (1) Phelps Dodge Corporation Unisource/Tucson Electric Power Co. (continued) $ $ 618,100 0 0 0 33,833 44,047 23,593 15,889 0 0 21,013 18,816 87,000 0 63,698 156,780 153,431 Estimated Assessed Value (1) 6 5 7 10 8 9 3 4 1 2 Rank 2008 $9,594,862 6.5% 0.0% 0.0% 0.0% 0.3% 0.4% 0.2% 0.2% 0.0% 0.0% 0.2% 0.2% 0.9% 0.0% 0.6% 1.6% 1.6% Percent of Total Assessed Value $ $ 667,355 0 0 0 0 63,572 27,561 19,384 0 0 18,888 21,029 74,646 20,042 64,775 198,694 158,764 Estimated Assessed Value (1) 5 6 9 10 7 3 8 4 1 2 Rank 2009 $9,860,981 6.8% 0.0% 0.0% 0.0% 0.0% 0.6% 0.3% 0.2% 0.0% 0.0% 0.2% 0.2% 0.8% 0.2% 0.7% 2.0% 1.6% Percent of Total Assessed Value PIMA COUNTY, ARIZONA Principal Property Taxpayers Last Ten Tax Years (amounts in thousands) $ 492,722 0 0 0 0 0 16,635 16,582 17,097 0 17,715 21,208 55,076 28,878 65,879 89,289 $ 164,363 Estimated Assessed Value (1) 9 10 8 7 6 4 5 3 2 1 Rank 2010 $9,342,561 5.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.0% 0.2% 0.2% 0.6% 0.3% 0.7% 1.0% 1.8% Percent of Total Assessed Value $ 532,828 0 0 0 0 0 0 16,153 17,390 17,519 17,931 21,217 51,942 58,585 64,533 99,048 $ 168,510 Estimated Assessed Value (1) 10 9 8 7 6 5 4 3 2 1 Rank 2011 $8,448,282 6.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 0.2% 0.2% 0.2% 0.3% 0.6% 0.7% 0.8% 1.2% 2.0% Percent of Total Assessed Value Exhibit D - 7 126 Amount 218,192 231,619 250,929 271,841 292,019 318,520 348,741 363,624 384,983 383,978 Amounts collected are on a cash basis rather than the modified accrual basis used in the financial statements. $ Percent of Original Levy 95.50% 95.94% 96.30% 96.68% 96.65% 96.45% 96.20% 95.77% 95.75% 95.39% (2) Real Property Tax Levy (Adjusted) $ 227,454 240,403 259,583 280,678 301,836 329,918 361,913 379,314 401,975 402,166 Represents the difference between the adjusted levy and collected to June 30, 2011. Tax Roll Corrections $ (1,023) (1,013) (987) (494) (291) (322) (622) (360) (87) (366) (1) NOTES: Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Original Real Property Tax Levy $ 228,477 241,416 260,570 281,172 302,127 330,240 362,535 379,674 402,062 402,532 Collected to June 30, End of Tax Fiscal Year (2) Collections in Subsequent Years $ 8,986 8,666 8,635 8,667 9,756 11,298 12,946 15,046 15,877 PIMA COUNTY, ARIZONA Real Property Tax Levies and Collections Last Ten Fiscal Years (in thousands) $ Amount 227,178 240,285 259,564 280,507 301,776 329,818 361,687 378,670 400,860 383,978 Percent of Adjusted Levy 99.88% 99.95% 99.99% 99.94% 99.98% 99.97% 99.94% 99.83% 99.72% 95.48% Collected to June 30, 2011 (2) Delinquent Taxes Receivable (1) $ 276 118 19 171 60 100 226 644 1,115 18,188 Exhibit D - 8 PIMA COUNTY, ARIZONA Exhibit D - 9 Assessed, Limited and Full Cash (Secondary) Value of Taxable Property Last Ten Fiscal Years (in thousands) Fiscal Year 2001-02 Primary 2001-02 Secondary Limited and Full Cash Values (1) Net Assessed Value $ 4,361,493 4,491,395 $ Ratio of Net Assessed to Full Cash Value 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% 2005-06 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% 2007-08 Primary 2007-08 Secondary 7,353,331 8,220,396 64,347,659 72,101,321 11.43% 11.40% 2008-09 Primary 2008-09 Secondary 8,230,967 9,594,862 73,122,499 85,993,246 11.26% 11.16% 2009-10 Primary 2009-10 Secondary 8,985,712 9,860,981 80,593,121 88,095,754 11.15% 11.19% 2010-11 Primary 2010-11 Secondary 8,939,647 9,342,561 82,348,221 86,228,902 10.86% 10.83% (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. 127 PIMA COUNTY, ARIZONA Comparative Net Valuations and Tax Rate (per $100 assessed value) (valuation $ amounts in thousands) Jurisdiction State of Arizona FY 2010-11 (Tax Year 2010) Valuation Rate $ 8,939,647 $0.0000 Pima County General Fund - Primary Debt Service - Secondary Free Library - Secondary Exhibit D - 10 FY 2011-12 (Tax Year 2011) Valuation Rate $ 8,310,120 $0.0000 8,939,647 9,342,561 9,342,561 3.3133 0.7500 0.3100 8,310,120 8,448,282 8,448,282 3.4178 0.7800 0.3460 8,939,647 9,342,561 3.3133 1.0600 4.3733 8,310,120 8,448,282 3.4178 1.1260 4.5438 Education Assistance 8,939,647 0.3564 8,310,120 0.4259 Flood Control District - Secondary 8,529,150 0.2635 7,634,237 0.2635 Fire District Assistance - Secondary 9,345,594 0.0430 8,481,951 0.0418 Pima Community College District Primary Secondary T otal 8,939,647 9,342,561 0.9755 0.1093 1.0848 8,310,120 8,448,282 1.0846 0.0248 1.1094 9,342,561 0.1000 8,448,282 0.1000 3,667,566 3,914,105 0.3289 0.6261 0.9550 3,422,619 3,487,960 0.4297 0.7324 1.1621 25,107 0.1999 23,614 24,688 0.2265 2.4338 2.6603 15,711 1.4797 16,801 1.7682 3,632,596 3,809,571 5.0489 1.2487 6.2976 3,313,108 3,388,423 5.4701 1.4779 6.9480 Total County - Primary Total County - Secondary Grand Total Central Arizona Water Conservation District Secondary Cities & Towns City of Tucson Primary Secondary T otal City of South Tucson Primary Secondary T otal School Districts Unorganized - Primary Tucson Unified (District #1) Primary Secondary T otal (continued) 128 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 T otal FY 2010-11 (Tax Year 2010) Valuation Rate $ 852,820 890,671 $ 3.0360 1.6635 4.6995 FY 2011-12 (Tax Year 2011) Valuation Rate $ 780,413 794,566 $ 3.5510 1.6537 5.2047 Flowing Wells Unified (District #8) Primary Secondary T otal 218,438 233,154 3.8837 2.1570 6.0407 205,273 212,616 3.4062 2.5627 5.9689 Amphitheater Unified (District #10) Primary Secondary T otal 1,613,751 1,695,333 3.6518 1.3993 5.0511 1,517,536 1,549,557 3.9571 1.4462 5.4033 Sunnyside Unified (District #12) Primary Secondary T otal 489,883 512,628 3.9944 2.9736 6.9680 439,615 455,198 3.7893 3.1522 6.9415 Tanque Verde Unified (District #13) Primary Secondary T otal 220,027 227,156 2.3744 0.9801 3.3545 198,984 200,702 2.7218 1.0824 3.8042 19,941 20,821 4.9069 0.0000 4.9069 19,368 19,839 5.6740 0.0000 5.6740 Catalina Foothills Unified (District #16) Primary Secondary T otal 679,717 697,492 2.7180 1.4974 4.2154 623,029 629,511 2.6674 1.5421 4.2095 Vail Elementary (District #20) Primary Secondary T otal 486,043 507,007 3.1463 1.7376 4.8839 461,391 471,045 3.3502 1.3048 4.6550 Ajo Unified (District #15) Primary Secondary T otal (continued) 129 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 2010-11 (Tax Year 2010) Valuation Rate $ 304,949 309,567 $ 3.1373 3.4380 6.5753 FY 2011-12 (Tax Year 2011) Valuation Rate $ 315,986 319,085 $ 3.4833 1.9234 5.4067 San Fernando Elementary (District #35) Primary Secondary Total 1,525 1,887 3.6883 0.0000 3.6883 1,211 1,508 4.8541 0.0000 4.8541 Empire Elementary (District #37) Primary Secondary Total 7,381 7,988 2.9195 0.0000 2.9195 7,636 7,992 2.7531 0.0000 2.7531 355,497 365,271 1.4797 0.2148 1.6945 334,446 338,328 1.7682 0.2576 2.0258 Indian Oasis Unified (District #40) Primary Secondary Total 1,039 1,040 0.0000 0.0000 0.0000 1,060 1,060 0.0000 0.0000 0.0000 Redington Elementary (District #44) Primary Secondary Total 1,556 1,598 7.0689 0.0000 7.0689 1,417 1,433 6.7630 0.0000 6.7630 37,918 41,025 5.2001 1.0499 6.2500 36,367 37,661 5.3985 1.1690 6.5675 Continental Elementary (District #39) Primary Secondary Total Altar Valley Elementary (District #51)* Primary Secondary Total *Formerly known as the Mary E. Dill School District 130 PIMA COUNTY, ARIZONA Historical Collections - Hotel Excise Tax Car Rental Surcharges and Recreational Vehicle Tax Last Ten Fiscal Years (amounts in thousands) Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Car Rental Surcharges (2) Hotel Excise Tax (1) $ 2,495 2,536 2,717 2,885 5,212 7,796 6,901 5,628 5,637 5,887 $ 1,377 1,436 1,277 1,595 1,589 1,357 1,732 1,389 1,521 1,538 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 131 Exhibit D - 11 190 195 209 200 214 210 222 159 181 165 PIMA COUNTY, ARIZONA Streets and Highways Revenues Last Ten Fiscal Years (amounts in thousands) Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Total Amount $ Exhibit D - 12 Highway User Revenue 47,071 48,072 51,334 53,878 56,937 58,638 57,847 53,907 50,535 50,460 $ 41,756 43,292 44,607 44,060 41,210 38,739 38,974 Vehicle License Tax $ 12,122 13,645 14,031 13,787 12,697 11,796 11,486 Note: Beginning with fiscal year 2004-05 this schedule identifies the Highway User Revenue and Vehicle License Tax individually Source: Pima County Finance and Risk Management Department 132 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. Eight 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. 133 183,381 200,554 232,553 267,927 231,918 290,150 349,542 388,032 420,261 455,856 Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 $ 5,348 4,585 3,805 3,010 2,230 1,470 725 725 Flood Control Bonds Note: $ 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Fiscal Year 79,206 105,541 95,461 137,736 127,000 136,541 149,801 139,683 142,226 131,375 Transportation Revenue Bonds 825 495 $ 440,959 483,463 515,686 584,227 530,644 664,089 845,872 878,680 1,058,962 1,035,070 Total Primary Government $ Lease Revenue Bonds $ $ 21,991,000 22,973,000 23,965,000 26,302,000 28,421,000 30,899,000 33,009,000 32,898,000 34,974,000 36,263,000 Personal Income 2,506 2,121 1,736 1,093 911 Special Assessment Bonds $ 2.01% 2.10% 2.15% 2.22% 1.87% 2.15% 2.56% 2.67% 3.03% 2.85% Percentage of Personal Income 31,731 81,612 74,554 72,638 48,235 3,045 1,560 Certificates of Participation $ 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 1,048,796 1,070,723 1,092,369 Population at July 1 (a) 5,100 4,060 3,020 1,943 5,739 3,714 1,000 Transportation Loans Details regarding outstanding debt can be found in Note 7 page 63 in Notes to the Financial Statements. (a) See schedule D-20 for population data. $ General Obligation Bonds Governmental Activities $ $ 495 532 557 619 552 661 824 838 989 948 Debt per Capita 32,596 31,049 29,323 27,879 26,426 24,736 23,223 21,327 19,387 17,775 Capital Leases $ 67,811 63,098 60,064 55,809 51,710 94,356 163,701 183,389 166,935 184,782 Sewer Revenue Bonds $ 165,000 165,000 $ 57,456 63,551 83,941 83,978 80,148 76,111 70,426 64,489 66,210 27,390 Regional Wastewater Loans Payable $ 3,685 6,849 5,783 4,852 4,562 5,280 5,842 6,481 6,305 4,657 $ 440,959 483,463 515,686 584,227 530,644 664,089 845,872 878,680 1,058,962 1,035,070 Total Primary Government Exhibit D - 13 Contracts and Notes Business-Type Activities Sewer Revenue Obligations PIMA COUNTY, ARIZONA Ratios of Outstanding Debt by Type to Personal Income and Per Capita Last Ten Fiscal Years ($ amounts in thousands) 134 183,381 200,554 232,553 267,927 231,918 290,150 349,542 388,032 420,261 455,856 Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 $ 5,348 4,585 3,805 3,010 2,230 1,470 725 725 $ 4,883 2,226 2,648 8,899 5,571 7,431 10,241 10,523 11,396 27,904 Debt Service Funds Available for Principal $ 183,846 202,913 233,710 262,038 228,577 284,189 340,026 378,234 408,865 427,952 Net General Bond Debt $ 4,491,395 4,835,561 5,221,271 5,620,156 6,050,950 6,869,955 8,220,396 9,594,862 9,860,981 9,342,561 Secondary Net Assessed Value Note: Details regarding outstanding debt can be found in Note 7 on page 63 in Notes to the Financial Statements. * The Debt per Capita is shown in actual dollars and not in thousands. $ General Obligation Bond Debt Flood Control General Obligation Bond Debt 4.09% 4.20% 4.48% 4.66% 3.78% 4.14% 4.14% 3.94% 4.15% 4.58% Percent Net General Bond Debt to Assessed Value 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) 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 1,048,796 1,070,723 1,092,369 Population at July 1 $ 206 223 252 278 238 283 331 361 382 391 Net General Bond Debt per Capita* Exhibit D - 14 135 1,134,289 1,129,103 1,091,892 1,185,435 1,146,388 1,107,662 1,137,114 1,213,050 1,302,802 1,335,431 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 $ 4,491,395 4,835,561 5,221,271 5,620,156 6,050,950 6,869,955 8,220,396 9,594,862 9,860,981 9,342,561 Secondary Net Assessed Value Note: 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 1,048,796 1,070,723 1,092,369 Population at July 1 $ 1,274 1,243 1,179 1,256 1,192 1,103 1,108 1,157 1,217 1,222 Debt per Capita* 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 businesses therein. However, this does not imply that every taxpayer is a resident and is responsible for the repayment of debt of each overlapping government. 25.25% 23.35% 20.91% 21.09% 18.95% 16.12% 13.83% 12.64% 13.21% 14.29% Percentage of Assessed Value * The Debt per Capita is shown in actual dollars and not in thousands. $ Total Overlapping Debt Fiscal Year PIMA COUNTY, ARIZONA Ratio of Direct and Overlapping Debt to Property Values and Per Capita Last Ten Fiscal Years ($ amounts in thousands) Exhibit D - 14a PIMA COUNTY, ARIZONA Computation of Direct and Overlapping Governmental Activities Debt Outstanding At June 30, 2011 ($ amounts in thousands) Debt Outstanding Governmental Unit Debt repaid with property tax School Districts $ 632,544 Pima Community College City of Tucson $ Amount Overlapping $ 632,544 8,715 8,715 238,316 238,316 Total overlapping Debt repaid with property tax Direct: Pima County * Exhibit D - 15 455,856 Total direct $ 879,575 $ 455,856 $ 455,856 $ 48,235 Other Debt: Certificates of participation Jail capital lease Transportation bonds $ 48,235 17,775 17,775 131,375 131,375 Total other debt $ 197,385 Total direct and overlapping debt $ 1,532,816 *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 is responsible for the repayment of debt of each overlapping government. 136 137 26.45% 27.30% 527,285 $ $ 29.30% 553,734 229,457 (2,648) 232,105 783,191 5,221,271 2004 $ $ 30.65% 584,652 258,371 (8,899) 267,270 843,023 5,620,156 2005 See Notes to the Financial Statements (Note 7 page 70) for calculation of the legal debt margin for the current year. Total net debt applicable to the limit as a percentage of debt limit. 495,522 Legal debt margin 198,049 (2,226) (4,883) 725,334 4,835,561 200,275 $ $ 2003 183,070 673,709 4,491,395 178,187 $ $ Total net debt applicable to the limit General obligation bonds Less: Net assets reserved for repayment of general obligation debt Debt applicable to limit: Debt limit (15% of assessed value) Legal Debt Margin Assessed Value 2002 $ $ 24.87% 681,904 225,739 (5,571) 231,310 907,643 6,050,950 2006 $ $ PIMA COUNTY, ARIZONA Legal Debt Margin Last Ten Fiscal Years ($ amounts in thousands) 27.38% 748,334 282,159 (7,431) 289,590 1,030,493 6,869,955 2007 $ 27.42% 894,965 338,094 (10,241) 348,335 1,233,059 $ 8,220,396 2008 $ $ 26.15% 1,062,907 376,322 (10,523) 386,845 1,439,229 9,594,862 2009 $ $ 27.49% 1,072,548 406,599 (11,396) 417,995 1,479,147 9,860,981 2010 $ $ 30.32% 976,538 424,846 (27,904) 452,750 1,401,384 9,342,561 2011 Exhibit D - 16 138 $ 105,827 103,959 109,264 105,987 128,067 152,442 Sewer User Revenues (1) $ 57,371 69,597 78,521 73,186 69,904 74,638 Less: Operating Expense (2) $ 48,456 34,362 30,743 32,801 58,163 77,804 Available Net Revenue $ 20,163 11,257 $ 78,326 89,061 Pledged Revenues (3) $ Note: Beginning with fiscal year 2009-10 sewer revenue debt coverage is presented with 5 years of data . Data for each successive year will be added until 10 years are presented. 10,053 13,957 13,325 14,187 16,952 17,110 $ 5,619 6,340 7,221 9,469 9,838 17,047 Interest Debt Service (6) Principal (1) Includes sewer connection fees. (2) Excludes grants, depreciation, interest expense and amortization. (3) Pledged revenues defined by BOS 2010-50. (4) Sewer revenue debt rate covenants require minimum coverage of 1.20. (5) For fiscal year 2009-2010, a new Debt Coverage calculation was implemented. (6) Debt service requirements include principal and interest payable during the Bond Fiscal Year. Per the bond resolution, the Bond Fiscal Year is defined as 7/2/2010 to 7/1/2011. 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Fiscal Year Plus: Ending cash Balances of Prior Fiscal Year (unrestricted) PIMA COUNTY, ARIZONA Regional Wastewater Reclamation Pledged Sewer Revenue Debt Coverage Last Six Fiscal Years (amounts in thousands) Coverage Ratio (4) 3.09 1.69 1.50 1.39 2.92 (5) 2.61 Exhibit D - 17a 139 $ 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 $ 34,855 34,059 36,865 38,349 39,336 42,639 43,490 38,082 34,214 34,552 Less: Operating Expense $ 15,744 17,793 18,912 19,470 22,608 22,142 21,519 20,809 20,683 18,159 Available Net Revenue $ 8,535 10,215 8,905 10,710 11,435 11,745 12,365 15,145 10,530 11,015 $ * Debt Service Requirements include principal and interest payable in the 12 months following each fiscal year. 3,370 4,394 3,965 6,058 5,257 5,659 6,147 6,203 5,709 5,244 Debt Service * Principal Interest 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. 50,599 51,852 55,777 57,819 61,944 64,781 65,009 58,891 54,897 52,711 Transportation Revenue Fiscal Year PIMA COUNTY, ARIZONA Transportation Revenue Bonds - Pledged Revenue Bond Coverage Last Ten Fiscal Years (amounts in thousands) 1.32 1.22 1.47 1.16 1.35 1.27 1.16 0.97 1.27 1.11 Coverage Ratio Exhibit D - 17b 140 * * * * * * * $ Lease Revenue 2 1 0 $ 7 7 27 Less: Operating Expense * This debt was satisfied in full during FY 2003-04. 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Fiscal Year $ (5) (6) (27) Available Net Revenue $ 145 155 460 $ Debt Service Principal Interest PIMA COUNTY, ARIZONA Pledged Revenue Bond Coverage - Lease Revenue Bonds Last Ten Fiscal Years (amounts in thousands) 52 31 99 (0.03) (0.03) (0.05) Coverage Ratio Exhibit D - 17c 141 195 3,824 74 1,643 42 5,778 $ $ FY 03-04 $ $ 2,953 42 147 2,764 FY 04-05 $ $ 3,115 42 31 3,042 FY 05-06 Source: Pima County Finance and Risk Management Department * 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. ** The capital lease agreement for equipment was paid in full as of June 30, 2011 Clerk of Superior Court - equipment** Jail * Juvenile Court Public Works Building Sheriff Function/Department $ $ 3,118 21 82 3,015 FY 06-07 $ $ 6,002 82 5,920 FY 07-08 $ $ 3,158 131 3,027 FY 08-09 PIMA COUNTY, ARIZONA Lease, Lease-Purchase and Purchase Agreements (amounts in thousands) $ $ 3,118 111 3,007 FY 09-10 $ $ 3,041 37 3,004 FY 10-11 $ $ 18,565 18,565 FY 11-12 Exhibit D - 18 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 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Principal $ 35,358 43,648 46,998 41,255 48,672 50,940 56,459 96,751 83,565 72,525 Total Debt Service Interest $ 12,366 13,904 13,702 14,794 18,147 17,672 19,757 24,322 24,097 23,945 $ 47,724 57,552 60,700 56,049 66,819 68,612 76,216 121,073 107,662 96,470 Total General Expenditures * $ Exhibit D - 19 Ratio of Debt Service To General Expenditures 487,476 515,774 546,136 589,708 640,336 689,968 755,413 780,044 730,379 730,278 * Includes General, Special Revenue and Debt Service Funds, while excluding Capital Projects Fund. 142 9.8% 11.2% 11.1% 9.5% 10.4% 9.9% 10.1% 15.5% 14.7% 13.2% 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 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Population (a) 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 1,048,796 1,070,723 1,092,369 Personal Income (b) $ 21,991,000 22,973,000 23,965,000 26,302,000 28,421,000 30,899,000 33,009,000 32,898,000 34,974,000 36,263,000 Per Capita Personal Income ($) $ 24,787 25,395 25,797 27,599 28,894 30,813 32,470 32,343 33,931 37,101 Exhibit D - 20 Unemployment Rate (a) 4.7% 4.8% 3.5% 4.1% 4.4% 3.3% 4.7% 7.9% 8.6% 9.1% 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. 143 144 3,783 Phelps Dodge 10 9 8 397,900 20.4% 1.0% 1.0% 1.5% 2.8% 81,606 3,375 6,168 11,580 10 8 1 7 6 9 4 5 2 3 Rank 2003 Sources: Data is obtained from www.azstarnet.com/star200, a website of the Arizona Daily Star. University of Arizona, "Arizona's Economy" U of A Business Research Program (EBR), College of Business & Public Administration Total Work Force Total Carondelet Health Network 81,076 3,800 T M C HealthCare Inc. Tohono O'odam Nation 5,933 City of Tucson UA Healthcare 2 7,135 10,969 1.8% Fort Huachuca 7 7,175 9,947 Pima County Government 2.1% 2.3% 9,732 8,234 6 5 2.5% 11,335 8,278 9,200 Davis Monthan AFB 4 2.9% 10,100 Tucson Unified School District 9,932 State of Arizona 1 2.6% Employees 4,000 11,606 University of Arizona 3 Rank Percent of Total County Employment Wal-Mart Stores, Inc. 10,400 Raytheon Employer Employees 2002 424,400 19.2% 0.8% 1.5% 2.7% 1.7% 1.9% 0.9% 2.3% 2.3% 2.7% 2.4% Percent of Total County Employment 77,740 3,515 5,495 11,939 6,987 7,690 4,420 7,692 9,753 10,078 10,171 Employees 10 8 1 7 6 9 5 4 3 2 Rank 2004 431,400 18.1% 0.8% 1.3% 2.8% 1.6% 1.8% 1.0% 1.8% 2.3% 2.3% 2.4% Percent of Total County Employment PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 81,678 4,500 6,757 12,250 6,767 7,684 4,595 8,727 9,750 10,348 10,300 Employees 10 8 1 7 6 9 5 4 2 3 Rank 2005 443,100 18.3% 1.0% 1.5% 2.8% 1.5% 1.7% 1.0% 2.0% 2.2% 2.3% 2.3% Percent of Total County Employment 80,908 4,123 5,306 13,098 6,765 7,623 4,980 8,233 9,742 10,282 10,756 Employees 10 8 1 7 6 9 5 4 3 2 Rank 2006 (continued) 443,300 18.2% 0.9% 1.2% 3.0% 1.5% 1.7% 1.1% 1.9% 2.2% 2.3% 2.4% Percent of Total County Employment Exhibit D - 21 145 7,290 Pima County Government 79,899 4,900 10 453,500 17.6% 1.1% 1.3% 80,671 5,840 5,848 9 8 Sources: Data is obtained from www.azstarnet.com/star200, a website of the Arizona Daily Star. U niversity of Arizona, "Arizona's Economy" U of A Business Research Program (EBR), College of Business & Public Administration Total Work Force Total Carondelet Health Network Tohono O'odam Nation Phelps Dodge Freeport-McMoran Copper 8 7 6 459,200 17.6% 1.3% 1.3% 1.5% 1.5% 1.7% 1.3% 1.7% 2.3% 2.3% 2.7% 77,214 5,987 5,635 6,463 6,235 7,227 6,715 7,509 9,329 10,575 11,539 Employees 9 10 7 8 5 6 4 3 2 1 Rank 2009 486,400 15.9% 1.2% 1.2% 1.3% 1.3% 1.5% 1.4% 1.5% 1.9% 2.2% 2.4% Percent of Total County Employment 75,882 4,566 5,399 6,236 6,511 7,012 7,192 7,755 8,708 10,363 12,140 Employees 10 9 8 7 6 5 4 3 2 1 Rank 2010 488,500 15.5% 0.9% 1.1% 1.3% 1.3% 1.4% 1.5% 1.6% 1.8% 2.1% 2.5% Percent of Total County Employment 6,225 6,403 6,709 7,308 8,462 8,866 10,481 10,500 Employees 75,866 4,930 5,848 6,701 6,954 4 10 5 2 3 1 Rank Percent of Total County Employment City of Tucson 2.0% 1.6% 8,018 5,805 7,701 10,754 10,535 12,515 Employees 2008 5,982 4 7 1.6% 1.2% 1.8% 2.2% 2.3% 2.5% Percent of Total County Employment UA Healthcare 9,119 6 7,419 Tucson Unified School District Fort Huachuca 9 5,625 Wal-Mart Stores, Inc. 5 8,233 Davis Monthan AFB 3 2 9,927 10,354 University of Arizona 1 Rank 2007 State of Arizona 11,184 Employer Employees Raytheon (continued) PIMA COUNTY, ARIZONA Principal Employers Current Year and Nine Years Ago 10 9 8 7 6 5 4 3 2 1 Rank 2011 485,800 15.6% 1.0% 1.2% 1.3% 1.3% 1.4% 1.5% 1.7% 1.8% 2.2% 2.2% Percent of Total County Employment Exhibit D - 21 146 1,500 1,400 1,200 1,500 1,700 1,900 2,100 1,300 1,800 1,820 21,800 23,700 24,000 26,600 28,500 28,100 23,600 16,500 14,300 14,456 32,300 29,100 28,500 28,600 29,300 29,000 26,900 25,900 24,500 24,767 Manufacturing 184,500 184,500 185,000 199,300 219,200 228,600 221,600 215,900 216,800 219,159 15,100 14,800 15,600 18,200 17,500 17,800 16,300 16,700 17,400 17,589 Finance, Insurance and Real Estate 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). 4.7% 4.8% 3.5% 4.1% 4.4% 3.3% 4.7% 7.9% 8.6% 9.1% Construction Trades and Services Note: 397,900 424,400 431,400 443,100 443,300 453,500 459,200 486,400 488,500 485,800 Mining EMPLOYMENT Arizona Department of Economic Security, Economic Forecasting Project University of Arizona, "Arizona's Economy" U of A Business Research Program (EBR), College of Business & Public Administration 890,356 908,227 926,052 943,795 961,519 1,003,918 1,026,506 1,048,796 1,070,723 1,092,369 Population Total Unemployment Rate Exhibit D - 22 Sources: 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Calendar Year Civilian Labor Force PIMA COUNTY, ARIZONA Population and Employment Last Ten Calendar Years 147 Sources: 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Calendar Year 3,459,183 3,522,401 3,611,696 3,928,773 4,251,710 4,284,880 4,474,352 3,777,057 3,696,875 3,721,785 13,628,899 15,016,131 15,393,817 15,847,429 17,179,275 17,857,865 19,491,376 21,648,350 20,483,709 19,746,774 Transportation No. of Air Bus Passengers Ridership 1.80 1.91 1.96 2.00 2.18 2.21 2.27 2.46 2.22 2.18 Riders Per Mile 3,367 9,441 10,432 12,103 11,903 6,265 4,171 2,364 2,340 2,400 Residential Bldg. Permits 11,860 12,933 15,054 17,039 16,630 13,821 10,718 10,472 12,471 11,545 Real Estate Multiple Listings University of Arizona, "Arizona's Economy" U of A Business Research Program, Eller Business Review (EBR), College of Business & Public Administration Tucson Airport Authority Pima Association of Governments Tucson Association of Realtors, Multiple Listing Service, Inc. 259,794 271,802 239,966 261,037 289,440 263,910 240,329 190,445 169,780 164,152 Aircraft Movements PIMA COUNTY, ARIZONA Transportation and Real Estate Last Ten Calendar Years $ 1,955,348 2,271,131 2,899,012 3,908,054 4,462,020 3,757,536 2,810,383 2,245,644 2,457,147 2,033,702 Sales Volume In $ 000's Exhibit D - 23 PIMA COUNTY, ARIZONA Economic Indicators by Calendar Year Last Ten Calendar Years ($ amounts in thousands) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Construction Activity No. of Dwelling Construction Units Awards Awarded Aggregate Retail Sales Calendar Year $ 8,728,079 8,804,946 9,550,501 10,366,181 11,478,781 11,829,081 11,922,231 10,799,849 10,614,927 11,144,720 Exhibit D - 24 $ 1,678,354 7,716 8,015 9,281 12,640 10,313 6,110 3,728 1,986 2,221 2,288 * University of Arizona, "Arizona's Economy" U of A Business Research Program (EBR), College of Business & Public Administration. *With Calendar Year 2011 the number of dwelling units awarded includes both single fa mily and 2-5-plus unit structures combined. 148 Bank Deposits $ 6,554,000 7,175,000 7,895,000 9,013,000 10,134,000 10,497,000 10,765,000 10,855,000 11,134,000 11,265,000 PIMA COUNTY, ARIZONA Population Statistics June 30, 2011 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+ 72,349 70,902 65,651 66,241 78,574 224,006 210,360 69,623 63,375 49,685 38,424 83,179 Total 1,092,369 POPULATION PROJECTIONS Year Projected Population 2011 2013 2018 2023 2043 2053 1,092,369 1,134,853 1,234,697 1,325,564 1,623,983 1,745,812 Source: Arizona Department of Economic Security 149 Exhibit D - 25 PIMA COUNTY, ARIZONA Average Annual Jail Population Last Ten Calendar Years Calendar Year Average Jail Population 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1,481 1,462 1,539 1,739 2,009 2,028 2,008 1,913 1,826 1,636 Source: Pima County Sheriff's Department 150 Exhibit D - 26 STATISTICAL SECTION OPERATING INFORMATION: The objective of the operating information is 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. 151 6,839 Total 6,527 1,385 481 42 548 162 149 3 5,142 2,040 1,902 288 0 413 185 197 117 2004 6,820 1,241 449 42 0 631 116 3 5,579 2,952 1,434 351 0 408 20 164 250 2005 7,250 1,461 668 0 0 634 156 3 5,789 2,911 1,401 526 45 414 23 180 289 6,855 1,187 472 0 0 559 153 3 5,668 2,776 1,442 334 41 408 22 466 179 * Previously known as Wastewater Management - Liquid Waste. In fiscal year 2005-2006 Wastewater Management-Solid Waste was classified as a governmental fund. It now appears under the category "Sanitation". 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. 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. 7,093 1,202 508 0 0 563 128 3 5,891 2,860 1,560 330 40 404 26 485 186 Full-time employees (FTEs) as of 6/30: 2006 2007 2008 Variances can be noted in the Governmental Activities categories due to a change in classification criteria in fiscal year 2005. Note: Internal service funds FTEs were added to the General Government function in FY 2004-2005. 1,811 Total business-type activities 506 43 607 511 141 3 5,028 Total governmental activities Business-type activities Regional Wastewater Reclamation* Wastewater Management- Solid Waste Kino Hospital Pima Health System & Services Development Services Parking Garages 1,851 1,986 290 0 407 174 180 140 Governmental activities General government Public safety Highways and streets Sanitation Health Welfare Culture and recreation Education and economic opportunity Function/Program 2003 PIMA COUNTY, ARIZONA Employees by Function Last Nine Fiscal Years 6,644 1,034 507 0 0 451 73 3 5,610 2,684 1,491 311 34 397 29 480 184 2009 6,728 978 488 0 0 422 66 2 5,750 2,870 1,488 264 33 422 32 467 174 2010 6,704 970 481 0 0 421 66 2 5,734 2,850 1,529 262 23 412 27 461 170 2011 Exhibit D - 27 152 36,823 $ $ 112,791,318 $ 12,908,101 9,356,754 2,598,134 72,540,294 $ 97,403,283 20,698,771 18,609,343 5,592,348 67,890,856 1,338,000 6,063,771 486,402 107 344,470 22,465 147,117 165,387 65.0 9,718 $ 98,220,398 $ 42,755,555 42,916,920 5,071,608 7,476,315 1,430,690 6,249,123 474,045 129 388,092 23,785 146,739 165,441 65.5 11,245 42,016 37,868 4,148 32,501 2005 $ 99,185,638 $ 16,646,964 2,018,849 3,568,917 76,950,908 1,390,792 6,276,794 488,250 135 391,295 17,218 155,377 171,179 66.4 8,325 31,016 27,846 3,170 30,686 2006 $ 154,588,664 $ 37,402,683 66,095,100 21,944,399 29,146,482 1,395,849 6,371,480 492,973 141 438,051 25,700 142,773 153,595 68.5 8,734 34,131 30,204 3,927 33,929 Fiscal Year 2007 (1) MGD: Millions of Gallons per Day (2) Sidewinders attendance 7/08 through 9/08; beginning in fiscal year 2008-09, the team is no longer in Tucson (3) *For fiscal year 2010-11 there were no Spring Training games in Tucson Capital Projects Completed Land Buildings Improvements Infrastructure 1,300,000 5,761,423 458,736 101 280,850 23,070 Parks & Recreation Athletic field permits issued Community center admissions Volunteer hours Library Volumes in collection Total volumes borrowed Number of cardholders 137,302 167,552 64.5 8,289 40,636 42,074 45,994 3,813 33,815 2004 3,920 32,159 Cultural and Recreational Spring training attendance (2) Sidewinders attendance (3) (1) Wastewater Avg. daily sewage treated (MGD) New connections Total violations/citations Traffic violations/citations Criminal Total Civil Total Sheriff Physical arrests Program: 2003 PIMA COUNTY, ARIZONA Operating Indicators by Program Last Nine Fiscal Years $ 113,810,324 $ 18,619,333 17,591,833 4,673,301 72,925,857 1,429,365 6,874,888 554,339 147 445,137 19,622 160,626 143,611 67.3 4,452 47,509 41,542 5,967 32,796 2008 $ 106,021,120 $ 59,922,798 14,336,536 9,028,251 22,733,535 1,425,235 7,409,820 516,780 149 403,887 25,756 103,407 58,879 67.8 1,477 56,239 49,817 6,422 33,571 2009 $ 65,029,616 $ 36,953,802 11,994,142 1,921,052 14,160,620 1,427,089 7,517,692 526,170 168 351,692 14,321 84,520 65.4 1,950 48,217 41,800 6,417 27,946 2010 5,655,264 57,876,009 6,366,258 24,259,854 $ 94,157,385 $ 1,414,928 7,199,809 452,400 161 339,550 12,168 * 62.7 1,412 36,574 32,270 4,304 24,108 2011 Exhibit D - 28 153 2 606 7,437 18 7 10,334 17,771 25 12 12 3,177 74.76 2,411 32 67 12 9 8 138 10,313 1,773 $ 672,427 6 5 280 2004 7 13,942 31,713 32 12 12 3,249 81.50 2,419 34 73 14 9 8 138 10,558 1,782 $ 926,828 6 5 276 2005 17 1,235 32,948 49 12 13 3,314 87.45 2,885 36 78 14 9 9 138 10,622 1,798 $ 964,051 6 5 303 2006 18 3,668 36,616 67 25 3,464 92.45 2,932 41 84 16 9 9 139 10,840 1,801 $ 1,150,950 7 4 302 Fiscal Year 2007 7 4 324 2008 9 757 37,373 76 26 3,492 90.00 2,991 41 90 17 11 9 140 10,999 1,893 $ 1,321,034 (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 all County libraries. * Annexation by other jurisdictions resulted in a decrease of Transportation (Streets and Highways) ** Pothole repair was unavailable in FY 2010. Open Space Acquisitions Properties added Acres Cumulative acreage Total properties 12 12 3,049 74.76 Wastewater Sanitary sewers (miles) Treatment capacity (MGD) Libraries County (2) City 2,366 30 64 12 8 7 138 10,219 Flood Control Bank protection (miles) Flood plain / drainageway (acres) Parks & Recreation Urban parks (acres) Playgrounds (1) Baseball/softball diamonds Soccer/football fields Community centers Swimming pools 1,750 $ 691,236 6 5 252 Transportation (streets and highways) Streets (miles) Pothole repair** Sheriff Stations Zone offices Patrol units Program: 2003 PIMA COUNTY, ARIZONA Capital Assets and Infrastructure by Program Last Nine Fiscal Years 5 14,753 52,126 81 26 3,462 91.50 2,881 38 85 17 8 9 140 11,053 1,893 $ 1,257,087 7 4 323 2009 9 5,390 57,516 90 26 3,472 94.26 2,881 38 85 17 8 9 140 11,966 1,893 7 4 361 2010 4 275 57,791 94 26 3,476 97.76 2,898 39 86 18 11 10 141 12,027 1,892 * $2,822,770 7 4 355 2011 Exhibit D - 29 (This page is intentionally blank) 154